1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
UNIFAB International, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
2
[UNIFAB INTERNATIONAL, INC. LOGO]
UNIFAB INTERNATIONAL, INC.
5007 PORT ROAD
NEW IBERIA, LOUISIANA 70562
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 2001
---------------------
DATE: Friday, June 1, 2001
TIME: 10:00 A.M. C.D.T.
PLACE: 5007 Port Road, New Iberia, Louisiana
PURPOSE: - To elect one director;
- To ratify the appointment of Ernst & Young LLP as our
independent auditors to audit our financial statements
for 2001; and
- To transact such other business as may properly come
before the annual meeting.
RECORD DATE: Close of business on April 2, 2001
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. You may revoke your proxy at any time before it is voted.
We appreciate your cooperation.
By Order of the Board of Directors
Peter J. Roman
Secretary
New Iberia, Louisiana
May 7, 2001
3
UNIFAB INTERNATIONAL, INC.
5007 PORT ROAD
NEW IBERIA, LOUISIANA 70562
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 1, 2001
We will begin mailing this proxy statement to our shareholders on or about
May 7, 2001.
We are furnishing this proxy statement to our shareholders in connection
with the solicitation of proxies on behalf of our board of directors for use at
our 2001 annual meeting of shareholders to be held on Friday, June 1, 2001, at
10:00 A.M. C.D.T. at our offices, 5007 Port Road, New Iberia, Louisiana.
Our annual meeting is being held this year approximately three months ahead
of the schedule we have customarily followed in past years because we have
elected to change our fiscal year from one that ends on March 31 to one that
ends on December 31. This is discussed further on page 3, below.
WHO CAN VOTE
If you held any of our common stock at the close of business on April 2,
2001, then you are entitled to notice of and to vote at our 2001 annual meeting.
On that date 8,132,283 shares of our common stock were outstanding.
QUORUM
The presence of a majority of our common stock entitled to vote, present in
person or represented by proxy, is necessary to constitute a quorum. For
purposes of determining a quorum, we will count as present shares of common
stock present at the meeting that abstain from voting or that are the subject of
broker non-votes. A broker non-vote occurs when a broker, or the broker's
nominee, who holds common stock for a beneficial owner does not vote on a
particular matter because the broker or nominee does not have discretionary
voting power with respect to that matter and has not received voting
instructions from the beneficial owner.
VOTING RIGHTS
Each share of our common stock that you hold entitles you to one vote on
all matters that come before the annual meeting. One or more inspectors of
election will count votes cast at the annual meeting. One director will be
elected by a plurality of the shares voted (that is, the nominee receiving the
largest number of votes will be elected). All other matters voted on will be
decided by a majority of the votes actually cast, except as otherwise provided
by statute, our articles of incorporation and our bylaws.
Abstentions and broker non-votes are not considered as cast in the director
election or as to any matter expected to come before the annual meeting and will
have no effect on the outcome.
HOW YOUR PROXY WILL BE VOTED
Our board of directors is soliciting a proxy in the enclosed form to
provide you with an opportunity to vote on all matters scheduled to come before
the annual meeting, whether or not you attend in person.
Granting Your Proxy
If you properly execute and return a proxy in the enclosed form, your stock
will be voted as you specify. If you make no specifications on your proxy, your
stock will be voted in favor of the proposed director nominee and for the
ratification of the appointment of auditors.
4
We expect no matter to be presented for action at the 2001 annual meeting
other than the items described in this proxy statement. The enclosed proxy will,
however, confer discretionary authority with respect to any other matter that
may properly come before the meeting. The persons named in the enclosed proxy
intend to vote in accordance with their judgment on any matters that may
properly come before the annual meeting.
Revoking Your Proxy
If you submit a proxy, you may subsequently revoke it or submit a revised
proxy at any time before your proxy is voted. You may also attend the annual
meeting in person and vote by ballot, which would cancel any proxy that you
previously submitted.
PROXY SOLICITATION
We will pay all expenses of soliciting proxies for the 2001 annual meeting.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone, telefax and telegraph. We will request banks, brokerage
houses and other institutions, nominees and fiduciaries to forward solicitation
materials to the beneficial owners of our common stock and, upon their request,
we will reimburse such persons for reasonable out-of-pocket expenses incurred in
doing so.
SHAREHOLDER PROPOSALS
If you want us to consider including a proposal in next year's proxy
statement, you must deliver it in writing to Peter J. Roman, Secretary, UNIFAB
International, Inc., 5007 Port Road, New Iberia, Louisiana 70562 by January 7,
2002. Proxies solicited on behalf of our board of directors for next year's
annual meeting will confer discretionary authority to vote with respect to any
matter properly submitted by a shareholder for action at next year's annual
meeting if we do not receive notice of the matter on or before March 25, 2002.
ELECTION OF DIRECTOR
Our articles of incorporation and by-laws provide for a board of directors
of four natural persons, divided into three classes. The members of each class
serve for three years, with one class to be elected at each annual meeting. The
term of office of the Class I director will expire at the 2001 annual meeting.
Our board of directors has nominated the Class I director named below to
serve for an additional three-year term expiring in 2004 and recommends that
shareholders vote FOR the re-election of the nominee. In the absence of contrary
instructions, the proxy holders will vote for the election of the nominee listed
below. In the unanticipated event that the nominee is unavailable as a candidate
for director, the persons named in the accompanying proxy will vote for a
substitute candidate nominated by the board of directors.
In recent years our board of directors has consisted of either five or six
members, but this number has been reduced by the resignation in March, 2001 of
one of our directors. Our board of directors intends, after the 2001 annual
meeting, to add one or more new members to the current board at such time as
qualified candidates for board membership have been identified and selected.
2
5
The following table sets forth as of December 31, 2000, for the nominee and
each of our other directors, his age, position, and principal occupation and
employment during the past five years, his directorships in other public
corporations, and the year that he was first elected a director of our company
or its predecessor.
PRINCIPAL OCCUPATION AND DIRECTORSHIPS IN DIRECTOR
NAME AND AGE OTHER PUBLIC CORPORATIONS SINCE
- ------------ ----------------------------------------- --------
NOMINEE FOR ELECTIONAS CLASS I DIRECTOR (FOR TERM EXPIRING IN 2004)
Perry Segura, 71......................... Mr. Segura is a director of our company. 1980
Mr. Segura is an architect and real
estate developer. Mr. Segura has served
as Chairman of the Board of Supervisors
of Louisiana State University since 1997
and was its Vice Chairman from 1996 to
1997.
CONTINUING CLASS II DIRECTORS (TERM EXPIRES IN 2002)
Charles E. Broussard, 75................. Mr. Broussard is a director of our 1980
company. Mr. Broussard is also Chairman
of the Board and Chief Executive Officer
of Flying J. Ranch, Inc., a Louisiana
cattle and rice farm.
George C. Yax, 59........................ Mr. Yax is a director of our company. Mr. 1997
Yax was a co-founder of Ceanic
Corporation (formerly, American Oilfield
Divers, Inc.), a provider of subsea
products and services to the offshore oil
and gas industry, and served as its
Chairman of the Board until its sale in
August, 1998.
CONTINUING CLASS III DIRECTOR (TERM EXPIRES IN 2003)
Dailey J. Berard, 71..................... Mr. Berard is the founder of our company. 1980
Mr. Berard serves as our Chairman of the
Board, President and Chief Executive
Officer.
Our board of directors has primary responsibility for directing our
management and affairs. On June 20, 2000, our board of directors elected to
change our fiscal year cycle from one that ends on March 31 to one that ends on
December 31. Our last full fiscal year on the previous cycle was from April 1,
1999 to March 31, 2000 ("fiscal 2000"). The change in our fiscal year cycle
resulted in a nine-month transition period from April 1, 2000 to December 31,
2000 ("transition 2000"). Our next full fiscal year will be from January 1, 2001
to December 31, 2001. During transition 2000, our board of directors held 4
meetings. Each director attended 75% or more of the aggregate number of meetings
of the board of directors and committees of which he was a member held during
transition 2000.
3
6
To provide for effective direction and management of our business, our
board has established an audit committee and a compensation committee. Our board
does not have a nominating committee. The following tables provide you with
information about our audit and compensation committees. None of the members of
these committees is an officer or employee of UNIFAB or any of its subsidiaries.
NUMBER OF
MEETINGS
HELD IN
TRANSITION
AUDIT COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE 2000
- ----------------------- -------------------------- ----------
Perry Segura - Reviews our financial statements and annual audit 3
George C. Yax - Meets with our independent auditors to review our internal
controls and financial management practices
- Exercises general oversight of the integrity and reliability of
our accounting and financial reporting practices and the
effectiveness of our System of internal controls
NUMBER OF
MEETINGS
HELD IN
TRANSITION
COMPENSATION COMMITTEE MEMBERS FUNCTIONS OF THE COMMITTEE 2000
- ------------------------------ -------------------------- ----------
Charles E. Broussard - Analyzes, reviews and makes recommendations to our board 3
George C. Yax concerning compensation programs
- Administers our long-term incentive plan
DIRECTOR COMPENSATION
Each director who is not also an employee of the company receives an annual
fee of $12,000 for his services as a director. We reimburse all directors for
reasonable out-of-pocket expenses incurred in attending board and committee
meetings.
In addition, in each year during which our long-term incentive plan is in
effect and a sufficient number of shares are available under the plan, on the
day of each annual meeting of shareholders, each non-employee director will
receive an option to purchase up to 2,500 shares of common stock at an exercise
price equal to the fair market value of our common stock on such date. The
compensation committee determines the exact number of shares subject to the
option. Each stock option will be fully exercisable on the date of its grant and
will expire ten years from the date of grant, unless the non-employee director
ceases to be a director. In that case, the exercise period will be shortened. In
accordance with this arrangement, on September 14, 2000, we granted each
non-employee director an option to buy 2,500 shares of our common stock at an
exercise price of $11.31, the fair market value of our common stock on that
date.
4
7
STOCK OWNERSHIP
The following table sets forth, as of December 31, 2000, certain
information regarding beneficial ownership of our common stock by (1) each of
our directors, (2) each of our executive officers for whom compensation
information is disclosed under the heading "Executive Compensation" below, and
(3) all of our directors and executive officers as a group. Unless otherwise
indicated, we believe that the shareholders listed below have sole investment
and voting power with respect to their shares based on information furnished to
us by them.
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING COMMON STOCK
- ------------------------ --------------------- -------------------------
Dailey J. Berard.................................... 538,719(2) 6.5
Charles E. Broussard................................ 421,934(3) 5.2
Vincent J. Cuevas................................... 84,712(4) 1.0
Philip J. Patout.................................... 243,259 3.0
Perry Segura........................................ 459,477(5) 5.6
George C. Yax....................................... 20,000 *
All directors and executive officers as a group
(7 persons)....................................... 1,803,642 21.6
- ---------------
* Less than 1%.
(1) Includes shares that could be acquired within sixty days after December 31,
2000, upon the exercise of options granted pursuant to our stock option
plan, as follows: Mr. Berard, 108,333 shares; Mr. Broussard, 10,000 shares;
Mr. Cuevas, 25,000 shares; Mr. Patout, 10,000 shares; Mr. Segura, 10,000
shares; Mr. Yax, 10,000 shares; all directors and executive officers as a
group (7 persons), 207,333 shares.
(2) Includes 15,700 shares owned by Mr. Berard's spouse. Mr. Berard's address is
c/o UNIFAB International, Inc., 5007 Port Road, New Iberia, Louisiana 70562.
(3) Includes 151,900 shares owned by a company controlled by Mr. Broussard,
254,534 shares owned by a limited liability company controlled by Mr.
Broussard and 500 shares owned by his spouse. Mr. Broussard's address is
23604 South Louisiana Highway 82, Kaplan, Louisiana 70548.
(4) Includes 3,000 shares held by the custodian of an individual retirement
account for the benefit of Mr. Cuevas.
(5) Includes 373,591 shares owned by a company controlled by Mr. Segura. Mr.
Segura's address is 712 Darby Lane, New Iberia, Louisiana 70560.
5
8
EXECUTIVE COMPENSATION
The following table provides you with information about the compensation we
paid in transition 2000 (April 1, 2000 to December 31, 2000), fiscal 2000 (April
1, 1999 to March 31, 2000), fiscal 1999 (April 1, 1998 to March 31, 1999), and
fiscal 1998 (April 1, 1997 to March 31, 1998) to our chief executive officer and
our other executive officer whose individual salary and bonus for the calendar
year 2000 exceeded $100,000 in the aggregate (collectively, the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION SECURITIES
FISCAL ------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- --------------------------- ------ -------- -------- ---------- ---------------
Dailey J. Berard...................... 2000* $135,000 $ 0 40,000 $2,700
President and Chief Executive 2000 180,000 0 0 3,600
Officer 1999 180,000 75,600 30,000 3,600
1998 206,681 429,120 65,000 8,276
Vincent J. Cuevas(2).................. 2000* 100,254 0 30,000 2,857
Vice President 2000 130,330 0 0 3,760
1999 83,433 0 15,000 2,498
- ---------------
* Transition 2000 (April 1, 2000 to December 31, 2000).
(1) Comprised of our contributions to our 401(k) Plan and interest, at the prime
rate as quoted by the Chase Manhattan Bank from time to time, earned on
deferred bonus compensation:
INTEREST ON DEFERRED
NAME PERIOD PLAN CONTRIBUTIONS COMPENSATION
- ---- ------ ------------------ --------------------
Dailey J. Berard............................ transition 2000 $ 2,700 $ 0
fiscal 2000 3,600 0
fiscal 1999 3,600 0
fiscal 1998 3,219 5,057
Vincent J. Cuevas........................... transition 2000 2,857 0
fiscal 2000 3,760 0
fiscal 1999 2,498 0
(2) Mr. Cuevas began employment with us in July, 1998.
STOCK OPTION GRANTS
The following table provides you with information about all stock options
that we granted in transition 2000 (April 1, 2000 to December 31, 2000) to each
of the Named Executive Officers. No stock options were granted by us to either
of the Named Executive Officers in fiscal 2000 (April 1, 1999 to March 31,
2000).
OPTION GRANTS IN 2000
GRANT DATE
INDIVIDUAL GRANTS VALUE
--------------------------------------------------------------- ----------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS GRANTED GRANT DATE
OPTIONS TO EMPLOYEES IN EXERCISE OR BASE EXPIRATION PRESENT
NAME GRANTED(#)(1) TRANSITION 2000 PRICE ($/SH) DATE VALUE $(2)
- ---- ------------- --------------- ---------------- ---------- ----------
Dailey J. Berard............ 40,000 9.3% $7.12 08/08/10 $124,800
Vincent J. Cuevas........... 30,000 7.0% 7.12 08/08/10 93,600
- ---------------
(1) One-third of each of the stock options that we granted in transition 2000 to
our Named Executive Officers were exercisable on the grant date, an
additional one-third of those stock options will become
6
9
exercisable on the first anniversary of the grant date, and the remaining
one-third of those stock options will become exercisable on the second
anniversary of the grant date. The stock options will, however, become
immediately exercisable in their entirety if (a) under certain
circumstances, any individual, entity or group acquires beneficial ownership
of more than 30% of our outstanding shares of common stock; (b) under
certain circumstances, the composition of our board of directors is changed;
(c) under certain circumstances, our shareholders approve of a
reorganization, merger or consolidation, or sale or other disposition of all
or substantially all of our assets; or (d) our shareholders approve of our
complete liquidation or dissolution. Our compensation committee also has the
authority to take several actions regarding outstanding stock options upon
the occurrence of any of the events described above, including requiring
that outstanding stock options remain exercisable only for a limited time,
providing for mandatory conversion of outstanding stock options in exchange
for either a cash payment or certain securities, making equitable
adjustments to stock options or providing that outstanding stock options
will become options relating to securities to which a participant would have
been entitled in connection with any of the events described above if the
stock options had been exercised.
(2) We used the Black-Scholes option pricing model to determine the grant date
present value of the stock options that we granted in transition 2000 to our
Named Executive Officers. Under the Black-Scholes option pricing model, the
grant date present value of each stock option referred to in the table was
calculated to be $3.12. We used the following facts and assumptions in
making such calculation: (a) an exercise price of $7.12 for each such stock
option; (b) a fair market value of $7.12 for one share of common stock on
the date of grant; (c) no dividend payments on our common stock; (d) a stock
option term of 10 years; (e) a stock volatility of 74.5%, based on an
analysis of monthly closing stock prices of shares of our common stock
during a 152-week period; and (f) an assumed risk-free interest rate of
6.28%, which is equivalent to the yield on a 2-year treasury note on the
grant date. We applied no other discounts or restrictions related to vesting
or the likelihood of vesting of stock options. We multiplied the resulting
grant date present value of $3.12 for each stock option by the total number
of stock options granted to each of our Named Executive Officers to
determine the total grant date present value of such stock options granted
to each of our Named Executive Officers.
OUTSTANDING STOCK OPTIONS
The following table provides you with information about all outstanding
stock options held by each of the Named Executive Officers as of December 31,
2000. None of our Named Executive Officers exercised stock options in either
fiscal 2000 (April 1, 1999 to March 31, 2000) or transition 2000 (April 1, 2000
to December 31, 2000).
AGGREGATED OPTIONS AS OF DECEMBER 31, 2000
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT 12/31/00(#) AT 12/31/00(1)
------------------------- -------------------------
EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
------------------------- -------------------------
Dailey J. Berard................................. 108,333/26,667 $91,733/$63,467
Vincent J. Cuevas................................ 25,000/20,000 53,800/ 47,600
- ---------------
(1) Based on the difference between the closing sales price of our common stock
of $9.50 on December 29, 2000, as reported by the Nasdaq National Market and
the exercise price of such options.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000 (April 1, 1999 to March 31, 2000) and transition 2000
(April 1, 2000 to December 31, 2000), Messrs. Broussard and Yax served on our
compensation committee. No member of the committee has ever served as an officer
or employee of our company or any of our subsidiaries. In fiscal 2000 and
transition
7
10
2000, none of our executive officers served as a director or member of the
compensation committee of any other entity of whose executive officers served on
our board of directors or on our compensation committee.
CERTAIN TRANSACTIONS
In connection with our acquisitions in July, 1998, of all the capital stock
of Allen Tank, Inc. and LATOKA USA, Inc. by means of mergers of those
corporations into two of our subsidiaries, we granted to William A. Hines, a
shareholder of Allen Tank, Inc. and LATOKA USA, Inc. who subsequently served as
one of our directors from July, 1998 to March, 2001, a one-time limited right to
require us to register the sale of all or a portion of his shares of common
stock under the Securities Act of 1933. Mr. Hines has agreed to pay all the
expenses of such demand registration up to $200,000, and we have agreed to pay
all the expenses, other than underwriting fees, discounts and commissions, in
excess of $200,000. In addition, we granted to each of the Allen Tank, Inc. and
LATOKA USA, Inc. shareholders, including Mr. Hines and Vincent J. Cuevas, who
subsequently became one of our executive officers, a one-time limited right to
include all or a portion of his shares of our common stock in a registration
statement otherwise being filed by us to register the sale of our common stock
under the Securities Act of 1933. On October 26, 2000, we filed a registration
statement under the Securities Act of 1933 to register the sale of our common
stock by certain of our other shareholders, and Mr. Hines elected to include all
his shares of common stock in that registration statement. In accordance with
our agreement, we paid all the expenses of that registration, other than
underwriting fees, discounts and commissions.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Our compensation committee has the authority, among other things, to
review, analyze, and recommend compensation programs to our board of directors
and to administer and grant awards under our employee benefit plans. Two of our
directors, Charles E. Broussard and George C. Yax, comprise the compensation
committee. Neither Mr. Broussard nor Mr. Yax is a present or former officer or
employee of our company.
Our executive compensation consists primarily of (1) salaries, (2) annual
cash incentive bonuses and (3) long-term incentive compensation in the form of
stock options granted under our long-term incentive plan. The annual salary of
Dailey J. Berard, our President and Chief Executive Officer, is set at $180,000
in his employment agreement, which was negotiated between our board of directors
and Mr. Berard. The salaries of our other executive officers are based on their
levels of responsibility and the subjective assessment of their performance.
The amount of the annual bonus, if any, payable to Dailey J. Berard is
determined in accordance with the terms of his employment agreement, which
provides that he will be entitled to receive, as an annual incentive bonus, a
percentage of his annual salary ranging from 50% to 100%, depending on the
percentage net income return on our capital. We must achieve a minimum 15% net
income return on capital for Mr. Berard to receive a minimum bonus of 50% of his
annual salary, and Mr. Berard may receive the maximum bonus of 100% of his
annual salary if we achieve a 30% or greater percentage net income return on
capital. We did not achieve a minimum 15% net income return on capital in either
fiscal 2000 (April 1, 1999 to March 31, 2000) or transition 2000 (April 1, 2000
to December 31, 2000); accordingly, Mr. Berard was not paid a bonus for either
of those periods. We have included the amounts of incentive bonuses awarded to
Mr. Berard in fiscal 1999 and fiscal 1998 in the "Summary Compensation Table"
under the heading "Executive Compensation."
We have adopted an executive compensation program for our other executive
officers that ties a portion of executive compensation to our short-term
performance. Under this program, executive officers and other key employees are
entitled to receive, as an annual incentive bonus, a percentage of their
respective annual salary ranging from 22.5% to 70%, depending on the percentage
net income return on our capital. We must achieve a minimum 10% net income
return on our capital for any of them to receive a minimum bonus of 22.5% of
annual salary, and each of them may receive the maximum bonus of 70% of annual
salary if we achieve a 30% or greater percentage net income return on capital.
We did not achieve a minimum 10% net
8
11
income return on capital in either fiscal 2000 or transition 2000; accordingly,
we did not pay a bonus for either of those periods to any of our executive
officers.
We also provide long-term incentives to our executive officers in the form
of stock options granted under our long-term incentive plan. The stock option
awards are intended to reinforce the relationship between compensation and
increases in the market price of our common stock and to align our executive
officers' financial interests with that of our shareholders. We based the sizes
of awards to each of our executive officers in transition 2000 on the position
of each participating officer and a subjective assessment of each participant's
individual performance. No stock options were granted in fiscal 2000 to our
executive officers. The table entitled "Option Grants in Transition 2000" under
the heading "Executive Compensation" sets forth the stock options granted in
transition 2000 to certain of our executive officers. We have also included the
number of securities underlying stock options granted to certain of our
executive officers in fiscal 1999 and 1998 in the "Summary Compensation Table"
under the heading "Executive Compensation."
Section 162(m) of the Internal Revenue Code limits the tax deduction to $1
million for compensation paid to certain highly compensated executive officers.
Qualified performance-based compensation is excluded from this deduction
limitation if certain requirements are met. None of our executive officers
reached the deductibility limitation for fiscal 2000 or transition 2000. Our
compensation committee believes that the stock options granted to our executive
officers, as discussed above, qualify for the exclusion from the deduction
limitation under Section 162(m). Our compensation committee anticipates that the
remaining components of individual executive compensation that do not qualify
for an exclusion from Section 162(m) should not exceed $1 million in any year
and therefore will continue to qualify for deductibility.
The Compensation Committee
Charles E. Broussard George C. Yax
9
12
PERFORMANCE GRAPH
Our common stock initially traded publicly on September 19, 1997, during
our fiscal year ended March 31, 1998. On June 20, 2000, our board of directors
elected to change our fiscal year cycle from one that ends on March 31 to one
that ends on December 31. Our last full fiscal year on the previous cycle was
from April 1, 1999 to March 31, 2000. The change in our fiscal year cycle
resulted in a nine-month transition period from April 1, 2000 to December 31,
2000.
The following graph compares the cumulative total shareholder return on our
common stock from September 19, 1997 to December 31, 2000 with the cumulative
total return of the Standard & Poor's 500 Stock Index and the Standard & Poor's
Oil & Gas (Drilling & Equipment) Index for the same period. The returns are
based on an assumed investment of $100 on September 19, 1997 in our common stock
and in each of the indexes and on the assumption that dividends were reinvested.
The assumed $100.00 investment in our common stock is made at $32.00 per share,
the closing price on September 19, 1997, the first day of trading after the
effective date of our initial public offering. Our common stock was sold in the
initial public offering at $18.00 per share.
COMPARISON OF CUMULATIVE TOTAL RETURN*
UNIFAB INTERNATIONAL, INC., S&P 500 INDEX &
S&P OIL & GAS (DRILLING & EQUIPMENT) INDEX
[PERFORMANCE GRAPH]
S&P OIL & GAS (DRILLING &
S&P 500 EQUIPMENT) INDEX UNIFAB INTERNATIONAL, INC.
------- ------------------------- --------------------------
September 19, 1997 100.00 100.00 100.00
March 31, 1998 116.87 94.56 54.69
March 31, 1999 138.44 73.16 25.39
March 31, 2000 163.29 98.40 25.00
December 31, 2000 145.10 103.25 29.69
SEPTEMBER 19, MARCH 31, MARCH 31, MARCH 31, DECEMBER 31,
1997 1998 1999 2000 2000
------------- --------- --------- --------- ------------
UNIFAB International, Inc. ................ $100.00 $ 54.69 $ 25.39 $ 25.00 $ 29.69
S&P 500.................................... 100.00 116.87 138.44 163.29 145.10
S&P Oil & Gas (Drilling & Equipment)
Index.................................... 100.00 94.56 73.16 98.40 103.25
ASSUMES $100 INVESTED ON SEPTEMBER 19, 1997 IN UNIFAB INTERNATIONAL, INC. COMMON
STOCK, S&P 500 INDEX & S&P OIL & GAS (DRILLING & EQUIPMENT) INDEX
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
2 2
K UNIFAB International, Inc.
2 2
M S&P 500
2 2
O S&P Oil & Gas (Drilling &
Equipment) Index
10
13
AUDIT COMMITTEE REPORT
Our audit committee is currently composed of two directors and currently
has one vacancy as a result of the resignation in March, 2001, of a member of
the board of directors. The board of directors intends to fill the vacancy with
a qualified director as soon as possible. The current members of our committee
are independent, as defined in the National Association of Securities Dealers
listing standards. The committee operates under a written charter approved by
the committee and adopted by the board of directors. The charter describes the
functions performed by the committee and is attached to this proxy statement as
Appendix A. The following is the report of our audit committee.
Financial Statement Review; Discussions with Management and Independent
Auditors
We have reviewed and discussed the company's audited financial statements
for fiscal 2000 (April 1, 1999 to March 31, 2000) and transition 2000 (April 1,
2000 to December 31, 2000) with management and the company's independent
auditors. Management represented to us that the audited financial statements
were prepared in accordance with accounting principles generally accepted in the
United States.
We have received and reviewed the written disclosures and the letter from
the independent auditors required by Independence Standards Board Standard No.
1, "Independence Discussions with Audit Committees," as amended, by the
Independence Standards Board, and have discussed with the independent auditors
their independence from the company and management. We have also discussed with
the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61, "Communication with Audit Committees," as amended, by
the Auditing Standards Board of the American Institute of Certified Public
Accountants.
In addition, we have discussed with the independent auditors the overall
scope and plans for their audit, and have met with the independent auditors and
management to discuss the results of their examination, their understanding and
evaluation of the company's internal controls as they considered necessary to
support their opinions on the financial statements for fiscal 2000 and the
financial statements for transition 2000, and various factors affecting the
overall quality of the company's financial reporting. The independent auditors
also have had opportunities to meet with us without management being present to
discuss any of these matters.
Based on these reviews and discussions, we recommended to the board of
directors that the financial statements for fiscal 2000 referred to above be
included in the company's annual report on Form 10-K for fiscal 2000 and that
the financial statements for transition 2000 referred to above be included in
the company's annual report on Form 10-K for transition 2000. We also
recommended, subject to the approval of the company's shareholders, the
selection of Ernst & Young LLP as the independent auditors of the company's
financial statements for 2001.
Consideration of Auditors' Independence
We have considered whether the provision of the services covered under the
sections below entitled "Financial Information Systems Design and Implementation
Fees" and "All Other Fees" for fiscal 2000 and transition 2000 is compatible
with maintaining the auditors' independence and have discussed with the auditors
their independence from the company and management.
The Audit Committee
Perry Segura George C. Yax
11
14
APPOINTMENT OF AUDITORS
RATIFICATION
Our board of directors seeks shareholder ratification of its appointment of
Ernst & Young LLP to act as the independent auditors of our financial statements
for 2001. Our board has not determined what, if any, action it would take should
the appointment of Ernst & Young LLP not be ratified. One or more
representatives of Ernst & Young LLP will be available at our 2001 annual
meeting to respond to appropriate questions. The Ernst & Young LLP
representatives will also have an opportunity to make a statement.
FEES FOR ACCOUNTING SERVICES
Audit Fees. The independent auditors billed the company $60,045 for the
audit of the company's financial statements for fiscal 2000. The independent
auditors billed the company $50,810 for the audit of the company's financial
statements for transition 2000.
Financial Information Systems Design and Implementation Fees. The company
did not incur any fees for financial information systems design and
implementation services for fiscal 2000 or transition 2000.
All Other Fees. The independent auditors billed the company $3,015 for all
other services, including audit related services, for fiscal 2000. The
independent auditors billed the company $19,800 for all other services,
including audit related services, for transition 2000. Audit related services
include services in connection with business acquisitions, accounting
consultations, and registration statements filed under the securities laws.
By Order of the Board of Directors
Peter J. Roman
Secretary
New Iberia, Louisiana
May 7, 2001
12
15
APPENDIX A
CHARTER OF
THE AUDIT COMMITTEE OF
THE BOARD OF DIRECTORS OF
UNIFAB INTERNATIONAL, INC.
ORGANIZATION
This charter governs the operations of the audit committee. The committee
shall review and reassess the charter at least annually and obtain the approval
of the board of directors. The committee shall be appointed by the board of
directors and shall comprise at least three directors, each of whom are
independent of management and the Company. Members of the committee shall be
considered independent if they have no relationship that may interfere with the
exercise of their independence from management and the Company. All committee
members shall be financially literate, or shall become financially literate
within a reasonable period of time after appointment to the committee, and at
least one member shall have accounting or related financial management
expertise.
STATEMENT OF POLICY
The audit committee shall provide assistance to the board of directors in
fulfilling their oversight responsibility to the shareholders, potential
shareholders, the investment community, and others relating to the Company's
financial statements and the financial reporting process, the systems of
internal accounting and financial controls, the internal audit function, the
annual independent audit of the Company's financial statements, and the legal
compliance and ethics programs as established by management and the board. In so
doing, it is the responsibility of the committee to maintain free and open
communication between the committee, independent auditors, and management of the
Company. In discharging its oversight role, the committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities, and personnel of the Company and the power to retain
outside counsel, or other experts for this purpose.
RESPONSIBILITIES AND PROCESSES
The primary responsibility of the audit committee is to oversee the
Company's financial reporting process on behalf of the board and report the
results of their activities to the board. Management is responsible for
preparing the Company's financial statements, and the independent auditors are
responsible for auditing those financial statements. The committee in carrying
out its responsibilities believes its policies and procedures should remain
flexible, in order to best react to changing conditions and circumstances. The
committee should take the appropriate actions to set the overall corporate
"tone" for quality financial reporting, sound business risk practices, and
ethical behavior.
The following shall be the principal recurring processes of the audit
committee in carrying out its oversight responsibilities. The processes are set
forth as a guide with the understanding that the committee may supplement them
as appropriate.
- The committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the board and the audit committee, as representatives of
the Company's shareholders. The committee shall have the ultimate
authority and responsibility to evaluate and, where appropriate, replace
the independent auditors. The committee shall discuss with the auditors
their independence from management and the Company and the matters
included in the written disclosures required by the Independence
Standards Board. Annually, the committee shall review and recommend to
the board the selection of the Company's independent auditors, subject to
shareholder's approval.
- The committee shall discuss with the independent auditors the overall
scope and plans for their respective audits including the adequacy of
staffing and compensation. Also, the committee shall
A-1
16
discuss with management and the independent auditors the adequacy and
effectiveness of the accounting and financial controls, including the
Company's system to monitor and manage business risk, and legal and
ethical compliance programs. Further, the committee shall meet separately
with the independent auditors, with and without management present, to
discuss the results of their examinations.
- The committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the committee by the independent auditors
under generally accepted auditing standards. The chair of the committee
may represent the entire committee for the purposes of this review.
- The committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. Also, the committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
committee by the independent auditors under generally accepted auditing
standards.
A-2
17
UNIFAB INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [X]
[ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEE LISTED BELOW AND
FOR PROPOSAL 2.
FOR WITHHOLD AUTHORITY
the nominee listed to vote for the nominee
to the left listed to the left
1. Election of the
nominee for director.
Nominee: Perry Segura [ ] [ ]
FOR AGAINST ABSTAIN
2. Ratification of appointment [ ] [ ] [ ]
of Ernst & Young LLP as
independent auditors.
3. In their discretion to vote upon such other business
as may properly come before the Annual Meeting or
any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
____________________________________________________, 2001
Signature of Shareholder Date
____________________________________________________, 2001
Signature if held jointly Date
Note: Please sign exactly as name appears on the
certificate or certificates representing shares to be
voted by this proxy, as shown on the label above. When
signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If a
corporation, please sign full corporate name by president
or other authorized officer. If a partnership, please
sign in partnership name by authorized persons.
18
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
UNIFAB INTERNATIONAL, INC.
The undersigned hereby constitutes and appoints Daily J. Berard and Peter
J. Roman or either of them proxy for the undersigned, with full power of
substitution, to represent the undersigned and to vote, as designated on the
reverse side, all of the shares of Common Stock of UNIFAB International, Inc.
(the "Company") that the undersigned is entitled to vote held of record by the
undersigned on April 2, 2001, at the annual meeting of shareholders of the
Company to be held on June 1, 2001 (the "Annual Meeting"), and at all
adjournments thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE NOMINEE AND "FOR" THE PROPOSAL LISTED ON THE REVERSE SIDE.
THE INDIVIDUALS DESIGNATED ABOVE WILL VOTE IN THEIR DISCRETION ON ANY OTHER
MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
(PLEASE SEE REVERSE SIDE)