SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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 (S) 240.14a-11(c) or (S) 240.14a-12
LEARNING TREE INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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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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[_] Check box if any part of the fee is offset as provided by Exchange
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was paid previously. Identify the previous filing by registration statement
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(1) Amount Previously Paid:
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Learning Tree International, Inc.
6053 W. Century Boulevard
Los Angeles, California 90045
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on Friday, March 2, 2001
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Learning Tree International, Inc. (the "Company") will be held at
the Sheraton Gateway Hotel, 6101 West Century Boulevard, Los Angeles, California
90045 on Friday, March 2, 2001, at 10:00 a.m. local time for the following
purposes as more fully described in the accompanying Proxy Statement:
1. To elect three Class III directors for a term of three years.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on January 19, 2001
as the record date for determining the stockholders entitled to notice of and to
vote at the Annual Meeting or at any adjournment thereof. Only stockholders at
the close of business on the record date are entitled to vote at the Annual
Meeting.
Accompanying this Notice are a Proxy and Proxy Statement. If you will not
be able to attend the Annual Meeting to vote in person, you may vote your shares
by completing and returning the accompanying proxy card or by voting
electronically via the Internet or by telephone. To vote by mail, please
complete, sign and date the accompanying proxy and return it promptly in the
enclosed postage paid envelope. The proxy may be revoked at any time prior to
its exercise at the Annual Meeting.
By Order of the Board of Directors,
/s/ DAVID C. COLLINS
David C. Collins, Ph.D.
Chairman of the Board and Chief Executive Officer
January 24, 2001
LEARNING TREE INTERNATIONAL, INC.
6053 West Century Boulevard
Los Angeles, California 90045
PROXY STATEMENT
INTRODUCTION
This Proxy Statement is furnished to the stockholders of Learning Tree
International, Inc., a Delaware corporation (the "Company"), in connection with
the solicitation of proxies by and on behalf of the Board of Directors of the
Company. The proxies solicited hereby are to be voted at the Annual Meeting of
the Stockholders of the Company to be held at the Sheraton Gateway Hotel, 6101
West Century Boulevard, Los Angeles, California 90045 on March 2, 2001 at 10:00
a.m. Pacific Standard Time and at any and all adjournments thereof (the "Annual
Meeting").
At the Annual Meeting, stockholders will be asked to consider and vote upon
the following proposals:
1. To elect three Class III directors for a term of three years.
2. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
A form of proxy is enclosed for your use. The shares represented by each
properly executed unrevoked proxy will be voted as directed by the stockholder
executing the proxy. If no direction is made, the shares represented by each
properly executed unrevoked proxy will be voted "FOR" the election of
management's nominees for the Board of Directors. With respect to any other item
of business that may come before the Annual Meeting, the proxy holders will vote
the proxy in accordance with their best judgment.
Any proxy given may be revoked at any time prior to its exercise by filing,
with the Secretary of the Company, an instrument revoking such proxy or by the
filing of a duly executed proxy bearing a later date. Any stockholder present at
the meeting who has given a proxy may withdraw it and vote his or her shares in
person if such stockholder so desires.
It is contemplated that the solicitation of proxies will be made primarily
by mail. Should it, however, appear desirable to do so in order to ensure
adequate representation of shares at the Annual Meeting, officers, agents and
employees of the Company may communicate with stockholders, banks, brokerage
houses and others by telephone, in person or otherwise to request that proxies
be furnished. All expenses incurred in connection with this solicitation will be
borne by the Company. In following-up the original solicitation of proxies by
mail, the Company may make arrangements with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material to the
beneficial owners of the shares eligible to vote at the Annual Meeting and will
reimburse them for their expenses in so doing. The Company has no present plans
to hire special employees or paid solicitors to assist in obtaining proxies, but
reserves the option of doing so if it should appear that a quorum otherwise
might not be obtained. This Proxy Statement and the accompanying form of proxy
are first being mailed to stockholders on or about January 26, 2001.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Outstanding Shares; Record Date
Only holders of record of the Company's voting securities at the close of
business on January 19, 2001, (the "Record Date") are entitled to notice of and
to vote at the Annual Meeting and any adjournments thereof. As of the Record
Date, the Company had issued and outstanding, 21,738,788 shares of the Company's
Common Stock, the holders of which are entitled to vote at the Annual Meeting.
Each share of Common Stock that was issued and outstanding as of the Record Date
is entitled to one vote at the Annual Meeting.
The presence, in person or by proxy, of stockholders entitled to cast at
least a majority of the votes entitled to be cast by all stockholders will
constitute a quorum for the transaction of business at the Annual Meeting.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of January 19, 2001 by (i) each person or entity known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
each of the Company's directors, (iii) each of the persons named in the Summary
Compensation Table and (iv) all directors and executive officers as a group.
Except as otherwise noted, the persons or entities named have sole voting and
investment power with respect to all shares shown as beneficially owned by them.
Common Stock /(1)/
------------------------------------------------
Number of Percent of
Name and Address of Owner Shares Class
------------------------- ---------------------- ---------------------
David C. Collins/(1)(2)(3)(4)/................................. 4,309,610 19.8%
Eric R. Garen/(2)(5)/.......................................... 3,695,030 17.0%
Gary R. Wright/(1)/............................................ 283,500 1.3%
Mary C. Adams/(1)(3)(4)/....................................... 4,309,610 19.8%
James E. Furlan/(1)/........................................... 120,833 *
Alan B. Salisbury/(1)/......................................... 87,115 *
W. Matthew Juechter............................................ 29,760 *
Michael W. Kane................................................ 8,268 *
Theodore E. Guth/(1)(6)/....................................... 1,363,758 6.3%
All directors and executive officers as a group (9) /(7)/...... 8,541,616 39.0%
_________________
* Less than 1%
Note: Based upon review of 13G filings, there were no other 5% or more holders
of Learning Tree Common Stock as of January 19, 2001.
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares that such person or group has the
right to acquire within 60 days after the date as of which information in
this table is provided. For purposes of computing the percentage of
outstanding shares held by each person or group on that date, such shares
are deemed to be outstanding, but are not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. The
number of shares in this table includes 9,000 shares each for Mr. Wright
and Dr. Salisbury, 27,000 shares for Ms. Adams, 120,833 shares for Mr.
Furlan and 7,500 shares for Mr. Guth, which may be issued upon the exercise
of vested options that they hold.
(2) Dr. Collins is the Chairman of the Board of Directors and Chief Executive
Officer of the Company and Mr. Garen is the President and a director of the
Company. The address of these individuals is Learning Tree International,
Inc., 6053 West Century Boulevard, Los Angeles, California 90045-0028.
(3) Dr. Collins' shares include 224,640 shares and options owned by Ms. Adams.
Ms. Adams shares include 1,471,650 shares owned by Dr. Collins. David C.
Collins and Mary C. Adams are married but disclaim beneficial ownership of
each other's shares.
(4) Includes 198,320 shares owned by the Collins Family Foundation. The
directors of the Collins Family Foundation are David C. Collins and Mary C.
Adams; however, they disclaim beneficial ownership of these shares. Also
includes 215,000 shares owned by The Pegasus Foundation, of which David C.
Collins and Mary C. Adams are a minority of the trustees and they disclaim
beneficial ownership, and 2,200,000 shares owned by DCMA Holdings LP.
David C. Collins and Mary C. Adams are the general partners of DCMA
Holdings LP.
(5) Includes 270,380 shares owned by the Garen Family Foundation. Mr. Garen is
a trustee of the Garen Family Foundation; however, he disclaims beneficial
ownership of these shares. Also includes 1,356,258 shares held by certain
trusts (546,672 shares held by the Garen Children's Trust, 127,225 shares
held by the Nancy Garen 1999 Annuity Trust, 127,225 shares held by the Eric
R. Garen 1999 Annuity Trust, 196,068 shares held by the Nancy Garen 1999
Annuity Trust-2, 196,068 shares held by the Eric R. Garen 1999 Annuity
Trust-2, and 163,000 shares held by the Garen Dynasty Trust) as to which
Mr. Garen lacks voting and disposition power and as to which he disclaims
beneficial ownership. See footnote 6.
2
(6) Mr. Guth has sole voting and disposition power, as Trustee, of the 546,672
shares held by the Garen Children's Trust, 127,225 shares held by the Nancy
Garen 1999 Annuity Trust, 127,225 shares held by the Eric R. Garen 1999
Annuity Trust, 196,068 shares held by the Nancy Garen 1999 Annuity Trust-2,
196,068 shares held by the Eric R. Garen 1999 Annuity Trust-2, and the
163,000 shares held by the Garen Dynasty Trust. See Footnote 5. Mr. Guth
also holds, in his own name and not as Trustee, options to purchase from
the Company 12,500 shares of Common Stock, of which 7,500 shares are
vested. Mr. Guth's address is Guth|Christopher LLP, 10866 Wilshire
Boulevard, Suite 1250, Los Angeles, California 90024.
(7) As described in Footnotes 3, 4, 5 and 6, certain of the shares have been
listed for more than one of the named individuals. This total reflects the
total number of shares owned by the director and officer group as a whole,
eliminating the shares attributed to more than one individual.
3
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Board of Directors has nine members and is divided into three
classes, Class I, Class II and Class III. The current terms of the Class III
directors expire at the Annual Meeting to be held this year; the terms of the
Class I directors will expire at the annual meeting of stockholders to be held
in 2002; and the terms of the Class II directors will expire at the annual
meeting of stockholders to be held in 2003. The Class III directors are to be
elected at the Annual Meeting for three-year terms expiring in 2004. At each
subsequent annual meeting of the stockholders, directors will be elected for a
full three-year term to succeed the directors whose terms are then to expire.
Information Concerning Nominees and Other Directors
Name Age Position with the Company
---------------------------------------- --------- ----------------------------------------
Class I Directors - Present Term
Expires in 2002.
W. Mathew Juechter.................... 67 Director
Alan B. Salisbury..................... 63 Director
Theodore E. Guth...................... 46 Director
Class II Directors - Present Term
Expires in 2003.
Michael W. Kane....................... 49 Director
Mary C. Adams......................... 45 Vice President Administration and
Investor Relations, Assistant
Secretary, and Director
James E. Furlan....................... 50 Chief Operating Officer and Director
Class III Directors - Nominees for
Election to Terms Expiring in 2004.
David C. Collins...................... 60 Chairman of the Board of Directors
and Chief Executive Officer
Eric R. Garen......................... 53 President and Director
Gary R. Wright........................ 43 Chief Financial Officer, Secretary,
and Director
Dr. Collins, a co-founder of the Company, has been Chairman of the Board
and Chief Executive Officer since the Company's business began in 1974. Dr.
Collins has a Bachelor of Science degree (with distinction) in Electrical
Engineering from Stanford University, and Masters and Ph.D. degrees in
Electrical Engineering from the University of Southern California.
Mr. Garen, a co-founder of the Company, has served as Executive Vice
President and as President of the Company since the Company's business began in
1974. Mr. Garen holds a Bachelor of Science degree in Electrical Engineering
from the California Institute of Technology and a Masters degree in Computer
Science from the University of Southern California, earning both degrees with
honors.
Mr. Wright has been Chief Financial Officer of the Company since January
1995, and from January 1990 to that time he was Corporate Controller of the
Company. From April 1983 to January 1990, Mr. Wright was employed by The Flying
Tiger Line Inc. and its parent company, Tiger International, Inc., a publicly-
held transportation company, where he held a variety of financial executive
positions, including Assistant Controller and Director of Financial Reporting.
Prior to April 1983, Mr. Wright worked at the public accounting firm of Arthur
Andersen LLP. Mr. Wright is a certified public accountant. Mr. Wright became a
Director of the Company in December 1999.
Mr. Juechter has been a director of the Company since June 1987. He is
President and Chief Executive Officer of IRA, Inc., a management consulting
company that works primarily in the areas of strategy, structure and executive
development. From 1991 to 1999, he was Chief Executive Officer of ARC
International Ltd., a management consulting and training company. From 1986 to
1991, Mr. Juechter was Managing Director of IRA, Inc. in St. Paul, Minnesota.
Mr. Juechter served as President and Chief Executive Officer of Wilson Learning
Corp., a multi-national training organization, from 1977 to 1986. From 1989 to
1997, he was President of the Board of Governors of the American Society for
Training and Development (ASTD). Mr. Juechter is a graduate of Boston University
and Harvard Business School.
4
Dr. Salisbury is an independent management consultant in the information
technology field. He retired from Learning Tree in 1999, where he had served as
President and General Manager, and later Chairman, of Learning Tree
International USA, Inc., the Company's operating subsidiary in the United
States, since April 1993. From 1991 until he joined the Company, Dr. Salisbury
was Chief Operating Officer of Microelectronics and Computer Technology
Corporation (MCC), an organization involved in the research and development of
IT products located in Austin, Texas. From 1987 to 1991, he was President of the
Contel Technology Center, the research and development group of Contel Corp, an
independent telephone company located in Chantilly, Virginia. Dr. Salisbury is a
director of Sybase, Inc., an enterprise software vendor, and chairman of Avilar
Technologies, an eLearning infrastructure and services provider. The author of
numerous books and articles related to information technology and education, Dr.
Salisbury served in the United States Army from 1958 to 1987, when he retired as
Commanding General of the U.S. Army Information Systems Engineering Command. He
holds a Bachelor of Science degree, with distinction, from the U.S. Military
Academy, and Masters and Ph.D. degrees in Electrical Engineering and Computer
Science from Stanford University.
Mr. Guth has served as a director of the Company since March 1999. He is a
partner at Guth|Christopher LLP, a law firm he co-founded in 1997. Mr. Guth was
previously a partner at the law firm of Irell & Manella LLP from 1985 to 1993
and from 1995 to 1997. From 1993 to 1995, he was the President of
Dabney/Resnick, Inc., a 100-person investment banking and brokerage firm. Mr.
Guth was a full-time professor at the UCLA School of Law from 1981 to 1983. He
holds a JD from Yale Law School and a Bachelor of Science degree from the
University of Notre Dame (summa cum laude, Phi Beta Kappa).
Dr. Kane has served as a director of the Company since February 1995. Since
1991, he has been President and Chief Executive Officer of M. Kane & Company,
Inc., an investment banking firm focusing primarily on technology companies.
From 1987 to 1988, he was an investment banker with L.F. Rothschild & Co., Inc.
and from 1988 to 1991 he was an investment banker with Oppenheimer & Co., Inc.
From 1984 to 1987, Dr. Kane practiced primarily corporate and securities law
with the law firm of Irell & Manella LLP and, prior to that, he was a Project
Leader in the Systems Sciences Department of The Rand Corporation and an
independent consultant to the satellite telecommunications industry. Dr. Kane
has a Bachelor of Arts degree in Political Science from the University of
Wisconsin-Madison and a Master's degree in International Relations, a Ph.D.
degree in Political Science and a J.D. degree from the University of California,
Los Angeles.
Ms. Adams has served as Vice President, Administration and Investor
Relations since September 1995. She began her association with the Company in
September 1975 and has held a variety of key positions in the Company. Ms. Adams
is also the President of Advanced Technology Marketing, Inc., a wholly owned
subsidiary of the Company. Ms. Adams became a Director of the Company in
December 1999.
Mr. Furlan joined the Company in February 1999 as Chief Operating Officer.
Prior to joining the Company, Mr. Furlan was employed by the Xerox Corporation
from July 1974 to February 1999. From 1991 to 1999, Mr. Furlan was Vice
President, General Manager of various Xerox business units, the most recent
being Distributed Printing and Publishing Systems. Prior to these positions, he
held a series of senior management positions in sales, marketing, finance and
strategic planning in Xerox's printer and copier divisions. Mr. Furlan holds a
Bachelor of Science degree in engineering and a Master of Business
Administration from the University of Illinois. Mr. Furlan became a Director of
the Company in August 1999.
David C. Collins and Mary C. Adams are married. There are no other family
relationships among any of the directors or executive officers of the Company.
The shares of each properly executed unrevoked proxy will be voted FOR the
election of all of the above named nominees unless the stockholder executing
such proxy indicates that the proxy shall not be voted for all or any one of the
nominees. All of the nominees have indicated a willingness to serve as
directors, but if any of them should decline or be unable to act as a director,
the proxy holders will vote for the election of another person or persons as the
Board of Directors recommends.
5
Board Meetings and Committees
The Board of Directors held four meetings during the fiscal year ended
September 30, 2000. The Board of Directors has three standing committees: the
Audit Committee, the Compensation Committee and the Options Committee. Each
incumbent director attended at least 75% of the aggregate of the number of
meetings of the Board and meetings of committees of the Board on which he served
during the 2000 fiscal year.
The Audit Committee currently comprises Dr. Kane and Mr. Juechter. Although
Mr. Jucheter meets the standards for director "independence" adopted by the
NASD, Dr. Kane may not because of the services he has provided to the Company as
an investment banker during the past fiscal year (see "Certain Transactions").
However, the Board believes that his experience and knowledge has been and will
be helpful on the Audit Committee until additional "independent" directors have
been added to the Board. The Board intends to seek additional directors who meet
the NASD standard for independence to replace Dr. Kane on the Audit Committee
subsequent to the Annual Meeting. Until August 9, 2000, Dr. Collins served as a
member of the Audit Committee.
The principal functions of the Audit Committee are to review the plan and
results of the Company's independent audit with the Company's independent
auditors and management, to review the Company's systems of internal control,
and to recommend the engagement or the discharging of the Company's independent
auditors. The Company's Board of Directors has adopted a written charter for the
Audit Committee (see Appendix A). The Audit Committee met two times during the
2000 fiscal year. The material in this paragraph shall not be deemed to be
incorporated by reference by any general statement incorporating by reference
this Proxy Statement into any filing under the Securities Act, or under the
Exchange Act, except to the extent that the Company specifically incorporates
this information by reference, and shall not otherwise be deemed soliciting
material or filed under such acts.
The Compensation Committee comprises Dr. Collins, Dr. Kane and Mr.
Juechter. The principal functions of the Compensation Committee are to (a)
review and make recommendations to the Company's Board of Directors with respect
to the direct and indirect compensation and employee benefits of the Chairman,
President and other elected officers of the Company, (b) review, administer and
make recommendations to the Company's Board of Directors with respect to any
incentive plans and bonus plans that include elected officers and (c) review the
Company's policies relating to the compensation of senior management and other
employees. In addition, the Compensation Committee reviews management's long-
range planning for executive development and succession, establishes and
periodically reviews policies on perquisites and performs certain other review
functions relating to management compensation and employee relations policies.
The Compensation Committee met one time during the 2000 fiscal year.
The Options Committee is comprised of Dr. Collins and Mr. Garen. The
functions of the Options Committee include addressing matters relating to the
Company's stock option plans and making grants and recommendations to the Board
of Directors as to grants of stock options. The Options Committee held five
meetings during the 2000 fiscal year.
The Board of Directors does not have a standing Nominating Committee.
However, the Board has appointed a special Nominating Committee consisting of
Dr. Collins and Messrs. Garen and Guth to consider the composition of the Board
in connection with the NASD independence requirements scheduled to become
effective this year. The special Nominating Committee will consider nominees
recommended by securities holders, and names may be submitted in writing to the
Secretary of the Company.
Compensation of Directors
No director who is an employee of the Company is compensated for service as
a member of the Board of Directors or for service on any committee of the Board
of Directors. Compensation for non-employee directors (other than committee
chairpersons) consists of a monthly retainer of $1,000. Compensation for non-
employee chairpersons of committees consists of an annual retainer of $3,000.
Compensation for all non-employee directors also consists of a $500 fee for each
Board meeting and a $250 fee for each Committee meeting attended. Directors are
reimbursed for travel and out-of-pocket expenses incurred on behalf of the
Company.
6
Quorum; Vote Required
Directors will be elected by a plurality of the votes cast. Only votes cast
for a nominee will be counted, except that each properly executed unrevoked
proxy will be voted for the three management nominees for the Board of Directors
in the absence of instructions to the contrary. Abstentions, broker non-votes
and instructions on a proxy to withhold authority to vote for one or more of
such nominees will result in the respective nominees receiving fewer votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE-NAMED
NOMINEES.
7
EXECUTIVE COMPENSATION
The following table sets forth certain information with respect to
compensation for a) the Company's Chief Executive Officer, b) the four most
highly compensated executive officers of the Company as of the end of the last
completed fiscal year and, c) up to two additional executive officers who would
have been included in the top four but they were not serving as an executive
officer at year-end. All listed officers had annual compensation in excess of
$100,000 during the fiscal years ended September 30, 2000, 1999 and 1998:
Summary Compensation Table
Long Term
Fiscal Annual Compensation/(1)/ Compensation All Other
-------------------------------
Name and Principal Position Year Salary Incentive/(2)/ Options Compensation/(3)/
--------------------------------------- -------------- ------------ --------------- -------------- -----------------
David C. Collins 2000 $400,000 $794,239 -- $ 7,244
Chairman of the Board of Directors and 1999 $310,000 $223,657 -- $ 6,162
Chief Executive Officer 1998 $310,000 $ 32,001 -- $ 8,289
Eric R. Garen /(4)/ 2000 $325,000 $425,000 -- $ 7,829
President and Director 1999 $310,000 $223,657 -- $ 7,310
1998 $310,000 $ 32,001 -- $ 6,930
Gary R. Wright 2000 $210,000 $204,796 -- $ 8,058
Chief Financial Officer, Secretary, and 1999 $200,000 $ 60,841 -- $ 8,567
Director 1998 $176,000 $ 6,600 -- $ 7,395
Mary C. Adams 2000 $200,000 $158,848 -- $ 7,626
Vice President--Administration and 1999 $188,000 $ 57,895 -- $ 7,743
Investor Relations, Assistant 1998 $168,000 $ 7,403 20,000 $ 7,076
Secretary and Director
James E. Furlan /(5)/ 2000 $255,800 $325,055 -- $10,250
Chief Operating Officer and Director 1999 $145,833 $ 71,856 275,000 $ 3,750
____________
(1) Certain of the Company's executive officers receive personal benefits in
addition to salary and cash bonuses. The aggregate amount of such personal
benefits, however, does not exceed the lesser of $50,000 or 10% of the
total of the annual salary and bonus reported for the named executive
officers.
(2) The basic format for the incentive compensation has been in place for
several years. The increases in fiscal 2000 were due to the significant
improvement in the Company's performance as compared to fiscal 1999 and
1998.
(3) These amounts represent contributions made by the Company to a defined
contribution plan.
(4) For fiscal 2000, Mr. Garen voluntarily limited the amount of incentive
compensation which would have otherwise been payable under his compensation
plan to $425,000.
(5) Mr. Furlan joined the Company in February 1999.
Stock Option Plans
1995 Stock Option Plan
- ----------------------
In September 1995, the Company adopted the 1995 Stock Option Plan (the
"1995 Plan"), which provides for the issuance of incentive stock options within
the meaning of Section 422 of the Code and non-qualified stock options to
purchase an aggregate of up to 2,250,000 shares of the Common Stock of the
Company. The 1995 Plan permits the grant of options to officers, employees and
directors of the Company.
8
1999 Stock Option Plan
- ----------------------
In March 1999, the Company adopted the 1999 Stock Option Plan (the "1999
Plan" and together with the 1995 Plan, the "Stock Option Plans"), which provides
for the issuance of incentive stock options within the meaning of Section 422 of
the Code and non-qualified stock options to purchase an aggregate of up to
1,500,000 shares of the Common Stock of the Company. The 1999 Plan permits the
grant of options to officers, employees and directors of the Company.
Administration of the Stock Option Plans
- ----------------------------------------
The Stock Option Plans are administered by a committee of the Board of
Directors (the "Options Committee") composed of Dr. Collins and Mr. Garen, who
are not eligible to participate in the Stock Option Plans. Each option is
evidenced by written agreement in a form approved by the Options Committee. No
options granted under either of the Stock Option Plans are transferable by the
optionee other than by will or by the laws of descent and distribution, and each
option is exercisable, during the lifetime of the optionee, only by the
optionee.
Under the Stock Option Plans, the exercise price of an incentive stock
option must be at least equal to 100% of the fair market value of the Common
Stock on the date of grant (110% of the fair market value in the case of options
granted to employees who hold more than ten percent of the voting power of
Company's capital stock on the date of grant). The exercise price of a non-
qualified stock option must be not less than 75% of the fair market value of the
Common Stock on the date of grant. For both incentive stock options and non-
qualified stock options, the exercise price must not be less than the par value
of a share of the Common Stock on the date of grant. The term of an incentive or
non-qualified stock option is not to exceed ten years (five years in the case of
an incentive stock option granted to a ten percent holder). The Options
Committee has the discretion to determine the vesting schedule and the period
required for full exercisability of stock options; however, in no event can the
Options Committee shorten such period to less than six months. Upon exercise of
any option granted under either of the Stock Option Plans, the exercise price
may be paid in cash, and/or such other form of payment as may be permitted under
the applicable option agreement, including, without limitation, previously owned
shares of Common Stock.
Option Grants During Fiscal 2000
- --------------------------------
The Company granted approximately 448,000 options during fiscal 2000. No
options were granted during fiscal 2000 to the executive officers named above.
Aggregated Option Exercises in Fiscal 2000 and Fiscal Year-End Option Values
- ----------------------------------------------------------------------------
No options were exercised by the executive officers of the Company during
fiscal 2000. The following table presents the number and value of exercisable
and unexercisable options held by the executive officers named above, as of
September 30, 2000:
Number of Securities
Underlying Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year-End Year-End
-----------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Name
- -----------------------
David C. Collins/(1)/ -- -- $ -- $ --
Eric R. Garen/(1)/ -- -- -- --
Gary R. Wright 6,750 2,250 154,969 51,656
Mary C. Adams 19,750 13,250 455,094 312,531
James E. Furlan 33,333 241,667 1,366,653 9,908,347
___________________
(1) Not eligible for option grants.
9
Other Employee Benefit Plans
The Company has adopted the Learning Tree International 401(k) Plan (the
"401(k) Plan"), which is intended to qualify under Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Code"). Under Section 401(k) of
the Code, contributions by employees or by the Company to the 401(k) Plan, and
income earned on plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and contributions by the Company will be
deductible by the Company when made.
All employees of the Company and its U.S. subsidiary who have attained 18
years of age and have met the plan's service requirements are eligible to
participate in the 401(k) Plan. Each eligible employee may contribute to the
401(k) Plan, through payroll deductions, up to 15% of his or her salary, subject
to statutory limitations. For fiscal 1998 through 2000, for each $1.00 invested
by an employee, the Company contributed $0.75 up to four and one-half percent of
such employee's salary. The 401(k) Plan permits, but does not require,
additional contributions to the 401(k) Plan by the Company.
Employment Agreements
Pursuant to an employment agreement dated as of October 1, 1995 (the
"Collins Agreement"), David C. Collins is employed as Chairman of the Board and
Chief Executive Officer of the Company. Pursuant to the Collins Agreement, Dr.
Collins received an annual base salary and additional incentive compensation
based upon the achievement of certain performance targets. In addition, Dr.
Collins is entitled to reimbursement of reasonable travel and business
entertainment expenses authorized by the Company, as well as certain fringe
benefits. In the event of the termination of Dr. Collins' employment with the
Company, Dr. Collins has agreed, for a period of one year after the termination,
not to offer any service or product in competition with the Company, whether
directly or indirectly, in any area served by the Company at the date of
termination. On September 30, 1999, the Collins Agreement was renewed through
September 30, 2002.
Pursuant to an employment agreement dated as of October 1, 1995 (the "Garen
Agreement"), Eric R. Garen is employed as President of the Company. Pursuant to
the Garen Agreement, Mr. Garen received an annual base salary and additional
incentive compensation based upon the achievement of certain performance
targets. In addition, Mr. Garen is entitled to reimbursement of reasonable
travel and business entertainment expenses authorized by the Company, as well as
certain fringe benefits. In the event of the termination of Mr. Garen's
employment with the Company, Mr. Garen has agreed, for a period of one year
after the termination, not to offer any service or product in competition with
the Company, whether directly or indirectly, in any area served by the Company
at the date of termination. On September 25, 2000, the Garen Agreement was
renewed through September 30, 2001.
Pursuant to an employment agreement dated as of January 8, 1990, as amended
(the "Wright Agreement"), Gary R. Wright is employed as Chief Financial Officer
of the Company. Pursuant to the Wright Agreement, Mr. Wright received an
annual base salary, as well as incentive compensation. Upon termination of
employment by the Company, Mr. Wright will receive severance compensation equal
to three months' base salary plus one month's base salary per year of employment
subsequent to January 16, 1995, not to exceed eight months' base salary in the
aggregate. In addition, Mr. Wright has agreed, for a period of two years
following the termination of the Wright Agreement, not to (i) solicit any of the
Company's customers with whom he did business or was acquainted during the term
of the Wright Agreement and (ii) disclose any information pertaining to the
Company's customers or the contents of any mailing list prepared or used by the
Company during or prior to the term of the Wright Agreement. The Wright
Agreement is terminable by either party at any time.
Pursuant to an employment agreement dated as of February 9, 1978, as
amended (the "Adams Agreement"), Mary C. Adams is employed as Vice President
Administration and Investor Relations of the Company. Pursuant to the Adams
Agreement, Ms. Adams received an annual base salary, as well as incentive
compensation. Upon termination of employment by the Company, Ms. Adams will
receive severance compensation equal to three months' base salary plus one
month's base salary per year of employment subsequent to October 1, 1993, not to
exceed eight months' base salary in the aggregate. In addition, Ms. Adams has
agreed, for a period of two years following the termination of the Adams
Agreement, not to (i) solicit any of the Company's customers with whom she did
business or was acquainted during the term of the Adams Agreement and (ii)
disclose any information pertaining to the Company's customers or the
contents of any mailing list prepared or used by the Company during or prior to
the term of the Adams Agreement. The Adams Agreement is terminable by either
party at any time.
10
Pursuant to an employment agreement dated as of February 25, 1999, (the
"Furlan Agreement"), James E. Furlan is employed as Chief Operating Officer of
the Company for a period of three years. Pursuant to the Furlan Agreement, Mr.
Furlan received an annual base salary, as well as incentive compensation. If the
Company terminates his employment during the term of the Furlan Agreement,
without Good Reason, Mr. Furlan will receive severance compensation. The
severance compensation will be equal to one month's base salary plus $8,333 for
each month remaining in the term of the Furlan Agreement, not to exceed twelve
months nor be less than six months in the aggregate. In addition, Mr. Furlan
has agreed, for a period of two years following the termination of the Furlan
Agreement, not to (i) solicit any of the Company's customers with whom he did
business or was acquainted during the term of the Furlan Agreement and (ii)
disclose any information pertaining to the Company's customers or the contents
of any mailing list prepared or used by the Company during or prior to the term
of the Furlan Agreement. The Furlan Agreement is subject to extension upon
mutual agreement with the Company and is terminable by either party at any time.
Stockholders Agreement
Dr. Collins and Mr. Garen have entered into a Stockholders Agreement dated
as of October 1, 1995 and amended as of October 23, 1995 (the "Stockholders
Agreement"). The Stockholders Agreement provides that (i) the non-transferring
stockholder shall have a right of first refusal with respect to any transfer
that is not made to certain affiliates or pursuant to either an underwritten
public offering or Rule 144 of the Securities Act (a "Restricted Transfer"); and
(ii) in addition to the foregoing restriction, no Restricted Transfer to any
person or group involving more than five percent of the then outstanding Common
Stock may be effected without the prior consent of the non-transferring
stockholder.
CERTAIN TRANSACTIONS
In September 2000, Dr. David Collins, the Company's Chief Executive
Officer, Eric Garen, the Company's President, and certain of their related
entities, sold an aggregate of 3,000,000 shares of Common Stock of the Company.
In connection with the transaction, the Company made standard representations
and warranties, and agreed to certain covenants (including the filing of a
registration statement on Form S-3) which are typical in transactions of this
type. As part of the transaction, the selling shareholders have agreed to
reimburse the Company for all costs incurred by it in connection with the
transaction or registration statement and to indemnify the Company against any
claims based on or related to the transaction or the registration statement.
During fiscal 2000, the Company paid $182,000 for legal services performed
by Guth|Christopher LLP, a law firm in which Mr. Guth is a partner. During
fiscal 2000, the Company paid $161,000 for financial consulting services to M.
Kane & Company, Inc. Dr. Kane is the president of M. Kane & Company, Inc.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Dr. Collins, who serves as Chairman of the Board and Chief Executive
Officer of the Company, is a member of the Compensation Committee.
11
REPORT OF THE COMPENSATION COMMITTEE
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), which is composed of the Company's Chairman and Chief Executive
Officer and two independent outside directors, is responsible for overseeing
and, as appropriate, making recommendations to the Board regarding, the annual
salaries and other compensation of the officers of the Company, providing
assistance and recommendations with respect to the compensation policies and
practices of the Company and assisting with the administration of the Company's
compensation plans. Stock option grants are made by the Options Committee, but
are considered by the Compensation Committee in its compensation review.
Compensation Policy for Executive Officers
- ------------------------------------------
In order to attract and retain well-qualified executives, which the
Compensation Committee believes is crucial to the Company's success, the
Compensation Committee's general approach to compensating executives is to pay
cash salaries which are commensurate with the executives' experience and
expertise and, where relevant, are comparable with the salaries paid to
executives in competitive businesses. Consequently, except as described below
as to Dr. Collins (and except in the case of Eric Garen, the Company's
President, whose salary is determined under an employment contract identical to
Dr. Collins' contract), base salaries for the Company's executives have been
determined as part of the total compensation package by reference to such
factors as salary history, competitive factors in the market, and relative
merit. The Company has not employed any formal process for evaluating its base
salaries, believing that the benefits would not be justified by the costs.
Fiscal 2000 Salary and Incentive Compensation of Chief Executive Officer and
- ----------------------------------------------------------------------------
Other Officers
- --------------
In the 2000 fiscal year, Dr. David Collins, the Company's Chief Executive
Officer and Chairman of the Board of the Directors, received compensation under
the terms of an Employment Agreement between the Company and Dr. Collins dated
as of October 1, 1995 ("Collins Agreement"). The Collins Agreement provides
that Dr. Collins shall receive a base salary of at least $300,000 and also
entitles Dr. Collins to participate in an incentive plan each year, whereby he
may receive an "on-target" incentive payment of at least $155,000 if certain
specified performance criteria are met. As contemplated by the Collins
Agreement, Dr. Collins received a base salary of $400,000, and the "on-target"
incentive payment was set in fiscal 2000 at $250,000. The Compensation
Committee evaluated the base salary and the "on-target" incentive payment and
concurred, without the participation of Dr. Collins, in the formula for the
incentive payment. The actual incentive compensation earned by Dr. Collins was
$794,239. These amounts reflect the terms of the Collins Agreement.
The basic format for the incentive compensation of Dr. Collins and other
line executives has been in place for several years. The Regular Incentive pays
a specified portion of the participant's salary based on the results for the
year in three areas: (1) the "net income component" (weighted 60%), which
provides a portion of the Regular Incentive based on the Company achieving a
specified operating income (as defined by the plan), (2) the "revenue growth
component" (weighted 25%), which provides a portion of the Regular Incentive
based upon the Company achieving a specified growth in revenues over the prior
year (as defined by the plan) and (3) the "quality component" (weighted 15%),
which provides a portion of the Regular Incentive based upon the average rating
of the Company's courses based upon reviews completed by course attendees (the
target rating being based upon a desired improvement over the prior year's
average rating). An executive can earn in excess of the targeted amount for any
of these components if the applicable performance factor exceeds the budgeted or
targeted level or no Regular Incentive if certain minimum standards are not met.
Further, if the Company does not achieve 100% of the net income target, the
revenue growth component which would have otherwise been payable will be reduced
by multiplying this amount by the percentage of the operating income target
actually achieved.
For officers whose responsibilities are limited to particular business
units of the Company, the criteria used relate directly to the financial and
quality parameters attained by the units for which they are responsible. Non-
line officers generally do not have any portion of their bonus determined by a
"quality component", as they have no, or very attenuated, influence over course
quality. At or around the beginning of each fiscal year, the budget for each
area, and the targeted range of salary to be paid, are set for each individual.
In addition, adjustments may be made in the case of any individual as warranted.
12
The Compensation Committee has reviewed this plan and believes that it
adequately focuses the officers of the Company on the Company's growth,
profitability, and quality assurance. The Compensation Committee has reviewed
the basic structure of the fiscal 2000 plan and used it as the basis for the
2001 compensation plan.
Equity Incentives
- -----------------
The Compensation Committee also believes that equity ownership by key
executives provides a valuable incentive and further aligns executives' and
stockholders' interests. The Company previously adopted the Stock Option Plans,
pursuant to which the Company may grant stock options to executives (as well as
other employees and directors) to purchase an aggregate of up to 3,750,000
shares of Common Stock. The Company granted no options to any of the above
named executives in fiscal 2000. The Stock Option Plans are administered by the
Stock Option Committee, which consists of Messrs. Collins and Garen.
Messrs. Collins and Garen are not eligible to receive grants under the 1995
Option Plan or the 1999 Option Plan. The Compensation Committee believes that
grants of options for additional equity would not have a measurable effect on
the incentives provided to these officers in light of their significant current
holdings of Common Stock, 19.8% and 17.0% respectively, of the total shares
outstanding as of January 19, 2001. The Compensation Committee did not consider
alternatives for equity based compensation.
Deductibility of Executive Compensation
- ---------------------------------------
Section 162(m) of the Internal Revenue Code, as amended, could under
certain circumstances result in limits on the Company's ability to deduct
compensation of $1,000,000 paid to certain executive officers. Exceptions to
this deductibility limit may be made for various forms of performance-based
compensation. Based on the fiscal 2000 compensation levels and the terms of the
incentive compensation plans, no such limits on the deductibility of
compensation applied for any officer of the Company. While the Company has not
adopted a policy specifically prohibiting compensation at a level that would
limit deductions, the Compensation Committee does not currently anticipate any
restrictions on the future deductibility of compensation for the Company's
officers. However, the Compensation Committee will not necessarily limit
executive compensation to that deductible under Section 162(m) of the Code.
January 10, 2001 COMPENSATION COMMITTEE
Michael W. Kane
W. Mathew Juechter
David C. Collins
13
REPORT OF THE AUDIT COMMITTEE
The material in this report shall not be deemed to be incorporated by reference
by any general statement incorporating by reference this Proxy Statement into
any filing under the Securities Act, or under the Exchange Act, except to the
extent that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed soliciting material or filed under such acts.
The Audit Committee has reviewed and discussed the audited financial
statements with management. In addition, the Audit Committee has discussed with
the independent auditors the matters required to be discussed by Statements on
Auditing Standards No. 61, "Communication With Audit Committees". The Audit
Committee has also received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees", and has discussed with the
independent accountants the independent accountants' independence.
Based upon the review and discussions referred to in the foregoing
paragraph, the Audit Committee 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 last fiscal year for filing with the Commission.
January 23, 2001 AUDIT COMMITTEE
Michael W. Kane
W. Mathew Juechter
14
COMPANY STOCK PERFORMANCE
The stock price performance graph below is required by the SEC and shall
not be deemed to be incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act, or under the Exchange Act, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed soliciting material or filed under such acts.
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from the date of the Company's initial public
offering (December 6, 1995) to September 30, 2000 with the cumulative total
return on the NASDAQ Stock Market Composite Index and an appropriate "peer
group" index (assuming the investment of $100 in the Company's Common Stock and
in each of the indexes on the date of the Company's initial public offering, and
reinvestment of all dividends).
[Learning Tree International, Inc.]
Stock Performance Graph
[GRAPH APPEARS HERE]
Nasdaq Stock Learning Tree
Exchange International,
Composite Peer Group Inc. Common
Index Index Stock
------------ ---------- --------------
12/06/95 100 100 100
12/31/95 99 107 130
03/31/96 104 149 165
06/30/96 112 180 256
09/30/96 116 185 308
12/31/96 122 209 369
03/31/97 115 179 350
06/30/97 136 238 555
09/30/97 159 273 358
12/31/97 148 297 361
03/31/98 173 320 277
06/30/98 178 354 252
09/30/98 160 257 160
12/31/98 207 309 113
03/31/99 232 286 125
06/30/99 253 245 137
09/30/99 259 221 207
12/31/99 383 222 350
03/31/00 431 316 444
06/30/00 374 306 766
09/30/00 346 401 595
For the fiscal years ended September 30,
----------------------------------------
12/06/95 1996 1997 1998 1999 2000
-------- ---- ---- ---- ---- ----
Learning Tree International, Inc. Common Stock 100 308 358 160 207 595
Peer Group Index/(1)/ 100 185 273 257 221 401
NASDAQ Stock Exchange Composite Index 100 116 159 160 259 346
===============================================================================
(1) Peer Group index includes: Apollo Group, Inc.; SmartForce PLC; Computer
Learning Centers, Inc.; DeVry, Inc.; ITT Educational Services, Inc. The
Peer Group Index has been restated to exclude Wave Technologies
International, Inc. since it was acquired during fiscal 2000 and is no
longer publicly traded. The returns of each issuer within the Peer Group
Index have been weighted according to such issuer's respective stock market
capitalization at the beginning of the period presented.
15
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission (the "SEC") initial reports of beneficial ownership and reports of
changes in beneficial ownership of the Company's Common Stock. Directors,
executive officers and greater-than-ten-percent stockholders are required by the
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of copies of reports filed with the SEC and
submitted to the Company and on written representations by certain directors and
executive officers of the Company, the Company believes that all of the
Company's directors and executive officers filed all required reports on a
timely basis during the past fiscal year.
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended September 30,
2000 were Arthur Andersen LLP. The Board of Directors of the Company has not
yet considered the selection of an auditor for the current fiscal year. It is
anticipated that the Board will consider the selection and make a decision by
August 1, 2001. A representative of Arthur Andersen LLP will be available at
the Annual Meeting to respond to appropriate questions or make any other
statements such representative deems appropriate.
STOCKHOLDERS' PROPOSALS FOR 2001 ANNUAL MEETING
Pursuant to the Rule 14a-8 of the Securities and Exchange Commission
proposals by eligible stockholders, which are intended to be presented at the
Company's Annual Meeting of Stockholders in 2002, must be received by the
Company by October 3, 2001 in order to be considered for inclusion in the
Company's proxy materials.
OTHER MATTERS
The Board of Directors is not aware of any matter to be acted upon at the
Annual Meeting other than described in this Proxy Statement. Unless otherwise
directed, all shares represented by the persons named in the accompanying proxy
will be voted in favor of the proposals described in this Proxy Statement. If
any other matter properly comes before the meeting, however, the proxy holders
will vote thereon in accordance with their best judgments.
EXPENSES
The entire cost of soliciting proxies will be borne by the Company.
Solicitation may be made by mail. The Company will request brokerage houses,
nominees, custodians, fiduciaries and other like parties to forward soliciting
material to the beneficial owners of the Company's Common Stock held of record
by them and will reimburse such persons for their reasonable charges and
expenses in connection therewith.
16
ANNUAL REPORT TO SHAREHOLDERS
The Company's Annual Report for the year ended September 30, 2000 is being
mailed to Shareholders along with this Proxy Statement. Item 7 - "Management's
Discussion and Analysis of Financial Condition"; Item 8 - "Financial Statements
and Supplementary Data"; and Item 9 - "Changes In and Disagreements With
Accountants on Accounting and Financial Disclosures of the Annual Report" are
incorporated by reference herein. The Annual Report is not to be considered
part of the soliciting material except as incorporated by reference herein.
By Order of the Board of Directors,
/s/ DAVID C. COLLINS
David C. Collins, Ph.D.
Chairman of the Board and Chief Executive Officer
January 24, 2001
17
Appendix A
Learning Tree International, Inc.
Audit Committee Charter
August 9, 2000
Statement of Policy
- -------------------
The Audit Committee of the Board of Directors shall assist the directors in
fulfilling their financial oversight responsibilities. Its primary function
shall be to review the financial reporting process, the system of internal
controls, the audit process and the Company's process for monitoring compliance
with laws and regulations.
To assure the appropriate division of labor in corporate governance, the Audit
Committee must draw a line between its oversight role and management's role in
managing the affairs of the Company. The Audit Committee is intended to
oversee, but not replace, management's own efforts. Accordingly, the Audit
Committee will initiate reviews of the Company's financial reporting processes
and systems, but it is the responsibility of management and the outside auditors
to bring to the attention of the Audit Committee any failures, irregularities,
or other problems within those processes and systems that may arise from time to
time.
In performing its duties, the Audit Committee will seek to maintain free and
open communication between the directors, the independent auditors, the internal
auditors and the financial management of the Company. The Audit Committee is
intended to provide an independent and, if necessary, confidential forum in
which interested parties can freely discuss information and concerns.
Organization and Meetings
- -------------------------
The Audit Committee shall be comprised of at least three directors. If at any
time there are fewer than three directors, such lesser number will constitute
the Audit Committee until the Board of Directors appoints a successor or
successors. The members of the Audit Committee shall designate a Chair by
majority vote of the full Committee membership.
Each director shall be an independent director, and free from any relationship
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Audit committee. The term
"independent" shall have the meaning contained in Rule 4200(a)(13) of the NASD
Manual and Notices to Members. For purposes of convenience only, a copy of the
rule as it exists on the date hereof is attached to this document.
All Audit Committee members will have the ability to read and understand
financial statements and at least one member will have or have had prior
experience in accounting or related financial management.
The Audit Committee will meet at least two times a year, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet at least annually with management and the independent
auditors in separate sessions to discuss any matters that the Audit Committee or
either of these groups believe should be discussed privately.
18
Responsibilities
- ----------------
In carrying out its responsibilities, the Audit Committee believes its policies
and procedures should remain flexible in order to be able to best react to
changing conditions, and to help ensure that the corporate accounting and
reporting practices of the Company meet or exceed all applicable legal and
business standards.
In carrying out these responsibilities, the Audit Committee will:
. Obtain the approval of the full Board of Directors of this Charter, and
review/reassess this charter at least annually or as conditions dictate.
. Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the Company and its divisions
and subsidiaries, considering independence and effectiveness and approve
the fees and other compensation to be paid to the independent accountants.
. On an annual basis, obtain from the independent auditors a written
communication delineating all their relationships and professional
services, as required by Independence Standards Board Standard No. 1,
Independence Discussion with Audit Committees. In addition, review with the
independent auditors the nature and scope of any disclosed relationships or
professional services and take, or recommend that the Board of Directors
take, appropriate action to ensure the continuing independence of the
auditors.
. Have a clear understanding with the independent auditors that they are
ultimately accountable to the Board of Directors and the Audit Committee,
as the shareholders' representatives, and that the Board of Directors and
the Audit Committee have the ultimate authority in deciding to engage,
evaluate and, if appropriate, terminate their services.
. Meet with the independent auditors and financial management of the Company
to review the scope of the proposed audit, including the timing of the
audit, the procedures to be utilized and the adequacy of the independent
auditors' compensation. At the conclusion of the audit process, review
findings with the independent auditors.
. Review the performance of the Company's financial and accounting personnel
with the independent auditors, as well as the adequacy and effectiveness of
the accounting and financial controls of the Company. Elicit any
recommendations for the improvement of such internal controls or particular
areas where new or more detailed controls or procedures are desirable.
. Review communications received by the Company from regulators and other
legal and regulatory matters that may have a material effect on the
financial statements or on the Company's compliance policies, as provided
by Management.
. Inquire of management and the independent auditors about significant areas
of risk or exposure and assess the steps management has taken to minimize
such risks.
. Review with financial management and the independent auditors (i) the
financial statements contained in the annual report to shareholders to
determine that the independent auditors are satisfied with the disclosure
and content of the financial statements to be presented to the
shareholders; (ii) significant financial reporting issues and practices,
including changes in or adoptions of accounting principles and disclosure
practices, review significant period-end adjustments and any other matters
required to be communicated to the Audit Committee by the auditors; and
(iii) the quality, not just acceptability, of accounting principles and the
clarity of the financial disclosure practices used or proposed to be used
and particularly, the degree of aggressiveness or conservatism of the
Company's accounting principles and underlying estimates and other
significant decisions made in preparing the financial statements.
. Management and the independent auditors will review with the Audit
Committee Chair the interim financial reports before they are filed with
the Securities and Exchange Commission or other regulators.
19
. Provide an opportunity, at least annually, for the independent auditors and
management to meet separately with the Audit Committee without members of
the other group present. Among the items to be discussed in these meetings
are the independent auditors' evaluation of the Company's financial
accounting and auditing personnel and the cooperation that the independent
auditors received during the course of the audit.
. Review accounting and financial human resources and succession planning
within the Company.
. Report the results of the annual audit to the Board of Directors and, if
requested by the Board, invite the independent auditors to attend the full
Board of Directors' meeting to assist in reporting the results of the
annual audit or to answer the directors' questions.
. Submit the minutes of all meetings of the Audit Committee to, or discuss
the matters discussed at each committee meeting with, the Board of
Directors.
. Investigate any matter brought to its attention within the scope of its
duties with the power to retain outside counsel, accountants, or others for
this purpose to assist it in its investigation.
. Confirm in writing to the NASD annually or with respect to any changes on
the Audit Committee regarding independence, financial capabilities and the
annual review and reassessment of the Audit Committee Charter.
. Disclose in the Company's Proxy Statement the Audit Committee Charter and
affirmation as to the Committee satisfying their responsibilities during
the year in compliance with the Charter. The Charter will be included in
the Proxy Statement every three years or when significant amendments are
made to it.
. Consider such other matters in relation to the financial affairs of the
Company and its accounts, and in relation to the external audit of the
Company, as the Audit Committee may, in its discretion, determine to be
advisable.
Approved by the Board of Directors and the Audit Committee as of August 9, 2000.
/s/ Michael W. Kane /s/ David C. Collins
- ---------------------------- ----------------------------------
Chairman, Audit Committee Chairman of the Board of Directors
20
LEARNING TREE INTERNATIONAL, INC.
Proxy for Annual Meeting of Stockholders to be held March 2, 2001
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Stockholders of Learning Tree International, Inc. ("Learning Tree") dated
January 24, 2001 and the accompanying Proxy Statement relating to the above-
referenced Annual meeting, and hereby appoints David C. Collins or Eric R.
Garen, with full power of substitution in each, as attorneys and proxies of the
undersigned.
Said proxies are hereby given authority to vote all shares of Common Stock,
$.0001 par value, of Learning Tree which the undersigned may be entitled to vote
at the Annual Meeting of Stockholders of Learning Tree, to be held at 10:00
a.m., local time, on Friday, March 2, 2001, at the Sheraton Gateway Hotel, 6101
West Century Boulevard, Los Angeles, California 90045, and at any and all
adjournments or postponements thereof (the "Annual Meeting") on behalf of the
undersigned on the matters set forth on the reverse side hereof and in the
manner designated thereon.
The Board of Directors of Learning Tree solicits this proxy, and when
properly executed, the shares represented hereby will be voted in accordance
with the instructions in this proxy. If no direction is made, this proxy will
be voted FOR the election of all nominees named as Directors of Learning Tree on
the reverse side hereof.
PLEASE DATE AND SIGN ON THE REVERSE SIDE AND RETURN THIS PROXY CARD PROMPTLY
IN THE ENCLOSED ENVELOPE.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACHAND RETURN THIS PORTION ONLY.
LEARNING TREE INTERNATIONAL
Vote on Directors
Election of Three (3) Class III Directors: For Withhold For All To Withhold Authority to vote for any
All All Except: nominee, mark "For All Except" and write
the nominee's number on the line below:
________________________________________________
NOMINEES: 01) David C. Collins
02) Eric R. Garen
03) Gary R. Wright
Note: Please date and sign exactly as your name(s) appear on this proxy card.
If shares are registered in more than one name, all such persons should sign.
A corporation should sign in its full corporate name by a duly authorized
officer, stating his title. When signing as attorney, executor, administrator,
trustee or guardian, please sign in your official capacity and give your full
title as such. If a partnership, please sign in the partnership name by an
authorized person.
In their discretion, the proxies are authorized to vote "FOR" the election of
such substitute nominee(s) for directors as the Board of Directors of the
Company shall select, and upon other such matters as may come before the Annual
Meeting.
___________________________________ ________________________________________
Signature (PLEASE SIGN) Date Signature (Joint Owners) Date