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
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 Section 240.14a-11c or Section 240.14a-12
Preformed Line Products Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement)
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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(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
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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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PREFORMED LINE PRODUCTS COMPANY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------------
To our shareholders:
The 2002 annual meeting of shareholders of Preformed Line Products Company
will be held at the offices of the Company, 660 Beta Drive, Mayfield Village,
Ohio, Monday, April 29, 2002, at 9:00 a.m., local time, for the following
purposes:
1. To elect four directors, each for a term expiring in 2004;
2. To receive reports at the meeting. No action constituting approval
or disapproval of the matters referred to in the reports is contemplated;
and
3. Any other matters that properly come before the meeting.
Only shareholders of record at the close of business on March 22, 2002, are
entitled to notice of and to vote at the meeting or any adjournment thereof.
Shareholders are urged to complete, date and sign the enclosed proxy and return
it in the enclosed envelope. The principal address of Preformed Line Products
Company is 660 Beta Drive, Mayfield Village, Ohio 44143
By order of the Board of Directors,
J. RICHARD HAMILTON,
Secretary
Dated: March 28, 2002
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, SIGN, DATE AND RETURN YOUR PROXY
PREFORMED LINE PRODUCTS COMPANY
PROXY STATEMENT
---------------------
Our Board of Directors is sending you this proxy statement to ask for your
vote as a Preformed Line Products Company shareholder on certain matters to be
voted on at the annual meeting of shareholders. The annual meeting of
shareholders will be held at 660 Beta Drive, Mayfield Village, Ohio, 44143, on
Monday, April 29, 2002 at 9:00 a.m., local time. We are mailing this proxy
statement and the accompanying notice and proxy to you on or about March 28,
2002.
Annual Report. A copy of our Annual Report to Shareholders for the fiscal
year ended December 31, 2001 is enclosed with this proxy statement.
Solicitation of Proxies. Our Board of Directors is making this solicitation
of proxies and we will pay the cost of the solicitation. In addition to
solicitation of proxies by mail, our employees may solicit proxies by telephone,
facsimile or electronic mail.
Proxies; Revocation of Proxies. The shares represented by your proxy will
be voted in accordance with the instructions as indicated on your proxy. In the
absence of any such instructions, they will be voted to elect the director
nominees set forth under "Election of Directors." Your presence at the annual
meeting of shareholders, without more, will not revoke your proxy. However, you
may revoke your proxy at any time before it has been exercised by signing and
delivering a later-dated proxy or by giving notice to us in writing at our
address indicated on the attached Notice of Annual Meeting of Shareholders, or
in open meeting.
Voting Eligibility. Only shareholders of record at the close of business on
the record date, March 22, 2002, are entitled to receive notice of the annual
meeting of shareholders and to vote the common shares that they held on the
record date at the meeting. On the record date, our voting securities
outstanding consisted of 5,757,030 common shares, $2 par value, each of which is
entitled to one vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of the Company's Common Shares
beneficially owned as of December 31, 2001 by (a) the Company's directors, (b)
each other person known by the Company to own beneficially more than 5% of the
outstanding Common Shares, (c) the Company's Chief Executive Officer and the
other four most highly compensated executive officers named in the Summary
Comparison Table, and (d) the Company's executive officers and directors as a
group.
NUMBER OF
SHARES BENEFICIALLY PERCENT
NAME OF BENEFICIAL OWNER OWNER OF CLASS
------------------------ ------------------- --------
Barbara P. Ruhlman(1)....................................... 1,537,430(2) 26.7%
Jon R. Ruhlman(1)........................................... 511,963(3) 8.9%
Thomas F. Peterson, Jr...................................... 494,026 8.5%
3060 Lander Road
Pepper Pike, Ohio 44124
Robert G. Ruhlman(1)........................................ 402,838(3)(4) 7.0%
Randall M. Ruhlman.......................................... 226,266(5) 3.9%
John D. Drinko.............................................. 521,178(6) 9.1%
1900 East Ninth Street
3200 National City Center
Cleveland, Ohio 44114
Wilber C. Nordstrom......................................... 14,000 *
Frank B. Carr............................................... 6,000(7) *
Eric R. Graef............................................... 7,900(3) *
William H. Haag III......................................... 9,060(3) *
R. Jon Barnes............................................... 7,500(3) *
All Executive Officers and directors as a Group (14
persons).................................................. 3,272,035 56.8%
---------------
* Represents less than 1%.
(1) The mailing address for each of Barbara P. Ruhlman, Jon R. Ruhlman and
Robert G. Ruhlman is 660 Beta Drive, Mayfield Village, Ohio 44143.
(2) Includes 112,776 shares held by The Thomas F. Peterson Foundation, of which
Barbara P. Ruhlman is President and a Trustee.
(3) Includes 7,500 shares that may be acquired pursuant to a currently
exercisable stock option.
(4) Includes 140,170 shares held by the Preformed Line Products Company Profit
Sharing Trust, and 60,000 shares held in trust for the benefit of Robert G.
Ruhlman and his children (these 60,000 shares are also shown as being
beneficially owned by Randall M. Ruhlman) and 14,768 shares owned by his
wife or held by her as custodian or trustee.
(5) Includes 60,000 shares held in trust for the benefit of Randall M. Ruhlman
and his children and for the benefit of Robert G. Ruhlman and his children
(these 60,000 shares are also shown as being beneficially owned by Robert G.
Ruhlman).
(6) Includes 400,452 shares held in the Ethel B. Peterson Trust for which John
D. Drinko acts as Trust Advisor and has voting control. Also includes 10,400
shares held in Mr. Drinko's IRA and 2,000 shares held by his wife.
(7) Includes 2,000 shares held in Mr. Carr's IRA.
2
ELECTION OF DIRECTORS
In accordance with our Code of Regulations, the number of directors has
been fixed at seven. The Company has classified its Board of Directors into two
classes serving staggered terms. Four of the seven directors, Messrs. John D.
Drinko, Wilber C. Nordstrom, Jon R. Ruhlman and Randall M. Ruhlman are currently
serving a term that expires at this year's annual meeting of shareholders and
have been nominated for re-election at the meeting. Three directors, Mrs.
Barbara P. Ruhlman and Messrs. Robert G. Ruhlman and Frank B. Carr, are
currently serving a term that expires in 2003. At the annual meeting of
shareholders, you will elect four directors to hold office until our annual
meeting of shareholders held in 2004 and until their successors are elected and
qualified. The Board of Directors proposes that the nominees described below,
all of whom are currently serving as directors, be re-elected to the Board of
Directors. At the annual meeting of shareholders, the shares represented by
proxies, unless otherwise specified, will be voted for the election of the four
nominees hereinafter named.
The director nominees are identified in the following table. If for any
reason any of the nominees is not a candidate when the election occurs (which is
not expected), the Board of Directors expects that proxies will be voted for the
election of a substitute nominee designated by management. The following
information is furnished with respect to each person nominated for election as a
director.
THE BOARD RECOMMENDS THAT YOU VOTE "FOR" THE FOLLOWING NOMINEES.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
EXPIRATION
PERIOD OF TERM
PRINCIPAL OCCUPATION OF SERVICE FOR WHICH
NAME AND AGE AND BUSINESS EXPERIENCE AS A DIRECTOR PROPOSED
------------ ----------------------- ------------- ----------
John D. Drinko, 80................ Senior Partner -- Baker & Hostetler 1954 to date 2004
LLP
Wilber C. Nordstrom, 83........... Retired Executive with The Standard 1977 to date 2004
Products Company, Mr. Nordstrom was
serving as Executive Vice President
when he retired in 1983
Jon R. Ruhlman, 74................ Chairman of the Company since 1975. 1956 to date 2004
Mr. Ruhlman served as the Company's
CEO from 1975 until July 2000
Randall M. Ruhlman, 43............ President of Ruhlman Motorsports 1998 to date 2004
(a race car team) since 1987
Current directors whose terms will not expire at the annual meeting of
shareholders.
PERIOD
PRINCIPAL OCCUPATION OF SERVICE TERM
NAME AND AGE AND BUSINESS EXPERIENCE AS A DIRECTOR EXPIRATION
------------ ----------------------- ------------- ----------
Robert G. Ruhlman, 45............. Chief Executive Officer since 1992 to date 2003
July 2000. Mr. Ruhlman served as
President since 1995 (a position he
continues to hold) and Chief
Operating Officer from 1995 until
July 2000.
Frank B. Carr, 74................. Private Investor 1992 to date 2003
Barbara P. Ruhlman, 69............ President of the Thomas F. 1988 to date 2003
Peterson Foundation since 1988
Barbara P. Ruhlman and Jon R. Ruhlman are married and are the parents of
Randall M. Ruhlman and Robert G. Ruhlman.
Jon R. Ruhlman has been the Chairman of the Company since 1975. He served
as Chief Executive Officer from 1975 until July 2000. Robert G. Ruhlman became
Chief Executive Officer in July 2000. He had served as President since 1995 (a
position he continues to hold) and Chief Operating Officer from 1995 until
3
July 2000. From 1983 to 1996, Mr. Carr was a Managing Director of McDonald &
Company Securities, Inc., Cleveland, Ohio, an investment banking and brokerage
firm, and a partner in its predecessor firm (McDonald & Company) since 1968. Mr.
Carr also serves as a director of Invacare, Inc.
Our Board of Directors has appointed an Audit Committee and a Salary
Committee. The Board of Directors does not have a finance or nominating
committee. The Audit Committee is comprised of Messrs. Carr (chairman), Drinko
and Nordstrom. The Salary Committee is comprised of Messrs. Carr, Drinko
(chairman) and Nordstrom.
The Audit Committee makes recommendations to the Board of Directors
concerning the engagement of independent public accountants for our Company,
reviews with the independent public accountants the plans and results of audit
engagements, approves professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
considers the range of audit and nonaudit fees, reviews the independent public
accountants' management letters and our responses, reviews the adequacy of our
internal accounting controls, and reviews major accounting or reporting changes.
The Salary Committee reviews employment, development, reassignment and
compensation matters involving corporate officers and other executive level
employees, including issues related to salary, bonus and incentive arrangements.
The Salary Committee also administers our equity award (stock option) plan.
In 2001, our Board of Directors held five meetings. In 2001, the Audit
Committee held one meeting and the Salary Committee held one meeting. In 2001,
each member of the Board of Directors, except Mr. Drinko, attended at least 75%
of the meetings of the Board of Directors and of the committees on which he or
she serves.
Directors' Compensation. Each director, who is not an employee of the
Company, receives $12,000 per year for being a director, $1,400 for attending
each meeting of the Board of Directors and each meeting of any committee.
Directors who are also employees of ours are not paid any director's fee. We
reimburse out-of-pocket expenses incurred by all directors in connection with
attending Board of Directors and committee meetings.
SALARY (COMPENSATION) COMMITTEE REPORT
The Company's executive compensation program is administered by the Salary
Committee, which has responsibility for reviewing all aspects of the
compensation program for the executive officers of the Company. The Committee is
comprised of the three directors listed at the end of this report, none of whom
is an employee of the Company.
The Committee's primary objective with respect to executive compensation is
to establish programs which attract and retain key managers and align their
compensation with the Company's overall business strategies, values, and
performance. To this end, the Committee has established and the Board of
Directors has endorsed an executive compensation philosophy to compensate
executive officers based on their responsibilities and the Company's overall
annual and longer-term performance.
Until 2000, when the Company's shareholders approved its Employee Stock
Option Plan, the primary components of the Company's executive compensation
program have been (a) base salaries, and (b) annual cash incentive
opportunities. These components are discussed below.
Base Salaries. Base salaries for each of the Company's executive officers
are reviewed every 18 to 24 months by the Committee using as a guide one or more
widely accepted salary evaluation systems, taking into account the size of the
Company, expectations for the annual bonus plan described below and company
performance, and competitive, inflationary, and internal equity considerations.
The salary of Robert G. Ruhlman, Chief Executive Officer, was set by the
Committee to be within a range that is competitive with the fixed salaries of
chief executive officers of similar size companies with comparable
profitability. At the time of his promotion on July 1, 2000, to Chief Executive
Officer, the Committee increased his salary from $240,000 to $300,000. This
brought Mr. Ruhlman's salary to what the Committee believes is nearly the
mid-level range of comparable salaries.
4
Annual Cash Incentives. All officers of the Company are eligible to receive
annual cash bonus awards based on a set percentage of their base salary with a
maximum bonus attainable equal to 50% of base salary. The percentage of base
salary is determined on a sliding scale, based on the return on shareholders'
equity. The bonus awards for all officers for the years 1999, 2000 and 2001 were
30%, 40% and 20%, respectively, of base salary.
Stock Options. The Committee has awarded options to purchase 167,000 shares
of the Company's Common stock. While the Committee has had the opportunity to
grant stock options for only two years, it believes that option grants are a
valuable motivating tool and provide a long-term incentive to management. Share
option grants reinforce long-term goals by providing the proper nexus between
the interests of management and the interests of the Company's shareholders. All
options were awarded to retain qualified personnel in positions of significant
responsibility with the Company and its subsidiaries. No options were granted to
employees who had been with the Company for less than two years and all options
contained provisions for periodic vesting. Each named executive officer was
granted an option to purchase 10,000 common shares in 2000 but none in 2001. All
option grants had exercise prices at least equal to the fair market value of the
Company's Common shares on the date of the grant.
Frank B. Carr
John D. Drinko, Chairman
Wilber C. Nordstrom
AUDIT COMMITTEE REPORT
The Board of Directors adopted a written charter for the Audit Committee on
May 16, 2001, and a copy of this charter is attached to this proxy statement as
Appendix A. In accordance with its written charter, the Audit Committee assists
the Board of Directors in fulfilling its responsibility relating to corporate
accounting, reporting practices of the Company, and the quality and integrity of
the financial reports and other financial information provided by the Company to
any governmental body or the public. Management is responsible for the financial
statements and the reporting process, including the system of internal controls.
The independent auditors are responsible for expressing an opinion on the
conformity of the audited financial statements with generally accepted
accounting principles. Our Audit Committee is comprised of three directors, who
are not officers of the Company. They are all considered "independent" under the
listing standards of the NASDAQ.
In discharging its oversight responsibility as to the audit process, the
Audit Committee reviewed and discussed the audited financial statements of the
Company for the year ended December 31, 2001, with the Company's management. The
Audit Committee discussed the matters required to be discussed by SAS 61, as
modified or supplemented, with the independent accountants. The Audit Committee
also obtained a formal written statement from the independent accountants that
described all relationships between the independent accountants and the Company
that might bear on the accountant's independence consistent with Independence
Standards Board Standard No. 1, "Independence Discussions with Audit Committee,"
as amended or supplemented. The Audit Committee discussed with the independent
accountants any relationships that might impact their objectivity and
independence and satisfied itself as to the accountants' independence. The Audit
Committee also considered whether the provision of non-audit services by
PricewaterhouseCoopers LLP ("PwC") is compatible with maintaining PwC's
independence. Management has the responsibility for the preparation of the
Company's financial statements, and the independent accountants have the
responsibility for the examination of those statements.
Based on the above-referenced review and discussions with management and
the independent accountants, the Audit Committee recommended to the Board of
Directors that the Company's audited financial statements be included in its
Annual Report on Form 10-K for the year ended December 31, 2001, for filing with
the Securities and Exchange Commission.
Frank B. Carr, Chairman
John D. Drinko
Wilber C. Nordstrom
5
EXECUTIVE COMPENSATION
The table below describes the compensation paid for the last three fiscal
years to our chief executive officer and the four other most highly paid
executive officers. We sometimes refer to the persons listed in the table below
as our "named executive officers."
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION OTHER ----------------------
-------------------------- ANNUAL SHARE ALL OTHER
NAME AND SALARY BONUS COMPENSATION OPTIONS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($)(1) ($)(2) # ($)(3)
------------------ ---- -------- -------- ------------ ------- ------------
Robert G. Ruhlman............ 2001 $300,000 $100,500 -- -- $ 58,124
President and 2000 270,000 108,000 -- 10,000 52,347
Chief Executive Officer 1999 240,000 81,000 -- -- 46,522
Jon R. Ruhlman............... 2001 480,000 168,000 -- -- 129,965(3)
Chairman of the Company 2000 480,000 192,000 -- 10,000 126,430(3)
1999 480,000 165,000 -- -- 122,640(3)
Eric R. Graef................ 2001 180,000 61,875 -- -- 34,823
Vice President -- Finance 2000 172,500 69,000 -- 10,000 31,161
and Treasurer 1999 13,750 2,750 -- -- --
R. Jon Barnes................ 2001 156,000 53,400 -- -- 30,771
Vice President -- Sales 2000 148,000 59,200 -- 10,000 29,183
and Marketing 1999 140,000 48,250 -- -- 27,586
William H. Haag III.......... 2001 150,000 50,250 -- -- 29,191
Vice President -- 2000 135,000 41,750 -- 10,000 25,714
International Operations 1999 120,000 16,000 -- -- 19,852
---------------
(1) The Bonus Plan for all named executive officers is discussed in the Salary
(Compensation) Committee Report.
(2) No named executive officer received perquisites and other personal benefits
above the threshold amounts specified in the regulations of the Securities
and Exchange Commission.
(3) Reflects the Company's contributions to the Profit Sharing Plan, including
accruals to the related Supplemental Plan. Also includes, for Jon R.
Ruhlman, premiums paid on "split dollar" life insurance policies covering
Mr. and Mrs. Ruhlman, which totaled $35,466, in 2001, $32,173 in 2000, and
$28,910 in 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-THE-
OPTIONS AT FISCAL MONEY OPTIONS AT
SHARES YEAR-END YEAR-END ($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
---- ------------ ------------ ----------------- -------------------
Robert G. Ruhlman.................... -- -- 5,000/5,000 11,810/11,810
Jon R. Ruhlman....................... -- -- 5,000/5,000 11,810/11,810
Eric R. Graef........................ -- -- 5,000/5,000 19,375/19,375
R. Jon Barnes........................ -- -- 5,000/5,000 19,375/19,375
William H. Haag III.................. -- -- 5,000/5,000 19,375/19,375
6
EMPLOYMENT CONTRACT
The Company has a five-year employment contract with Kenneth G. Brownell to
serve as President and Chief Executive Officer of Superior Modular Products
Inc., which expires December 2, 2003. His salary is established at not less than
$190,000 annually, plus a bonus calculated under a formula based upon the
percentage of attainment of annually established profit goals. The Agreement
includes a covenant not to compete during the term of the Agreement and for a
period of two years after its termination.
SALARY (COMPENSATION) COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no Salary Committee interlocks. John D. Drinko, a member of the
Salary Committee, is senior partner of Baker & Hostetler LLP, which firm acts as
general legal counsel for the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a sponsor of Ruhlman Motorsports. Ruhlman Motorsports is
owned by Randall M. Ruhlman, a director of the Company, and by his wife. In
1999, 2000 and 2001, the Company paid $707,738, $691,004, and $658,000
respectively, to Ruhlman Motorsports in sponsorship fees and for related
promotional materials. In addition, in 1999 and 2000 the Company's Canadian
subsidiary, Preformed Line Products (Canada) Ltd., paid $60,974 and $80,000,
respectively, to Ruhlman Motorsports in sponsorship fees and for related
promotional materials. This sponsorship provides the Company with a unique venue
to entertain the Company's customers and to advertise on the race car which
participates on the Trans-Am racing circuit. The Company believes that its
sponsorship contract with Ruhlman Motorsports is as favorable to the Company as
a similar contract with a similar independent third-party racing team would be.
The Company and Preformed Line Products (Canada) Ltd. intend to continue to
sponsor Ruhlman Motorsports in 2002.
Mr. John D. Drinko, one of the Company's directors, is a senior partner in
Baker & Hostetler LLP, which acts as our general outside counsel. The Company
expects that Baker & Hostetler will continue to provide legal services in that
capacity in 2002.
The Company paid fees of $96,813, $112,838 and $158,254 to
Liggett-Stashhower, Inc. during 1999, 2000 and 2001, respectively. The brother
of Jon R. Ruhlman, the chairman and a director of the Company, is an officer of
Liggett-Stashhower. Liggett-Stashhower is a Cleveland, Ohio-based advertising
and public relations firm which assists the Company with its advertising and the
publication of its annual report. The Company believes that the fees paid to
Liggett-Stashhower were substantially similar to the fees that would have been
required to be paid to an unaffiliated third-party public relations firm for
similar service. The Company has continued to contract for the services of
Liggett-Stashhower in 2002.
7
PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total return of a
hypothetical investment in our common shares with the cumulative total return of
hypothetical investments in the NASDAQ Market Index and the Media General
Financial Services, Inc. -- Industry Group 627 (Industrial Electrical Equipment)
Index based on the respective market price of each investment at December 31,
2000, March 31, 2001, June 30, 2001, September 30, 2001 and December 31, 2001,
assuming in each case an initial investment of $100 on December 31, 2000, and
reinvestment of dividends.
[LINE GRAPH]
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COMPANY/INDEX/MARKET 12/31/2000 3/31/2001 6/30/2001 9/30/2001 12/31/2001
--------------------------------------------------------------------------------------------
[DOLLARS]
Preformed Line Products
Co. 100.00 104.81 147.44 145.17 146.93
Industrial Electrical
Eqp 100.00 91.30 101.10 59.71 76.23
NASDAQ Market Index 100.00 75.39 88.36 61.36 79.98
SHAREHOLDER PROPOSALS FOR 2003 ANNUAL MEETING
Proposals of shareholders intended to be presented, pursuant to Rule 14a-8
under the Securities Exchange Act of 1934 (the "Exchange Act"), at our 2003
annual meeting of shareholders must be received by us at 660 Beta Drive,
Mayfield Village, Ohio 44143, on or before November 28, 2002, for inclusion in
our proxy statement and form of proxy relating to the 2003 annual meeting of
shareholders. In order for a shareholder's proposal outside of Rule 14a-8 under
the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) of
the Exchange Act, such proposal must be received by us at the address listed in
the immediately preceding sentence not later than February 11, 2003.
8
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive
officers, and owners of more than 10% of our common shares, to file with the
Securities and Exchange Commission (the "SEC") and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of our common
shares and other equity securities. Executive officers, directors and owners of
more than 10% of the common shares are required by SEC regulations to furnish
our Company with copies of all forms they file pursuant to Section 16(a).
To our knowledge, based solely on our review of the copies of such reports
furnished to us and written representations that no other reports were required,
during the fiscal year ended December 31, 2001, all Section 16(a) filing
requirements applicable to its executive officers, directors and
greater-than-10% beneficial owners were complied with, except that each of our
Section 16 reporting persons inadvertently failed to timely file a Form 3 prior
to the effectiveness of our Form 10 registration statement. However, the Form 3s
were filed before the SEC's staff cleared all of its comments on the Form 10.
OTHER MATTERS
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
On October 24, 2001, our Board of Directors voted to approve the engagement
of PricewaterhouseCoopers LLP ("PwC") as our independent accountant for the
fiscal year ending December 31, 2001. PwC replaced Ernst & Young, LLP ("E&Y"),
who was dismissed as our independent accountant effective October 24, 2001. The
decision to dismiss E&Y was communicated by the Company to E&Y on October 24,
2001. Our Audit Committee did not recommend or approve the change in accountant
since the entire Board of Directors considered the matter.
The reports of E&Y on our financial statements for the past two fiscal
years did not contain an adverse opinion or a disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope, or accounting principles.
In connection with the audits of our financial statements for each of the
two fiscal years ended December 31, 1999 and December 31, 2000, and in the
subsequent interim period, there were no disagreements with E&Y on any matters
of accounting principles or practices, financial statement disclosure, or
auditing scope and procedures which, if not resolved to the satisfaction of E&Y,
would have caused E&Y to make reference to the matter in their report. We
requested E&Y to furnish a letter addressed to the Securities and Exchange
Commission stating whether it agreed with the above statements. A copy of that
letter, dated October 26, 2001, is filed as Exhibit 16.1 to our Form 8-K filed
with the SEC on October 26, 2001.
During the two most recent fiscal years and the subsequent interim period
through October 24, 2001, neither the Company nor anyone on behalf of the
Company consulted with PwC regarding either the application of accounting
principles to a specified transaction, either completed or proposed; or the type
of audit opinion that might be rendered on our financial statements; or on any
matter considered important by the Company in reaching a decision as to any
accounting, auditing or financial reporting issue or any matter that was either
the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation
S-K, or any reportable event, as defined in Item 304(a)(1)(v) of Regulation S-K.
INDEPENDENT PUBLIC ACCOUNTANTS
We have not selected our independent accountants for the current fiscal
year. The Audit Committee of the Board of Directors will make this selection
later in the year. Representatives of PwC, which served as our independent
public accountants for the fiscal year ended December 31, 2001, are expected to
be present at the annual meeting of shareholders, will have an opportunity to
make a statement if they so desire, and will be available to respond to
appropriate questions.
9
AUDIT FEES
The aggregate fees billed for professional services rendered by PwC for the
audit of the Company's annual financial statements for the year ended December
31, 2001, and for PwC's reviews of the financial statements included in the
Company's Form 10-Q filed with the Securities and Exchange Commission during
2001 were $385,700.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PwC performed no services and therefore billed no fees relating to
operating or supervising the operation of the Company's information systems or
local area network or for designing or implementing the Company's financial
information management systems during 2001.
ALL OTHER FEES
The aggregate fees billed for other professional services rendered to the
Company by PwC other than audit fees in 2001 were $119,800.
MISCELLANEOUS
If the enclosed proxy is executed and returned to us, the persons named in
it will vote the shares represented by that proxy at the meeting. The form of
proxy permits specification of a vote for the election of directors as set forth
under "Election of Directors" above, the withholding of authority to vote in the
election of directors, or the withholding of authority to vote for one or more
specified nominees. When a choice has been specified in the proxy, the shares
represented will be voted in accordance with that specification. If no
specification is made, those shares will be voted at the meeting to elect
directors as set forth under "Election of Directors" above. Under Ohio law and
our Amended and Restated Articles of Incorporation broker non-votes and
abstaining votes will not be counted in favor of or against any nominee.
Director nominees who receive the greatest number of affirmative votes will be
elected directors. If any other matter properly comes before the meeting, the
persons named in the proxy will vote thereon in accordance with their judgment.
We do not know of any other matter that will be presented for action at the
meeting and we have not received any timely notice that any of our shareholders
intend to present a proposal at the meeting.
By order of the Board of Directors,
J. RICHARD HAMILTON,
Secretary
Dated: March 28, 2002
10
APPENDIX A
AUDIT COMMITTEE CHARTER
PREFORMED LINE PRODUCTS COMPANY
ORGANIZATION
There shall be a committee of the board of directors to be known as the
Audit Committee. This committee shall consist of at least three directors who
are independent of the management of the company (as defined by the listing
standards of the Nasdaq System) and are free of any relationship that, in the
opinion of the board of directors, would interfere with their exercise of
independent judgement as a committee member. Each member of the committee shall
be able to read and understand financial statements, including the company's
balance sheet, income statement and cash flow statement, and at least one
committee member shall have had past employment experience in finance or
accounting, requisite professional certification in accounting, or any other
comparable experience or background (including a current or past position as
chief executive or financial officer or other senior officer with financial
oversight responsibilities) that results in the individual's financial
sophistication as determined in the board's judgment.
STATEMENT OF POLICY
The Audit Committee shall oversee and monitor management's and the
independent auditors' participation in and responsibility for the financial
reporting process of the company. In so doing, it is the responsibility of the
Audit Committee to maintain free and open means of communication among the
directors, the independent auditors and the senior and financial management of
the company. While the committee has the responsibilities and powers set forth
in this charter, it is not the duty of the committee to plan or conduct audits
or to determine that the company's financial statements are complete and
accurate and are in accordance with generally accepted accounting principles.
This is the responsibility of financial management and the independent auditors.
Nor is it the duty of the committee to conduct investigations, to resolve
disagreements, if any, between management and the independent auditors, or to
assure compliance with laws and regulations.
RESPONSIBILITIES
A. Review of Documents and Reports
- Review and update the committee's charter at least annually.
- Review the financial statements contained in the annual report to
shareholders with management and the independent auditors to determine that
the independent auditors are satisfied with the disclosure and content of
the financial statements to be presented to the shareholders. Any changes
in accounting principles should be reviewed. Significant findings,
difficulties encountered during the course of audit work and any changes in
the planned scope should also be reviewed with the independent auditors.
B. Independent Auditors
- Review and recommend to the directors the independent auditors to be
selected to audit the financial statements of the company, considering
independence and effectiveness, and approve the fees and other compensation
to be paid to the independent auditors. The independent auditors for the
company are ultimately accountable to the board and the committee, and the
board and committee have the ultimate authority and responsibility to
select, evaluate and, when appropriate, replace the independent auditors.
- Ensure that the independent auditors submit on a periodic basis to the
committee a formal written statement delineating all relationships between
the auditors and the company, actively engage in a dialogue with the
independent auditors with respect to any disclosed relationship or service
that may
impact the objectivity and independence of the independent auditors, and
recommend that the board take appropriate action in response to the
independent auditors' report to satisfy the committee of the independent
auditors' independence.
C. Financial Reporting Process
- Provide an open avenue of communication among the independent auditors,
senior and financial management and the board of directors.
- Meet with the independent auditors and financial management of the company
to review the scope of the proposed audit for the current year and the
audit procedures to be used and, at the conclusion thereof, review such
audit, including any comments or recommendations of the independent
auditors.
- Review with the independent auditors and the financial and accounting
personnel, the adequacy and effectiveness of the accounting and financial
controls of the company, including computerized information system controls
and security. Elicit any recommendations for the improvement of internal
control procedures or particular areas where new or more detailed controls
or procedures are desirable.
D. Ethical and Legal Compliance
- Submit the minutes of all meetings of the Audit Committee to or discuss the
matters discussed at each committee meeting with the board of directors.
- Investigate any matter brought to its attention within the scope of its
duties with the power to retain outside counsel, accountants or others, for
this purpose, if, in its judgement, it is deemed appropriate.
2
PREFORMED LINE PRODUCTS COMPANY
PROXY
The undersigned hereby appoints Jon R. Ruhlman, Wilber C. Nordstrom
and J. Richard Hamilton, and each of them, attorneys and proxies of
the undersigned, with full power of substitution, to attend the annual
meeting of shareholders of Preformed Line Products Company to be held
at 660 Beta Drive, Mayfield Village, Ohio, on Monday, April 29, 2002,
at 9:00 a.m., local time, or any adjournment thereof, and to vote the
number of common shares of Preformed Line Products Company which the
undersigned would be entitled to vote, and with all the power the
undersigned would possess if personally present, as follows:
1.
------------- FOR (except as noted below), or
------------- WITHHOLD AUTHORITY to vote for, the following
nominees for election as directors, each to serve until the 2004 annual
meeting of the shareholders and until his successor has been duly
elected and qualified: John D. Drinko, Jon R. Ruhlman, Wilber C.
Nordstrom and Randall M. Ruhlman.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY PARTICULAR NOMINEE,
WRITE THAT NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
----------------------------------------------------------------------
2. On such other business as may properly come before the meeting.
(To be signed on reverse side)
-------------------------------------------------------------------------------
(Continued from other side)
THE PROXIES WILL VOTE AS SPECIFIED ABOVE, OR IF A CHOICE IS NOT
SPECIFIED, THEY WILL VOTE FOR THE NOMINEES LISTED IN ITEM 1.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
Receipt of the Notice of Annual Meeting of Shareholders and Proxy
Statement dated March 28, 2002, is hereby acknowledged.
Dated , 2002
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Signature(s)
(Please sign exactly as your
name or names appear hereon,
indicating, where proper,
official position or
representative capacity.)