[GRAPHIC OMITTED]
April 8, 2002
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Aldila, Inc., to be held Wednesday,
May 15, 2002, at 9:00 a.m. at the Rancho Bernardo Inn, 17550 Bernardo Oaks
Drive, San Diego, California 92128. The formal notice and proxy statement
for the Annual Meeting are attached to this letter.
It is important that you vote your shares as soon as possible, either
by phone or by mail as explained on the enclosed proxy card, even if you
currently plan to attend the Annual Meeting. By doing so, you will ensure
that your shares are represented and voted at the meeting. If you decide to
attend, you can still vote your shares in person, if you wish.
On behalf of the Board of Directors, I thank you for your cooperation
and I look forward to seeing you on May 15.
Very truly yours,
/s/ Peter R. Mathewson
----------------------------
Peter R. Mathewson
Chairman of the Board
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 2002
TO THE STOCKHOLDERS OF ALDILA, INC.
Notice is hereby given that the Annual Meeting of Stockholders of
Aldila, Inc. (the "Company") will be held at the Rancho Bernardo Inn, 17550
Bernardo Oaks Drive, San Diego, California 92128, on Wednesday, May 15,
2002, at 9:00 a.m., Pacific time, for the following purposes:
1. ELECTION OF DIRECTORS. To elect by vote of the holders of Common
Stock a total of seven persons to the Board of Directors to serve
until the next Annual Meeting of Stockholders and until their
successors are elected and have qualified. The Board of
Directors' nominees are:
Peter E. Bennett Peter R. Mathewson
Thomas A. Brand Lloyd I. Miller, III
Marvin M. Giles, III Chapin Nolen
John J. Henry
2. REVERSE STOCK SPLIT. To authorize the Board of Directors to file
an amendment to the Company's Restated Certificate of
Incorporation at any time prior to the 2003 annual meeting of
stockholders of the Company to effectuate a reverse stock split
of the Company's Common Stock of not less than 1-for-2 and not
more than 1-for-5.
3. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS. To
ratify the Board of Directors' selection of Deloitte & Touche LLP
as the Company's independent accountants for the fiscal year
ending December 31, 2002.
4. OTHER BUSINESS. To consider and act upon such other business as
may properly come before the meeting.
Only stockholders of record at the close of business on March 28, 2002
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and at any adjournments thereof.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
------------------------------
Robert J. Cierzan
Secretary
Dated: April 8, 2002
WHETHER OR NOT YOU CURRENTLY PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
PLEASE VOTE BY PHONE OR BY MAIL, AS INSTRUCTED ON THE ENCLOSED PROXY CARD,
AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE YOUR PROXY (WHETHER GIVEN BY PHONE
OR MAIL) IF YOU DECIDE TO ATTEND THE ANNUAL MEETING AND WISH TO VOTE YOUR
SHARES IN PERSON.
ALDILA, INC.
12140 COMMUNITY ROAD
POWAY, CALIFORNIA 92064
(858) 513-1801
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
May 15, 2002
GENERAL
This proxy statement is furnished to stockholders of Aldila, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company (the "Board" or "Board
of Directors") for use at the Annual Meeting of Stockholders to be held at
9:00 a.m., Pacific time, on Wednesday, May 15, 2002, at the Rancho Bernardo
Inn, 17550 Bernardo Oaks Drive, San Diego, California 92128, and any
adjournments thereof (the "Annual Meeting" or "Meeting").
Common stockholders of record as of the close of business on March 28,
2002, will be entitled to vote at the Meeting or any adjournments thereof.
As of the record date, the Company had outstanding 14,843,404 shares of
Common Stock, each entitled to one vote on all matters to be voted upon.
This proxy statement, the accompanying form of proxy and the Company's
annual report to stockholders for the fiscal year ended December 31, 2001
are being mailed on or about April 8, 2002 to each stockholder entitled to
vote at the Meeting.
VOTING AND REVOCATION OF PROXIES
VOTING
If the enclosed proxy is voted by telephone or executed and returned
by mail in time and not revoked, all shares represented thereby will be
voted. Each proxy will be voted in accordance with the stockholder's
instructions. If no such instructions are specified, the proxies will be
voted FOR the election of each person nominated for election as a director,
FOR the reverse stock split and FOR the ratification of the Board's
selection of Deloitte & Touche LLP as the Company's independent accountants
for the fiscal year ending December 31, 2002.
Assuming a quorum is present, the affirmative vote by the holders of a
plurality of the votes cast at the Meeting will be required for the
election of directors; the affirmative vote of a majority of the votes cast
at the Meeting will be required for the reverse stock split; the
affirmative vote of a majority of the votes cast at the Meeting will be
required for the ratification of the Board's selection of Deloitte & Touche
LLP as the Company's independent accountants; and the affirmative vote of a
majority of the votes cast at the Meeting will be required to act on all
other matters to come before the Annual Meeting. An automated system
administered by the Company's transfer agent tabulates the votes. For
purposes of determining the number of votes cast with respect to any voting
matter, only those cast "for" or "against" are included. Abstentions and
broker non-votes are counted only for purposes of determining whether a
quorum is present at the Meeting. With respect to all matters (other than
the election of directors), abstentions and broker non-votes will have the
effect of reducing the number of affirmative votes required to achieve a
majority of the votes cast.
REVOCATION
A stockholder giving a proxy may revoke it at any time before it is
voted by delivery to the Company of a subsequently executed proxy or a
written notice of revocation. In addition, returning your completed proxy
by mail or by telephone will not prevent you from voting in person at the
Annual Meeting should you be present and wish to do so.
ELECTION OF DIRECTORS
The Company's Restated Bylaws give the Board the power to set the
number of directors at no less than one nor more than twenty-one. The size
of the Company's Board is currently set at seven. Directors hold office
until the next annual meeting of stockholders and until their successors
are elected and have qualified.
Unless otherwise directed, proxies in the accompanying form will be
voted FOR the nominees listed below. If any one or more of the nominees is
unable to serve for any reason or withdraws from nomination, proxies will
be voted for the substitute nominee or nominees, if any, proposed by the
Board of Directors. The Board has no knowledge that any nominee will or may
be unable to serve or will or may withdraw from nomination. All of the
following nominees are current directors of the Company whose terms end at
the 2002 Annual Meeting. Information concerning the nominees for directors
is set forth below.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE BOARD OF DIRECTORS'
NOMINEES FOR DIRECTORS TO BE ELECTED BY THE HOLDERS OF COMMON STOCK.
NOMINEES FOR ELECTION BY HOLDERS OF COMMON STOCK
THOMAS A. BRAND has been a director of the Company since November
1997. Since January 1994, Mr. Brand has been an instructor at the
University of Phoenix and a consultant to the composite materials industry.
Since August 2000, he has been a director of Reinhold Industries, Inc., a
manufacturer of advanced custom composite components, sheet molding
compounds and graphic arts and industrial rollers for a variety of
applications in the United States and Europe. From 1983 to 1992, he was
Senior Vice President/General Manager of Fiberite Advanced Materials, a
business unit of ICI-PLC. From 1964 to 1983, Mr. Brand served as Vice
President/General Manager, Fiberite West Coast Corp., which is a division
of Fiberite Corporation. Age: 68.
PETER E. BENNETT has been a director of the Company since November
1994. Mr. Bennett has been the President and a Senior Partner of Liberty
Partners L.P. since September 1992. He is a director of Tnex, LLC, Internet
Healthcare Group, LLC, Datamax Corp., Norwood Promotional Products, Inc.,
P1ayPower, Inc., PADCOM, Inc., and Regulus Group, LLC. Age: 60.
MARVIN M. GILES, III has been a director of the Company since October
1993. He has been President of Octagon Golf ("Octagon") since he co-founded
that company in 1973. Octagon is a business management firm that
specializes in representing professional athletes, particularly golfers
including Davis Love, III, Tom Kite and Lanny Wadkins. Mr. Giles is also an
accomplished golfer. He was the 1972 U.S. Amateur Champion and the 1975
British Amateur Champion. Mr. Giles was the 1993 U.S. Walker Cup Captain
and played on four Walker Cup teams from 1969 to 1975. Age: 59.
JOHN J. HENRY has been a director of the Company since November 1994.
Mr. Henry has been the Vice Chairman of Sinclair & Rush since September
1978. Mr. Henry previously held various executive positions with Rockwell
International Corp. from 1967 to 1978, including Sr. Vice President and
President of the Admiral Corporation. He is a director of P1ayPower, Inc.
and Duquesne University. Age 75.
PETER R. MATHEWSON has been a director of the Company since January
1997 and has been President, Chief Executive Officer and Chairman of the
Board of the Company since January 2000. From 1990 until December 31, 1999,
he served as Vice President of the Company (or its predecessors). Since
January 1997, Mr. Mathewson has also served as President and Chief
Operating Officer of Aldila Golf Corp., the Company's operating subsidiary
that conducts its core golf operations. Mr. Mathewson has been with the
Company (or its predecessors) since September 1973 and has held various
positions, including: plant manager, production manager, shipping and
receiving supervisor, and purchasing agent. Age: 51.
LLOYD I. MILLER, III has been a director of the Company since
September 4, 2001. Mr. Miller has been a registered investment advisor
since 1990, and he is a director of Advantica Restaurant Group, Inc. and
FRD Acquisition Co. Age: 47
CHAPIN NOLEN has been a director of the Company since November 1994.
Mr. Nolen has been a director and was President of Combe, Incorporated from
1970 to 1995. He is a director of Santa Barbara Olive Company and the
Cosmetic Toiletry and Fragrance Association. Age: 69.
FURTHER INFORMATION CONCERNING
THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company directs the management of the
business and affairs of the Company, as provided by Delaware law, and
conducts its business through meetings of the Board and four standing
committees: Executive, Audit, Compensation and Stock Option. In addition,
from time to time, special committees may be established under the
direction of the Board when necessary to address specific issues. The
Company has no nominating or similar committee.
COMMITTEES OF THE BOARD -- BOARD MEETINGS
The Board of Directors of the Company held five meetings in fiscal
2001. Each director attended 75% or more of the aggregate of (i) meetings
of the Board held during the period for which he served as a director and
(ii) meetings of all committees held during the period for which he served
on those committees.
The EXECUTIVE COMMITTEE of the Board has the authority, between
meetings of the Board of Directors, to exercise all powers and authority of
the Board in the management of the business and affairs of the Company that
may be lawfully delegated to it under Delaware law. The Committee is
chaired by Peter R. Mathewson and its other members are Peter E. Bennett
and Lloyd I. Miller, III. The Executive Committee held one meeting in
fiscal 2001.
The AUDIT COMMITTEE is currently comprised of John J. Henry, as
chairman, Peter E. Bennett and Chapin Nolen. The Audit Committee held four
meetings in fiscal 2001. See "Report of Audit Committee" for a description
of its responsibilities and activities.
The COMPENSATION COMMITTEE is charged with the responsibility of
supervising and administering the Company's compensation policies,
management awards, reviewing salaries, approving significant changes in
salaried employee benefits, and recommending to the Board such other forms
of remuneration as it deems appropriate. The Compensation Committee is
currently comprised of Peter E. Bennett, as chairman, and John J. Henry and
Marvin M. Giles. The Compensation Committee held one meeting in fiscal
2001.
The STOCK OPTION COMMITTEE's principal functions are to determine
individuals to whom stock options will be granted under the Company's 1994
Stock Incentive Plan, the terms on which such options will be granted, and
to administer the 1994 Stock Incentive Plan. The Stock Option Committee is
currently comprised of Thomas A. Brand, who is the chairman, Chapin Nolen
and Marvin M. Giles, III, who are independent, "non-employee directors"
(within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934
(the "Exchange Act")). The Stock Option Committee also retains
administrative responsibility over the Company's 1992 Stock Option Plan.
The Stock Option Committee held one meeting in fiscal 2001.
REVERSE STOCK SPLIT, CERTIFICATE OF INCORPORATION AMENDMENT
The Board of Directors is proposing to the Company's stockholders a
resolution to approve an amendment to the Company's Restated Certificate of
Incorporation for the purpose of effectuating a reverse stock split of the
Company's outstanding Common Stock with a ratio of between one new share
for each two old shares and one new share for each five old shares (a
"Reverse Stock Split"), with the Company's Board of Directors having the
authority and discretion to determine if and when to effectuate any Reverse
Stock Split and the ratio of any Reverse Stock Split. The authority of the
Board of Directors to effectuate a Reverse Stock Split would expire at the
time of the 2003 annual meeting of stockholders.
The Company's Board of Directors believes that it would be advisable
to obtain the approval of the stockholders for a Reverse Stock Split in
order to attempt to increase the trading price of the Common Stock on The
Nasdaq National Market on a per share basis. Over the last several months,
the trading price of shares of the Common Stock has, on occasion, declined
below $1.00, with a significant percentage of trades beginning in March
2002 below that level. According to the requirements of continued listing
on The Nasdaq National Market, the failure to maintain the trading price
above $1.00 on a consistent basis may result in delisting of the Common
Stock. The Company's Board of Directors believes that such a delisting
could harm the Company's stockholders by reducing the marketability and the
liquidity of their shares. If a Reverse Stock Split were to be implemented,
the number of shares of the Common Stock owned by each stockholder would be
reduced in the same proportion as the reduction in the total number of
shares outstanding, so that the percentage of the outstanding shares owned
by each stockholder would remain unchanged, but the trading price per share
would likely increase.
By obtaining stockholder approval of a Reverse Stock Split at the
Annual Meeting, the Company's Board of Directors will be able to determine
the most appropriate time, if ever, to effectuate the Reverse Stock Split,
by filing an amendment to the Company's Restated Certificate of
Incorporation in the form attached as Exhibit A (the "Amendment"). When
appropriate, the Company's Board of Directors will determine whether to
file the Amendment based on factors such as prevailing market conditions
and the trading price of the Common Stock on The Nasdaq National Market. If
the Board of Directors determines that a Reverse Stock Split is in the best
interests of the Company and its stockholders, it will then cause the
Company to take the necessary steps to effect a Reverse Stock Split. The
Company's Board of Directors also believes that, because it is not possible
to predict market conditions at the time the Reverse Stock Split is to be
effectuated, it would be in the best interests of the stockholders if the
Board of Directors were to be able to determine, within specified limits
approved in advance by the stockholders, the appropriate ratio of the
Reverse Stock Split.
If approved by the stockholders of the Company, a Reverse Stock Split
may become effective on any date selected by the Board of Directors on or
prior to the Company's next annual meeting of stockholders but in no event
later than such time. Moreover, the Board of Directors reserves the right,
even after stockholder approval, to entirely forego filing of the Amendment
if such action is determined not to be in the best interests of the Company
and its stockholders. If a Reverse Stock Split approved by the stockholders
is subsequently not implemented by the Board of Directors on or prior to
the Company's next annual meeting, the proposal to amend the Company's
Restated Certificate of Incorporation to effect a Reverse Stock Split will
be deemed abandoned, without any further effect. In such case, the Board of
Directors will again need to seek stockholder approval at a future date for
a reverse stock split if it deems a reverse stock split to be advisable at
that time.
Accordingly, the Board of Directors has proposed that the Company's
stockholders approve a Reverse Stock Split with a ratio of between 1-for-2
and 1-for-5; and further, that the Board of Directors be authorized to
determine which of the Reverse Stock Splits in the specified range, if any,
to implement. In determining which Reverse Stock Split to implement, if
any, the Board of Directors will assess a variety of factors, including,
but not limited to, analysis of general market conditions. However, primary
emphasis will be placed on the trading price of the Common Stock on the
days leading up to the date of the Reverse Stock Split.
A vote in favor of this proposal will be a vote for approval of each
of the reverse split ratios in the specified range and for the granting of
authority and discretion to the Board of Directors to effectuate one of the
Reverse Stock Splits in the range as it deems advisable at the time the
Reverse Stock Split is to be effectuated. The proposal gives the Board of
Directors the discretion to abandon the Reverse Stock Split if the trading
price of shares of the Common Stock are above Nasdaq's minimum trading
price requirements on a continuous basis prior to its implementation, or if
market or other conditions or circumstances make implementation of the
Reverse Stock Split inadvisable as determined by the Board of Directors.
The vote required for approval of the Reverse Stock Split proposal is a
majority of the outstanding shares of the Common Stock.
REASONS FOR THE REVERSE STOCK SPLIT
The primary purpose of the Reverse Stock Split is to combine the
outstanding shares of the Common Stock into a smaller number of shares so
that the shares will trade at a significantly higher price per share than
their recent trading prices. Pursuant to Nasdaq listing requirements, the
minimum bid price of shares of the Common Stock must be at least $1.00 per
share in order to maintain inclusion on The Nasdaq National Market. During
the period from October 1, 2001 to February 28, 2002, the Company's stock
traded at prices ranging from $0.77 to $1.40, with most trades between
$1.00 and $1.20. Since the beginning of March, the stock has regularly
traded below the $1.00 threshold. The Company has not received any
notification at the present time from The Nasdaq National Market that it is
considering delisting, but is aware of a number of other companies that
have received such notification under similar circumstances.
The Company believes that the implementation of a Reverse Stock Split
at an appropriate ratio would enable shares of the Common Stock to trade
above the $1.00 minimum bid price. The Company believes that continued
listing of the Common Stock on The Nasdaq National Market is in the best
interests of the Company and its stockholders. Inclusion on The Nasdaq
National Market generally increases liquidity. Many investors, particularly
institutional investors, have policies preventing the purchase of
low-priced or non-exchange listed securities. In addition, access to
information regarding listed companies and their securities is more readily
available than with respect to non-listed companies. Listing on The Nasdaq
National Market may result in lower spreads between the "bid" and "asked"
prices quoted by market makers, thus reducing the cost to investors of
acquiring shares of Common Stock. Further, a continued Nasdaq National
Market listing may enhance the Company's access to capital and increase its
flexibility in responding to anticipated capital requirements.
If the trading price for the Common Stock should continue to trade
routinely below $1.00 per share to the point where the listing of the
Common Stock with The Nasdaq National Market is threatened, the Company
would like the authority to proceed with a Reverse Stock Split without
further authorization of the Company's stockholders. Obtaining stockholder
approval of a Reverse Stock Split at this Annual Meeting of Stockholders
will enable the Company to avoid the additional time and expense of holding
a special meeting of stockholders should the Board of Directors determine
that it is in the best interests of the Company's stockholders to implement
a Reverse Stock Split prior to the Company's next annual meeting of
stockholders.
For the above reasons, the Company believes that giving the Board of
Directors the authority to effectuate a Reverse Stock Split without further
authorization of the Company's stockholders is in the best interests of the
Company and its stockholders. The Company anticipates that, following the
consummation of a Reverse Stock Split, the Common Stock would trade at a
price per share that is proportionately higher than current market prices.
However, there can be no assurances that the Reverse Stock Split, if
implemented, would have the desired effect of proportionately raising the
price of the Common Stock.
If the Reverse Stock Split proposal is approved by the stockholders at
the Annual Meeting, the Company expects to implement a Reverse Stock Split
only if the Company believes that it is necessary to comply with the
continued listing requirements of The Nasdaq National Market or otherwise
in the best interests of the Company. Accordingly, notwithstanding approval
of the Reverse Stock Split proposal by the stockholders, the Board of
Directors may elect to delay or even abandon entirely the Reverse Stock
Split.
IMPLEMENTATION AND EFFECTS OF THE REVERSE STOCK SPLIT
If the stockholders approve the Reverse Stock Split proposal and the
Board of Directors determines it is necessary or desirable to effectuate a
Reverse Stock Split, the Board of Directors would:
o Determine the ratio at which a Reverse Stock Split, between
1-for-2 and 1-for-5 would be advisable, based on market and other
relevant conditions and circumstances and the trading prices of
the Common Stock at that time; and
o Direct management to file the Amendment with the Delaware
Secretary of State. The Amendment would specify that, on its
filing, every two to five shares (depending on the ratio of the
Reverse Stock Split selected by the Board of Directors) of the
Common Stock outstanding would automatically be combined and
converted into one share. For example, if the Board of Directors
selected a 1-for-2 Reverse Stock Split, the amendment would
specify that every two shares of the Common Stock outstanding be
combined and converted into a single share.
We estimate that, following the Reverse Stock Split, the Company would
have approximately the same number of stockholders and, except for the
effect of cash payments for fractional shares as described below, the
completion of the Reverse Stock Split would not affect any stockholder's
proportionate equity interest in the Company. By way of example, a
stockholder who owns a number of shares that prior to the Reverse Stock
Split represented one-half of a percent of the outstanding shares of the
Company would continue to own one-half of a percent of its outstanding
shares after the Reverse Stock Split.
The Reverse Stock Split also will not affect the number of shares of
Common Stock that the Board of Directors is authorized to issue by the
Restated Certificate of Incorporation of the Company, which will remain
unchanged at 30,000,000 shares. However, it will have the effect of
increasing the number of shares available for future issuance because of
the reduction in the number of shares that will be outstanding after giving
effect to the Reverse Stock Split.
CASH TO BE PAID FOR FRACTIONAL SHARES
If any Reverse Stock Split ratio is selected, implementation of a
Reverse Stock Split would result in some stockholders owning a fractional
share of Common Stock. For example, if a 1-for-3 Reverse Stock Split were
to be implemented, the shares owned by a stockholder with 100 shares would
be converted into 33.33 shares. To avoid such a result, stockholders that
would otherwise be entitled to receive a fractional share of the Common
Stock as a consequence of the Reverse Stock Split will, instead, receive
from the Company a cash payment in U.S. dollars equal to the value of that
fractional share, determined on the basis of the average closing price of
the Common Stock on The Nasdaq National Market for the five trading days
immediately preceding the effective date of the Reverse Stock Split (as
adjusted for that Reverse Stock Split).
If any stockholder owns, in total, fewer than the number of the
Company's shares to be converted into one share as a result of the Reverse
Stock Split, that stockholder's shares would be converted into a fractional
share of stock and, therefore, that stockholder would receive only cash in
place of the fractional share as a result of the implementation of the
Reverse Stock Split. For example, if a 1-for-3 Reverse Stock Split is
implemented then stockholders with fewer than three shares would receive
only cash. See "Exchange of Stock Certificates and Payment for Fractional
Shares" below. The interest of such stockholders in the Company would,
therefore, be terminated, and such stockholders would have no right to
share in the assets or future growth of the Company. Based on the foregoing
example, each stockholder that owns three shares or more of the Company
Common Stock prior to the Reverse Stock Split would continue to own one or
more shares after the Reverse Stock Split and would continue to share in
the assets and future growth of the Company as a stockholder, and any
stockholder that owns less than three shares would receive only cash in
place of the factional share resulting from the Reverse Stock Split.
Because the maximum reverse split under this proposal would be a 1-for-5
Reverse Stock Split, a stockholder could assure his or her continued
ownership of shares of stock of the Company after the reverse split by
purchasing a number of shares sufficient to increase the total number of
shares that he or she owns to five or more.
The Reverse Stock Split will result in some stockholders owning "odd
lots" of less than 100 shares of the Common Stock as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions
in odd lot shares may be higher, particularly on a per-share basis, than
the cost of transactions in even multiples of 100 shares.
EFFECT OF REVERSE SPLIT ON OPTIONS
The number of shares subject to outstanding options to purchase shares
of the Common Stock also would automatically be reduced in the same ratio
as the reduction in the outstanding shares. Correspondingly, the per share
exercise price of those options will be increased in direct proportion to
the Reverse Stock Split ratio, so that the aggregate dollar amount payable
for the purchase of the shares subject to the options will remain
unchanged. For example, assume that a 1-for-4 Reverse Stock Split is
implemented and that an optionee holds options to purchase 1,600 shares at
an exercise price of $1.25 per share. On the effectiveness of the 1-for-4
Reverse Stock Split, the number of shares subject to that option would be
reduced to 400 shares and the exercise price would be proportionately
increased to $5.00 per share.
EXCHANGE OF STOCK CERTIFICATES AND PAYMENT FOR FRACTIONAL SHARES
The combination of, and reduction in, the number of the Company's
outstanding shares as a result of the Reverse Stock Split would occur
automatically on the date that the Reverse Stock Split amendment is filed
with the Delaware Secretary of State (the "Effective Date"), without any
action on the part of the Company's stockholders and without regard to the
date that stock certificates representing the shares prior to the Reverse
Stock Split are physically surrendered for new stock certificates.
As soon as practicable after the Effective Date, transmittal forms
will be mailed to each holder of record of certificates for shares of the
Common Stock to be used in forwarding such certificates for surrender and
exchange for certificates representing the number of shares of the Common
Stock such stockholder is entitled to receive as a result of the Reverse
Stock Split. The transmittal forms will be accompanied by instructions
specifying other details of the exchange. Upon receipt of such transmittal
form, each stockholder should surrender the certificates representing
shares of the Common Stock prior to the Reverse Stock Split in accordance
with the applicable instructions. Each holder who surrenders certificates
will receive new certificates representing the whole number of shares of
the Common Stock that he or she holds as a result of the Reverse Stock
Split and any cash payable in lieu of a fractional share. STOCKHOLDERS
SHOULD NOT SEND THEIR STOCK CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL
FORM.
After the Effective Date, each certificate representing shares of the
Common Stock outstanding prior to the Effective Date (an "Old Certificate")
will, until surrendered and exchanged as described above, be deemed, for
all corporate purposes, to evidence ownership of the whole number of shares
of the Common Stock, and the right to receive from the Company the amount
of cash for any fractional shares, into which the shares of the Common
Stock evidenced by such certificate have been converted by the Reverse
Stock Split. However, the holder of such unexchanged certificates will not
be entitled to receive any dividends or other distributions payable by the
Company after the Effective Date, until the Old Certificates have been
surrendered. Such dividends and distributions, if any, will be accumulated,
and at the time of surrender of the Old Certificates, all such unpaid
dividends or distributions will be paid without interest.
If the number of shares of the Common Stock to which a holder is
entitled as a result of the Reverse Stock Split would otherwise include a
fraction, the Company will pay to that stockholder, in lieu of issuing
fractional shares of stock, cash in an amount equal to the same fraction
multiplied by the average closing price of the Company's shares on The
Nasdaq National Market for the five days immediately preceding the
Effective Date (as adjusted for the Reverse Stock Split). For example, if
the Board of Directors determined to implement a 1-for-3 Reverse Stock
Split, the shares of a stockholder that owned 100 shares prior to the
Reverse Stock Split would be converted into 33.33 shares as a result of the
Reverse Stock Split. If the average of the pre-split closing bid prices of
shares of the Common Stock for the five day trading period immediately
prior to the Effective Date (as adjusted for the Reverse Stock Split) was
$1.00 per share, that stockholder would receive, in exchange for his stock
certificates evidencing his 100 shares, a stock certificate for 33 whole
shares and a check in the amount of $1.00 for his .33 fractional share. The
Company does not anticipate that the aggregate payment in respect of
fractional shares will represent a significant amount.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes certain federal income tax
considerations relating to the Reverse Stock Split. This discussion is
based upon the Internal Revenue Code of 1986, as amended, final, temporary
and proposed regulations promulgated thereunder, legislative history,
judicial decisions, and current administrative rulings and practices, all
as amended and in effect on the date of this Proxy Statement. Any of these
authorities could be repealed, overruled, or modified at any time and could
be retroactive and, accordingly, could cause the tax consequences to vary
substantially from the consequences described herein. No ruling from the
Internal Revenue Service (the "IRS") with respect to the matters discussed
herein has been requested, and there is no assurance that the IRS would
agree with the conclusions set forth in this discussion. All stockholders
should consult with their own tax advisors.
This discussion does not address certain federal income tax
consequences that may be relevant to particular stockholders in light of
their personal circumstances (such as persons subject to the alternative
minimum tax) or to certain types of stockholders (such as dealers in
securities, insurance companies, foreign individuals and entities,
financial institutions, and tax-exempt entities) who may be subject to
special treatment under the federal income tax laws. This discussion also
does not address any tax consequences under state, local, or foreign laws.
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING
THE APPLICABILITY OF ANY STATE, LOCAL, OR FOREIGN TAX LAWS, CHANGES IN
APPLICABLE TAX LAWS, AND ANY PENDING OR PROPOSED LEGISLATION.
Tax Consequences to the Company. The Company should not recognize any
gain or loss as a result of the Reverse Stock Split.
Tax Consequence to Stockholders Generally. A stockholder who receives
only the Common Stock should not recognize any gain or loss as a result of
the Reverse Stock Split. A stockholder who receives cash in lieu of a
fractional share of the Common Stock that otherwise would be held as a
capital asset generally should recognize capital gain or loss on an amount
equal to the difference between the cash received and the stockholder's
basis in such fractional share of the Common Stock. For this purpose, a
stockholder's basis in such fractional share of the Common Stock will be
determined as if the stockholder actually received such fractional share.
Except as provided above with respect to fractional shares, the
aggregate tax basis of the shares of the Common Stock held by a stockholder
following the Reverse Stock Split will equal the stockholder's aggregate
tax basis in the shares of the Common Stock held by the stockholder
immediately prior to the Reverse Stock Split and generally will be
allocated among the shares of the Common Stock held following the Reverse
Stock Split on a pro rata basis. Stockholders who have used the specific
identification method to identify their basis in shares of the Common Stock
combined in the Reverse Stock Split should consult their own tax advisors
to determine their basis in the post-Reverse Stock Split shares that they
will receive in exchange therefor.
VOTE REQUIRED FOR APPROVAL
The affirmative vote of the holders of a majority of the outstanding
shares of the Common Stock is required to approve the Reverse Stock Split
proposal.
THE BOARD OF DIRECTORS HAS DETERMINED THAT THE REVERSE STOCK SPLIT
PROPOSAL IS ADVISABLE AND IN THE BEST INTERESTS OF THE STOCKHOLDERS AND
RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE REVERSE STOCK
SPLIT PROPOSAL AND THE AMENDMENT TO THE RESTATED CERTIFICATE OF
INCORPORATION.
RATIFICATION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
The Board has selected the accounting firm of Deloitte & Touche LLP to
audit the Company's financial statements for, and otherwise act as the
Company's independent accountants with respect to, the fiscal year ending
December 31, 2002. Deloitte & Touche LLP has acted as independent
accountants for the Company since the fiscal year ended December 31, 1991.
In accordance with the Board's resolution, its selection of Deloitte &
Touche LLP as the Company's independent accountants for the current fiscal
year is being presented to stockholders for ratification at the Annual
Meeting. The Company knows of no direct or material indirect financial
interest of Deloitte & Touche LLP in the Company or any connection of that
firm with the Company in the capacity of promoter, underwriter, voting
trustee, officer or employee.
Members of Deloitte & Touche LLP will be present at the Meeting, will
have an opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE INDEPENDENT ACCOUNTANTS OF THE
COMPANY.
INDEPENDENT ACCOUNTANT FEES
AUDIT FEES
Aggregate fees billed to the Company for the fiscal year ended
December 31, 2001, by the Company's principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their
respective affiliates (collectively, "Deloitte & Touche"), which includes
Deloitte Consulting:
Audit Fees (a) $108,150
========
Financial Information Systems Design $ 0
and Implementation Fees (b) ========
Audit Related Fees (c) $41,300
Other Non-Audit Related Fees (d) 79,277
--------
All Other Fees $120,577
========
(a) Audit fees include audit of consolidated financial
statements, quarterly reviews, review of annual report on
Form 10-K, attendance at audit committee and stockholder
meetings and review of proxy statement for annual meeting.
(b) Deloitte & Touche, including Deloitte Consulting, did not
bill any fees for the professional services described in
Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
Deloitte & Touche has recently announced its intent to
separate Deloitte Consulting from the firm.
(c) Includes fees for audit of employee benefit plan - $10,900;
audit of foreign statutory report - $15,400; accounting
consultations on SFAS No. 121 impairment - $15,000.
(d) Includes fees for tax services - $79,277 (i.e., tax planning
and consultations, tax return preparation, etc.)
The Audit Committee has concluded that Deloitte & Touche LLP did not
provide any services that adversely impacted its independence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
shares of Common Stock beneficially owned as of March 28, 2002 by (a) each
person or entity who, insofar as the Company has been able to ascertain,
beneficially owned more than 5% of the Company's Common Stock as of such
date, (b) each of the directors of the Company (all nominees for election
as a director are current members of the Board), (c) the Company's Chief
Executive Officer and the two other most highly compensated executive
officers of the Company for the fiscal year ended December 31, 2001 (the
"Named Executive Officers") and (d) all current directors and executive
officers of the Company as a group (9 persons). Except as otherwise
indicated, the business address for each person is c/o Aldila, Inc., 12140
Community Road, Poway, California 92064.
Common Stock
Beneficially Percent of
Name Owned(1) Shares(1)
- -------------------------------------------- ------------ ----------
J. Carlo Cannell D/B/A Cannell Capital
Management(2).................................. 1,520,050 10.2%
Dimensional Fund Advisors Inc.(3).............. 864,200 5.8%
Acquisitor PLC (4)............................. 802,400 5.4%
PNC Bank, National Association(5).............. 1,390,188 9.4%
Peter E. Bennett(6)............................ 96,313 *
Thomas A. Brand(7)............................. 41,313 *
Robert J. Cierzan(8)........................... 337,474 2.2%
Marvin M. Giles,III(9)......................... 81,313 *
John J. Henry(10).............................. 84,513 *
Peter R. Mathewson(11)......................... 430,031 2.8%
Lloyd I. Miller, III(12)....................... 2,699,643 18.2%
Chapin Nolen(13)............................... 116,313 *
Michael J. Rossi(14)........................... 115,198 *
All directors and executive officers
as a group (9 persons)(15)................... 4,002,111 25.2%
- -----------------
* The percentage of shares of Common Stock beneficially owned does not
exceed one percent of the outstanding shares of Common Stock.
(1) For purposes of this table, a person or group of persons is deemed
to have "beneficial ownership" of any shares of Common Stock which
such person has the right to acquire within 60 days following March
28, 2002. For purposes of computing the percentage of outstanding
shares of Common Stock held by each person or group of persons named
above, any security which such person or persons has or have the
right to acquire within 60 days following March 28, 2002 is deemed
to be outstanding, but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person.
(2) Based on a joint filing of a Schedule 13G, dated January 10, 2000,
as amended by Amendment No. 1, dated September 27, 2001, and as
further amended by Amendment No. 2, dated February 14, 2002 (the
"Cannell 13G"), Cannell Capital, LLC ("Cannell"), which is an
investment advisor and J. Carlo Cannell ("Managing Member") each
have shared dispositive and shared voting power with respect to
1,520,050 shares of Common Stock of the Company. Based on the
Cannell 13G, Cannell's beneficial ownership of the Common Stock of
the Company is direct as a result of its discretionary authority to
buy, sell, and vote shares of such Common Stock for its investment
advisory clients. Managing Member's beneficial ownership of the
Common Stock of the Company is indirect as a result of Managing
Member's ownership and management of Cannell. The address of
Cannell's and Managing Member's principal office is 150 California
Street, Fifth Floor, San Francisco, California 94111.
(3) Based on a Schedule 13G, dated February 2, 2001, as amended by
Amendment No. 1, dated January 30, 2002 (the "Dimensional 13G"),
Dimensional Fund Advisors Inc. ("Dimensional"), which is an
investment advisor, has sole voting and dispositive power over
864,200 shares of Common Stock of the Company. Based on the
Dimensional 13G, all shares of Common Stock of the Company are owned
by advisory clients of Dimensional, no one of which to the knowledge
of Dimensional owns more than 5% of such shares. Dimensional
disclaims beneficial ownership of all such shares. Dimensional's
principal office is located at 1299 Ocean Avenue, 11th Floor, Santa
Monica, California 90401.
(4) Based on a Schedule 13D, dated July 27, 2001, by Acquisitor PLC
("Acquisitor"), a company incorporated in Wales and England,
Acquisitor has sole voting and dispositive power over 802,400 shares
of Common Stock of the Company. Acquisitor's principal office is
located at 190 The Strand, London, England WC2R 1JN.
(5) Based on a Schedule 13G, dated February 12, 2001, as amended by
Amendment No. 1, dated February 12, 2002 (the "PNC 13G"), The PNC
Financial Services Group, Inc. ("PNC Group"), PNC Bancorp, Inc.
("PNC Bancorp") and PNC Bank, National Association ("PNC BNA"), PNC
Group, PNC Bancorp and PNC BNA have shared voting power over all
1,390,188 shares beneficially owned by them. Based on the PNC 13G,
the shares are held in Trust Accounts created by an Amended and
Restated Trust Agreement, dated September 20, 1983, in which Lloyd
I. Miller, Jr. was Grantor and for which PNC BNA serves as Trustee.
Lloyd I. Miller, III has dispositive power with respect to these
shares of Common Stock held in the Trust Accounts pursuant to an
Investment Advisory Agreement dated as of April 1, 1997 with PNC
BNA, as Trustee and both parties have shared voting authority. PNC
Group's and PNC BNA's principal office is located at One PNC Plaza,
249 Fifth Avenue, Pittsburgh, PA 15222 and PNC Bancorp's principal
office is located at 222 Delaware Avenue, Wilmington, Delaware
19899.
(6) Includes options to acquire 66,313 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Bennett
also has options to purchase 20,001 shares of Common Stock that will
not have vested within 60 days following March 28, 2002.
(7) Includes options to acquire 36,313 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Brand also
had options to purchase 20,001 shares of Common Stock that will have
not vested within 60 days following March 28, 2002.
(8) Includes options to acquire 268,000 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Cierzan
also has options to purchase 45,000 shares of Common Stock that will
not have vested within 60 days following March 28, 2002. All of the
currently owned shares are owned by Robert J. Cierzan and Lynn M.
Cierzan, JTWROS.
(9) Includes options to acquire 76,313 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Giles also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 28, 2002.
(10) Includes options to acquire 66,313 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Henry also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 28, 2002.
(11) Includes options to acquire 367,499 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Mathewson
also has options to purchase 87,501 shares of Common Stock that will
not have vested within 60 days following March 28, 2002.
(12) Mr. Miller has beneficial ownership of 2,699,643 shares of Common
Stock of the Company, of which he has sole voting and dispositive
power over 1,261,655 shares and of which he has shared voting and
dispositive power over 1,437,988 shares which number is inclusive of
the shares shown in footnote number 5 above as beneficially owned by
PNC Group, PNC Bancorp and BNC BNA. Mr. Miller also has options to
purchase 26,314 shares of Common Stock that will not have vested
within 60 days following March 28, 2002.
(13) Includes options to acquire 66,313 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Nolen also
has options to purchase 20,001 shares of Common Stock that will not
have vested within 60 days following March 28, 2002. All of the
currently owned shares are owned directly by the Nolen Millennium
LLC, a Delaware limited liability company ("Nolen LLC"), of which
Mr. Nolen has a 15.8% membership interest and shares the remaining
membership interests with his two adult daughters. As a result of
his position as sole manager of Nolen LLC, Mr. Nolen may be deemed
to beneficially own the shares of Common Stock held by Nolen LLC.
(14) Includes options to acquire 114,998 shares of Common Stock that will
have vested within 60 days following March 28, 2002. Mr. Rossi also
has options to purchase 37,502 shares of Common Stock that will not
have vested within 60 days following March 28, 2002.
(15) Includes beneficial ownership of shares of Common Stock subject to
options exercisable within 60 days following March 28, 2002 and
includes the shares held by Nolen LLC.
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's Common
Stock to file with the Securities and Exchange Commission (the "SEC")
reports of ownership and changes in ownership of Common Stock and other
equity securities of the Company on Forms 3, 4 and 5. Based on a review of
such forms and written representations of reporting persons, the Company
believes that during the fiscal year ended December 31, 2001, its officers
and directors and holders of more than 10% of the Company's Common Stock
complied with all applicable Section 16(a) filing requirements.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is certain information regarding each of the current
executive officers of the Company. Information about Mr. Mathewson is
presented in "ELECTION OF DIRECTORS -- Nominees for Election by Holders of
Common Stock." Officers are appointed by and serve at the discretion of the
Board. Except as otherwise indicated, the positions listed are with Aldila,
Inc.
Name Age Position
- ---- --- --------
Peter R. Mathewson 51 Chairman of the Board of Directors,
Chief Executive Officer,
President and Director; President
and Chief Operating Officer of
Aldila Golf Corp.
Robert J. Cierzan 55 Vice President, Finance, Secretary
and Treasurer
Michael J. Rossi 48 Vice President, Sales and Marketing
of Aldila Golf Corp.
The principal occupations and positions for the past five years, and
in certain cases prior years, of the executive officers of the Company who
are not also nominees for election as a director, are as follows.
Robert J. Cierzan has been Secretary and Treasurer of Aldila (or its
predecessors) since January 1991 and Vice President, Finance since March
1989. From September 1988 to February 1989, Mr. Cierzan held the position
of Executive Vice President-Finance at Illinois Coil Spring Company, a
diversified manufacturer of springs, automotive push-pull controls and
rubber products.
Michael J. Rossi has been the Vice President, Sales and Marketing of
Aldila Golf Corp. since March 24, 1997 when he joined the Company. Prior to
that, from August 1994 to March 1997, Mr. Rossi was the Vice President and
General Manager of Fujikura Composite America which manufactures graphite
golf shafts and is a wholly owned subsidiary of Fujikura Rubber Limited, a
Japanese publicly held company. From November 1989 to August 1994, he was
Vice President, Sales and Marketing for True Temper Sports, a division of
the Black & Decker Corporation which manufactures steel golf shafts.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth the
compensation (cash and non-cash, plan and non-plan) paid to each of the
Named Executive Officers for services rendered in all capacities to the
Company during the three fiscal years ended December 31, 2001, 2000 and
1999.
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation
------------------------------------------------ --------------
Securities
Other Annual Underlying
Name and Principal Position Fiscal Year Base Salary Bonus Compensation Options
- -------------------------------- --------------- -------------- -------------- ------------------- ------------
Peter R. Mathewson 2001 $250,000 -- -- 75,000
Chairman of the Board and 2000 249,000 $247,000 -- 25,000
Chief Executive Officer; 1999 210,000 -- -- 87,500
President and
Chief Operating Officer,
Aldila Golf Corp.
Robert J. Cierzan 2001 $183,000 -- -- 30,000
Vice President, Finance; 2000 175,000 $174,000 -- 15,000
Secretary and Treasurer 1999 168,000 -- -- 60,000
Michael J. Rossi 2001 $172,000 -- -- 25,000
Vice President - Sales and 2000 163,400 $162,000 -- 12,500
Marketing, Aldila Golf Corp. 1999 157,500 -- -- 50,000
Stock Option Grants. The following table sets forth information
concerning the grant of stock options during the fiscal year ended December
31, 2001 to each of the Named Executive Officers.
OPTION GRANTS
IN THE FISCAL YEAR ENDED DECEMBER 31, 2001
Individual Grants
-----------------------------------------------------
Percent of
Total Potential Realizable
Options Value at Assumed
Granted to Annual Rates of
Employees Exercise or Stock Price
Options in Fiscal Base Price Expiration Appreciation for
Name Granted(1) Year 2001(2) (per share) Date(3) Option Term - 10 yr.
- ------------------------ ------------- -------------- -------------- ---------------- ----------------------------------
5%(4) 10%(4)
--------------- -----------------
Peter R. Mathewson 75,000 12.7% $1.54 05/21/11 $72,637 $184,077
Robert J. Cierzan 30,000 5.1% 1.54 05/21/11 29,055 73,631
Michael J. Rossi 25,000 4.2% 1.54 05/21/11 24,212 61,359
- --------------------
<FN>
(1) These options were granted pursuant to the Company's 1994 Stock
Incentive Plan, as amended and restated (the "1994 Stock Incentive
Plan"). One-third of the total number of options granted are
exercisable on the first anniversary of the option grant date and
thereafter, an additional one-third of the total number of options
granted are exercisable on each of the second and third anniversaries
of the option grant.
(2) In fiscal 2001, the Company granted a total of 592,500 options to its
employees under the Company's 1994 Stock Incentive Plan. This number
was used in calculating the percentages above.
(3) The options granted under the Company's 1994 Stock Incentive Plan
generally expire on the earliest of (a) the tenth anniversary of the
date of grant, (b) if the Optionee's employment is terminated as a
result of death, disability, retirement or within two years after a
change in control, one year following termination of employment, (c)
if the Optionee's employment is terminated for any other reason, 30
days following termination of employment or (d) the exercise in full
of the option.
(4) The assumed 5% and 10% annual rates of appreciation over the term of
the options are set forth in accordance with rules and regulations
adopted by the SEC and do not represent the Company's estimate of
stock price appreciation.
</FN>
Aggregated Option Exercises. The following table sets forth
information (on an aggregated basis) concerning each exercise of stock
options during the fiscal year ended December 31, 2001 by each of the Named
Executive Officers and the fiscal year-end value of unexercised options.
The Company has no outstanding stock appreciation rights, either
freestanding or in tandem with options.
AGGREGATE OPTION EXERCISES
IN THE FISCAL YEAR ENDED DECEMBER 31, 2001 AND
FISCAL YEAR-END OPTION VALUES
Value of Unexercised
Number of Securities Underlying "In-the-Money"
Unexercised Options at Options at Fiscal
Shares Fiscal Year-End Year-End(1)
Acquired on Value ------------------------------- ---------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------- ------------- ---------- ------------- ----------------- --------------- ---------------
Peter R. Mathewson -- -- 334,166 120,834 -- --
Robert J. Cierzan -- -- 253,000 60,000 -- --
Michael J. Rossi -- -- 102,501 49,999 -- --
- -------------------
(1) Options are "in-the-money" at the fiscal year-end if the fair market
value of the underlying securities on such date exceeds the exercise
price of the option. None of the Named Executive Officer's options
were "in-the-money" at December 31, 2001.
DIRECTOR COMPENSATION
Directors, other than management directors (Peter R. Mathewson),
currently receive for their service as directors $2,000 per quarter, $1,000
per Board meeting attended and $500 per committee meeting attended. Each
director, including each management director and other directors not
receiving directors' fees, is reimbursed for his or her out-of-pocket
expenses arising from attendance at meetings of the Board or committees
thereof.
Pursuant to the Company's 1994 Stock Incentive Plan, on September 4,
2001, Lloyd I. Miller, III, a non-employee director, received an initial
stock option grant of 26,314 shares. In May, 2001, each of the non-employee
directors who had more than one year of service (Peter E. Bennett, Thomas
A. Brand, Marvin M. Giles, III, John J. Henry and Chapin Nolen) received an
annual stock option grant of 10,000 shares. Under the 1994 Stock Incentive
Plan, each non-employee director with more than one year of service
(currently, Messrs. Bennett, Brand, Giles, Henry and Nolen) will receive
additional options to acquire 10,000 shares annually on the last trading
day in the month of May.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company entered into a Severance Protection Agreement (the
"Severance Agreement") in March 1999, with each of the Named Executive
Officers. All capitalized terms in the description below have the same
meaning as in the Severance Agreement. Pursuant to the Severance Agreement,
in the case of termination of employment as a result of death, by the
Company for Cause or Disability, or by the Executive other than for Good
Reason, the Executive is entitled to his Accrued Compensation. In the case
of termination for any other reason, the Executive is entitled to the
following: (i) Accrued Compensation and a Pro Rata Bonus for the year of
termination (typically computed based on the average bonus paid for the
prior two years), (ii) a lump sum payment equal to twice the sum of the
Executive's then annual base salary and his average bonus for the prior two
years, (iii) continued provision of insurance (including life, disability
and medical) for two years, "grossed up" to cover any excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, and (iv) a lump sum
equal to two years' automobile allowance (or the length of the automobile
lease, if longer, in the case of automobiles leased by the Company for the
Executive's use). These payments are in lieu of any other severance benefit
to which the Executive would otherwise have been entitled. Upon a
Change-in-Control, regardless of whether the Executive's employment has
terminated, the Company is required to contribute to a grantor trust an
amount sufficient to fund the payments under clauses (i), (ii), and (iv)
above.
Change-in-Control means (1) an acquisition of 40% of the Company's
Common Stock, (2) a change in two-thirds of the composition of the Board of
Directors of the Company without the approval of the existing members of
the Board, (3) the completion of a merger where the existing stockholders
and Board of Directors do not retain control of the surviving company, or
(4) the liquidation or sale of substantially all the assets of the Company.
Except as provided above and except for the provisions of the 1994
Stock Incentive Plan and related agreements thereto, there are no
compensatory plans or arrangements with respect to any of the above
executive officers (including each of the Named Executive Officers) which
are triggered by, or result from, the resignation, retirement or any other
termination of such executive officer's employment, a change-in-control of
the Company or a change in such executive officer's responsibilities
following a change-in-control.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON EXECUTIVE COMPENSATION
Introduction. The Compensation Committee of the Board of Directors in
2001 was comprised of Peter E. Bennett, Marvin M. Giles, III and John J.
Henry. The Company's employee stock option plans, including its 1994 Stock
Incentive Plan, are administered by the Stock Option Committee, which was
comprised in 2001 of Marvin M. Giles, III, Thomas A. Brand and Chapin
Nolen.
Compensation Objectives and Policies. The principle objectives of the
Company's executive compensation committee are to: (i) support the
achievement of desired Company performance, (ii) align the executive
officers' interests with the success of the Company and with the interests
of the Company's stockholders and (iii) provide compensation that will
attract and retain superior talent and reward performance. These objectives
are principally achieved through compensation in the form of annual base
salaries, bonuses and equity investment opportunities. In line with these
objectives, the Company's executive compensation system consists generally
of base salary, bonuses based on corporate performance under the Company's
Executive Bonus Plan (the "Bonus Plan"), and the grant of stock options
under the 1994 Stock Incentive Plan.
Executive officers generally receive salary increases at the time of
their respective employment anniversaries as approved by the Compensation
Committee, taking into consideration the recommendations of the Company's
Chairman and Chief Executive Officer. In 2001, due to the overall financial
performance of the Company, executive officer salaries were increased by
5%. In deciding to provide salary increases at this level to the executive
officers, the Compensation Committee took into account the overall
performance of the Company in recent years in the face of increasing market
pressures, including declining unit prices that have been negatively
impacting the Company's gross margins and an overall drop in sales of golf
equipment by many of the Company's customers. The Compensation Committee
also considered efforts taken by management to improve performance and
control costs in light of these market factors.
Principally as a result of the market conditions in 2001, the Company
did not perform at a level that warranted any bonuses under the Company's
Bonus Plan as described below.
Bonus awards to be granted under the Bonus Plan were predicated on the
actual financial performance of the Company at the end of the Company's
fiscal year as compared to the target financial performance objectives
established by the Compensation Committee in late 2000 based on the
Company's 2001 operating plan. The bonuses to be awarded were dependent
upon the Company achieving a specified dollar amount of pretax profits and
increased to the extent pretax profits exceeded that minimum level and
achieved various higher levels. The bonus for each participant was set at a
percentage of the participant's base salary, with the percentage depending
on what level of pretax profits the Company achieved. In establishing the
targets and proposed bonuses, the Committee determined that it was
important that the bonus payment structure be designed to reward executive
officers for high levels of performance by the Company, weighted so that
superior performance (viewed against the performance then expected in
accordance with management's internal projections for 2001 performance as
approved by the Board of Directors) would result in substantially higher
bonuses than would result from merely acceptable performance. While a
substantial portion of the bonus was subject solely to the Company
attaining its quantitative objectives, a portion of the total bonus award
was also subject to a discretionary modifier determined by the Chairman and
Chief Executive Officer allowing him to reduce the bonus if the executive's
individual performance so warranted. As indicated above, the Company's
pre-tax profits did not meet the minimum thresholds in the Bonus Plan, and
no bonuses were paid under the Bonus Plan for 2001. The Company will
continue to make the Bonus Plan available to its executive officers for
2002.
The Compensation Committee believes that overall 2001 executive
compensation levels adequately reflected (i) each executive's business
results and performance in his area of responsibility, (ii) each
executive's contribution to the overall management team and (iii) each
executive's then expected future contributions to the Company.
The Board of Directors believes that executive officers who are in a
position to make a substantial contribution to the long-term success of the
Company and to build stockholder value should have a significant stake in
the Company's on-going success. To this end, the Company's compensation
objectives have been designed to be achieved through significant stock
ownership in the Company by executive officers in addition to base salary
and bonus payments.
The purpose of the 1994 Stock Incentive Plan is to provide an
additional incentive to employees to work to maximize stockholder value and
to facilitate broadening and increasing stock ownership by executives and
other key employees. In 2001, options to purchase an aggregate of 592,500
shares were granted to employees of the Company as a group, with 130,000 of
those being granted to the Named Executive Officers. The Stock Option
Committee believes that these stock option grants were appropriate in light
of the policy of the Board of Directors that significant equity ownership
by executive officers is an important contributor to aligning the interests
of executive officers with those of the stockholders of the Company, and
the number of options awarded to individual officers were set based on the
Stock Option Committee's perception, in part in light of recommendations by
the Company's Chairman and Chief Executive Officer, as to each officer's
ability to affect the Company's overall future performance. The Named
Executive Officers collectively hold options to acquire 920,500 shares.
The Stock Option Committee believes that these newly granted options,
together with the shares and options previously made available to executive
officers, have provided significant incentives for executives to increase
the value of the Company for the benefit of all stockholders and have
offered executives significant opportunities to profit personally from
their efforts to increase that value.
Many of the options currently outstanding, particularly those issued
more than a few years ago, have exercise prices substantially in excess of
recent trading prices for the Company's common stock. As a result, the
purpose of having issued these options has been frustrated and their value
to the Company is quite limited. In recognition of this fact, upon the
recommendation of the Stock Option Committee, the Board of Directors has
authorized an exchange offer to be made to current employees, including the
Named Executive Officers (but not the non-management directors), under
which employees could elect to have their higher priced options-those
unlikely to be "in-the-money" for the foreseeable future-cancelled and
replaced at least six months and a day later with a substantially smaller
number of options at the then current market price. The other outstanding
options, including those held by non-management directors and those that,
while not currently "in-the-money," are closer to being "in-the-money,"
will be unaffected by this exchange offer. The Stock Option Committee has
been assigned responsibility for finalizing the terms of this exchange
offer, which is expected to commence later in the spring of 2002. The
Company will file a Schedule TO with the SEC, which will provide specific
information concerning the proposed option exchange program. The Stock
Option Committee believes that the exchange offer will increase the value
of the option program to the Company and its stockholders, while decreasing
the total number of outstanding options significantly.
The Compensation Committee and the Stock Option Committee have
considered the impact of Section 162(m) of the Internal Revenue Code on
their executive compensation decisions. Section 162(m) generally disallows
a federal income tax deduction to any publicly-held corporation for
compensation paid to the chief executive officer and the four other most
highly compensated executive officers to the extent that such compensation
in a taxable year exceeds $1 million. Section 162(m), however, does not
disallow a deduction for qualified "performance-based compensation" the
material terms of which are disclosed to and approved by stockholders. The
Company's Bonus Plan does not qualify as performance-based compensation for
the purposes of Section 162(m), although the 1994 Stock Incentive Plan so
qualifies. During 2001, the Compensation Committee believed it unlikely
that any executive officer of the Company would receive in excess of $1
million in compensation, other than performance-based compensation, and the
Compensation Committee believes it is unlikely that any executive officer
will receive in excess of that amount in 2002. As a result, the
Compensation Committee has not taken any steps to qualify the bonus plan as
performance-based compensation, although it anticipates that the Company
would do so before any executive receives salary, bonus and other
non-performance based compensation in excess of $1 million.
Compensation of Chief Executive Officer. Peter R. Mathewson's
compensation during 2001 as Chairman of the Board and Chief Executive
Officer was reviewed in connection with the Compensation Committee's
overall review of executive officer compensation. The Compensation
Committee proposed in the fall of 2001 to increase his base salary
reflecting the overall performance of the Company during his tenure as
Chief Executive Officer and his performance specifically. As described
above, Mr. Mathewson also did not receive any bonus under the Bonus Plan.
In May 2001, as part of the general grant referred to above, the Stock
Option Committee awarded Mr. Mathewson options to acquire 75,000 shares of
the Company's Common Stock. The Stock Option Committee believed that this
number of options was appropriate in light of the importance of Mr.
Mathewson's position to the Company and his level of stock ownership. The
Compensation Committee also continues to believe that Mr. Mathewson's
participation in the Bonus Plan in conjunction with his stock ownership and
employee stock options have provided substantial incentives for him to
create stockholder value.
The Compensation and Stock Option Committee Report on Executive
Compensation shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing
under the Securities Act of 1933, as amended (the "Securities Act"), or the
Exchange Act and shall not otherwise be deemed filed under such Acts.
REPORT OF AUDIT COMMITTEE
The Audit Committee currently consists of John J. Henry (chairman),
Peter E. Bennett, and Chapin Nolen, all of whom are independent directors
meeting the requirements of the NASDAQ rules. It held four meetings during
fiscal 2001. The Audit Committee operates under a written charter adopted
by the Board of Directors on May 10, 2000. A copy of the charter was
included as an exhibit to the Company's proxy statement for its 2001 Annual
Meeting, which is available as provided under "Available Information"
below.
Under its charter, the Audit Committee's principal responsibilities
are to (a) monitor the integrity of the Company's financial reporting
process and systems of internal controls, (b) monitor the independence and
performance of Company's independent accountants, currently Deloitte &
Touche LLP, and (c) provide an avenue of communication among the
independent accountants, Company management and the Board of Directors. The
Company's management remains directly responsible for the Company's
internal controls and the financial reporting process, and the Company's
independent accountants are responsible for performing an independent audit
of the Company's financial statements in accordance with generally accepted
auditing standards and to issue a report on the Company's financial
statements, as well as to review the Company's quarterly financial
statements. The Audit Committee has the principal responsibility to monitor
and oversee these processes, although the Board of Directors retains
ultimate responsibility for the performance of the Company's independent
accountants and management.
The Audit Committee is charged with meeting at least four times each
year, at a minimum including a meeting following preparation of quarterly
and annual financial statements to review these financial statements with
management and the independent accountants. Company management has
represented to the Audit Committee that the Company's financial statements
for the fiscal year 2001 were prepared in accordance with generally
accepted accounting principles, and the Audit Committee has reviewed and
discussed these financial statements with management and the Company's
independent accountants. The Audit Committee also discussed with the
Company's independent accountants matters required to be discussed by the
Statement on Auditing Standards No. 61 (communications with audit
committees).
The Company's independent accountants also provided to the Audit
Committee the written disclosure required by Independence Standards Board
Standard No. 1 (independence discussions with audit committees), and the
Audit Committee discussed with the independent accountants the accounting
firm's independence. The Audit Committee also considered whether non-audit
services provided by the independent accountants during the last fiscal
year were compatible with maintaining the independent accountants'
independence.
The Audit Committee is also responsible for recommending the
independent accountants to be retained by the Company for each fiscal year
and has recommended that Deloitte & Touche LLP be nominated again for
approval by the stockholders for fiscal 2002.
Based upon the Audit Committees' discussion with management and the
Company's independent accountants and the Audit Committees' review of the
representations of management and the report of the independent accountants
to the Audit Committee, the Audit Committee has recommended to the Board of
Directors that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001 filed with the Securities and Exchange Commission.
This report shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, and shall not otherwise be deemed filed
under such Acts.
Respectfully submitted,
John J. Henry, Chairman
Peter E. Bennett
Chapin Nolen
PERFORMANCE GRAPH FOR ALDILA, INC. COMMON STOCK
The performance graph for the Company's Common Stock compares the
cumulative total return (assuming reinvestment of dividends) on the
Company's Common Stock with (i) the Center for Research in Security Prices
("CRSP") Index for NASDAQ Stock Market (U.S. Companies) (the "Market
Index") and (ii) the CRSP Index for NASDAQ Stocks (SIC 3940 - 3949) --
Dolls, Toys, Games and Sporting and Athletic Goods (the "Peer Index"),
assuming an investment of $100 on December 31, 1996 in each of the Common
Stock, the stock comprising the Market Index and the stock comprising the
Peer Index.
[CHART OMITTED]
INDEXED/CUMULATIVE RETURN
----------------------------------------------------
12/31 12/31 12/31 12/31 12/31
COMPANY/INDEX 1997 1998 1999 2000 2001
------------- ---- ---- ---- ---- ----
Aldila 90.3 51.6 28.4 27.1 21.7
Market Index 122.5 172.7 320.8 193.0 153.1
Peer Index 90.7 40.4 32.7 43.0 79.7
NOTES:
A. The index levels are derived from compounded daily returns that
include all dividends.
B. The index levels for the Company, the Market Index and the Peer Index
were each set to 100 at December 31, 1996.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended December 31,
2001 (the "2001 Annual Report") is included with the mailing of this Proxy
Statement. The 2001 Annual Report contains consolidated financial
statements of the Company and its subsidiaries and the report thereon of
Deloitte & Touche LLP, independent accountants.
PROXY SOLICITATION
The cost of soliciting proxies will be paid by the Company. Mellon
Investor Services, 400 South Hope Street, 4th Floor, Los Angeles,
California 90071, has been retained to solicit proxies by mail, telephone
or personal solicitation for a fee of $5,000 plus expenses. The Company has
also arranged for reimbursement, at the rate suggested by the New York
Stock Exchange, of brokerage houses, nominees, custodians and fiduciaries
for the forwarding of proxy materials to the beneficial owners of shares
held of record. Proxies may also be solicited by directors, officers and
employees of the Company, but such persons will not be specially
compensated for such services.
PROPOSALS OF STOCKHOLDERS
If a stockholder desires to have a proposal included in the proxy
materials for the 2003 Annual Meeting of Stockholders, such proposal shall
conform to the applicable proxy rules of the SEC concerning the submission
and content of proposals and must be received by December 3, 2002 at the
executive offices of the Company, 12140 Community Road, Poway, California
92064, Attention: Secretary. The Company's receipt of notice of a
stockholder's intent to submit a proposal outside of Rule 14a-8 at the 2003
Annual Meeting of Stockholders after February 16, 2003 will be considered
untimely under Rule 14a-4(c)(1).
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports, proxy statements
and other information with the SEC. Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549 and at the SEC's Regional
Offices located at 233 Broadway, New York, New York 10279 and 175 W.
Jackson Blvd., Suite 900, Chicago, Illinois 60604. Copies of such materials
can be obtained by mail from the Public Reference Section of the SEC at 450
Fifth Street, N. W., Washington, D.C. 20549, at prescribed rates or, at no
charge, may be obtained at the SEC's web site: http://www.sec.gov. In
addition, such material may also be inspected and copied at the offices of
the National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006-1500.
OTHER MATTERS
The Board knows of no matters other than those listed in the attached
Notice of Annual Meeting which are likely to be brought before the Meeting.
However, if any other matter properly comes before the Meeting, the persons
named on the enclosed proxy card will vote the proxy in accordance with
their best judgment on such matter.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Robert J. Cierzan
------------------------------
Robert J. Cierzan
Secretary
April 8, 2002
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
ALDILA, INC.
Aldila, Inc., a corporation organized and existing under and by virtue
of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify that:
(1) The name of the Corporation is Aldila, Inc. The date of the
filing of its original Certificate of Incorporation (the "Original
Certificate") with the Secretary of State of the State of Delaware was
December 6, 1991, under the name Aldila Holdings Corp.. The Original
Certificate was amended on December 11, 1991 and January 8, 1992, and
Restated Certificates of Incorporation became effective on April 23,
1993 and June 15, 1993.
(2) Pursuant to Section 242(b) of the Delaware General
Corporation Law the Board of Directors of the Corporation has duly
adopted, and a majority of the outstanding stock entitled to vote
thereon has approved, the amendments to the Restated Certificate of
Incorporation of the Corporation set forth in this Certificate of
Amendment.
(3) Article FOURTH of the Restated Certificate of Incorporation
of the Corporation is amended to insert the following paragraph as the
second paragraph of Article FOURTH:
"Effective immediately upon the filing of this Certificate
of Amendment with the Delaware Secretary of State, every [ ]
outstanding shares of Common Stock shall without further action
by this Corporation or the holder thereof be combined into and
automatically become one share of Common Stock. The authorized
shares of the Corporation shall remain as set forth in this
Certificate of Incorporation. No fractional share shall be issued
in connection with the foregoing stock split; all shares of
Common Stock so split that are held by a stockholder will be
aggregated and each fractional share resulting from such
aggregation shall be rounded down to the nearest whole share. In
lieu of any interest in a fractional share of Common Stock to
which a stockholder would otherwise be entitled as a result of
the foregoing split, the Corporation shall pay a cash amount to
such stockholder equal to the fair value as determined by the
Board of Directors of such fractional share as of the effective
date of the foregoing split."
IN WITNESS WHEREOF, the undersigned has executed this Certificate of
Amendment of the Restated Certificate of Incorporation on this [ ] day of
[ ], 200[].
ALDILA, INC.
By:
---------------------------------
Peter R. Mathewson
Chairman, Chief Executive
Officer and President
Attest:
By:
-----------------------------
Robert J. Cierzan
Secretary
ALDILA, INC.
The undersigned stockholder of ALDILA, INC. hereby appoints PETER R.
MATHEWSON and ROBERT J. CIERZAN, or either of them, Proxies of the
undersigned, each with full power to act without the other and with the
power of substitution, to represent the undersigned at the Annual Meeting
of Stockholders of Aldila, Inc., to be held at the Rancho Bernardo Inn,
17550 Bernardo Oaks Drive, San Diego, California 92128 on Wednesday, May
15, 2002 at 9:00 a.m. (Pacific time), and at any adjournments or
postponements thereof, and to vote all shares of stock of the Company
standing in the name of the undersigned with all the powers the undersigned
would possess if personally present, in accordance with the instructions
below and on the reverse hereof, and, in their discretion, upon such other
business as may properly come before the meeting or any adjournments
thereof.
THIS PROXY WILL BE VOTED ON THE REVERSE HEREOF, AND WILL BE VOTED IN
FAVOR OF PROPOSALS 1, 2, 3 AND 4 IF NO INSTRUCTIONS ARE INDICATED.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
- -----------------------------------------------------------------------------
COMMENTS/ADDRESS CHANGE: PLEASE MARK COMMENT/ADDRESS CHANGE BOX ON
REVERSE SIDE
(Continued and to be marked, signed and dated on reverse side)
FOLD AND DETACH HERE
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY. YOUR BOARD
OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE PROPOSALS. |X| Please mark
your votes as
indicated in
this example
FOR AGAINST ABSTAIN
1. ELECTION OF DIRECTORS. FOR all nominees WITHHOLD 2. Approval of Reverse Stock - - -
listed (except as AUTHORITY to Split and Certificate of |_| |_| |_|
marked to the vote for all Incorporation Amendment.
contrary) nominees listed
- -
|_| |_| 3. Ratification of the - - -
appointment of Deloitte & |_| |_| |_|
Touche LLP as the
independent accountants
of the Company.
4. In their discretion, the - - -
Proxies are authorized to vote |_| |_| |_|
upon such other business as
may properly come before the
meeting or any adjournment
thereof.
Nominees: 01 Peter E. Bennett, 02 Thomas A. Brand, 03 Marvin M. Giles, III,
04 John J. Henry, 05 Peter R. Mathewson, 06 Lloyd I. Miller, III, and 07 Chapin Nolen
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's
name on the line provided below.)
_
I PLAN TO ATTEND THE MEETING |_|
COMMENTS/ADDRESS CHANGE
Please mark this box if you have -
written comments or an address |_|
change on the reverse side.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders to be held May 15, 2002 and the Proxy Statement furnished
herewith.
Signature(s) Date 2002
--------------------------------------------- ---------------------,
Please sign as name appears hereon, date and return the proxy card promptly using the enclosed
envelope. When signing as attorney, executor, administrator, trustee or guardian, give full title
as such. If more than one name appears hereon, all parties should sign.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
YOUR VOTE IS IMPORTANT!
YOU CAN VOTE IN ONE OF TWO WAYS:
===============================================================================
VOTE BY PHONE: FOR U.S. stockholders only, call toll-free 1-800-840-1208
on a touch tone telephone 24 hours a day, 7 days a week.
There is NO CHARGE to you for this call. Have your proxy card in hand.
You will be asked to enter a Control Number, which is located in the box
in the lower right hand corner of this form.
OPTION 1: To vote as the Board of Directors recommends on ALL proposals,
press 1.
When asked, please confirm by Pressing 1
OPTION 2: If you choose to vote on each proposal separately, Press 0. You
will hear these instructions:
Proposal 1, Director Election Proposal: To vote FOR ALL nominees, press 1;
to WITHHOLD FOR ALL nominees, press 9.
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions.
Proposal 2 and All Other Proposals: To vote FOR, press 1; AGAINST, press 9;
ABSTAIN, press 0
The instructions are the same for all other proposals.
When asked, please confirm by Pressing 1
===============================================================================
or
===============================================================================
VOTE BY PROXY CARD: Mark, sign and date your proxy card and
return it promptly in the enclosed envelope.
NOTE: If you voted by telephone, THERE IS NO NEED TO MAIL BACK your proxy card.
================================================================================
THANK YOU FOR VOTING.