SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
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RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
A.S.V., Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[_] Fee paid previously with preliminary materials.
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Notes:
[LOGO OF A.S.V. INC.]
A.S.V., Inc.
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held
June 1, 2001
-----------------
The Annual Meeting of Shareholders of A.S.V., Inc. will be held at the
Myles Reif Performing Art Center, 720 Conifer Drive, Grand Rapids, Minnesota on
Friday, June 1, 2001 at 2:00 p.m., local time, for the following purposes:
1. To elect ten directors to the Board of Directors.
2. To approve the selection of Grant Thornton LLP as independent public
accountants of the Company for the fiscal year ending December 31,
2001.
3. To take action upon any other business that may properly come before
the meeting or any adjournment thereof.
Accompanying this Notice of Annual Meeting is a Proxy Statement, form of
Proxy and the Company's 2000 Annual Report to Shareholders, which are being sent
to you by order of the Board of Directors.
Only shareholders of record shown on the books of the Company at the close
of business on April 10, 2001 will be entitled to vote at the meeting or any
adjournment thereof. Each shareholder is entitled to one vote per share on all
matters to be voted on at the meeting.
Please join us for factory tours and product demonstrations from 10 a.m.
to 12 noon on Friday, June 1. A map to our facility is located on the inside
front cover of the proxy statement.
You are cordially invited to attend the meeting. Whether or not you plan
to attend the meeting, please sign, date and return your Proxy in the return
envelope provided as soon as possible. Your cooperation in promptly signing and
returning the Proxy will help avoid further solicitation expense to the Company.
By Order of the Board of Directors,
/s/ Edgar E. Hetteen
Edgar E. Hetteen
Secretary
Dated: May 1, 2001
Grand Rapids, Minnesota
A.S.V., Inc.
840 Lily Lane
Grand Rapids, Minnesota 55744
PROXY STATEMENT
for
Annual Meeting of Shareholders
to be held June 1, 2001
INTRODUCTION
This Proxy Statement is being furnished to the shareholders of A.S.V.,
Inc. ("ASV" or the "Company"), in connection with the solicitation by the Board
of Directors of ASV of proxies to be voted at the Annual Meeting of Shareholders
(the "Annual Meeting") to be held on Friday, June 1, 2001 at 2:00 p.m., local
time, and at any adjournment thereof, for the purposes set forth in the attached
Notice of Annual Meeting. This Proxy Statement and the accompanying proxy were
first mailed to shareholders on or about May 1, 2001.
The cost of soliciting Proxies, including preparing, assembling and
mailing the Proxies and soliciting material, will be borne by the Company.
Directors, officers and regular employees of the Company may, without
compensation other than their regular compensation, solicit Proxies personally
or by letter or telephone.
Any shareholder giving a Proxy may revoke it at any time prior to its use
at the Annual Meeting by giving written notice of such revocation to the
Secretary or other officer of the Company or by filing a new written Proxy with
an officer of the Company. Personal attendance at the Annual Meeting is not, by
itself, sufficient to revoke a Proxy unless written notice of the revocation or
a subsequent Proxy is delivered to an officer before the revoked or superseded
Proxy is used at the Annual Meeting.
The presence at the Annual Meeting in person or by proxy of the holders of
a majority of the outstanding shares of ASV's Common Stock entitled to vote
shall constitute a quorum for the transaction of business. Proxies not revoked
will be voted in accordance with the instructions specified by shareholders by
means of the ballot provided on the Proxy for that purpose. Proxies which are
signed but which lack any such specific instructions with respect to any
proposal will, subject to the following, be voted in favor of the proposals set
forth in the Notice of Annual Meeting and in favor of the slate of directors
proposed by the Board of Directors as listed herein. If a shareholder abstains
from voting as to any proposal, then the shares held by such shareholder shall
be deemed present at the Annual Meeting for purposes of determining a quorum and
for purposes of calculating the vote with respect to such proposal, but shall
not be deemed to have been voted in favor of such proposal. Abstentions as to
any proposal, therefore, will have the same effect as votes against such
proposal. If a broker returns a "non-vote" proxy, indicating a lack of voting
instruction by the beneficial holder of the shares and a lack of discretionary
authority on the part of the broker to vote on a particular proposal, then the
shares covered by such non-vote proxy shall be deemed present at the Annual
Meeting for purposes of determining a quorum, but shall not be deemed to be
present at the Annual Meeting for purposes of calculating the vote required for
approval of such proposal.
OUTSTANDING SHARES AND VOTING RIGHTS
The Board of Directors of the Company has fixed April 10, 2001 as the
record date (the "Record Date") for determining shareholders entitled to vote at
the Annual Meeting. Persons who were not shareholders on the Record Date will
not be allowed to vote at the Annual Meeting. At the close of business on the
Record Date 10,209,997 shares of ASV's Common Stock were issued and outstanding.
Each share of Common Stock is entitled to one vote on each matter to be voted
upon at the Annual Meeting. Holders of the Common Stock are not entitled to
cumulative voting rights. Generally, the affirmative vote of a majority of the
shares of Common Stock present and entitled to vote on each matter is required
for the election of each director nominee and the approval of each other matter
to be acted upon. However, if the shares present and entitled to vote on that
item of business would not constitute a quorum for the transaction of business
at the meeting, then the item must be approved by a majority of the voting power
of the minimum number of shares that would constitute such a quorum.
1
ELECT TEN DIRECTORS TO THE BOARD OF DIRECTORS
(Proposal #1)
The Board of Directors has set the number of directors to be elected for
the ensuing year at ten (10). The Board of Directors has nominated the ten
current directors of the Company: Gary D. Lemke, Edgar E. Hetteen, Jerome T.
Miner, Leland T. Lynch, Karlin S. Symons, James H. Dahl, R. E. "Teddy" Turner,
IV, Richard A. Benson, Richard A. Cooper and Robert R. Macier (the "Nominees")
to stand for election at the Annual Meeting. The ten current directors of the
Company have consented to stand for reelection.
Vote Required. THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" EACH OF THE NOMINEES.
In the absence of other instructions, the Proxies will be voted for each
of the Nominees. If elected, each Nominee shall serve until the next annual
meeting of shareholders and until his or her successor has been elected and
qualified. If any of the Nominees should be unable to serve as director by
reason of death, incapacity or other unexpected occurrence, the Proxies
solicited by Board of Directors shall be voted by the proxy representatives for
such substitute nominee(s) as is recommended by the Board of Directors, or, in
the absence of such recommendation, for such fewer number of directors as remain
willing and able to serve.
The following provides certain information with respect to the Company's
director nominees and executive officers.
Gary D. Lemke, 60, has been President of A.S.V., Inc. since he co-founded
the Company in 1983 and Chairman since September 2000. Mr. Lemke has been a
director of the Company since 1983.
Edgar E. Hetteen, 80, has been Vice President and Secretary of A.S.V.,
Inc. since he co-founded the Company in 1983. Mr. Hetteen has been a director of
the Company since 1983.
Jerome T. Miner, 65, has been Vice Chairman of A.S.V., Inc. since 1995 and
the President of Jerry Miner Realty, Inc., an owner and operator of various
retail stores in Grand Rapids, Minnesota, since 1984. Mr. Miner has been a
director of the Company since 1991.
Leland T. Lynch, 64, has been Managing Partner, Chairman and Chief
Executive Officer of the advertising firm of Carmichael Lynch Inc. in
Minneapolis, Minnesota since 1962. Mr. Lynch has been a director of the Company
since 1995. Mr. Lynch is a director of Archivers Inc. and a partner in the
Historical Theatre Group.
Karlin S. Symons, 54, has been an attorney/partner with the law firm of
Kaplan, Strangis and Kaplan in Minneapolis, Minnesota since 1989. Ms. Symons has
been a director of the Company since 1995. Ms. Symons is the past Chairperson of
the Board of Trustees of The William Mitchell College of Law.
James H. Dahl, 47, has been the President of James Dahl & Company, a
private investment company, since 1989 and the Managing General Partner of Rock
Creek Partners, Ltd., a private investment partnership in Jacksonville, Florida,
since 1993. Mr. Dahl has been a director of the Company since 1996.
R. E. "Teddy" Turner IV, 37, has been the owner of Charleston Boatworks,
Inc. located in Charleston, South Carolina since 2000. From 1998 to 2000, Mr.
Turner was the Chairman of the Board of MyTurn.com, Inc., a computer hardware
and software company. From 1996 to 1998, Mr. Turner was the President of Turner
Telecommunications Inc., an advanced video technology company. Mr. Turner is a
member of the Board of Trustees of St. Mary's College of Maryland, a Trustee of
the Turner Foundation and was a director of MyTurn.com, Inc. until October 2000.
Mr. Turner has been a director of the Company since 1997.
Richard A. Benson, 58, has been Vice President of Caterpillar Inc.,
Diversified Products Division since 1992 and President of Caterpillar's Global
Mining Division since 2000. Mr. Benson is a director of Cat Elphinstone,
Morrison Products, Mitsibushi Caterpillar and the Illinois Agricultural
Leadership Foundation. Mr. Benson has been a director of the Company since
January 1999.
Richard A. Cooper, 50, has been the President of Caterpillar Paving
Products, Inc., a subsidiary of Caterpillar, Inc. since 1996. Mr. Cooper has
been a director of the Company since January 1999.
2
Robert R. Macier, 50, has been a Vice President of Caterpillar Inc. since
1998 and has held various management positions at Caterpillar since 1981. Mr.
Macier has been a director of the Company since January 2001.
Thomas R. Karges, 40, has been the Company's Chief Financial Officer since
October 1994.
Messrs. Benson and Cooper were appointed to the Board of Directors
pursuant to the terms of the Securities Purchase Agreement dated October 14,
1998 between Caterpillar Inc. and the Company.
Legal Proceedings
R. E. "Teddy" Turner IV was the Chairman of the Board of MyTurn.com, Inc.,
a computer hardware and software company, from 1998 to 2000 and a director of
MyTurn.com, Inc. through October 2000. On March 2, 2001, MyTurn.com, Inc. filed
a voluntary petition for relief under Chapter 11 of the Federal Bankruptcy Code
in the United States Bankruptcy Court for the Northern District of California.
Board Meetings and Committees
During fiscal 2000, the Board of Directors met four times. In addition to
meetings of the full Board, directors also attended various Board committee
meetings. All directors attended 75% or more of the total number of meetings of
the Board of Directors and Committees of which they were members.
Directors and Committee members frequently take formal action by written
consent, in accordance with Minnesota law, rather than hold formal Board and
Committee meetings.
The Company's Board of Directors has two standing committees, an Audit
Committee and a Compensation and Stock Option Committee. The Company does not
have a nominating committee for Board of Director nominees.
The Audit Committee is comprised of three independent directors and
operates under a written charter, a copy of which is included as Appendix A to
this Proxy Statement. The Audit Committee's role is one of oversight and it
meets with the Company's management and the Company's independent public
accountants to review the scope and results of the audit along with the
Company's accounting and financial reporting practices. The Audit committee met
one time in 2000.
The Compensation and Stock Option Committee is comprised of independent
non-employee directors and provides recommendations concerning salaries and
incentive compensation for officers and employees of the Company. The
Compensation and Stock Option Committee met one time in 2000.
Compensation of Directors
The Company does not pay its directors a fee for attendance at Board of
Director or Committee meetings. Each non-employee director is eligible for stock
option grants under the 1998 Non-Employee Director Stock Option Plan (the
"Director Plan"), including an option to purchase 2,250 shares of Common Stock
upon initial election to the Board and an option to purchase 3,000 shares of
Common Stock on the first business day of each calendar year thereafter,
provided such person is a director of the Company at the time of grant of the
option. In addition, the Company reimburses directors for expenses incurred in
connection with attendance at Board meetings.
Options to purchase 3,000 shares of the Company's Common Stock at $8.00
per share were granted on January 2, 2001 to Messrs. Miner, Lynch, Dahl and
Turner and Ms. Symons.
Messrs. Benson and Cooper were eligible to receive options to purchase
3,000 shares of the Company's Common Stock at $8.00 per share in January 2001.
Mr. Macier was eligible to receive an option to purchase 2,250 shares of the
Company's Common Stock at $8.00 per share in January 2001. However, Messrs.
Benson, Cooper and Macier declined the options due to their employment by
Caterpillar Inc.
Directors who are also employees of the Company do not receive any
additional compensation for serving on the Board of Directors, but may receive
stock options as part of their compensation as officers of the Company.
3
RATIFY THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal #2)
The Board of Directors unanimously recommends that the shareholders ratify
the appointment of Grant Thornton LLP, independent public accountants, as the
Company's independent public accountants for the fiscal year ending December 31,
2001. Unless otherwise instructed, the Proxies will be so voted. Grant Thornton
LLP has been the Company's independent public accountant since 1994.
Representatives of Grant Thornton LLP are expected to be present at the Annual
Meeting, will be given an opportunity to make a statement regarding financial
and accounting matters of the Company if they so desire, and will be available
to respond to appropriate questions from the Company's shareholders.
Audit Fees
The Company paid Grant Thornton, LLP an aggregate of $78,000 for the
annual audit for the year ended December 31, 2000 and for reviews of the
Company's financial statements included in the Company's quarterly reports on
Form 10-Q for the year ended December 31, 2000. The above amount includes
out-of-pocket expenses incurred by Grant Thornton, LLP in connection with
provision of such services.
Financial Information Systems Design and Implementation Fees
Grant Thornton, LLP did not render any professional services to the
Company in the year ended December 31, 2000 with respect to financial systems
design and implementation.
All Other Fees
The Company paid Grant Thornton, LLP an aggregate of $6,300 for services
provided in connection with management consultation, tax compliance and tax
consultation.
The Audit Committee has considered whether the provision of non-audit
services provided by Grant Thornton LLP during the last fiscal year, fees for
which are disclosed above, is compatible with maintaining Grant Thornton LLP's
independence.
AUDIT COMMITTEE REPORT
The Company's Audit Committee is comprised of three independent
non-employee directors. The Audit Committee's primary function is one of
oversight of the Company's management and independent public accountants in
regards to the Company's internal controls, accounting and financial reporting
practices.
In carrying out its duties, the Audit Committee performed the following:
Reviewed and discussed the Company's audited financial statements
for the year ended December 31, 2000 with the Company's management.
Discussed with the Company's independent public accountants the
matters required to be discussed by Statement of Auditing Standards
No. 61 regarding communication with audit committees.
Received written disclosures and the letter from the Company's
independent public accountants required by Independence Standards
Board Statement No. 1 (Independent Discussions with Audit
Committees) and discussed with the Company's independent public
accountants their independence.
Based on the review and discussions with management and the Company's
independent public accountants, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report of Form 10-K for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
SUBMITTED BY THE AUDIT COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
R. E. "Teddy" Turner, IV - Chair Jerome T. Miner Karlin S. Symons
4
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview
The Company's Compensation and Stock Option Committee (the "Compensation
Committee") is responsible for establishing compensation policies for all
executive officers of the Company, including the Company's President. The
Compensation Committee is composed entirely of independent non-employee
directors. The present members of the Committee are listed at the end of this
report.
The objectives of the Company's executive compensation program are:
1. to attract, retain and motivate superior talent and reward
individual performance;
2. to support the achievement of the Company's strategic goals;
and
3. through stock based compensation, align the executive
officers' interests with those of the shareholders of the
Company.
The following report addresses the Company's executive compensation
policies and discusses factors considered by the Compensation Committee in
determining the compensation of the Company's President and other executive
officers for the year ended December 31, 2000.
Compensation policies for executive officers
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual and long term performance goals, reward the achievement of
corporate goals, recognize individual initiative and achievements, and assist
the Company in attracting and retaining qualified executives. The Company's
executive officers are paid base salaries that are subject to annual
cost-of-living increases, along with periodic adjustments to recognize favorable
corporate and individual performance and also to make such salaries competitive
with other similar sized companies in the manufacturing industry. The Company's
executive officers are also given the opportunity to participate in certain
other broad-based employee benefit plans. The Company's use of stock option
grants as a key component of its executive compensation plans reflects the
Compensation Committee's position that stock ownership by management and stock
based compensation arrangements are beneficial in aligning management's and
shareholders' interests to enhance shareholder value. The Compensation Committee
believes that a greater reliance on stock-based incentives is appropriate for
the Company's current stage of development.
Incentive Compensation
For fiscal year 2001, the Company has no formalized incentive compensation
plan for executive officers or management employees. No formalized incentive
compensation plan existed for executive officers or management employees for
fiscal 2000.
Stock Options
Stock options awarded under the Company's 1994 Long-Term Incentive and
Stock Option Plan and 1996 Incentive and Stock Option Plan are intended as
incentive compensation and have historically been granted to officers and other
key employees to attract, retain and motivate the talent necessary for the
Company to achieve its objectives. The Company's policy is to grant stock
options annually in connection with a review of each individual's performance of
their job functions and their current stock option holdings, at which point the
Compensation Committee may or may not grant additional options at its
discretion. The Company also grants stock options to newly hired employees as
part of their overall compensation package.
The 1996 Incentive and Stock Option Plan provides for the granting of
options to those employees who are not subject to Section 16(b) of the
Securities Exchange Act of 1934 without the approval of the Compensation
Committee. In 2000, stock option grants totaling 94,500 shares were granted to
100 employees in this manner.
Stock option grants totaling 120,000 shares (which includes the 94,500
shares discussed above) were approved by the Compensation Committee in January
2000 to be granted to all full-time employees in February and March 2000.
Included in this figure are stock option grants totaling 25,000 shares granted
to executive officers on February 1, 2000.
5
President's compensation
Gary D. Lemke serves as the Company's President and Chief Executive
Officer and was elected Chairman of the Board of Directors in September 2000.
Compensation for Mr. Lemke during 2000, as reflected in the Summary Compensation
Table set forth herein, consisted of base compensation only. Mr. Lemke's base
compensation for 2000 was increased 10 percent from his base salary in 1999 to
reflect a cost-of-living increase and to recognize favorable corporate and
individual performance. Mr. Lemke was also granted an option to purchase 15,000
shares of the Company's Common Stock at $15.44 per share in February 2000.
At this time the Committee has no formal written plan for Presidential
compensation separate and apart from the Company's general compensation
philosophy. Until a plan specific to the President is developed, Presidential
compensation will be based on corporate and individual performance, consistent
with guidelines applicable to all key employees.
SUBMITTED BY THE COMPENSATION COMMITTEE OF THE COMPANY'S BOARD OF DIRECTORS:
Karlin S. Symons - Chair Richard A. Cooper
SUMMARY COMPENSATION TABLE
The following table sets forth the total remuneration paid during the
Company's last three fiscal years to the Company's President and Chief Executive
Officer. No other executive officer of the Company earned total annual salary
and bonus in fiscal 2000 in excess of $100,000.
Annual Long-Term
Compensation Compensation
------------ ------------
Fiscal Number of Securities
Name Year Salary Bonus Underlying Options
---- ---- ------ ----- ------------------
Gary D. Lemke.............................. 2000 $ 165,000 $ --- 15,000
1999 150,000 --- ---
1998 125,000 --- ---
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning grants of
options to purchase Common Stock made during fiscal 2000 to the executive
officer named in the Summary Compensation Table above.
Number of Percent of Total
Securities Options Granted Exercise Grant Date
Underlying to Employees in Price Expiration Present
Name Options Fiscal Year Per Share Date Value ($) (2)
---- -------- ----------- --------- ---- -------------
Gary D. Lemke..................... 15,000 (1) 12.6% $ 15.44 Feb 1, 2007 $ 121,200
(1) Twenty-five percent of the option becomes exercisable on each annual
anniversary date of the option beginning February 1, 2001.
(2) The present value of the stock option is calculated using the
Black-Scholes options-pricing model with the following assumptions:
zero dividend yield; expected volatility of 42.5%; risk-free
interest rate of 4.96% and an expected life of seven years.
6
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table summarizes information related to options exercised
during fiscal 2000 and the number and value of options held at the end of fiscal
2000 by the executive officer named in the Summary Compensation Table above.
Number of Unexercised Value of Unexercised
Options at In-the-Money Options
Shares December 31, 2000 at December 31, 2000 (2)
Acquired on Value ----------------- ------------------------
Name Exercise (#) Realized (1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
Gary D. Lemke........... 4,500 $ 31,000 611,250 15,000 $ 53,750 $ ---
(1) Market value of underlying securities on date of exercise minus the
exercise price.
(2) Market value of underlying securities at fiscal year end minus the
exercise price.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total shareholder return on the
Company's Common Stock for the five fiscal years ended December 31, 2000 with
the cumulative total return on the Total Return Index for the Nasdaq Stock
Market (U.S. Companies) and the Total Return Index for Nasdaq Non-Financial
Stocks over the same period (assuming the investment of $100 in each on December
31, 1995 and the reinvestment of all dividends).
[PERFORMANCE GRAPH APPEARS HERE]
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12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
----------------------------------------------------------------------------------------------------------------
A.S.V., Inc. $100.00 $437.31 $682.42 $630.96 $480.94 $282.39
----------------------------------------------------------------------------------------------------------------
NASDAQ - U. S. Companies 100.00 123.04 150.69 212.51 394.92 237.62
----------------------------------------------------------------------------------------------------------------
NASDAQ - Non-Financial Companies 100.00 121.48 142.20 208.73 408.72 238.48
----------------------------------------------------------------------------------------------------------------
7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of April 10, 2001 by: (i)
each director of the Company, (ii) each executive officer of the Company named
in the Summary Compensation Table, (iii) all directors and executive officers of
the Company as a group and (iv) each person or entity known by the Company to
own beneficially more than five percent of the Company's Common Stock.
Shares Beneficially Percent of Outstanding
Name Owned (1) Shares (1)
---- ------------------- ----------------------
Caterpillar Inc. (2)........................... 11,337,627 (3) 56.8%
James H. Dahl (4).............................. 954,225 (5) 9.3
Gary D. Lemke (6) ............................. 891,488 (7) 8.2
Jerome T. Miner................................ 383,000 (8) 3.7
Edgar E. Hetteen............................... 254,452 (9) 2.5
Leland T. Lynch................................ 101,900 (10) 1.0
Karlin S. Symons............................... 38,618 (8) *
R. E. "Teddy" Turner, IV....................... 28,750 (11) *
Richard A. Cooper.............................. 100 *
Richard A. Benson.............................. - *
Robert Macier.................................. - *
All executive officers and
directors as a group (11 persons)............ 2,796,589 (12) 25.2
* Less than 1%.
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or exercisable within
60 days of April 10, 2001 are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options but are
not deemed outstanding for computing the beneficial ownership percentage
of any other person. Except as indicated by footnote, the persons named in
the table above have the sole voting and investment power with respect to
all shares of Common Stock shown as beneficially owned by them.
(2) The address of Caterpillar Inc. is 100 Northeast Adams St., Peoria, IL
61629-2495.
(3) Includes 9,767,127 shares subject to a warrant exercisable within 60 days.
(4) The business address of Mr. Dahl is 1200 Riverplace Boulevard, Suite 902,
Jacksonville, FL 32207.
(5) Includes 28,000 shares subject to options exercisable within 60 days,
763,330 shares held by Rock Creek Partners, Ltd., an investment
partnership, of which Mr. Dahl is the Managing General Partner, 22,195
shares held by an IRA established for the benefit of Mr. Dahl and 140,700
shares held by a trust established for the benefit of Mr. Dahl's minor
children.
(6) The business address of Mr. Lemke is 840 Lily Lane, Grand Rapids, MN
55744.
(7) Includes 615,000 shares subject to options exercisable within 60 days,
143,209 shares held jointly with Mr. Lemke's wife, 61,363 shares held by
Mr. Lemke's wife and 7,138 shares held in the Company's 401(k) Plan.
(8) Includes 21,250 shares subject to options exercisable within 60 days.
(9) Includes 55,687 shares subject to options exercisable within 60 days and
89,500 shares held by Mr. Hetteen's wife.
(10) Includes 16,750 shares subject to options exercisable within 60 days,
10,000 shares held by Mr. Lynch's wife and 6,650 shares owned by a trust
established for the benefit of Mr. Lynch's grandchildren.
(11) Includes 28,000 shares subject to options exercisable within 60 days.
(12) Includes an aggregate of 898,687 shares of Common Stock that are subject
to options exercisable within 60 days by executive officers and directors
and 11,744 shares held in the Company's 401(k) Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1996, the Company entered into a five-year consulting
agreement with a private consulting firm, which is owned by Mr. Dahl's brother.
James Dahl provides contract services to this consulting firm. In connection
with the consulting agreement, the Company issued a warrant to the consulting
firm for the purchase of 337,500 shares of the Company's Common Stock at $7.33
per share in exchange for monthly consulting services to be received over the
term of the agreement. The warrant price was the approximate fair market value
on the date the Company and the private consulting firm orally agreed to enter
into the consulting agreement. The warrant became exercisable and transferable
in December 1997. The warrant expires December 2006. Mr. Dahl disclaims any
beneficial ownership in the shares that may be obtained upon exercise of the
warrant by the consulting firm.
8
The Company uses a public relations firm that is affiliated with Mr.
Lynch. Total fees paid to the public relations firm in 2000 were approximately
$201,000.
Affiliation with Caterpillar Inc.
On October 14, 1998, the Company entered into a Securities Purchase
Agreement (the "Purchase Agreement") with Caterpillar Inc. ("Caterpillar")
pursuant to which Caterpillar acquired, for an aggregate purchase price of
$18,000,000, one million newly-issued shares of the Company's Common Stock and a
warrant (the "Warrant") to purchase an additional 10,267,127 newly-issued shares
of the Company's Common Stock at an exercise price of $21.00 per share. The
purchase of the Common Stock and the Warrant occurred pursuant to the Purchase
Agreement which closed on January 29, 1999 (the "Closing Date"). The Purchase
Agreement contains certain agreements regarding various matters including (i)
the conduct of the Company's business following the Closing Date, (ii)
Caterpillar's right to designate directors of the Company, (iii) Caterpillar's
right of first offer with respect to future stock issuances by the Company and
(iv) the issuance of additional warrants to Caterpillar in the event the Company
issues additional shares of stock (except in certain limited circumstances). The
Warrant is exercisable at any time from the Closing Date until the tenth
anniversary of the Closing Date, except that it may expire with respect to a
portion of the shares in the event the Company meets certain revenue levels and
certain other conditions are met.
In connection with entering into the Purchase Agreement, the Company and
Caterpillar entered into a commercial alliance agreement (the "Commercial
Alliance Agreement") on October 14, 1998, pursuant to which the Company and
Caterpillar agreed to enter into a number of additional agreements
contemporaneously with or following the closing of the transaction contemplated
by the Purchase Agreement.
On the Closing Date, the Company and Caterpillar entered into a Marketing
Agreement which requires Caterpillar to provide the Company with access to its
worldwide distribution network, in part, by promoting the sale of the Company's
products to Caterpillar's dealers, and requires the Company to pay a commission
to Caterpillar for sales of certain of the Company's products to Caterpillar
dealers plus the cost of certain additional services that may be provided by
Caterpillar under the agreement. Also on the Closing Date, the Company and
Caterpillar entered into a Management Services Agreement pursuant to which
Caterpillar agreed to make available to the Company, for a fee, general
management support in connection with the day-to-day operation of its business,
commercial development and marketing research services, financial planning
services, such other administrative services as the Company and Caterpillar may
agree, and manufacturing and engineering services. Unless otherwise agreed, the
fee to be paid for these services is equal to Caterpillar's cost plus an
administrative surcharge.
The Commercial Alliance Agreement also provides that the Company and
Caterpillar enter into several additional agreements in the future, including
(i) a Trademark and Trade Dress Agreement, to be entered into at such time as
the Company's products have been found to meet Caterpillar's quality and safety
standards, pursuant to which Caterpillar will grant to the Company the right to
use certain trademarks of Caterpillar on the Company's products for a fee equal
to a percentage of the dealer net price for products sold with such trademarks,
(ii) a Services Agreement pursuant to which Caterpillar will offer to the
Company certain financial services, logistics services and services to promote
the Company's products to government bodies, and the Company will agree to use
such services if the prices to be negotiated are competitive, (iii) a Supply
Agreement (Caterpillar to Company) pursuant to which Caterpillar will offer to
supply Caterpillar components to the Company for incorporation into the
Company's products, (iv) a Supply Agreement (Company to Caterpillar) pursuant to
which the Company will offer to supply its components to Caterpillar for
incorporation into Caterpillar's products that do not compete with the Company's
products, (v) a Technology License Agreement (Company to Caterpillar) pursuant
to which the Company will offer to license to Caterpillar the right to use the
Company's proprietary patents and know-how relating to all-terrain rubber track
vehicles in the design, manufacture, use and sale of Caterpillar's products that
do not compete directly with the Company's products and (vi) a Joint Venture
Agreement pursuant to which the Company and Caterpillar will establish a 50-50
joint venture company to design and develop a line of agricultural tractors
utilizing key aspects of the parties' respective technology and know-how.
In October 2000, the Company entered into a Securities Purchase Agreement
in which Caterpillar purchased 500,000 newly issued shares of ASV Common Stock
at $18 per share, increasing its ownership in ASV to approximately 15 percent.
The Company also amended its original warrant issued to Caterpillar, reducing
the number of shares of ASV common stock available for purchase under the
warrant by 500,000 shares.
The Company and Caterpillar also entered into an alliance agreement in
which they plan to jointly develop and manufacture a new product line of
Caterpillar rubber track skid steer loaders called Multi-Terrain Loaders. The
product line, which is expected to include five new models, will feature
Caterpillar's patented skid steer loader technology and ASV's patent-pending
Maximum Traction Support System(TM) rubber track undercarriage. They will be
sold through the Caterpillar dealer network.
9
During 2000, the Company purchased parts used in its products from
Caterpillar. The Company also reimburses Caterpillar for the salary related
costs of two Caterpillar employees that work on the Company's behalf. In
addition, the Company utilizes Caterpillar's warranty processing system to
handle warranty claims on its machines and reimburses Caterpillar for the
warranty expense incurred by Caterpillar dealers.
During 2000, total parts purchases and salary and warranty reimbursements
were approximately $3,828,000. Also, at December 31, 2000, accounts payable to
Caterpillar were $389,000.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors of the Company, and persons who beneficially own more
than 10% of the Company's outstanding shares of Common Stock, to file initial
reports of ownership and reports of changes in ownership of securities of the
Company with the Securities and Exchange Commission. Officers, directors and
greater than 10% shareholders are required by the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on a review of the copies of such reports furnished to or
obtained by the Company, the Company believes during the fiscal year ended
December 31, 2000, all filing requirements applicable to its directors, officers
or beneficial owners of more than 10% of the Company's outstanding shares of
Common Stock were complied with, except Edgar Hetteen filed late one transaction
on Form 5 relating to gifting of shares in April 1999.
PROPOSALS FOR THE NEXT ANNUAL MEETING
In order to be eligible for inclusion in the Company's proxy solicitation
materials for its next annual meeting of shareholders, any shareholder proposal
to be considered at such meeting must be received at the Company's principal
executive offices, P.O. Box 5160, Grand Rapids, Minnesota 55744, not later than
January 1, 2002. Pursuant to the Company's Bylaws, in order for business to be
properly brought before the next annual meeting by a shareholder, the
shareholder must give written notice of such shareholder's intent to bring a
matter before the annual meeting no later January 1, 2002. Each such notice
should be sent to the Secretary, and must set forth certain information with
respect to the shareholder who intends to bring such matter before the meeting
and the business desired to be conducted, as set forth in greater detail in the
Company's Bylaws. Any such proposal will be subject to the requirements of the
proxy rules adopted by the Securities Act of 1934.
Management may use discretionary authority to vote against any shareholder
proposal presented at the 2001 annual meeting if: (1) such proposal has been
properly omitted from the Company's proxy materials under federal securities
law; (2) notice of such proposal was not submitted to the Secretary of the
Company at the address listed above by January 1, 2002; or (3) the proponent has
not solicited proxies in compliance with federal securities laws from the
holders of at least the percentage of the Company's voting shares required to
carry the proposal.
ADDITIONAL MATTERS
The Board of Directors of the Company do not presently know of any matters
to be presented for consideration at the Annual Meeting of Shareholders other
than the matters described in the Notice of Annual Meeting of Shareholders
mailed together with this Proxy Statement, but if other matters are presented it
is the intention of the persons named in the accompanying proxy to vote on such
matters in accordance with their best judgment. The proxy confers discretionary
authority to vote only with respect to matters that the Board of Directors of
the Company did not know, prior to March 19, 2001, were to be presented at the
Annual Meeting of Shareholders.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 2000, including financial statements, accompany this Notice
of Annual Meeting and Proxy Statement. No portion of the Annual Report is
incorporated herein or is to be considered proxy soliciting material.
The Company will furnish, without charge, a copy of its Annual Report on
Form 10-K for the fiscal year ended December 31, 2000, to any shareholder of the
Company upon written request. Requests should be sent to Thomas R. Karges, Chief
Financial Officer, A.S.V., Inc., P.O. Box 5160, Grand Rapids, Minnesota 55744.
Dated: May 1, 2001
Grand Rapids, Minnesota
10
Appendix A
A.S.V., Inc.
Audit Committee Charter
I. General:
The purpose of the audit committee of the Board of Directors of A.S.V.,
Inc. (the Company) is ensure the integrity of the Company's financial
reporting processes and products. This charter is meant to identify the
personnel and functions of the audit committee. These guidelines
contemplate the involvement of the outside counsel and where appropriate
the involvement of the full Board of Directors.
II. Audit Committee Membership and Function:
A. Definitions
1. Independence: A member of the audit committee and an auditor,
respectively, are independent if they have no relationship to
the corporation that may interfere with the exercise of their
independence from management and the corporation, such as
employment with the corporation or an affiliate within three
years; corporate compensation other than fees for Board
service; family relationship with an executive officer within
the last three years or been a partner, controlling
shareholder or an executive officer of any for-profit business
to which the corporation made, or from which it received,
payments (other than those which arise solely from investments
in the corporation's securities) that exceed five percent of
the organization's consolidated gross revenues for that year,
or $200,000, whichever is more, in any of the past three
years.
2. Financial Literacy: A member of the audit committee shall have
financial literacy, as signified by the ability to read and
understand fundamental financial statements, including a
company's balance sheet, income statement, and cash flow
statement. Directors who have limited familiarity with finance
can achieve such "literacy" through company-sponsored training
programs.
B. Audit Committee Membership
1. The audit committee shall be composed solely of independent
directors.
2. The audit committee shall be comprised of a minimum of three
directors, each of whom is financially literate or becomes
financially literate within a reasonable period of time after
his or her appointment to the audit committee, and at least
one member of the audit committee must have past employment
experience in finance or accounting, requisite professional
certification in accounting, or other comparable experience or
background, including a current or past position as a chief
executive or financial officer or other senior officer with
financial oversight responsibilities.
C. Audit Committee Function
1. The Board and the audit committee have the ultimate authority
and responsibility to select, oversee, evaluate, and, where
appropriate, to replace the independent auditor (or to
nominate the independent auditor to be proposed for
shareholder approval in any proxy statement). Oversight
responsibilities are described further in Section III, below.
2. The independent auditor is ultimately accountable to the Board
of Directors and the audit committee as the representatives of
the shareholders.
11
III. Independent Auditor Oversight:
A. Independent Auditor Qualifications
The audit committee shall be responsible for the following:
1. Receive from the independent auditors a formal written
statement delineating all relationships between the
independent auditor and the Company consistent with
Independent Standards Board Standard No. 1.
2. Actively engage in a dialogue with the independent auditor
with respect to any disclosed relationships or services that
may impact the objectivity and independence of the independent
auditor and to take or recommend that the full Board take
appropriate action to ensure the independence of the
independent auditor.
3. Review the audit firm's proposed executive partner and
auditing personnel background and experience.
4. Determine the audit firm's registration with the AICPA's SEC
practice division and participation in the voluntary peer
review professional practice programs.
5. Review the audit firm's litigation history and professional
liability insurance.
B. Independent Auditor Engagement Letter.
The independent auditor will provide a letter that will define the
nature and scope of the audit engagement and provide a contract for
the professional services of the auditing firm.
C. Annual Audit Planning and Supervision
The audit committee shall:
1. Inquire of the independent auditor regarding the audit scope,
timing and conduct of the audit.
2. Ascertain that the audit team has requisite industry and
corporate knowledge, appropriate ratio of staff assistants to
supervisors, and supervisory review procedures.
3. Confirm that the auditor's written audit plan give sufficient
consideration to
a. Financial disclosures
b. Operational efficiency
c. Corporate compliance and
d. Compliance with laws.
D. Annual Audit Review.
In connection with the annual audit, the audit committee shall:
1. Ascertain any disagreements among audit personnel or between
audit personnel and Company management.
2. Review the Company's accounting policies and practices
regarding:
a. Revenue recognition;
b. Reserves and allowances;
c. Asset capitalization;
d. Extraordinary charges or write-offs, and
e. Any other accounting practice of an unusual or
infrequent nature.
3. Affirm that the accounting policies are consistent with
industry practices, that correct requirements are reflected in
accounting policies and that the accounting policies are
consistent with a fair presentation of the financial
statements in conformity with accounting principles generally
accepted in the United States of America.
12
E. Quarterly Review
In connection with the quarterly reviews, the audit committee shall:
1. Prior to the time that the Company files its Quarterly Report
on Form 10-Q, the independent auditor will conduct an SAS 71
Interim Financial Review.
2. Prior to the filing of the Form 10-Q and prior to the public
announcement of the Company's quarterly results, the
independent auditor will discuss with the audit committee, or
at least its chairman, and a representative of financial
management, in person, or by telephone conference call, the
matters described in AU Section 380, Communications with Audit
Committee, including significant adjustments, significant new
accounting policies, and disagreements with management, as
needed.
F. Annual Report
In connection with the preparation of the annual report, the audit
committee shall:
1. Review the Company's annual report to evaluate whether it
contains a fair and meaningful presentation of financial
statements, footnotes, and supplementary information.
2. Affirm that the annual report discusses changes in corporate
reporting or accounting practices (for example, departures
from accounting principles generally accepted in the United
States of America, exceptions to the consistent application of
accounting principles, etc.)
3. Review financial statement disclosures and ensure that
practices are fully and fairly disclosed.
4. Affirm appropriate use of statutory "safe harbor" disclosure
if the annual report contains forward-looking information.
5. Prepare for the report to shareholders and for inclusion in
the Company's annual proxy statement a letter to shareholders
stating whether with respect to the prior fiscal year:
a. The audit committee has reviewed and discussed the
audited financial statements with management.
b. The independent auditors have discussed with the audit
committee the matters required to be discussed by SAS
No. 61;
c. The members have discussed among themselves, without
management or the independent auditors present, the
information disclosed to the audit committee described
in a. and b. above;
d. The audit committee has received from the written
disclosures and the letter from the independent auditors
as required by ISB Standard No. 1.
e. The audit committee has recommended that the financial
statements be included in the annual report on Form
10-K.
f. The Company was in compliance with its audit committee
charter.
G. Additional Matters for Review.
The audit committee shall also:
1. Review outside counsel's letter regarding litigation, claims
and assessments and review the accounting treatment concerning
contingency losses and their effect on the financial
statements.
2. Confer with the independent auditor and/or outside counsel to
ascertain the Company's compliance regarding:
a. Securities statutes;
b. Anti-trust laws;
c. Income tax laws;
d. Labor laws, and
e. Industry regulation.
13
3. Ascertain the existence of and review any material non-arm's
length transactions.
IV. Audit Committee Report:
A. Annual Report.
The audit committee shall report at least annually to the Board,
setting forth:
1. The audit committee's function and responsibilities;
2. A chronological review of committee's activities, particularly
auditing and accounting cycle activities;
3. A summary of the committee's recommendations, particularly
with respect to the selection of the auditing firm and the
review of the independent auditor's report;
4. Attach critical audit reports and management letters.
B. Committee Charter.
The audit committee shall:
1. At least annually, include a report of the audit committee in
the proxy statement:
2. At least annually, review the charter for any necessary
revisions and refer all revisions to the Board;
3. At least triennially, attach the audit committee charter to
the annual proxy statement.
14
A.S.V., INC.
ANNUAL MEETING OF SHAREHOLDERS
Friday, June 1, 2001
2:00 p.m.
Myles Reif Performing Arts Center
720 Conifer Drive
Grand Rapids, MN 55744
A.S.V., Inc.
[LOGO OF A.S.V. INC.] 840 Lily Lane, Grand Rapids, MN 55744 proxy
- --------------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for use at the Annual Meeting
on June 1, 2001.
The shares of stock you hold in your account will be voted as you specify on the
reverse side.
If no choice is specified, the proxy will be voted "FOR" Items 1 and 2.
By signing the proxy, you revoke all prior proxies and appoint Gary D. Lemke and
Thomas R. Karges, and each of them, with full power of substitution, to vote
your shares on the matters shown on the reverse side and any other matters which
may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
|| ||
\/ Please detach here \/
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1. Election of Directors: 01 Gary D. Lemke 02 Edgar E. Hetteen
03 Jerome T. Miner 04 Leland T. Lynch
05 Karlin S. Symons 06 James H. Dahl
07 R. E. "Teddy" Turner, IV 08 Richard A. Benson
09 Richard A. Cooper 10 Robert R. Macier
[_] Vote FOR [_] Vote WITHHELD
all nominees from all nominees
(except as marked)
(Instructions: To withhold authority to vote ---------------------------------
for any indicated nominee, write the | |
number(s) of the nominee(s) in the box ---------------------------------
provided to the right.)
2. Ratify appointment of Grant Thornton LLP [_] For [_] Against [_] Abstain
as independent public accountants for the
fiscal year ending December 31, 2001.
3. Other Matters. In their discretion, the appointed proxies are authorized to
vote upon such other business as may properly come before the Meeting or any
adjournment.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL
Address Change? Mark Box [_] Indicate changes below:
Date
-------------------------------
---------------------------------
| |
---------------------------------
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all person must sign.
Trustees, administrators, etc.,
should include title and authority.
Corporations should provide full
name of corporation and title of
authorized officer signing the
proxy.