SCHEDULE 14A
(Rule 14a - 101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No._____)
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
|X| Definitive proxy statement
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
DEVLIEG-BULLARD, 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 Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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|_| Fee paid previously with preliminary materials:
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|_| 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:
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(4) Date Filed:
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[LOGO]
One Gorham Island
Westport, Connecticut 06880
(203) 221-8201
November 3, 1997
Dear Stockholder:
On behalf of the Board of Directors, I am pleased to extend to you an
invitation to attend the Annual Meeting of Stockholders of DeVlieg-Bullard,
Inc., to be held at the Sheraton Stamford Hotel, One First Stamford Place,
Stamford, Connecticut, on Wednesday, December 10, 1997, beginning at 10:00 a.m.,
E.S.T.
The notice of meeting and proxy statement on the following pages contain
information about the matters which are to be considered. During the meeting we
will also review operating results for the past year.
In order to ensure that your shares are voted, please complete, date, sign,
and return the enclosed proxy in the enclosed postage-paid envelope at your
earliest convenience. Every stockholder's vote is important.
We look forward to seeing you on Wednesday, December 10, 1997.
Sincerely,
/s/WILLIAM O. THOMAS
WILLIAM O. THOMAS
President and Chief
Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of
DeVlieg-Bullard, Inc. (the "Company"), will be held at 10:00 a.m., local time,
on Wednesday, December 10, 1997, at the Sheraton Stamford Hotel, One First
Stamford Place, Stamford, Connecticut for the following purposes:
1. To elect eight (8) directors to hold office until the next Annual
Meeting and until their successors are elected and qualified; and
2. To transact such other business as may properly be brought before the
Annual Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on October 28, 1997,
as the record date for the determination of stockholders entitled to notice of
and to vote at the Annual Meeting.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding matters to be acted upon at the Annual
Meeting.
By the Order of the Board of Directors
/s/Lawrence M. Murray
Lawrence M. Murray, Secretary
Westport, Connecticut
November 3, 1997
YOUR REPRESENTATION AT THE ANNUAL MEETING IS IMPORTANT. TO ENSURE YOUR
REPRESENTATION, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE
COMPLETE, DATE, SIGN, AND RETURN THE ENCLOSED PROXY. SHOULD YOU DESIRE TO REVOKE
YOUR PROXY, YOU MAY DO SO AS PROVIDED IN THE ACCOMPANYING PROXY STATEMENT AT ANY
TIME BEFORE IT IS VOTED.
DeVlieg-Bullard, Inc.
One Gorham Island
Westport, Connecticut 06880
(203) 221-8201
------------------
PROXY STATEMENT
------------------
The accompanying proxy is solicited by the Board of Directors of
DeVlieg-Bullard, Inc. (the "Company") for use at the Annual Meeting of
Stockholders and any adjournments thereof (the "Annual Meeting"), to be held on
December 10, 1997, notice of which is attached hereto.
The purposes of the Annual Meeting are to elect eight directors and to
transact such other business as may properly be brought before the Annual
Meeting or any adjournment thereof.
A stockholder who signs and returns a proxy may revoke the same at any time
before the authority granted thereby is exercised by attending the Annual
Meeting and electing to vote in person, by filing with the Secretary of the
Company a written revocation or by duly executing a proxy bearing a later date.
Unless so revoked, the shares represented by the proxy will be voted at the
Annual Meeting. Where a choice is specified on the proxy, the shares represented
thereby will be voted in accordance with such specifications.
The Board of Directors knows of no other matters which are to be brought to
a vote at the Annual Meeting. However, if any other matter does come before the
Annual Meeting, the persons appointed in the proxy or their substitutes will
vote in accordance with their best judgment on such matters.
The Board of Directors has fixed the close of business on October 28, 1997,
as the record date for the Annual Meeting. Only record holders of the Company's
common stock, par value $.01 per share (the "Common Stock"), at the close of
business on that date will be entitled to vote at the Annual Meeting. On the
record date, the Company had outstanding 12,275,400 shares of Common Stock.
Holders of the Common Stock will be entitled to one vote for each share of
Common Stock so held, which may be given in person or by proxy duly authorized
in writing.
The representation in person or by proxy of at least a majority of the
outstanding shares entitled to vote is necessary to provide a quorum at the
meeting. The directors shall be elected by a plurality of the votes cast in the
election by the holders of the Common Stock represented and entitled to vote at
the Annual Meeting. Any other matters submitted to the stockholders shall be
approved by the affirmative vote of a majority of the votes cast by the holders
of the Common Stock represented and entitled to vote at the Annual Meeting.
Abstentions and "non-votes" are counted as present in determining whether the
quorum requirement is satisfied. Abstentions will not be counted either for or
against the election of directors. A "non-vote" occurs when a nominee holding
shares for a beneficial owner votes on one proposal, but does not vote on
another proposal because the nominee does not have discretionary voting power
and has not received instructions from the beneficial owner.
The cost of solicitation of proxies will be borne by the Company, including
expenses in connection with preparing, assembling and mailing this Proxy
Statement and the reasonable expenses of brokerage firms and others for
forwarding proxies and proxy material to the beneficial owners of Common Stock
of the Company. Such solicitation will be made by mail, and may also be made by
the Company's regular officers or employees personally or by telephone or
telecopy.
This Proxy Statement and the Company's Annual Report to Stockholders have
been mailed on or about November 3, 1997 to all stockholders of record at the
close of business on October 28, 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information furnished to the Company
as of October 28, 1997, with respect to any person known to the Company to be
the beneficial owner of more than 5% of the outstanding shares of the Common
Stock.
Amount and
Nature of
Beneficial Percent of
Name and Address of Beneficial Owner Ownership Class
- ------------------------------------ --------------- -------------
Stanwich Oil & Gas, Inc. (a) 4,331,181 (b) 35.3%
One Stamford Landing
Stamford, Connecticut 06902
Heartland Advisors, Inc. (c) 692,500 5.6%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
(a) Charles E. Bradley, the Chairman of the Board and a Director of the
Company, and John G. Poole, a Director of the Company, own 49.0% and 29.8%,
respectively, of the common stock of Stanwich Oil & Gas, Inc. ("Stanwich
Oil & Gas"). Mr. Bradley is a director and officer and Mr. Poole is an
officer of Stanwich Oil & Gas. In addition, 21.0% of the common stock of
Stanwich Oil & Gas is owned by an irrevocable trust established for the
benefit of Mr. Bradley's adult children.
(b) Of the shares of Common Stock beneficially owned by Stanwich Oil & Gas,
2,000,000 have been pledged to secure certain indebtedness of Mr. Bradley.
(c) Based on information contained in Amendment No. 3 to Schedule 13G filed by
Heartland Advisors, Inc. with the Securities and Exchange Commission on
February 14, 1997.
2
PROPOSAL 1: ELECTION OF DIRECTORS
Directors are elected each year, to hold office until the next Annual
Meeting of Stockholders and until their successors are duly elected and
qualified. The Company's Bylaws provide for a minimum of three and a maximum of
twelve directors, the exact number to be set by the Board of Directors. The
current Board of Directors consists of eight members. All of the nominees to be
elected as directors at the Annual Meeting are currently directors of the
Company. All of the nominees were elected by the stockholders.
Unless contrary instructions are received, the enclosed proxy will be voted
in favor of the election as directors of the nominees listed below. Each nominee
has consented to be a candidate and to serve, if elected. While the Board has no
reason to believe that any nominee will be unable to accept nomination or
election as a director, if such an event should occur, the proxy will be voted
with discretionary authority for a substitute or substitutes as shall be
designated by the current Board of Directors.
The following table contains certain information concerning the nominees
and regarding the beneficial ownership of the Common Stock by each director and
nominee, the executive officers of the Company and by all directors and
executive officers as a group. Except as otherwise indicated, each person has
sole voting and investment power over the shares of Common Stock listed as
beneficially owned by him.
3
Share of Common
Stock Beneficially
Owned on Percent
October 28, of
Name Age Position 1997(a) Class
- ------------------------------------ -------- ---------------------------- ------------------------- -------------
Charles E. Bradley.................. 68 Chairman and 305,252(b) 2.5%
Director and
Nominee
William O. Thomas................... 56 President, Chief 384,638 3.1
Executive Officer
and Director and
Nominee
Lawrence M. Murray ................. 55 Vice President, Chief 167,320 1.3
Financial Officer and
Secretary
Burton C. Borgelt................... 64 Director and 11,000 *
Nominee
Thomas L. Cassidy................... 69 Director and 24,000 *
Nominee
George A. Chandler.................. 68 Director and 12,000 *
Nominee
John R. Kennedy..................... 67 Director and 14,000 *
Nominee
John E. McConnaughy, Jr............. 68 Director and 10,000 *
Nominee
John G. Poole....................... 54 Director and 175,189(b)(c) 1.4
Nominee
All directors and executive officers as a group (9 persons).................. 1,103,399 8.5%
* Less than one percent.
(a) Includes the following shares which are not currently outstanding but which
the named individuals are entitled to acquire within 60 days of the date
hereof upon the exercise of options: William O. Thomas -- 300,000 shares;
Lawrence M. Murray -- 157,000 shares; Burton C. Borgelt -- 10,000 shares;
Thomas L. Cassidy -- 10,000 shares; George A. Chandler -- 10,000 shares;
John R. Kennedy -- 10,000 shares; John E. McConnaughy, Jr. -- 10,000
shares. Also includes the following shares which are not currently
outstanding
4
but which the named individuals are entitled to acquire within 60 days of
the date hereof upon the exercise of stock purchase warrants: Charles E.
Bradley -- 156,249 shares; John G. Poole -- 93,750 shares. Includes for all
directors and executive officers as a group (9 persons) -- 756,999 shares.
The shares described in this note are deemed to be outstanding for the
purpose of computing the percentage of outstanding Common Stock owned by
such persons individually and by the group, but are not deemed to be
outstanding for the purpose of computing the percentage of ownership of any
other person.
(b) Does not include 4,331,181 shares beneficially owned by Stanwich Oil & Gas.
Mr. Bradley and Mr. Poole own 49.0% and 29.8%, respectively, of the common
stock of Stanwich Oil & Gas. Mr. Bradley is a director and officer and Mr.
Poole is an officer of Stanwich Oil & Gas. In addition, 21.0% of the common
stock of Stanwich Oil & Gas is owned by an irrevocable trust established
for the benefit of Mr. Bradley's children. Does not include 1,500 shares
beneficially owned by Stanwich Partners, Inc. ("Stanwich Partners"). Mr.
Bradley and Mr. Poole are directors and officers of Stanwich Partners and
beneficially own 44.7% and 31.4%, respectively, of the common stock of
Stanwich Partners. Does not include 100,000 shares beneficially owned by
Stanwich Financial Services, Inc. ("Stanwich Financial"). Mr. Bradley is a
director and officer of Stanwich Financial and beneficially owns 42.0% of
the common stock of Stanwich Financial. Mr. Poole beneficially owns 7.0% of
the common stock of Stanwich Financial.
(c) In addition to the shares of Common Stock beneficially owned by Mr. Poole,
29,000 shares are owned by Mr. Poole's children and are maintained in
custodian accounts pursuant to the Uniform Gift to Minors Act. Mr. Poole
disclaims beneficial ownership of such shares.
The following is a brief summary of the business experience of each of the
nominees:
Charles E. Bradley was named Chairman of the Board of the Company in
December 1989. Mr. Bradley was a co-founder of the Company in 1986 and has
served as a Director since that time. Mr. Bradley served as the Vice President
and Treasurer of the Company from 1986 through December 1989. Mr. Bradley was a
co-founder of Stanwich Partners in 1982 and has served as its President since
that time. Mr. Bradley is a Director of Consumer Portfolio Services, Inc., NAB
Asset Corporation, General Housewares Corporation, Zydeco Energy Corporation,
Audits & Surveys Worldwide, Texon Energy Corporation and several private
companies. Mr. Bradley is currently the Chairman of the Board of Chatwins Group,
Inc., Consumer Portfolio Services, Inc. and NAB Asset Corporation, is a
Director, President and acting Chief Financial Officer of Sanitas, Inc., and is
a Director, President and Chief Executive Officer of Reunion Industries, Inc. He
is a certified public accountant and received his M.B.A. from New York
University School of Business and his B.S. from Yale University. See "Certain
Relationships and Related Transactions."
William O. Thomas has been a Director of the Company since 1986 and served
as its Chairman from 1986 to December 1989 and served as its Vice Chairman from
December 1989 until March 2, 1992. Effective March 2, 1992, Mr. Thomas was
elected President and Chief Executive Officer of the Company. Mr. Thomas is a
Director of Sanitas, Inc. Prior thereto, Mr. Thomas held several management
positions over a period of 16 years in the Plastics Group of General Electric
5
Company and was general manager of the Plastics Products Division of Uniroyal.
He received his B S. from Purdue University.
Burton C. Borgelt was elected a Director of the Company in December 1989.
Mr. Borgelt served as Chief Executive Officer of Dentsply International, Inc., a
dental supply company, from 1982 until 1993, and from 1995 to 1996. He served as
Chairman of the Board of Dentsply International, Inc., from 1989 to 1996. Mr.
Borgelt is a Director of Mellon Bank Corporation, Mellon Bank, N.A. and The
Quill Corporation. Mr. Borgelt attended the University of Toledo where he
majored in marketing and finance.
Thomas L. Cassidy was elected a Director of the Company in February 1990.
Mr. Cassidy has been a Managing Director of Trust Company of the West since
1984. He is also a Senior Partner of TCW Capital. He is a director of Reunion
Industries, Inc. and Spartech Corporation. Mr. Cassidy received his M.B.A. from
the Wharton School of Business of the University of Pennsylvania and his B.A.
from Georgetown University.
George A. Chandler was elected a Director of the Company in February 1990.
From 1990 to 1991, Mr. Chandler served as Chairman and Chief Executive Officer
of Advanced Aluminum Products, Inc. From 1985 to 1989, Mr. Chandler was
Chairman, President and Chief Executive Officer of Aqua Chem, Inc. Mr. Chandler
is presently on the Board of Directors of Kimmins Environmental Services Corp.
and Cumberland Holdings, Inc. Mr. Chandler received his M.B.A. from the Graduate
School of Business Administration at Harvard University and his B.A. from
Princeton University.
John R. Kennedy was elected a Director of the Company in February 1990. He
was employed with Federal Paper Board Company, Inc. from 1952 until 1996,
holding various management positions. Mr. Kennedy served as President and Chief
Executive Officer of Federal Paper Board from 1967 to 1996. He is a director of
Chase Brass Industries, Inc., International Paper Company and Spartech
Corporation. Mr. Kennedy received his B.S. from Georgetown University.
John E. McConnaughy, Jr. was elected a Director of the Company in December
1989. Mr. McConnaughy is Chairman and CEO of JEMC Corporation. From 1969 to
1986, Mr. McConnaughy served as Chairman and CEO of Peabody International Corp.
("Peabody"). From 1981 to 1992, he served as Chairman and CEO of GEO
International Corporation when it was spun off from Peabody in 1981. Mr.
McConnaughy is a Director of Mego Corporation, Transact International, Inc.,
Pantapec International, Inc., Riddell Sports, Inc. and Wave Systems, Inc. See
"Certain Legal Proceedings."
John G. Poole has served as a Director of the Company since 1986 and served
as its Vice President and Secretary from 1986 to December 1989. Mr. Poole was a
co-founder of Stanwich Partners in 1982 and has served as its Vice President
since that time. From 1978 to 1982, he was with Dean Witter Reynolds, Inc., as a
Managing Director. Mr. Poole is also a Director of Chatwins Group, Inc. and
Consumer Portfolio Services, Inc., and a Director and Vice President of Sanitas,
Inc.
6
Mr. Poole received his M.B.A. from the Wharton School of Business of the
University of Pennsylvania and his B.A. from Brown University. See "Certain
Relationships and Related Transactions."
The Board of Directors has an Audit Committee for the purpose of meeting
with the independent public accountants of the Company; reviewing the audit
plan, the annual audit and any other reports or recommendations made by the
accountants; recommending whether the auditors should be continued as auditors
for the Company and, if other auditors are to be selected, recommending the
auditors to be selected; meeting with the Company's internal auditors, if any,
and reviewing with them and the Company's auditors the adequacy of the Company's
internal controls; and performing such other duties as shall be delegated by the
Board of Directors. Messrs. Borgelt, Chandler, Kennedy and McConnaughy comprise
the Audit Committee, which met twice during the fiscal year ended July 31, 1997.
The Board of Directors has a Compensation Committee for the purpose of
recommending policies and plans concerning salaries, bonuses and other
compensation of the senior executives of the Company, including reviewing the
salaries of senior executives and recommending bonuses and other forms of
additional compensation for them; establishing and reviewing policies regarding
management perquisites; administering the Company's stock-based award plans; and
performing such other duties as shall be delegated by the Board. Messrs.
Borgelt, Cassidy and Kennedy comprise the Compensation Committee, which met once
during the fiscal year ended July 31, 1997. See "Executive Compensation and
Other Information -- Compensation Committee Report."
During the fiscal year ended July 31, 1997, the Board of Directors held six
meetings. All directors attended more than 75% of the aggregate number of
meetings of the Board and Committees of the Board on which they serve, except
Mr. Poole. The Board of Directors does not have a nominating committee.
A plurality of votes cast is necessary for the election of each nominee.
The Board of Directors recommends a vote FOR all nominees.
Certain Legal Proceedings
From 1981 until his retirement in 1992, Mr. McConnaughy served as Chairman
and CEO of GEO International Corporation. On October 25, 1993, GEO International
Corporation filed a petition for reorganization under Chapter 11 of the U.S.
Bankruptcy Code.
Mr. McConnaughy serves as a director for Enviropur Waste Refining
Technologies, Inc., which filed a petition for reorganization under Chapter 11
of the U.S. Bankruptcy Code on June 28, 1996.
7
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 the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission ("SEC"). Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the 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 all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with during the period ended July 31, 1997, except that one
transaction involving the granting of a stock option for each of Messrs.
Borgelt, Cassidy, Chandler, Kennedy, McConnaughy and Thomas were not timely
reported. Such transactions have been subsequently reported.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary Compensation Table
The following table summarizes the compensation earned or paid to the
Company's executive officers (the "Named Executive Officers") for fiscal years
ended July 31, 1997, 1996 and 1995, respectively.
Long-Term
Compensation
Awards
------------
Securities
Annual Compensation Underlying
---------------------------- Options/ All Other
Fiscal SARs Compensation
Name and Principal Position Year Salary ($) Bonus ($) (#)(1) ($) (2)
- ------------------------------------------- -------- ------------- ------------ ---------- -------------
William O. Thomas.......................... 1997 $252,000 (3) 100,000 $36,268
President and Chief Executive 1996 252,000 $126,915 -- 33,977
Officer 1995 252,000 50,000 50,000 38,284
Lawrence M. Murray......................... 1997 145,000 (3) -- 25,067
Vice President, Chief Financial 1996 145,000 48,684 -- 25,592
Officer and Secretary 1995 145,000 25,000 30,000 25,108
- ----------
(1) Number of stock options granted under the 1989 Employee Stock Plan (the
"1989 Plan"). Although the 1989 Plan permits grants of restricted stock and
stock appreciation rights, no grants of those incentives have been made.
8
(2) Includes the dollar amount of premiums and bonuses paid by the Company for
insurance policies in the amounts of $26,763, $27,424 and $28,362 on behalf
of Mr. Thomas, and $18,172, $18,131 and $18,145 on behalf of Mr. Murray, in
fiscal 1997, 1996 and 1995, respectively. The remainder represents (i)
contributions to the Company's Savings Plan (which is qualified under
Section 401 (k) of the Internal Revenue Code of 1986, as amended) in the
amounts of $4,500, $4,148 and $2,398 for the account of Mr. Thomas, and
$4,085, $3,392 and $1,853 for the account of Mr. Murray in fiscal 1997,
1996 and 1995, respectively, and (ii) the personal use of a Company-leased
automobile by Mr. Thomas valued at $5,005, $2,405 and $7,524, and by Mr.
Murray at $2,810, $3,069 and $5,110 in fiscal 1997, 1996 and 1995,
respectively.
(3) The Compensation Committee of the Board of Directors has not yet determined
the annual bonuses for Messrs. Thomas and Murray for fiscal 1997 as of the
date hereof.
Option Grants in Fiscal 1997
The following table sets forth information with respect to stock options
granted to the Named Executive Officers during the fiscal year ended July 31,
1997.
Percent of Potential Realizable Value
Number of Total at Assumed Annual Rates
Securities Options/SARs of Stock Price Appreciation
Underlying Granted to Exercise for Option Term (2)
Options/SARs Employees in Price Expiration ------------------------------
Name Granted (#)(1) Fiscal 1997 ($/Share) Date 5% 10%
- ---------------------- ---------------- ---------------- ----------- -------------- -------------- ------------
William O. Thomas 100,000 100.0% $2.4375 09/24/06 $153,293 $388,475
(1) All stock options were granted under the Company's 1989 Plan at an exercise
price equal to the fair market value at the date of grant. Options are
exercisable in installments of 30% at the end of the first and second years
from the date of grant and 40% at the end of the third year, and have a
term of ten years. Although the 1989 Plan allows the grant of stock
appreciation rights, no such rights have been granted to date.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the SEC and, therefore, are not intended to
forecast possible future appreciation, if any, of the Company's Common
Stock price.
9
Fiscal 1997 Year-End Option Values
The following table sets forth certain information regarding unexercised
stock options granted by the Company to the Named Executive Officers and held by
them at July 31, 1997. Neither of the Named Executive Officers exercised any
stock options issued by the Company during fiscal 1997.
Number of Securities
Underlying Unexercised Value of Unexercised in-the-
Options/SARs at Money Options/SARs at
July 31, 1997 (#) July 31, 1997 ($) (1)
-------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------ ------------- --------------- ------------- -----------------
William O. Thomas 250,000 125,000 $410,625 $156,563
Lawrence M. Murray 145,000 15,000 234,813 26,438
- ----------
(1) Based on the last reported sale price as reported on the Nasdaq Stock
Market's National Market on July 31,1997.
The Company has not awarded stock appreciation rights to any employee and
has no long term incentive plans, as that term is defined in regulations
promulgated by the SEC. During the fiscal year ended July 31, 1997, the Company
did not adjust or amend the exercise price of stock options awarded the Named
Executive Officers, whether through amendment, cancellation or replacement
grants, or other means. The Company presently has no defined benefit or
actuarial plans covering either of the Named Executive Officers.
Director Compensation
The Company's directors receive an annual retainer of $12,000 and a fee of
$1,000 for each Board of Directors meeting attended, $1,000 for each committee
meeting attended on a day on which there is no regularly scheduled Board of
Directors meeting and are reimbursed for travel expenses associated with serving
as a director. Directors who are officers or employees of the Company or
officers of Stanwich Partners and directors who serve as consultants to the
Company receive no compensation for serving as members of the Board of
Directors. The aggregate amount of fees paid to the outside directors for the
1997 fiscal year was $87,000.
Each director other than directors who have served as an employee of or
consultant to the Company or Stanwich Partners or its affiliates (each, an
"Outside Director") participate in the Company's 1991 Stock Option Plan for
Outside Directors (the "Outside Directors Plan"). In 1991, each Outside Director
was granted an option to purchase 5,000 shares of Common Stock (an aggregate of
25,000 shares) at $2.50 per share, the then fair market value of the shares. On
June 13, 1996, each Outside Director received an option for 5,000 shares of
Common Stock (an aggregate of 25,000 shares) at $2.56 per share, the then fair
market value of the shares. Upon initial election to
10
the Board, each Outside Director will be granted an option to purchase 5,000
shares of the Company's Common Stock at a price equal to the fair market value
as of the date of grant. Options granted under the Outside Directors Plan vest
one year after grant. The term of the options granted under the Outside
Directors Plan is ten years, unless the optionee ceases to be a director, in
which case the option expires three years following retirement or disability,
one year in the event of death and 90 days in the event the optionee ceases to
be a director for any other reason. At July 31, 1997, there were five
participants under the Outside Directors Plan who held options covering an
aggregate of 25,000 shares at an exercise price of $2.50 per share and options
covering an aggregate of an additional 25,000 shares at an exercise price of
$2.56 per share. There have been no exercises to date of options granted under
the Outside Directors Plan.
The Board of Directors may in the future adjust the compensation of
directors as it deems advisable and consistent with the best interest of the
Company's stockholders and the financial abilities of the Company.
Change in Control Provisions under the Company's Stock Option Plans
Under the Company's 1989 Plan and Outside Directors Plan, upon a Change in
Control (as defined in the 1989 Plan) any stock options, which are not then
exercisable, will become fully exercisable and the value of all stock options
may, unless otherwise determined by the Committee, be cashed out on the basis of
the Change in Control Price (as defined in the 1989 Plan).
Compensation Committee Interlocks and Insider Participation
During fiscal year 1997, the Board's Compensation Committee (the
"Committee") was composed of Messrs. Borgelt, Cassidy and Kennedy. None of these
persons has at any time been an officer or employee of the Company or any of its
subsidiaries. In addition, there are no relationships among the Company's
executive officers, members of the Committee or entities whose executives serve
on the Board or the Committee that require disclosure under applicable
regulations promulgated by the SEC.
Compensation Committee Report
The Company's executive compensation program is administered by the
Committee, a committee of the Board of Directors composed of non-employee
directors of the Company. The Committee approves compensation actions involving
the senior management of the Company, including the Named Executive Officers.
The Committee approves long-term incentive awards for the Named Executive
Officers and other key employees of the Company, and reviews and administers the
incentive compensation, stock option and other compensation plans of the
Company.
Under the supervision of the Committee, the Company has developed and
implemented compensation policies, plans and programs which are intended to
enhance the profitability of the
11
Company by aligning closely the financial interests of the Company's senior
management with those of its stockholders. In establishing levels of annual
salary, incentive bonus and equity incentives, the Committee generally considers
the following factors (i) the compensation policies and practices of competitive
businesses, (ii) the Company's performance, growth and achievements, (iii) the
level and degree of responsibility of each officer, (iv) the individual and
collective performance and achievements of the Company's senior management, and
(v) the level of compensation and equity incentives which would be required to
attract and retain qualified and experienced senior management. In establishing
levels of annual salary, incentive bonuses and equity incentives for fiscal
1997, the Committee relied on published information related to executive incomes
and on the recommendations of the Company's Chief Executive Officer, as well as
an analysis prepared in 1995 by Sibson & Company, a nationally recognized
management consulting firm. In 1995, the Committee requested Sibson & Company to
prepare a specific analysis of compensation information of publicly held
companies competing in a range of industries with revenues similar to those of
the Company. This analysis was used by the Committee to obtain an overall
perspective on compensation of its senior management and to assist the Committee
in structuring its compensation policies to more closely align the interests of
its senior management with those of its stockholders and to provide appropriate
incentives for senior management to work towards the achievement of the
Company's annual performance targets.
Following is a discussion of each of the elements of the executive
compensation program along with a description of the decisions and actions taken
by the Committee with regard to fiscal 1997 compensation.
Annual Compensation
Annual total cash compensation for senior management consists of base
salary and an annual cash bonus. Setting of the annual salary in fiscal 1997 for
members of senior management was based on the recommendations of the Chief
Executive Officer and the Committee's review of the individual officer's
responsibilities and compensation in comparison to similarly sized companies.
Members of senior management, including the Named Executive Officers, are
eligible to receive annual cash bonuses pursuant to the Company's bonus plan,
the purpose of which is to motivate members of senior management to use their
best efforts to enhance stockholder value through growth of the Company's
earnings. The Committee uses a formula in order to determine annual cash bonuses
which is established at the beginning of the fiscal year. The formula places
substantial emphasis on the Company meeting various targeted levels of earnings,
with a lesser emphasis on individually tailored objectives that are
strategically or operationally important to the Company's business.
The base annual salary and annual cash bonus for William O. Thomas, the
Company's President and Chief Executive Officer, were determined utilizing the
methods and factors discussed above. Mr. Thomas' base annual salary of $252,000,
was based on the Committee's estimate of the current market rates for the
position and the Committee's appraisal of the programs instituted by Mr. Thomas
during his tenure. Mr. Thomas' cash bonus for fiscal 1996 of $126,915 was
determined in accordance with the bonus formula adopted by the Committee at the
beginning of that year. Mr. Thomas' cash bonus for fiscal 1997 has not yet been
determined but will be based on the
12
application of a bonus formula adopted by the Committee at the beginning of
fiscal 1997 and the Committee's subjective appraisal of initiatives implemented
by the Company during fiscal 1997 that may not have been reflected in the
application of the bonus formula.
Long-Term Incentive Program
The long-term incentive program for senior management consists of stock
option awards granted pursuant to the 1989 Plan. The purpose of awarding equity
incentives under the 1989 Plan is to enable the Company to attract, retain and
motivate its employees by giving them the ability to participate in the
long-term growth of the Company. Stock option grants provide the right to
purchase shares of the Company's Common Stock at the fair market value on the
date of grant and have a ten-year term. Historically, options became exercisable
in five equal annual installments following the date of grant. Stock options
granted to senior management beginning in fiscal 1994 vest 30% at the end of
each of the first two years following grant and 40% at the end of the third
year. The Committee has typically granted stock options to members of senior
management, including the Named Executive Officers, and other key employees
following a review of the Company's operating results for the prior fiscal year.
On September 25, 1996, the Committee granted Mr. Thomas an option to purchase
100,000 shares of the Company's Common Stock at an exercise price equal to the
closing price of the Company's Common Stock on The Nasdaq Stock Market's
National Market on the date of grant. The option vests 30% at the end of each of
the first two years following grant and 40% at the end of the third year. In
determining the number of shares covered by each grant, the Committee considered
competitive industry practices and the likely effect on stockholder value of the
programs implemented by Mr. Thomas and his management team.
The tables set forth under "Executive Compensation and Other Information,"
and accompanying narrative and footnotes, reflect the decisions covered by the
above discussion.
Federal Income Tax Deductibility Limitations
The Committee believes it is appropriate to take into account the
$1,000,000 limit on the deductibility of executive compensation for federal
income tax purposes enacted as part of the 1993 Omnibus Budget Reconciliation
Act ("OBRA") and to seek, to the greatest extent possible, to qualify executive
compensation awards as performance-based compensation excluded from the
$1,000,000 OBRA limitation. None of the Named Executive Officers received
compensation in fiscal 1997 that would exceed the $1,000,000 OBRA limitation.
It is the Committee's intention to continue to utilize to the greatest
extent possible performance-based compensation, which should minimize the effect
of OBRA on the Company. However, the Committee believes that its primary
responsibility is to provide a compensation program that will attract, retain
and reward the executive talent necessary to maximize the return to
stockholders.
Burton C. Borgelt Thomas L. Cassidy John R. Kennedy
13
Stockholder Return Performance Graph
- --------------------------------------------------------------------------------
July 1992 July 1993 July 1994 July 1995 July 1996 July 1997
- --------------------------------------------------------------------------------
DeVlieg-Bullard, Inc. 100 103.57 92.86 96.43 128.57 203.57
- --------------------------------------------------------------------------------
Peer Group Index 100 107.49 109.50 138.22 141.76 197.75
- --------------------------------------------------------------------------------
Nasdaq Market Index 100 124.21 135.54 166.10 181.07 266.18
- --------------------------------------------------------------------------------
The above graph compares the total return on investment (change in year-end
stock price plus reinvested dividends) of the Common Stock of the Company with
that of the Nasdaq Market Index and Media General Financial Services Industry
Group (Machinery--Light Equipment) (the "Peer Group Index"). The cumulative
performance assumes that $100 was invested on August 1, 1992 in each of the
Company's Common Stock, the Nasdaq Market Index and the Peer Group Index and the
reinvestment of dividends.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Stanwich Partners
Effective July 1, 1995, the Company amended a consulting agreement with
Stanwich Partners dated April 3, 1986, as amended, pursuant to which Stanwich
Partners renders executive consulting services, consisting of general
management, finance and business investment services, as requested by the
President of the Company, up to a maximum of 20 hours per week. The term of the
amended consulting agreement expires in July 1998. The consulting agreement
provides for an annual fee, payable monthly, of $261,000 for each of the fiscal
years ending July 31, 1996, 1997 and 1998. Aggregate consulting fees paid to
Stanwich Partners were $261,000 in each of fiscal years 1997, 1996 and 1995. In
fiscal 1996, the Company paid to Stanwich Partners an additional $250,000 for
services rendered in connection with the refinancing of the Company's senior
credit facility made necessary by the acquisition of The National Acme Company.
In fiscal 1995, the Company paid to
14
Stanwich Partners an additional $180,000 for additional services in connection
with the Company's acquisition of (i) certain assets of Cushman Industries,
Inc., in September 1994, (ii) certain assets of Mideastern, Inc., in January
1995 and (iii) all of the outstanding capital stock of H.B. Industries, Inc., in
November 1994. In fiscal 1997, 1996 and 1995, the Company reimbursed Stanwich
Partners for an additional $11,000, $5,000 and $7,000, respectively, for travel
expenses incurred by Stanwich Partners on behalf of the Company.
Transactions with D.V. Associates, L.P.
Pursuant to a license agreement (the "License Agreement") dated March 22,
1990 between the Company and D.V. Associates, L.P., a Delaware limited
partnership, the Company licenses certain trade names, trademarks and trademark
registrations (the "Trademarks"). The License Agreement requires annual payments
of $300,000 payable monthly. The Company has the option to purchase the
Trademarks for $3,000,000. Mr. Bradley and Mr. Poole have a 15.5% and 4.5%
limited partnership interest in D.V. Associates, L.P., respectively.
Transactions with Holders of Subordinated Debentures and Junior Subordinated
Debentures
In October 1995, the Company acquired all of the outstanding stock of The
National Acme Company (the "Acquisition"). In connection with the Acquisition,
the Company refinanced its senior credit facility and entered into a new senior
credit facility consisting of a $25 million revolving credit facility and a $5
million term loan (the "Refinancing"). As part of the Refinancing, the holders
of the Company's $12 million principal amount of subordinated debentures (the
"Subordinated Debentures"), issued pursuant to the terms of an Investment
Agreement dated May 25, 1994 (the "Investment Agreement"), among the Company,
Allied Investment Corporation, Allied Investment Corporation II, Allied Capital
Corporation II (collectively "Allied") and certain other persons, agreed to
release their security interest in the Company's assets. CPS Holdings, Inc.
("Holdings") pledged 600,000 shares of the common stock of Consumer Portfolio
Services, Inc. ("CPSI") to secure the Subordinated Debentures pursuant to the
terms and conditions of a Credit Support Agreement dated October 23, 1995,
between the Company and Holdings. Holdings was subsequently merged into CPSI,
and Mr. Bradley and his son pledged the shares of CPSI stock that they received
in the merger to secure the Subordinated Debentures (the "Pledge"). The Company
is obligated to pay Mr. Bradley and his son $90,000 annually for so long as the
Pledge is in effect, payable in equal monthly installments of $6,805 to Mr.
Bradley and $695 to his son. Mr. Bradley is the Chairman of the Board of CPSI
and beneficially owns approximately 5% of the outstanding common stock of CPSI.
Mr. Poole is a director of CPSI.
The consummation of the Acquisition and the Refinancing required the
consent of the holders of the Subordinated Debentures. Due to the inability of
the Company to obtain the consent of Allied to the Acquisition and the
Refinancing on mutually agreeable terms, Messrs. Bradley and Poole loaned the
Company $2.5 million and $1.5 million, respectively, in exchange for certain
junior subordinated debentures (the "Junior Subordinated Debentures") to repay
the principal amount of the Subordinated Debentures owed Allied. Interest on the
Junior Subordinated Debentures accrues
15
at a rate of 14.5% per annum, with interest payable at 11.0% per annum on a
quarterly basis. The Junior Subordinated Debentures mature upon the earlier of
June 30, 2001, or 30 days after the Subordinated Debentures are repaid in full.
During fiscal 1997 and 1996, the Company paid $90,000 and $68,000, respectively,
to Mr. Bradley and his son as a collateral fee for the Pledge. Interest payments
on the Junior Subordinated Debt of $282,000 and $191,000 were paid to Mr.
Bradley and $169,000 and $115,000 were paid to Mr. Poole during fiscal 1997 and
1996, respectively. In addition, interest payable to Messrs. Bradley and Poole
of $142,000 and $84,000, respectively, has been accrued under the Junior
Subordinated Debentures as of July 31, 1997.
In connection with the repayment of Allied and the issuance of the Junior
Subordinated Debentures, Allied surrendered to the Company certain Class A Stock
Purchase Warrants representing the right to acquire 83,333 shares of the
Company's Common Stock, and the Company issued new Class A Stock Purchase
Warrants (the "Substitution Warrants") to Messrs. Bradley and Poole representing
the right to acquire 52,083 and 31,250 shares of the Company's Common Stock,
respectively, on the same terms and conditions as the warrants surrendered by
Allied. The Substitution Warrants may be exercised at any time in whole or in
part from and after May 25, 1996, and shall expire the later of three years from
the date of final payment of the Subordinated Debentures or May 25, 2004.
In addition, the Company issued Class A Stock Purchase Warrants to acquire
500,000 shares of the Company's Common Stock ("Class A Warrants") and Class C
Stock Purchase Warrants to acquire 750,000 shares of the Company's Common Stock,
subject to reduction in certain circumstances ("Class C Warrants") to the
holders of the Subordinated Debentures and Messrs. Bradley and Poole pro rata
based on the principal amount of the Subordinated Debentures and Junior
Subordinated Debentures held by such persons. Based on such allocation, Messrs.
Bradley and Poole received 104,166 and 62,500 of such Class A Warrants,
respectively, and 156,250 and 93,750 of such Class C Warrants, respectively. The
Class A Warrants and Class C Warrants have an exercise price of $0.01 per share
and are subject to certain anti-dilution protection, and the holders thereof are
entitled to certain registration rights with respect to the Company's Common
Stock. The Class A Warrants may be exercised at any time in whole or in part
from and after October 23, 1997, and shall expire the later of three years from
the date of final payment of the Subordinated Debentures or May 25, 2004. The
Class C Warrants may be exercised at any time after October 31, 1998, subject to
earlier exercise upon a sale of the Company, and expire on the later of three
years after the payment of the Subordinated Debentures or May 25, 2004. The
number of shares of the Company's Common Stock which the holders of the Class C
Warrants have the right to acquire may be reduced based on the Company attaining
earnings levels, as defined in the Third Amendment to Investment Agreement dated
January 17, 1997.
Policy of the Company
The Board of Directors adopted a policy which provides that any transaction
between the Company and any of its officers, directors or five percent
stockholders, or affiliates thereof, must be on terms no less favorable than
those which would be obtained from unaffiliated parties and must
16
be approved by a majority of the disinterested members of the Company's Board of
Directors. Transactions in the ordinary course of business, consistent with past
practices and which do not exceed $100,000, are permitted without prior approval
and are reported to the Board of Directors quarterly.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors of the Company has selected Price Waterhouse LLP to
serve as independent accountants for the current fiscal year. Such firm has
served as the Company's independent accountants since 1986. Representatives of
Price Waterhouse LLP are expected to be present at the Annual Meeting and will
be given the opportunity to make a statement if they desire to do so and to
respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR THE
1998 ANNUAL MEETING OF STOCKHOLDERS
Stockholders intending to submit proposals for presentation at the next
Annual Meeting of Stockholders of the Company and inclusion in the proxy
statement and form of proxy for such meeting should forward such proposals to
Lawrence M. Murray, Secretary, DeVlieg-Bullard, Inc., One Gorham Island,
Westport, Connecticut 06880. Proposals must be in writing and must be received
by the Company prior to July 6, 1998. Proposals should be sent to the Company by
certified mail, return receipt requested.
17
ADDITIONAL INFORMATION
The Annual Report to Stockholders for the year ended July 31, 1997, is
being mailed to all stockholders entitled to vote at the Annual Meeting.
Additional information is contained in the Company's Annual Report on Form 10-K
which was filed with the SEC on October 24, 1997. The Company will furnish
without charge to any stockholder a copy of its Annual Report on Form 10-K, upon
written request to Lawrence M. Murray, Secretary, DeVlieg-Bullard, Inc., One
Gorham Island, Westport, Connecticut 06880.
18
PROXY
DeVlieg-Bullard, Inc.
This Proxy is solicited on behalf of the Board of Directors for the
Annual Meeting of Stockholders to be held on December 10, 1997
The undersigned hereby appoints William O. Thomas, Lawrence M. Murray, and
each of them, attorneys and proxies with full power of substitution to vote in
the name of and as proxy for the undersigned all the shares of common stock of
DeVlieg-Bullard, Inc. (the "Company") held of record by the undersigned on
October 28, 1997, at the Annual Meeting of Stockholders of the Company to be
held at 10:00 a.m., local time, on Wednesday, December 10, 1997, at the Sheraton
Stamford Hotel, One First Stamford Place, Stamford, Connecticut, and any
adjournment thereof.
-----------
SEE REVERSE
CONTINUE AND TO BE SIGNED ON REVERSE SIDE SIDE
-----------
|_| Please mark
votes as in
this example
PROPERLY EXECUTED PROXIES WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF NO SUCH DIRECTIONS ARE GIVEN, SUCH PROXIES WILL BE
VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES REFERRED TO IN PROPOSAL
1.
1. To elect the following nominees as directors to serve until the next
Annual Meeting of Stockholders and until their successors are elected
and qualified:
Nominees: Charles E. Bradley; William O. Thomas; Burton C. Borgelt; Thomas
L. Cassidy; George A. Chandler; John R. Kennedy; John E. McConnaughy, Jr.;
and John G. Poole
FOR WITHHELD
ALL FROM ALL
NOMINEES NOMINEES
------- -------
MARK HERE FOR
ADDRESS CHANGE
AND NOTE BELOW
------------------------------------ ---------
For all nominees except as noted above
2. In their discretion, the Proxies are authorized to consider and take
action upon such other matters as may properly come before the meeting
or any other adjournment thereof.
PLEASE SIGN, DATE, AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED REPLY
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
(When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If stockholder is a corporation, corporate
name should be signed by an authorized officer and the corporate seal
affixed. If stockholder is a partnership, please sign in partnership name
by authorized persons. For joint accounts, each joint owner should sign.)
The undersigned revokes any prior proxies to vote the shares covered by
this proxy.
Signature:______________ Date:_____ Signature:______________ Date:_______