defa14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Filed by a party other than the registrant |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Under Section 240.14a-12 |
INFOUSA INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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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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Proposed maximum aggregate value of transaction:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule and the date
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Date Filed: |
5711 S 86TH CIRCLE PO BOX 27347 Omaha NE 68127-0347
Executive Office: (402) 596-8900 Fax (402) 596-8902
Internet: www.infoUSA.com
FOR IMMEDIATE RELEASE
May 16, 2006
CONTACT:
Laura Smith / Andrew Siegel
Joele Frank, Wilkinson Brimmer Katcher
Phone: (212) 355-4449
infoUSA SENDS LETTER TO SHAREHOLDERS
Urges Shareholders to Vote FOR infoUSA Directors
and AGAINST Shareholder Proposal Number 2
OMAHA, Neb. May 16, 2006 infoUSA (Nasdaq:IUSA) today sent the following letter to all infoUSA
stockholders recommending that they vote FOR the Boards director nominees and AGAINST shareholder
proposal number 2:
infoUSAs ANNUAL MEETING OF STOCKHOLDERS IS RAPIDLY APPROACHING
TAKE ACTION TO PROTECT YOUR INVESTMENT AND VOTE THE
ENCLOSED WHITE PROXY CARD TODAY!
May 16, 2006
Dear Fellow infoUSA Shareholder,
We urge you to take action to preserve and enhance the value of your investment in infoUSA by
signing, dating and returning the enclosed WHITE PROXY CARD TODAY in support of our three highly
qualified nominees Vinod Gupta, Dr. George Haddix and Dr. Vasant Raval.
As you know, Dolphin Partners, a dissident stockholder, has launched a hostile proxy contest in an
attempt to elect three of its own nominees to the infoUSA Board of Directors.
THE KEY ISSUE IS WHO SHOULD BE THE STEWARDS OF infoUSA
We strongly urge you to disregard the dissidents materials and the blue proxy card and vote FOR
the incumbent infoUSA directors. Your Board of Directors also urges you to vote AGAINST
shareholder proposal number 2.
infoUSAs EXISTING BOARD IS HIGHLY QUALIFIED, INDEPENDENT MINDED AND
COMMITTED TO THE PRINCIPLES OF GOOD CORPORATE GOVERNANCE
The current infoUSA Board is committed to sound corporate governance. infoUSA has continually
added highly-qualified members to the Board, and today eight of infoUSAs nine directors are
independent by NASDAQs Corporate Governance Standards and all of the members of the Boards
committees are independent.
Long before Dolphins involvement, this Board, under the direct oversight of Dr. Vasant Raval
(Chairman of the Audit Committee and current nominee), reviewed all related party transactions with
the Companys outside auditors and determined that such transactions were appropriate and disclosed
in the Companys SEC filings. However, given the post-Sarbanes Oxley corporate environment, Dr.
Raval recommended the reduction or restructuring of those transactions and by the end of 2004,
infoUSA had virtually eliminated all related party transactions. Also under Dr. Ravals oversight,
infoUSA has developed a strong internal audit function that reports directly to the Audit
Committee, and the Company received a clean Section 404 report on internal controls from its
outside auditors for 2005. Despite Dolphins rhetoric to the contrary, this Board has done the
right thing by proactively taking actions to strengthen its corporate governance.
infoUSAs NOMINEES HAVE THE RIGHT EXPERIENCE AND KNOWLEDGE
TO ENHANCE VALUE FOR ALL SHAREHOLDERS
infoUSAs nominees, which include its founder and largest shareholder, and the Chairmen of its
independent Corporate Governance and Nominating Committee and its independent Audit Committee, are
respected and proven business leaders. Importantly, they each have experience at companies whose
businesses are similar or complementary to that of infoUSA and they are dedicated to enhancing
shareholder value:
Vinod Gupta
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Founded the Company with $100 and as a result of his vision, infoUSA has grown into a
business with a market capitalization of more than $650 million. |
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Chairman of the Board since its incorporation in 1972; CEO since its incorporation in
1972 until September 1997 and since August 1998. |
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Pioneered the consolidation of the direct marketing industry, turning infoUSA into an
industry leader. |
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Personally spearheaded over 26 acquisitions. |
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Led the acquisition and integration of five email companies, purchased at a very low
price, creating a highly profitable email marketing division within infoUSA. |
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Mr. Gupta has the critical industry knowledge and personal relationships to lead this
Company forward as it implements a business plan that we believe will create value for all
shareholders. |
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Mr. Gupta is an industry innovator, who has spearheaded the implementation of new ideas
such as our highly successful salesgenie.com and credit.net subscription based strategy. |
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His leadership has helped infoUSA remain at the forefront of the industry by
anticipating and adapting to changing market conditions. |
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We believe that replacing Mr. Gupta, the Companys founding leader, would diminish the
future value of the Company. |
Dr. George F. Haddix
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Director since March 1995 and currently serves as the Chair of the Boards Corporate
Governance and Nominating Committee. |
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Dr. Haddix has significant operational and business experience in both public and
private companies that has greatly benefited infoUSA. |
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Chairman and CEO of PKW Holdings, Inc. and PKWARE, INC., computer software companies
headquartered in Milwaukee, Wisconsin. |
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Founder and former president of publicly-held CSG Systems International, Inc., a $600
million software and services company that has successfully built a customer subscription
business |
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His operational experience at CSG is highly relevant and makes him an invaluable
resource to infoUSA as we continue to build our subscription business. |
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Formerly CEO of U.S. West Network Systems Inc. and served as chairman and CEO of Applied
Communications, Inc. |
Dr. Vasant H. Raval
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Director of the Company and Chair of the Audit Committee since October 2002. |
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Professor of accounting and a highly qualified audit committee chair. |
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Under his oversight, and in many cases hands-on involvement, the Companys financial
reporting and internal controls have been markedly strengthened during his tenure on the
Board. |
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Dr. Raval invested numerous hours in overseeing the Companys successful efforts to
achieve compliance with the Sarbanes Oxley Act of 2002, build a highly professional
internal audit function and upgrade its financial reporting processes. |
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Dr. Raval has been Professor and Chair of the Department of Accounting at Creighton
University since July 2001. He joined the Creighton University faculty in 1981 and has
served as Professor of Accounting and Associate Dean and Director of Graduate Programs at
the College of Business Administration. |
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Dr. Raval is also a director and chairman of the audit committee of Syntel Inc., an
electronic business solutions provider based in Troy, Michigan. |
OUR NOMINEES ARE MORE THAN DIRECTORS, THEY ARE SIGNIFICANT infoUSA SHAREHOLDERS
Mr. Gupta, the founder of infoUSA is the Companys largest shareholder, and Dr. Haddix and Dr.
Raval have each made personal significant financial investments in the Company as well. The full
Board together with the senior management team beneficially own approximately 43% of the Company
their financial interests are clearly aligned with enhancing shareholder value. Dolphins nominees
have no financial stake in the success of infoUSA and therefore we dont believe that interests are
aligned with yours.
WE ARE EXECUTING A STRATEGIC PLAN THAT WILL ENHANCE VALUE
FOR ALL infoUSA STOCKHOLDERS
Our nominees have the skills, experience, judgment and institutional knowledge necessary to
successfully steer this Company as it moves forward with the implementation of its STRATEGIC
business plan. Through the successful acquisition and integration of more than twenty companies,
infoUSA believes it has put in place a platform for sustained organic revenue growth going forward.
Our acquisitions have enhanced content, opened new distribution channels and provided entry into
new vertical segments. In addition, we believe we will see revenue growth from our compelling
cross-selling opportunities across infoUSA businesses and suites of products and services. We also
have an outstanding track-record of integrating and reducing costs in these acquired companies,
which we believe offers significant potential for margin expansion.
The success of infoUSAs strategy is clearly evident in the Companys performance:
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infoUSAs return on equity was 16% in 2005. |
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Total return to our stockholders over the past four years has been 57.5% or an
average annual return of approximately 11.5%. |
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This compares to a return of only 14.8% from the NASDAQ over the same four-year
period or an average annual return of approximately 3.7%. |
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infoUSA has paid a cash dividend in each of the past two years returning more
than $12 million to infoUSA stockholders in 2006 alone. |
infoUSA had a great first quarter in 2006 and has revised revenue guidance to the upper end of the
range for the year, while keeping the same guidance for profitability. infoUSA reported 4.3%
organic growth in the first quarter.
OUR STRATEGIC PLAN HAS RESULTED IN STRONG CASH FLOW, ALLOWING infoUSA TO
SIGNIFICANTLY REDUCE ITS DEBT
The Companys strong free cash flow has enabled it to delever its balance sheet significantly over
the last five years. infoUSA reduced its outstanding net debt by approximately $48 million in 2005
and by approximately $5 million in the first quarter of 2006. Since 2000, we have dramatically
improved the Companys leverage ratio (total debt/EBITA) from 5.33 to 1.61.1
WHO ARE DOLPHINS NOMINEES?
DOES DOLPHIN REALLY KNOW?
In its proxy soliciting materials, Dolphin asserts that its nominees have the experience and
energy that shareholders can trust. But even a cursory examination of the public record by
Dolphin would have revealed serious questions about its nominees experience.
For instance, Mr. Trevisanis biography in Dolphins proxy materials states that from 1996 to
2000, Mr. Trevisani was a director of Home Port Bancorp (NASDAQ:HPBC). This is untrue.
Home Ports proxy statements for its 1996, 1997, and 1998 annual meetings do not list Mr. Trevisani
as a director. Home Ports proxy statement for its May 17, 1999 annual meeting of stockholders
states that Mr. Trevisani became a director of that company on February 3, 1999, not in 1996, to
replace a resigning director. Mr. Trevisani made a filing with the Securities and Exchange
Commission, a Form 3 which must be filed within ten days of becoming a director of a public company
that confirms that date. Unless several public filings made with the SEC are wrong, Mr. Trevisani
did not serve as a director of the publicly-held Home Port in 1996, 1997 or 1998 as claimed. It
also appears from public documents that prior to and during his relatively short term as a
director, Mr. Trevisani and his law firm served as Home Ports outside counsel. In fact, publicly
available documents confirm that after he joined its board, Mr. Trevisani personally served as the
attorney that handled the sale of the Home Port to Seacoast Financial Services Corp. in December
2000. The public record confirms that Mr. Trevisanis tenure as a Home Port director and his
experience as a public company director is substantially shorter than Dolphin would like you to
believe.
Given their long professional relationship, Mr. Meyer must certainly know when Mr. Trevisani served
on Home Ports board of directors. Mr. Meyers biography in Dolphins proxy solicitation materials
states that he was chairman of the board of Home Port from 1992 to 2000. The professional
relationship between Mr. Trevisani and Mr. Meyer has continued. Mr. Trevisani and Mr. Meyer were
both nominated to serve on the board of Computer Horizons by a shareholder that was attempting to
take control of that company.
Mr. Meyers biography in Dolphins solicitation materials ends with the statement that in April
2005, Mr. Meyer was nominated to the board of directors of OfficeMax (NYSE:OMX) by its then third
largest shareholder. This statement is incomplete and misleading. Again, a simple check of the
public filings of OfficeMax reveals that Mr. Meyers nomination was later withdrawn by that
shareholder.
Dolphins most recent communications to infoUSA shareholders no longer make reference to Mr.
Aslins current service as a director of ACT Teleconferencing, Inc. Public filings indicate that
since Mr. Aslin
became a member of that companys board of directors and audit committee in 2004, its auditors have
repeatedly found that its disclosure controls and procedures are not effective, it has failed to
file its reports with the SEC on time and it has been delisted from NASDAQ.
In short, it appears that Dolphin has made little effort to confirm or disclose the background and
experience of the nominees that it is asking you to make the stewards of the future of infoUSA.
DOLPHINS MISLEADING STATEMENTS ABOUT OUR FINANCIAL PERFORMANCE
We urge you to be cautious about relying on the financial analysis offered by Dolphin. In its
recently filed investor presentation, Dolphin includes several charts purporting to depict
infoUSAs financial performance. These charts and the underlying data are inaccurate and
misleading.
One chart is a comparison of infoUSAs P/E ratio to its peer group. Dolphin evidently has used an
earnings per share number other than the earnings per share reported in infoUSAs SEC filings. As
a result, Dolphins comparison substantially understates the Companys P/E ratio for each of the
periods covered. For example, in 2001, the Companys publicly reported earnings per share divided
by average trading price for the period results in a P/E ratio of 48.2, not 20.1 as reported by
Dolphin. We have been unable to ascertain the basis of Dolphins P/E calculations, but can find no
defensible reason for using numbers other than those publicly reported by the Company.
The other charts presented by Dolphin are based on EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) data. When infoUSA presents EBITDA information, it provides a
reconciliation of that information to its GAAP financial statements. Dolphin does not include such
a reconciliation or otherwise explain how it calculates EBITDA. This is significant, because the
EBITDA figures used by Dolphin are different than the EBITDA figures publicly disclosed by infoUSA,
and the calculation selected by Dolphin causes infoUSAs performance to look less favorable in
comparison to the peer group.
OUR ACQUISITION STRATEGY HAS CREATED SIGNIFICANT VALUE
While Dolphin says otherwise, our acquisition strategy has created significant value. Since 1996,
we have made over 20 acquisitions, financed primarily through debt. The operating cash flows from
these acquisitions have contributed significantly to the financial performance of the Company.
Over this period of time, the Companys EBITDA has increased from approximately $14 million to
approximately $92 million, without any additional equity investment from shareholders.
WE BELIEVE THAT DOLPHINS NOMINEES OFFER NO NEW IDEAS FOR
IMPROVING OPERATIONS OR ENHANCING VALUE
We believe that, unlike your directors, Dolphins nominees do not have the industry knowledge,
experience or commercial relationships that will help to ensure that your investment in infoUSA
will be maximized. In contrast to your Board and management, the dissident group offers no ideas
for improving operations or growing the Company. We believe that election of their slate could
interrupt the implementation of our strategic plan and negatively impact shareholder value.
In stark contrast to our current Board, we believe that Dolphins nominees have:
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NO working knowledge of infoUSA, its business or the industry |
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NO business plan or strategy for infoUSA |
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NO relevant industry experience |
WITH YOUR SUPPORT, infoUSAs BOARD AND MANAGEMENT CAN
CONTINUE TO BUILD VALUE FOR ALL SHAREHOLDERS
Your Board asks that you support the current infoUSA Board and management team by voting FOR
infoUSAs incumbent directors and AGAINST proposal number 2 on the enclosed WHITE proxy card today.
Your vote is extremely important, no matter how many or how few shares you own. If you have any
questions or need any assistance in voting your shares, please do not hesitate to contact MacKenzie
Partners, the firm assisting us in the solicitation of proxies, toll free at (800) 322-2885.
PRESERVE AND ENHANCE THE VALUE OF YOUR infoUSA INVESTMENT
VOTE FOR YOUR BOARDS NOMINEES AND AGAINST PROPOSAL NUMBER 2
ON THE WHITE PROXY CARD TODAY
Thank you very much for your continued support.
Sincerely,
Vinod Gupta
Chairman & Chief Executive Officer
infoUSA Inc.
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Total leverage is calculated by dividing
total debt, as reported in the Companys financial statements filed with
the Companys Annual Report on Form 10-K for each of the indicated
periods, by EBITDA. EBITDA is a non-GAAP financial measure. The following
table sets forth the Companys total debt and reconciles EBITDA with Net
Income, the most directly comparable financial measure calculated and presented
in accordance with GAAP, as reported in the Companys financial
statements filed with the Companys Annual Report on Form 10-K for each
of the indicated periods. The Company noted that its 2002 and 2003 results
reflect the effect of September 11, 2001. |
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Year Ended December 31 |
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2000 |
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2001 |
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2002 |
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2003 |
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2004 |
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2005 |
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( In Thousands ) |
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Net Income |
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(31,633 |
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4,964 |
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20,436 |
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$ |
19,695 |
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$ |
17,838 |
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31,507 |
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Income Tax |
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1,320 |
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11,371 |
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12,713 |
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12,072 |
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10,934 |
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17,659 |
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Interest Expense |
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26,651 |
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25,285 |
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16,059 |
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11,547 |
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9,210 |
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11,841 |
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Amortization |
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32,190 |
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30,254 |
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13,310 |
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13,276 |
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15,875 |
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18,098 |
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Depreciation |
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20,005 |
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17,873 |
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14,773 |
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14,573 |
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14,062 |
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12,818 |
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EBITDA |
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$ |
48,533 |
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$ |
89,747 |
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77,291 |
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71,163 |
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$ |
67,919 |
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91,923 |
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Total Debt at Year End |
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$ |
258,652 |
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$ |
225,670 |
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$ |
148,797 |
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$ |
181,396 |
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$ |
196,226 |
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$ |
148,006 |
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EBITDA Turns (Total Debt/EBITDA) |
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5.33 |
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2.51 |
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1.93 |
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2.55 |
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2.89 |
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1.61 |
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About infoUSA
infoUSA ( www.infoUSA.com ), founded in 1972, is the leading provider of
business and consumer information products, database marketing services, data
processing services and sales and marketing solutions. Content is the essential
ingredient in every marketing program, and infoUSA has the most comprehensive
data in the industry, and is the only company to own a proprietary database of
250 million consumers and 14 million businesses under one roof. The infoUSA
database powers the directory services of the top Internet traffic-generating
sites. Nearly 3 million customers use infoUSAs products and services to find
new customers, grow their sales, and for other direct marketing, telemarketing,
customer analysis and credit reference purposes. infoUSA headquarters are
located at 5711 S. 86th Circle, Omaha, NE 68127 and can be contacted at (402)
593-4500. To know more about Sales Leads, click www.infousa.com . To get a
7-day free trial and 100 free sales leads, click www.salesgenie.com.
Statements in this announcement other than historical data and information
constitute forward looking statements that involve risks and uncertainties that
could cause actual results to differ materially from those stated or implied by
such forward-looking statements. The potential risks and uncertainties include,
but are not limited to, recent changes in senior management, the successful
integration of recent and future acquisitions, fluctuations in operating
results, failure to successfully carry out our Internet strategy or to grow our
Internet revenue, effects of leverage, changes in technology and increased
competition. More information about potential factors that could affect the
companys business and financial results is included in the companys filings
with the Securities and Exchange Commission.