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SCHEDULE 14C
(Rule 14c-101)
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
Check the appropriate box:
|_| Preliminary Information Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14c-5(d)(2))
|X| Definitive Information Statement
Market America, Inc.
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(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) 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.
|_| 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: August 24, 2001
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF
- MARKET AMERICA, INC. -
To the Shareholders of Market America, Inc.:
Notice is hereby given that the annual meeting of the shareholders of
Market America, Inc. will be held at the Company's headquarters located at
1302 Pleasant Ridge Road, Greensboro, North Carolina, on October 1, 2001, at
10:00 a.m., for the following purposes:
(1) To re-elect existing directors; and
(2) To transact such other business as may properly come
before the meeting.
The determination of shareholders entitled to notice of and to vote at
the meeting was made as of the close of business on August 2, 2001, which is the
record date fixed by the Board of Directors for such purpose.
By order of the Board of Directors,
/s/ Loren Ashley Ridinger
-------------------------
Loren Ashley Ridinger
Secretary
Dated: August 24, 2001
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MARKET AMERICA, INC.
1302 Pleasant Ridge Road
Greensboro, NC 27409
August 24, 2001
INFORMATION STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 1, 2001
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished by the management of
Market America, Inc. (the "Company") in connection with the annual meeting of
shareholders of the Company to be held on October 1, 2001, at 10:00 a.m., at the
Company's headquarters located at 1302 Pleasant Ridge Road, Greensboro, North
Carolina. The meeting is being held for the purposes of electing directors and
transacting such other business as may lawfully come before the meeting.
As of August 2, 2001, the record date for determining the shareholders
entitled to notice of and to vote at the meeting, there were 19,420,000 shares
of the Company's Common Stock outstanding and entitled to be voted. Each share
has one vote. A majority of such shares will constitute a quorum for the
transaction of business at the meeting. Abstentions by shareholders represented
at the meeting will be counted as present for determining the presence of a
quorum.
Those persons who receive the highest numbers of votes will be elected
as directors. Except as otherwise required by law, all other matters will be
approved if the votes cast favoring the action exceed the votes cast opposing
the action. Abstentions will be excluded entirely from the vote, and will have
no effect on the outcome. Since the Company's management is not soliciting
proxies for the meeting, there will be no returns of proxies from brokers
holding shares in street name without instructions for voting. Therefore, such
"broker non-votes" will have no effect on any shareholder vote.
Additional Information
A copy of the Annual Report to Shareholders of the Company for the
fiscal year ended April 30, 2001 is being sent with this Information Statement
to all shareholders of record on the record date for the annual meeting.
Additional copies are available from the Corporate Secretary of the Company on
request. A copy of the most recent annual report of the Company filed with the
U.S. Securities and Exchange Commission on Form 10-K may be obtained from the
Company by any shareholder on written request of the Corporate Secretary. If
more than
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one member of your household who shares the same address is a Market America
shareholder, we may be sending only one copy of this Information Statement to
your address. Under SEC regulations, we may do so unless we receive contrary
instructions from at least one of the shareholders. If you are a shareholder at
a shared address and wish to receive a separate copy of the Company's
Information Statement and Annual Report, now or in the future, please contact
the Corporate Secretary.
Requests to the Corporate Secretary should be directed to the Corporate
Secretary, Market America, Inc., 1302 Pleasant Ridge Road, Greensboro, NC 27409
(telephone: (336) 605-0040).
Election of Directors
The members of the Company's Board of Directors elected at the annual
meeting will serve until the next annual meeting or until their successors are
elected and qualified. Listed below are the persons nominated for election to
the Board of Directors by management.
Nominees for Membership on Board of Directors
James H. Ridinger, 51, is Chairman of the Board of Directors and CEO of the
Company. He founded the Company in 1992 and has been a Director and Chief
Executive Officer of the Company since that time.
Loren A. Ridinger, 32, is a Director and Senior Vice President and Secretary of
the Company. She has been a Director of the Company since 1993 and has held a
number of executive positions with the Company since its founding in 1992. Mrs.
Ridinger is the wife of James H. Ridinger, the Chairman of the Board of
Directors and CEO of the Company.
Martin L. Weissman, 57, has been a Director of the Company since 1993 and has
served as an Executive Vice President of the Company since 1994. Mr. Weissman
was a founder, owner and Executive Vice President of Howard Carpet Mills of
Chatsworth, Georgia.
Executive Officers
In addition to the executive officers who are nominated for election as
directors, the following individuals are also executive officers of the Company:
Dennis J. Franks, 47, has served as an Executive Vice President of the Company
since 1993. He is a former professional football player and marketing
professional for a number of companies.
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Marc Ashley, 30, is currently the Vice President of Administrative for the
Company. Mr. Ashley has been an employee of the Company since 1992. Mr. Ashley
is a brother of Loren A. Ridinger, Senior Vice President and Secretary of the
Company.
Joseph V. Bolyard, 31, is currently the Vice President of Operations for the
Company. Mr. Bolyard has been an employee of the Company since 1992.
During the fiscal year ended April 30, 2001, the Board of Directors
held four meetings. No director attended fewer than 75% of the meetings. The
Board has no standing audit, nominating or compensation committees or committees
performing similar functions. Board members receive no additional compensation
for their service on the Board.
Executive Compensation
The following table summarizes the compensation awarded to, earned by
or paid to the CEO and the four other most highly compensated executive officers
of the Company for services to the Company in the fiscal year ended April 30,
2001:
Annual Compensation
-------------------
Other
Name and Fiscal Annual
Principal Position Year Ended Salary($) Bonus($) Compensation(1)
- --------------------------- ---------- --------- -------- ---------------
James H. Ridinger, Chairman 4-30-01 365,000 636,392 0
of the Board and Chief 4-30-00 365,000 641,961 0
Executive Officer 4-30-99 365,000 636,392 0
Loren A. Ridinger, Senior 4-30-01 184,894 820,654 0
Vice President and 4-30-00 184,894 818,112 0
Secretary 4-30-99 184,894 87,560 0
Dennis J. Franks, Executive 4-30-01 166,165 127,205 0
Vice President 4-30-00 122,492 105,000 0
4-30-99 120,000 60,000 0
Martin L. Weissman, Executive 4-30-01 134,496 91,490 0
Vice President 4-30-00 135,139 45,000 0
4-30-99 132,142 0 0
Marc Ashley, Vice President 4-30-01 166,308 145,000 0
4-30-00 155,800 113,597 0
4-30-99 95,975 66,551 0
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(1) Does not include the value of any perquisites or other personal benefits not
reflected in the above table because the aggregate amount of any such
compensation does not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus shown. Also does not include commissions on "business volume"
(a measure of sales) of the Company, which each of the named executive officers
receives as an independent distributor of the Company. See "Certain
Transactions."
None of the executive officers of the Company currently has a written
employment agreement. Mr. Ridinger negotiates the base salaries and other
compensation of all of the executive officers named in the table above other
than himself.
Board Compensation Report
The Company's compensation policy is set by the Board of Directors, which has
submitted the following report on compensation policies applicable to the
Company's executive officers:
"In setting Mr. Ridinger's compensation, the Board of Directors
considered numerous factors, including Mr. Ridinger's unique role as the
preeminent personality in the selling of the Company's products, the motivation
of the Company's sales organization and the formulation of sales promotional
programs. The Board fixed Mr. Ridinger's base compensation several years ago and
it has not changed since that time. The Board considers Mr. Ridinger's bonus on
an annual basis. His bonus is based upon the Company's overall performance and
his individual contribution to the success of the Company.
"Salaries of the executive officers are set by the Board of Directors
based on Mr. Ridinger's recommendations. Mr. Ridinger takes into consideration
industry comparables as well as individual job performance and the overall
performance of the Company. Bonuses for executive officers, other than Mr.
Ridinger, are based on a combination of performance criteria and Mr. Ridinger's
discretion.
The Board of Directors encourages executive officers of the Company to
also own and operate Business Development Centers as independent contractors and
distributors within the field sales organization of the Company and to earn
compensation as a result of that relationship with the Company.
"Respectfully submitted by:
James H. Ridinger
Loren A. Ridinger
Martin L. Weissman
Constituting the Members of the Board of Directors"
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Shareholder Return Performance Graph
Set forth below is a graph comparing the yearly percentage change in
total shareholder return on the Company's common stock with the Total Return
Index for the NASDAQ Stock Market (US Companies) and the total shareholder
return on a designated Peer Group of stocks. The total shareholder return
calculation is for the period commencing April 30, 1996 and includes the
reinvestment of dividends (on securities on which dividends were paid).
Comparison of Shareholder Returns Among the Company,
NASDAQ Total Return Index and Peer Group Companies*
Edgar representation of data points used in printed graphic
4/30/96 4/30/97 4/30/98 4/30/99 4/30/00 4/30/01
------- ------- ------- ------- ------- -------
Market America, Inc. $100.0 $ 37.8 $ 46.7 $ 36.1 $ 35.6 $ 35.4
NASDAQ Stock Market $100.0 $105.8 $158.2 $217.0 $328.8 $179.7
(U.S. Companies)
Peer Group $100.0 $119.4 $152.4 $175.7 $134.2 $140.7
* Assumes $100.00 invested at the closing price on April 30, 1996 in the stock
of Market America, Inc., the NASDAQ Total Return Index (U.S. Companies) and Peer
Group companies (weighted by market capitalization). Graph prepared for Market
America, Inc. by the Center for Research in Security Prices, Graduate School of
Business, The University of Chicago.
The Peer Group of stocks represented in the above graph is made up of
stocks of publicly traded companies possessing the following characteristics
similar to those of the Company:
o Size, as measured by net sales;
o Similarity in selling methodology;
o Comparative products, including companies engaged in the
distribution of health and nutritional supplements, and skin,
hair, or other personal products;
o Relatively high insider ownership; and /or
o Particular emphasis on the talents and visibility of the chief
executive officer.
Companies included in the Peer Group are: Avon Products, Inc., Enesco
Group, Inc. (formerly Stanhome, Inc.), Herbalife, Inc., Natural Alternatives
International, Inc., Nu Skin Enterprises, Inc., Nature's Sunshine Products,
Inc., Tupperware Corporation, Reliv International, Inc. and Usana, Inc. The
Company removed Aloette Cosmetics, Inc., Away Asia Pacific, LTD, Amway Japan,
LTD and Beauticontrol Cosmetics, Inc. from the Peer Group this year as a result
of the stock of these companies no longer being publicly traded as of April 30,
2001. The Company added Natural Alternatives International, Inc., Nu Skin
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Enterprises, Inc. and Reliv International, Inc. to the Peer Group this year
because these companies are publicly traded and share characteristics similar to
those of the Company. Without Natural Alternatives International, Inc., Nu Skin
Enterprises, Inc. and Reliv International, Inc. the Peer Group performance would
have been: 04/30/96--$100.0, 04/30/97--$119.3, 04/30/98--$153.0,
04/30/99--$181.1, 4/30/00 --$140.9 and 4/30/01--$148.1.
Beneficial Ownership of Shares
The following table sets forth certain information on the beneficial
ownership of shares of the Company's common stock by its directors and executive
officers and by its directors and executive officers as a group. The Company is
not aware of any person not listed in the table who is the beneficial owner of
more than five percent of the outstanding shares of the stock as of August 2,
2001, the record date for the annual meeting of the Company's common
shareholders. Unless otherwise indicated in the footnotes, all shares are owned
directly, and the person or entity identified as the beneficial owner has sole
voting and investment power.
No. of Shares Percentage of
Beneficially Outstanding
Name of Beneficial Owner Owned Shares/1
- ------------------------ ------------- -------------
James H. Ridinger 15,040,200/2 77.45%
Loren A. Ridinger 101,450/3 0.52%
Martin L. Weissman 532,000 2.74%
Dennis J. Franks 150,000 0.77%
Marc Ashley 50,000 0.26%
All Directors and Executive
Officers as a Group
(seven persons) 16,074,650 82.77%
1 Based on 19,420,000 shares issued and outstanding on August 2, 2001, the
record date for the Company's annual meeting of shareholders.
2 Does not include shares owned directly by Loren A. Ridinger, Mr. Ridinger's
wife, which are reported on separately in this table. Includes shares
reported by Mr. Ridinger as being subject to the AAA Plus Trust, of which
Mr. Ridinger is the trustee.
3 Includes only shares owned directly by Mrs. Ridinger, and does not include
shares reported in this table as beneficially owned by James H. Ridinger, her
husband.
Section 16 (a) Beneficial Ownership Reporting Compliance
To the Company's knowledge, based solely on its review of reports
submitted to it, all SEC Section 16(a) filing requirements, which prescribe that
the Company's executive officers, directors, and 10% shareholders must file
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock with the SEC, were complied with in fiscal year 2001.
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Certain Transactions
The five executive officers of the Company, named in the compensation
table above, own and operate Business Development Centers as independent
contractors and distributors within the field sales organization of the Company.
In this capacity, they perform the typical and usual functions of field sales
representatives, in return for which their Business Development Centers earn
management commissions under the performance compensation plan applicable to all
the Company's distributors. For the year ended April 30, 2001, these individuals
earned distributor commissions as follows: James H. Ridinger $631,470; Loren A.
Ridinger $7,695; Dennis J. Franks $243,545; Martin L. Weissman $153,670; and
Marc Ashley $19,395.
In December 1999, the Company entered into an agreement with a company
owned by Mr. and Mrs. James H. Ridinger, officers/stockholders of the Company,
to lease real estate in Miami, Florida for direct sales training and education,
as well as other corporate functions. The monthly rental is $60,000 and the
lease has a 20-year term with a renewal option for an additional 20-year term.
The Company has paid a $600,000 non-interest bearing damage deposit as part of
this lease, which is included in other assets on the balance sheet. The amount
of rent expense under this agreement aggregated $720,000 during the year ended
April 30, 2001. In connection with this lease, the Company has guaranteed a $5.3
million five-year loan to the related company for the purchase of the real
estate being leased. As of April 30, 2001, the guaranteed loan had an
outstanding balance of $5,248,075. The Company had restricted cash of $2,703,152
as collateral under the loan guarantee as of April 30, 2001.
During the year ended April 30, 1999, the Company entered into a
33-year net ground lease with a company owned by Mr. and Mrs. James H. Ridinger
for the site on which the Company has constructed its new headquarters and
warehouse facility in Greensboro, North Carolina at a cost of $4,593,133.
Required rental payments are $17,000 per month since October 2000, and $10,666
per month prior to that date. The amount of rent expense under this agreement
was $172,330 for the year ended April 30, 2001. In June 1999, the Company paid
$500,000 to the Ridinger company for a Right of First Refusal on this site,
which provides the Company with the opportunity to purchase the land, should it
be offered for sale, before the land is offered for sale to other parties. The
amount paid is included in other assets and will be amortized on a straight-line
basis over the lease term. The unamortized balance will be applied to the
purchase price of the land in the event the Company buys it. On June 28, 1999,
the Company became guarantor of a $1.6 million bank loan to the Ridinger company
used for the purchase of the land. This loan and the Company's term loan are
cross-collateralized by the land being leased from the Ridinger company and by
the building improvement constructed thereon by the Company. The guaranteed loan
is repayable over a five-year period following completion of the building
construction and had an outstanding balance of $1,551,167 at April 30, 2001.
The Ridinger companies owed the Company on average $11,549 during the
year ended April 30, 2001. As of April 30, 2001, these companies owed the
Company $16,222.
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Substantially all of the Company's leasehold improvements are to
properties leased from related companies.
On June 30, 2001, the Company entered into a note receivable agreement
with Marc Ashley, an executive officer of the Company, in the amount of
$100,415.83. The note is secured by 25,000 shares of the Company's stock and
bears an annual interest rate of 6.5%. Under the agreement, Mr. Ashley is
required to make interest only payments for the first 24 months of the note
term, followed by principal and interest payments for the next 120 months. Mr.
Ashley made a nonscheduled $10,000 principal payment against the note in April
2001.
Independent Auditors
Dixon Odom PLLC served as the Company's independent auditors for the
fiscal year ended April 30, 2001 and has been selected to serve in that capacity
for the current fiscal year. A representative of Dixon Odom PLLC is expected to
be available, in person or by conference telephone, at the annual meeting of
shareholders to make a statement if they no desire and to respond to appropriate
questions. The following fees were billed by Dixon Odom PLLC for professional
services rendered to the Company during fiscal 2001:
Audit services (including reviews of quarterly filings on form 10-Q ) $38,775
Other services $ 5,450
Consulting $ 0
Dixon Odom did not perform any other services for the Company for fiscal year
2001.
Board of Directors' Audit Report
Instead of having an audit committee, the Company's entire three-member
Board of Directors has responsibility for reviewing the Company's quarterly and
annual financial statements. Individual members of the Board have reviewed the
audited financial statements of the Company for the fiscal year ended April 30,
2001 and have discussed the financial statements with other members of the Board
and with members of management who are not members of the Board to the extent
they deemed appropriate. At the request of the Board, Martin Weissman, a Board
member, met with the Company's independent auditors before the Company filed its
Form 10-K for the fiscal year ended April 30, 2001 with the SEC. Mr. Weissman
discussed with the auditors the matters required to be discussed under Statement
on Auditing Standards No. 61 (Communication with Audit Committees).
On behalf of the Board, Mr. Weissman received from the auditors the
written disclosures and letter required by Independence Standards Board Standard
No. 1 (Independence Discussion with Audit Committees) and discussed the
independence of the auditors with them.
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Based on these reviews and discussions, Mr. Weissman recommended to the
Board of Directors that the audited financial statements be included in the
Company's Form 10-K for the fiscal year ended April 30, 2001 for filing with the
SEC.
Board of Directors (functioning as audit committee)
James H. Ridinger
Loren Ashley Ridinger
Martin Weissman
Shareholder Proposals
Any shareholder interested in submitting a proposal for inclusion in
the proxy or information materials for the Company's annual meeting of
shareholders in 2002 may do so by following the procedures prescribed in SEC
Rule 14a-8. To be eligible for inclusion, shareholder proposals must be received
by the Company's Secretary at 1302 Pleasant Ridge Road, Greensboro, North
Carolina 27409, no later than April 27, 2002.
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