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SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
NATIONAL PRESTO
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(Name of Registrant as Specified in Its Charter)
INDUSTRIES
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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NATIONAL PRESTO INDUSTRIES, INC.
EAU CLAIRE, WISCONSIN 54703
APRIL 3, 1998
Dear Shareholder:
Enclosed with this letter you will find the notice of our Annual Meeting
of Stockholders, which will be held at our offices in Eau Claire on May 19,
1998.
We sincerely hope that you will be able to be present to meet the
management of your company, see the new products that will be displayed at the
meeting, and cast your vote for the election of directors and against the
stockholder proposal described in the proxy statement. If, however, you find
that you are unable to attend the meeting in person, we urge that you
participate by voting your stock by proxy. You may cast your vote by signing
and returning the enclosed proxy card.
On March 27, 1998, we mailed you our annual report for 1997, which
contained a description of our business and also included audited financial
statements for that year. Enclosed with this letter is a proxy statement which
contains information regarding the annual meeting and the business to be
conducted thereat.
It is with great reluctance we announce that Walter G. Ryberg has decided
not to stand for reelection to the Board. Walt ended his 37-year employment
career with the company in 1983, when he retired as Vice President of Sales,
and has served as Director for the past 15 years. This company owes him a deep
debt of gratitude for his keen insight and sound business judgment, which he
has so faithfully provided throughout his career. His guidance will be sorely
missed by those of us who continue on the Board.
Your directors have nominated Richard N. Cardozo, Ph.D., who is Carlson
Chair in Entrepreneurial Studies, Director of the Center of Entrepreneurial
Studies, and Professor of Marketing at the Carlson School of Management at the
University of Minnesota, to fill the vacancy on the Board. If electd, we are
confident Dick will bring creative insight and a unique business perspective to
the Board.
We are always pleased to hear from our shareholders, and if you cannot be
present in person at the meeting, we would be happy to have your letters
expressing your viewpoints on our products and business or to answer any
questions that you might have regarding your company.
/s/ /s/
President Chairman
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NATIONAL PRESTO INDUSTRIES, INC.
3925 North Hastings Way
Eau Claire, Wisconsin 54703
Notice of Annual Meeting of Stockholders
TO THE STOCKHOLDERS OF NATIONAL PRESTO INDUSTRIES, INC.:
The Annual Meeting of Stockholders of National Presto Industries, Inc.,
will be held at the offices of the company, 3925 North Hastings Way, Eau
Claire, Wisconsin 54703, on Tuesday, May 19, 1998, at 2:00 p.m., for the
following purposes:
(a) to elect two directors for three year terms ending in 2001 and
until their successors are elected and qualified;
(b) to consider and act upon a stockholder proposal as set forth in
the proxy statement; and
(c) to transact such other business as may properly come before the
meeting.
Stockholders of record at the close of business on March 11, 1998, will be
entitled to vote at the meeting and any adjournment thereof.
James F. Bartl
Secretary
April 3, 1998
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS. PLEASE USE THE ENCLOSED ENVELOPE IN RETURNING YOUR PROXY.
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NATIONAL PRESTO INDUSTRIES, INC.
3925 North Hastings Way
Eau Claire, Wisconsin 54703
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 19, 1998
The accompanying proxy is solicited by the Board of Directors of National
Presto Industries, Inc. (the "Company"), for use at the annual meeting of
stockholders to be held May 19, 1998 (the "Annual Meeting"), and any adjournment
thereof. When such proxy is properly executed and returned, the shares it
represents will be voted at the meeting and at any adjournment thereof. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted. Presence at the meeting of a stockholder who has signed a proxy does not
alone revoke that proxy; the proxy may be revoked by a later dated proxy or
notice to the Secretary at the meeting.
At the Annual Meeting stockholders will be asked to:
(a) elect two directors for three year terms ending in 2001 and until
their successors are elected and qualified;
(b) consider and act upon a stockholder proposal as set forth in the
proxy statement; and
(c) transact such other business as may properly come before the
meeting.
Only stockholders of record as of the close of business on March 11, 1998,
will be entitled to vote at the Annual Meeting. The approximate date on which
this proxy statement and form of proxy were first sent or given to stockholders
is April 3, 1998.
Shares voted as "withhold authority to vote for" as to directors will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum at the Annual Meeting and as unvoted,
although present and entitled to vote, for purposes of electing directors. If
a broker submits a proxy that indicates the broker does not have discretionary
authority as to certain shares to vote as to the election of directors, those
shares will be counted as shares that are present and entitled to vote for
purposes of determining the presence of a quorum at the meeting, but will be
unvoted for purposes of electing directors.
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company has outstanding only common stock of which 7,354,981 shares
were outstanding and entitled to vote as of the close of business on the record
date, March 11, 1998. Each of the 7,354,981 outstanding shares of common stock
is entitled to one vote.
The following table sets forth, as of the record date, all persons known
by the Company to be the beneficial owners of more than 5% of the outstanding
common stock of the Company and such beneficial ownership by all officers and
directors as a group:
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP COMMON STOCK
------------------- ----------------------- ------------
Maryjo Cohen 2,005,400(1)(2) 27.3%
3925 N. Hastings Way
Eau Claire, WI 54703
Melvin S. Cohen 442,856 (1)(3) 6.0%
3925 N. Hastings Way
Eau Claire, WI 54703
First Chicago NBD Corporation 396,786(4) 5.4%
One First National Plaza
Chicago, IL 60670
Boston Partners Asset
Management, L.P. 375,000(5) 5.1%
One Finiancial Center
Boston, MA 02111
All officers and directors
as a group 2,136,623(6) 29.1%
- -------------------
(1) Includes 111,375 shares owned by the L. E. Phillips Family Foundation,
Inc. (the "Phillips Foundation"), a private charitable foundation of which
the named person is an officer and/or director and as such exercises
shared voting and investment powers.
(2) Includes 1,669,664 shares held in a voting trust described in the section
below captioned "Voting Trust Agreement," for which Ms. Cohen has sole
voting power, and 224,096 shares owned by pension and retirement trusts
of the Company or affiliates, and private charitable foundations (other
than the Phillips Foundation) and family member trusts of which Ms. Cohen
is a co-trustee, officer or director, and as such exercises shared voting
and investment powers.
(Footnotes continued on next page)
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(3) Includes 331,481 shares owned by pension and retirement trusts of the
Company or affiliates, charitable trusts and private charitable
foundations (other than the Phillips Foundation) of which Mr. Cohen is a
co-trustee, officer or director, and as such exercises shared voting and
investment powers. Does not include 874,231 shares held in a voting trust
described in the section below captioned "Voting Trust Agreeement," for
which Mr. Cohen holds voting trust certificates. Pursuant to the voting
trust, Mr. Cohen does not have the power to vote or dispose of such
shares.
(4) Based on January 30, 1998, 13G filing with the United States Securities
and Exchange Commission.
(5) Based on February 9, 1998, 13G filing with the United States Securities
and Exchange Commissison.
(6) Includes options for 1,000 shares currently exercisable by four officers
under the National Presto Industries, Inc. 1988 Stock Option Plan.
The information contained in the foregoing footnotes is for explanatory
purposes only' and the persons named in the foregoing table disclaim beneficial
ownership of shares owned by any trust for any other person, including family
members, of which such persons are trustees or by any private charitable
foundation of which such persons are directors or officers.
VOTING TRUST AGREEMENT
The two individual beneficial owners listed in the foregoing table, and
eight other persons comprising extended family members and related trusts, have
entered into a voting trust agreement with respect to the voting of an
aggregate of 1,669,664 shares of common stock of the Company. The voting trust
agreement will terminate on December 4, 2009, unless sooner terminated by the
voting trustee or unanimous written consent of all the parties to the voting
trust agreement. The voting trustee under the agreement is Maryjo Cohen. Under
the agreement, the voting trustee exercises all rights to vote the shares
subject to the voting trust with respect to all matters presented for
shareholder action.
NOMINEES AND DIRECTORS
Two directors are to be elected at the Annual Meeting for a term of three
years. The Articles of Incorporation and the Bylaws of the Company provide for
six directors, divided into three classes of two members each. At each annual
meeting, successors of the class whose term of office expires in that year are
elected for a three-year term. The two nominees who receive the highest number
of votes will be elected directors of the Company for the three-year term
commencing at the Annual Meeting. The Board of Directors propose as nominees
Mr. John M. Sirianni, Managing Director-Investments, Piper Jaffray, Inc., whose
term expires at the meeting, and Mr. Richard N. Cardozo, Ph.D., Carlson Chair
in Entrepreneurial Studies, Director of the Center of Entrepreneurial Studies,
and Professor of Marketing at the Carlson School of Management at the
University of Minnesota. Mr. Cardozo has held these positions for more than
ten years.
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INFORMATION CONCERNING DIRECTORS AND NOMINEES
The following table provides information as to the directors and nominees
of the Company and the shares of common stock of the Company owned beneficially
by each such person as of the record date for the meeting:
PRINCIPAL OCCUPATION; DIRECTOR'S SHARES PERCENT
BUSINESS EXPERIENCE DIRECTOR TERM TO BENEFICIALLY OF
DIRECTOR AGE PAST 5 YEARS SINCE EXPIRE OWNED(1) CLASS
------- --- --------------------- -------- --------- --------------- -------
John M. Sirianni* 39 Managing Director- 1992 1998 500 (2)
3602 Timber Trails Court Investments, Piper
Eau Claire, WI 54701 Jaffray Inc.
Richard N. Cardozo* 62 Carlson Chair in - - - -
1007 Pine Tree Trail Entrepreneurial Studies/
Stillwater, MN 55082 Professor of Marketing,
University of Minnesota
James F. Bartl 57 Secretary and 1995 1999 57,462(3) (2)
3925 N. Hastings Way Resident Counsel
Eau Claire, WI 54703 of the Company
Michael J. O'Meara 47 Chairman of the Board, 1996 1999 100 (2)
2720 Golf Road People's National Bank,
Eau Claire, WI 54701 Eau Claire, Wisconsin(4)
Melvin S. Cohen 80 Chairman of the 1949 2000 442,856(3)(5) 6.0%
3925 N. Hastings Way Board of the
Eau Claire, WI 54703 Company
Maryjo Cohen 45 President and Chief 1988 2000 2,005,400(3)(6)(7) 27.3%
3925 N. Hastings Way Executive Officer
Eau Claire, WI 54703 of the Company
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* Nominee
(1) Unless otherwise indicated, each director has sole voting and investment
powers for all shares beneficially owned.
(Footnotes continued on next page.)
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(2) Represents less than 1% of the outstanding shares of common stock of the
Company.
(3) Includes 42,042 shares held by pension and retirement trusts of the
Company or affiliates for which Messrs. Bartl and Cohen, and Ms. Cohen
share voting and investment powers.
(4) Mr. O'Meara is also a director of People's National Bank.
(5) See footnotes 1 and 3 under Voting Securities and Principal Holders
Thereof.
(6) See footnotes 1 and 2 under Voting Securities and Principal Holders
Thereof.
(7) Ms. Cohen is the daughter of Mr. Cohen.
Information contained in this proxy statement with respect to stock
ownership was obtained from the Company's shareholder records, filings with
governmental authorities, or from the named individual nominees, directors and
officers. The persons identified in the foregoing table disclaim beneficial
ownership of shares owned or held in trust for the benefit of members of their
families or entities with which they may be associated.
The Company has an Audit Committee but does not have a nominating or
compensation committee. The Audit Committee consists of Messrs. Sirianni and
O'Meara. During 1997, the Audit Committee held two meetings. The principal
function of the committee is to review the annual financial statements of the
Company prior to their submission to the Board of Directors. The Audit
Committee also has authority to consider such other matters in relation to the
internal and external audit of the Company's accounts and in relation to its
financial affairs as the committee may determine to be desirable. The Audit
Committee members reviewed and ratified the nature and extent of the services
to be provided by Grant Thornton LLP, including services rendered in 1997, the
costs and fees for such services and the effect of such fee arrangements on the
independence of the auditors. During 1997, there were two Board of Directors
meetings. Directors of the Company, other than those who are also executive
officers, currently receive $1000 for each Board and $275 for each Audit
Committee meeting attended. Executive officers are not compensated for services
as Board members.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning annual
compensation paid by the Company to the Company's chief executive officer and
each of the highest paid executive officers whose salary and bonus exceeded
$100,000 for the fiscal year ended December 31, 1997.
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SUMMARY COMPENSATION TABLE
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(1)
- --------------------------- ---- -------- -------- ---------------
Melvin S. Cohen 1997 $107,200 $ 23,525 $ -0-
Chairman of the Board 1996 107,200 48,525 -0-
1995 107,200 61,800 -0-
Maryjo Cohen 1997 $ 64,000 $206,000 $1,600
President, Chief Executive 1996 64,000 196,000 1,500
Officer and Director 1995 64,000 196,000 1,500
James F. Bartl 1997 $ 44,600 $160,400 $1,600
Secretary, Resident Counsel 1996 44,600 150,400 1,500
and Director 1995 44,600 140,400 1,500
Donald E. Hoeschen 1997 $ 37,204 $109,000 $1,368
Vice President-Sales 1996 31,370 99,000 -0-
1995 31,370 89,000 1,054
Richard F. Anderl 1997 $ 45,000 $75,000 $1,150
Vice President-Engineering 1996 45,000 70,000 1,100
1995 45,000 65,000 1,050
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(1) The amounts shown in this column are matching contributions made by the
Company for executive officers participating in its 401(k) Plan.
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OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
(a) (b) (c) (d) (e) (f) (g)
- --------------------------------------------------------------------- -----------------
NUMBER
OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS EXERCISE
OPTIONS GRANTED TO OR BASE
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (#) IN FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ---- --- -------------- ------ ---- ------ -------
Donald E. Hoeschen 2,500 50% 36.875 5/20/07 150,164 239,111
AGGREGATE OPTION EXERCISE IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)
ACQUIRED ON VALUE ------------------- ----------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ------------------ ----------- ----------- ------------------------- -------------------------
Richard F. Anderl -0- -0- 250 / 250 - / -(1)
Donald E. Hoeschen -0- -0- 250 / 2,250 672/ 6,048
- --------------------------------
(1) No in-the-money options.
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PENSION PLAN
The Company maintains a qualified defined benefit pension plan (the
"Plan") in which executive officers of the Company (other than Mr. Cohen)
participate. Upon retirement, participants may elect one of the Plan's payment
options, including an annuity or lump sum distribution. A participant's
remuneration covered by the Plan is his or her average compensation for the
highest five consecutive calendar years of service, or in the case of a
participant who has been employed for less than five full calendar years, the
average is based upon the number of completed years of employment with the
Company. It is estimated that the executive officers listed above (excluding
Mr. Cohen, who received a lump sum pension distribution in 1988) will receive
at their normal retirement date (age 65) a maximum annual benefit of $30,000 or
an estimated lump sum distribution of $230,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As described below in the report on executive compensation, members of the
Board of Directors determine the compensation of the executive officers of the
Company. This includes the compensation of those executive officers who also
serve as directors, namely, Melvin S. Cohen, Chairman of the Board, Maryjo
Cohen, President and Chief Executive Officer, and James F. Bartl, Secretary and
Resident Counsel. The Company's chief executive officer and other executive
officers who also serve on the Board of Directors do not participate in any
decisions regarding their own compensation.
Executive officers of the Company, including Messrs. Cohen and Bartl and
Ms. Cohen, also serve as directors and executive officers of the Company's
subsidiaries. Mr. Sirianni is a Managing Director- Investments of Piper Jaffray
Inc. The Company has purchased marketable securities during 1997 in
transactions through brokerage firms, including Piper Jaffray Inc.
The Company expects to continue to utilize the brokerage services of Piper
Jaffray Inc., during 1998. The Company believes that the terms and conditions
of its relationship with Piper Jaffray Inc. are as favorable as those that
could have been obtained from other entities providing similar services.
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BOARD REPORT ON EXECUTIVE COMPENSATION
Decisions on executive compensation are made by the Board of Directors.
There is no separate compensation committee. Salaries and bonus compensation
are reviewed annually at or near the end of the Company's fiscal year.
Historically the Company has maintained salaries at a level that is
considered to be below salaries for executives of comparable companies. This
provides a more conservative approach to base compensation if the Company
experiences significant adverse operating results that the Board of Directors
believes should result in a reduction in total compensation. Salaries
historically have been supplemented by amounts characterized as bonus
compensation, which is paid in cash as described in the above table. The Board
considers; however, salaries and bonuses together to determine if total
compensation, irrespective of how characterized, is reasonably related to the
services provided.
The Company has not relied upon stock incentives as a principal part of
its compensation program for its executives. However, the Company has made
available stock purchase arrangements for executive officers. The last such
arrangement for any of the executive officers named in the foregoing table was
in 1997.
The Board believes that the total salary and bonus compensation paid to
its executives is appropriate in relationship to the size and nature of the
Company's business, total compensation of other executives of similar
businesses, the longevity of such officers' service with the Company, the
limited number of senior executives employed by the Company and the results
that have been achieved by its management group (bonuses are not based upon a
percentage or other formula utilizing revenues, income or other financial data
as predicates). No compensation or other consultant has been retained by the
Board to evaluate executive compensation. The Board does consider; however,
data generally made available on executive compensation by such organizations.
The Company has utilized the salary and discretionary bonus approach
described above for more than 25 years and no change in this compensation
approach is currently being considered. Because of their substantial stock
ownership, the interests of Mr. Cohen and Ms. Cohen, the Company's two senior
officers, are substantially related to the interests of all stockholders. Mr.
Bartl also has material stock interests in relation to his compensation level.
Further, stock-based compensation is not deemed by the Board to be necessary or
appropriate.
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The basis for the compensation of Ms. Cohen as President and Chief
Executive Officer is determined in the same manner as the compensation for the
other executive officers. In May 1994, Ms. Cohen, who has been a full-time
employee of the Company since 1976, an officer since 1983, and President since
1989, assumed the added responsibilities of Chief Executive and Financial
Officer. As noted in the foregoing table, there was an increase in total
compensation in 1997 for Ms. Cohen, which was attributed to her overall
performance on behalf of the Company. The Board considered, in establishing Ms.
Cohen's compensation, her demonstrated competence over many years, the scope of
responsibilities assumed and her expertise in a variety of significant niches
within the business. No specific weight was assigned to any of these factors
and, as in the case of other executives, no formula is utilized for determining
bonus compensation.
In 1993, Section 162(m) of the Internal Revenue Code was adopted which,
beginning in 1994, imposes an annual deduction limitation of $1.0 million on
the compensation of certain executive officers of publicly held companies. The
Board of Directors does not believe that the Section 162(m) limitation will
materially affect the Company in the near future based on the level of the
compensation of the executive officers. If the limitation would otherwise
apply, the Board of Directors could defer payment of a portion of the bonus to
remain under the $1.0 million annual deduction limitation.
Submitted by the Company's Board of Directors:
Melvin S. Cohen James F. Bartl Walter G. Ryberg
Maryjo Cohen Michael J. O'Meara John M. Sirianni
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PERFORMANCE GRAPH
In accordance with regulations, the Company is including in this proxy
statement a line-graph presentation comparing cumulative, five-year shareholder
returns on an indexed basis with the Standard and Poor's 500 Composite Index
(the "S&P 500 Index") and an index of ten (10) electrical appliance
manufacturers created by Bridge Information Systems, Inc. (the "Bridge
Index").(1) The Board of Directors has approved use of the Bridge Index, even
though only three of the ten companies included may be fairly regarded as
engaged in a business competitive to that of the Company, with only one of a
comparable size in terms of sales volume. A list of companies comprising that
index is included in the graph below.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN AMONG
NATIONAL PRESTO INDUSTRIES, INC., S&P 500 INDEX AND BRIDGE INDEX
[GRAPH]
-----------------------------------------
DECEMBER 31,
- -------------------------------------------------------------------------------
1992 1993 1994 1995 1996 1997
- -------------------------------------------------------------------------------
National Presto Industries, Inc. 100.0 94.8 85.2 85.6 84.4 94.2
- -------------------------------------------------------------------------------
S&P 500 Index 100.0 109.8 111.3 153.1 188.8 252.0
- -------------------------------------------------------------------------------
Bridge Index 100.0 131.4 113.7 113.4 188.4 164.1
- -------------------------------------------------------------------------------
Assumes $100 invested on December 31, 1992, in National Presto Industries, Inc.
Common Stock, the S&P 500 Index' and the Bridge Index. Total return assumes
reinvestment of dividends.
(1) BRIDGE INDEX COMPANIES: Craftmade International, Inc., Dynamics Corporation
of America, Maytag Corporation, National Presto Industries, Inc., Royal
Appliance Mfg. Co., Singer Company, N.V., Sunbeam Corporation, Toastmaster,
Inc., Whirlpool Corporation, Windmere Durable Holdings Inc.
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STOCKHOLDER PROPOSAL ON SALE OR MERGER OF COMPANY
Management has been advised that Ms. Joyce A. Sample, 120 Nassau Road,
Lancaster, PA 17602, owner of 100 shares of the Company's Common Stock intends
to present the following proposal at the Annual Meeting. To be adopted, this
resolution, which is opposed by the Board of Directors, would require the
affirmative vote of a majority of the votes present or in person by proxy at
the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" THE FOLLOWING PROPOSAL FOR
THE REASONS STATED AFTER THE PROPOSAL.
"RESOLVED, that the shareholders of National Presto Industries present or
voting by proxy at the 1997 annual shareholder meeting hereby recommend to the
Board of Directors that such Board initiate and complete the steps necessary to
achieve a sale, merger or other restructuring of National Presto on terms that
will enhance, maximize and realize shareholder value as promptly as possible."
SUPPORTING STATEMENT OF PROPONENT
"I believe the value that may be achieved for stockholders of National Presto
by a sale, merger or other restructuring is significantly greater than the
current market price of our stock. Therefore, it should be deemed appropriate
that an investment banker be retained to explore the possible methods to
immediately enhance shareholder value.
This proposal was submitted to management prior to December 5, 1997. Please
consider the following financials:
1. The tangible book value as of September 30, 1997 was $32.76. That
value consisted of $212,892,000 of cash and marketable securities or
$28.95 per share offset by no long term debt. Third quarter working
capital is $222,572,000 or $30.27 per share.
2. The market price of the common stock on November 28, 1997 was
$39.19 per share.
3. Standard and Poor's states in their October eighteenth report
that a $10,000 investment in National Presto five years ago is worth
$8,459. This anemic performance was also elaborated upon in the 1996
proxy statement. One hundred dollars invested in Presto on December
31, 1991 was worth $73.40 on December 31, 1996. Whereas the same
amount invested during the same time period in the S&P 500 finished at
$203.20. The "Bridge Index" finished at $136.40.
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4. The return on equity has averaged a meager 8.6% over the last
five years.
5. Earnings were $4.98 for 1991 and finished at $2.00 for 1996. Even
more evident of the non-performance, is over the same time period
non-operating earnings as a percent of total pre-tax income has grown
from sixteen percent to thirty six percent.
6. Sunbeam Corporation is a company contained in the "Bridge Index",
which management has chosen as a comparable. It should be noted that
Sunbeam is selling in the marketplace as of November 30, 1997 at
fifteen times tangible book value, eleven times working capital and
thirty-three times projected earnings. Sunbeam is being perceived as
a "growth" company. What would Presto's market price be if it had
similar ratios?
7. Maryjo Cohen has received a bonus in each of the last three
fiscal years at a rate of almost three times her salary. James F.
Bartl's bonus during the same period has averaged over thrice his
salary.
Our Company is selling in the marketplace for 1.3 times working capital. This
places little value upon the business franchise of Presto products. Perhaps
this is due to the meager operating profits that have been and are being
generated. It would appear management has been unable to substantially grow
shareholder equity by way of corporate earnings. IT IS TIME TO EXPLORE OTHER
AVENUES."
BOARD OF DIRECTORS' STATEMENT IN OPPOSITION TO PROPOSAL
THE BOARD OF DIRECTORS OPPOSES THE FOREGOING PROPOSAL AND UNANIMOUSLY
RECOMMENDS THAT STOCKHOLDERS VOTE "AGAINST" THE PROPOSAL FOR THE FOLLOWING
REASONS:
1. The proposal offered is not, in your Board's judgment, in the best
interest of the Company and its stockholders.
The proponent owns 100 shares of National Presto Industries, Inc.
stock, which she purchased on November 6, 1996. On March 1, 1998, that
holding represented the equivalent of .00135 percent of the outstanding
shares, worth $3,893.75. As a measure of comparative interest in the
Company's destiny and well-being, it is interesting to observe that as
of March 1, 1998, the Directors, in aggregate, owned or controlled
2,133,805 shares, worth $83,085,032, with the vast bulk of these shares
having been held long term.
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The Board believes the adoption of the proposal could seriously
prejudice the financial interests of stockholders. For example,
approval of the proposal could severely damage long term relationships
with the Company's principal customers, and create competitive
disadvantages for the Company in the marketplace. Key customers might
become concerned about the continuity of supply of products, which
could provide an open invitation for competitors to step in and take
away existing business. Approval of the proposal could generate
negative reactions from both suppliers and employees. In today's
highly mobile labor market, worries about the future stability of an
organization can trigger unrest, and can lead to loss of key
employees. Realization of one or a combination of these factors could
result in severe economic consequences.
Most importantly, your Board believes it can only function effectively
when strategic planning is conducted confidentially. Illustratively,
should it become apparent to the Board in the future that disposing of
the Company's assets through sale or merger would be a wise course of
action, exploration could proceed without disturbing ongoing valuable
relationships. In this way, plans can be developed discreetly, without
the fear of adverse publicity or disruptions of the public market for
the Company's stock. The Board intends to continue its practice of
diligently evaluating and pursuing alternatives to enhance stockholder
value.
2. The Company's operating performance is generally on par or better
compared to others in the industry.
During the mid-1990's, including 1996 and 1997, the durable housewares
industry has suffered difficult business conditions, largely resulting
from ever increasing concentration of power in a handful of dominant
retailers. Such dominance has enabled these retailers to withstand
price increases attributable even to inflation, demand added
distribution services without compensation, dictate product design,
insist upon random promotions, etc.
This condition is well recognized and has been widely commented upon
in relationship to the (a) recent announcements by Rubbermaid,
Inc., which is taking its second significant restructuring charge in
two years, (b) reported declines in calendar year fourth quarter
earnings by West Bend, owned by Premark International, (-15%) and Rival
Co. (-13.5%), and (c) the January, 1998 announcement by Black & Decker
Corp. that it would sell off its household products division to
eliminate the drag this business segment has been on overall corporate
earnings. Anticipation of the Black & Decker strategy and its
subsequent announcement were enthusiastically greeted by investors,
resulting in an immediate increase in stock value.
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National Presto Industries, Inc. is facing and reacting to the same
challenges impacting its competitors. Your Board has formulated a
generalized plan to overcome those challenges and capitalize upon
existing opportunities. That plan was discussed generally in the 1996
Annual Report, which stressed that the small appliance business will
not be forsaken unless and until it is clear that a niche cannot be
developed which will permit the elevated return this Company has
historically enjoyed. That plan promised attention will be directed
toward identifying a business category or categories where employee
skills and assets, monetary and other, can be profitably employed.
The Board of Directors is not satisfied with the results achieved to
date. Efforts are ongoing to achieve greater improvement in future
bottom line results. Nevertheless, as can be seen from the chart below,
your Company's operating earnings, net earnings and gross margins
continue to be as good or better than others in its industry.
1997 COMPARATIVE FINANCIAL DATA - SMALL APPLIANCE INDUSTRY
Sales Gross Margins Operating Earnings Net Earnings
$(000) $(000) %of Sales $(000) % of Sales $(000) %of Sales
---------- ---------- --------- -------- ---------- -------- ---------
National Presto Industries $ 109,540 $ 35,541 32.4 $ 12,204 11.1 $ 16,982 15.5
Black and Decker* 4,940,500 1,771,300 35.9 489,300 9.9 227,200 4.6
Sunbeam 1,168,000 330,500 28.3 199,700 17.1** 110,000 9.4
Toastmaster 154,347 28,882 18.7 6,213 4.0 1,890 1.2
Premark (West Bend)* 2,406,830 881,053 36.6 178,504 7.4 103,802 4.3
Hamilton Beach/Proctor
Silex (NACCO) 423,100 No Information 23,300 5.5 9,200 2.2
Windmere 261,885 64,378 24.6 14,029 5.4 19,835 7.6
Rival*** 379,798 94,131 24.8 23,553 6.2 7,978 2.1
Signature Brands**** 90,365 26,977 29.9 7,786 8.6 1,225 1.4
* Includes products other than housewares
** A restructuring occured in 1996 which may have served to amplify
this figure
*** 12 months ended 12/31/97 - Fiscal year is June 30
**** 3 months ended 12/28/97 - Fiscal year is September 30
Nor can the Company's unparalleled dividend record be ignored. With
payment of the March, 1998 dividend, the Company will have paid
dividends for 54 consecutive years and in each of the past 45 years the
dividend rate has either equaled or surpassed prior distributions.
When the Company's performance is compared with others in its industry,
it becomes apparent that its market price does not reflect
management inadequacies, where an appropriate cure might be an
"auction-like" sale of the Company as proposed, which has proven
successful as applied to given companies, operating in healthy
industries.
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3. The following matters in the proponent's supporting statement
should be clarified.
(a) Company performance in 1991 compared to 1996.
Successful new products are the key to growth and bottom line
performance in the small appliance industry where generally the
high volume marketing life of a successful new product lasts no
more than two to four years. This is particularly true in the
case of National Presto which seeks to focus its innovative skills
on particular market niches. The supporting statement compares
Company performance in 1991 to the 1996 year. Unfortunately, it
fails to mention that 1991 was a record year for earnings. The
earnings record was generated by the rare occurrence of
simultaneous marketing of two highly successful nationally
televised products, the Presto(R) SaladShooter(R) slicer/shredder,
and the Presto(R) TaterTwister(TM) electric curly cutter. On the
other hand, as admitted in the 1996 Annual Report, that year's
new product offerings did not meet with success, a not uncommon
phenomenon in that 90% of new products, generally, are rejected by
a fickle public. As a consequence, 1996 represented a modern low
water mark for earnings.
(b) Reference to Sunbeam stock and its perception as a "growth"
Company.
Prior to "Chainsaw" Al Dunlap joining Sunbeam in 1996, its stock
was languishing in the marketplace. Following the
announcement that Dunlap would be joining Sunbeam, because of his
reputation as a turnaround specialist, the price of Sunbeam stock
made a significant advance. Recently, when rumors circulated that
Dunlap was leaving Sunbeam, the stock suffered a sharp decline.
It is readily apparent from these events, supported by commentary
from industry analysts, that Sunbeam is viewed by the marketplace
as a "turnaround situation" based on Al Dunlap's record and
reputation and not as a "growth" Company. Only the passage of
time will answer whether a turnaround indeed occurs.
(c) Reference to bonus payments as a multiple of base salary for two
officers of the Company.
These comments in the supporting statement taken at face value can
be misleading. Total compensation of your Company's
executives is comprised of two segments, base salary and bonus.
The Company has historically maintained base salaries at a level
that is considered to be below salaries for executives of
comparable companies. These base salaries have regularly been
supplemented by amounts characterized as bonus compensation which
is paid at the end of each year as a lump sum cash payment. The
Board considers salary and bonus together for purposes of
determining if total compensation, irrespective of how
characterized, is reasonably related to the services provided.
This technique provides a more conservative approach to
compensation, should the Company experience significant adverse
operating results that the Directors believe should result in a
reduction in total compensation.
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The charts below compare 1996 executive level compensation for
the two positions mentioned with executives in other companies in
the small appliance industry. As can be readily seen, total base
salary and bonus compensation for the two Company executives falls
below that granted to the other companies with but a single
exception. Based on this information it is clear that Company
executives are not excessively compensated.
COMPARATIVE 1996 COMPENSATION - SMALL APPLIANCE INDUSTRY
CHIEF EXECUTIVE OFFICER
Company Salary Bonus Other Total**
------- ------ ----- ----- -------
National Presto Industries* $ 64,000 $ 196,000 $ 1,500 $ 261,500
Rival*** 270,000 28,337 11,948 310,285
Toastmaster 290,698 -- 56,899 347,597
Signature Brands*** 302,918 68,028 -- 370,946
Sunbeam 507,054 -- -- 507,054
NACCO (Hamilton Beach) 358,450 170,500 91,426 620,376
Windmere 881,280 192,200 2,357 1,075,837
Premark (West Bend) 579,359 780,000 -- 1,359,359
Black and Decker 900,000 1,422,000 2,894,345 5,216,345
VICE PRESIDENT - SECRETARY - GENERAL COUNSEL****
Company Salary Bonus Other Total**
------- ------ ----- ----- -------
National Presto Industries $ 44,600 $ 150,400 $ 1,500 $ 196,500
Black and Decker 315,000 200,000 28,761 543,761
Premark (West Bend) 270,000 243,000 -- 513,000
Windmere 252,884 54,962 2,609 310,455
Sunbeam 272,112 -- -- 272,112
Toastmaster 167,793 -- 18,802 186,595
* Ms. Cohen performs without a Chief Operating Officer or Executive
Vice President, two highly paid offices customarily employed by
competitors.
** Does not include value of stock options.
*** 1997 fiscal compensation
**** Named companies were the only ones that provided data for this
position.
FOR THE REASONS STATED ABOVE, THE COMPANY'S BOARD OF DIRECTORS BELIEVES THAT
THE STOCKHOLDER PROPOSAL IS NOT IN THE BEST INTERESTS OF THE COMPANY AND ITS
STOCKHOLDERS. ACCORDINGLY, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE AGAINST THE STOCKHOLDER PROPOSAL.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED AGAINST THE PROPOSAL
UNLESS SHAREHOLDERS SPECIFY A CONTRARY CHOICE ON THE PROXY.
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INDEPENDENT PUBLIC ACCOUNTANTS
Grant Thornton LLP, Certified Public Accountants, were the independent
accountants for the Company during the year ended December 31, 1997, and have
been selected by the Audit Committee to be independent accountants for the
Company during the fiscal year ending December 31, 1998. The Audit Committee
meets with representatives of Grant Thornton LLP to review their comments and
plans for future audits. It is not anticipated that any representative of such
auditing firm will be present at the Annual Meeting of Stockholders.
OTHER MATTERS
The cost of preparing, assembling and mailing this proxy statement, the
notice and form of proxy will be borne by the Company. The management has made
no arrangement to solicit proxies for the meeting other than by use of mail,
except that some solicitation may be made by telephone, facsimile, or personal
calls by officers or regular employees of the Company. The Company will, upon
request, reimburse brokers and other persons holding shares for the benefit of
others in accordance with the rates approved by the New York Stock Exchange for
their expenses in forwarding proxies and accompanying material and in obtaining
authorization from beneficial owners of the Company's stock to give proxies.
The Board of Directors knows of no other matters to be brought before this
Annual Meeting. If other matters should come before the meeting; however, it is
the intention of each person named in the proxy to vote such proxy in
accordance with his or her judgment on such matters.
NATIONAL PRESTO INDUSTRIES, INC., FORM 10-K ANNUAL REPORT, ON FILE WITH
THE SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED, WITHOUT CHARGE, UPON
WRITTEN REQUEST TO JAMES F. BARTL, SECRETARY, NATIONAL PRESTO INDUSTRIES, INC.,
3925 NORTH HASTINGS WAY, EAU CLAIRE, WISCONSIN 54703. COPIES OF EXHIBITS TO
FORM 10-K MAY BE OBTAINED UPON PAYMENT TO THE COMPANY OF THE REASONABLE EXPENSE
INCURRED IN PROVIDING SUCH EXHIBITS.
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SHAREHOLDER PROPOSALS
Any proposal intended to be presented for action at the 1999 Annual
Meeting of Stockholders of the Company (the "1999 Annual Meeting") by any
stockholder of the Company must be received by the Secretary of the Company at
3925 North Hastings Way, Eau Claire, Wisconsin 54703, not later than
December 4, 1998, in order for such proposal to be included in the Company's
Proxy Statement and Proxy relating to the 1999 Annual Meeting. Nothing in this
paragraph shall be deemed to require the Company to include in its Proxy
Statement and Proxy relating to the 1999 Annual Meeting any stockholder
proposal which does not meet all of the requirements for such inclusion at the
time in effect.
BY ORDER OF THE BOARD OF DIRECTORS
James F. Bartl, Secretary
23
PRESTO
===============================================================================
- -------------------------------------------------------------------------------
NOTICE OF
ANNUAL
MEETING
AND
PROXY
STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 19, 1998
Please sign and return the enclosed proxy card promptly.
NATIONAL PRESTO INDUSTRIES, INC.
EAU CLAIRE, WISCONSIN 54703
- -------------------------------------------------------------------------------
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NATIONAL PRESTO THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
INDUSTRIES, INC. PROXY The undersigned hereby appoints Melvin S. Cohen and Maryjo Cohen,
Eau Claire, Wisconsin 54703 and each of them jointly and severally as proxies, with the power to
Telephone (715) 539-2119 appoint substitutes, and hereby authorizes them to represent and to
vote as designated below, all the shares of common stock of National
Presto Industries, Inc. held of record by the undersigned on March
11, 1998, at the Annual Meeting of Stockholders to be held on May 19,
1998, and any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" BOTH NOMINEES.
1. ELECTION OF DIRECTORS FOR both nominees listed below WITHHOLD authority to vote
(except as marked to the Contrary below) [ ] for both nominees listed below [ ]
JOHN M. SIRIANNI RICHARD N. CARDOZO
(INSTRUCTIONS: To vote against any individual nominee write that nominee's name in the space provided below.)
- ------------------------------------------------------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 2.
2. Stockholder proposal regarding sale or merger of the company.
[ ] For [ ] Against [ ] Abstain
3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Continued, and to be signed, on the other side)
This proxy when properly executed will be voted in the manner directed herein by the undersigned stockholder. If no direction is
made, this proxy will be voted "FOR" both nominees specified in Item 1 and "AGAINST" Item 2.
Please sign exactly as name appears below
-----------------------------------------
When shares are held by joint members, both should
sign. When signing as attorney, as executor,
administrator, trustee, or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in partnership
name by authorized person.
DATED ___________________________________, 1998
-----------------------------------------------------
Signature
- ---------------------------------------------
PLEASE MARK SIGN, DATE AND RETURN THE PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE. -----------------------------------------------------
- --------------------------------------------- Signature if held jointly