UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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United States Lime & Minerals, Inc.
- --------------------------------------------------------------------------------
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United States Lime & MINERALS, INC.
Minerals, Inc.
13800 Montfort Drive, Suite 330
Dallas, Texas 75240
April 4, 2003
5, 2004
Dear Shareholders:
You are cordially invited to attend the 20032004 Annual Meeting of Shareholders at 10:00 a.m. on Friday, May 2, 2003,5, 2004, at the Crowne Plaza Suites, 7800 Alpha Road, Dallas, Texas, 75240. Please refer to the back of this letter for directions. The Meeting will be preceded by an informal reception starting at 9:30 a.m., at which you will have an opportunity to meet the Directors and Officers of the Company.
Enclosed with this letter is a Notice of the Annual Meeting, Proxy Statement, and Proxy Card. I urge you to complete, sign, date, and mail the enclosed Proxy Card at your earliest convenience. Regardless of the size of your holdings, it is important that your shares be represented. If you attend the Meeting, you may withdraw your Proxy and vote in person. You may also withdraw your Proxy by submitting to the Company, prior to the Annual Meeting, a written notice of revocation.
I look forward to meeting and speaking with you at the Annual Meeting on May 2, 2003.
Sincerely,
/s/ TIMOTHY W. BYRNE
Timothy W. Byrne
President and Chief Executive Officer
5, 2004.
| Sincerely, | ||
 | ||
| Timothy W. Byrne | ||
| President and Chief Executive Officer |
Enclosures
UNITED STATES LIME
United States Lime & MINERALS, INC.
Minerals, Inc.
Directions to the 20032004 Annual Meeting of Shareholders
Friday, May 2, 2003,5, 2004, at 10:00 a.m.
CROWNE PLAZA SUITES
Crowne Plaza Suites
7800 ALPHA ROAD
DALLAS, TEXASAlpha Road
Dallas, Texas 75240
DIRECTIONS FROM DALLAS-FT. WORTH AIRPORT:
o
Directions from Dallas-Ft. Worth Airport:
Take the North exit from the airport
o
East on I-635 (Lyndon B. Johnson Freeway)
o
Exit at Coit Road, turning North (left) onto Coit
o
Turn left at first intersection onto Alpha Road
o
Hotel entrance is on the left before junction with Blossomheath Road
DIRECTIONS FROM DOWNTOWN DALLAS:
o
Directions from Downtown Dallas:
North on North Central Expressway (U.S. 75)
o
Exit at Coit Road (exit passes over U.S. 75 and joins Coit)
o
Continue North on Coit until you cross over I-635 (Lyndon B. Johnson
Freeway)
o
Turn left at first intersection onto Alpha Road
o
Hotel entrance is on the left before junction with Blossomheath Road
(MAP)
UNITED STATES LIME & MINERALS, INC.
13800 Montfort Drive
Suite 330
Dallas, Texas 75240
NOTICE OF 20032004 ANNUAL MEETING OF SHAREHOLDERS
To Be Held On May 2, 2003
5, 2004
To the Shareholders of
United States Lime & Minerals, Inc.:
Notice is hereby given that the 20032004 Annual Meeting of Shareholders of United States Lime & Minerals, Inc., a Texas corporation (the "Company"“Company”), will be held on Friday,Wednesday, the 2nd5th day of May, 2003,2004, at 10:00 a.m., local time at the Crowne Plaza Suites, 7800 Alpha Road, Dallas, Texas 75240 (the "Annual
Meeting"“Annual Meeting”), for the following purposes:
1. To elect five directors to serve until the next annual meeting
of shareholders and until their respective successors have
been duly elected and qualified; and
2.
| 1. | To elect five directors to serve until the next annual meeting of shareholders and until their respective successors have been duly elected and qualified; and | |||
| 2. | To transact such other business as may properly be brought before the Annual Meeting or any adjournment thereof. | |||
Information regarding the matters to be acted upon at the Annual Meeting is contained in the Proxy Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 21,
200326, 2004 as the record date for the determination of shareholders entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. Only shareholders of record at the close of business on the record date are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. A complete list of such shareholders will be available for inspection during usual business hours for ten days prior to the Annual Meeting at the office of the Company in Dallas, Texas.
All shareholders are cordially invited to attend the Annual Meeting.
SHAREHOLDERS ARE URGED, WHETHER OR NOT THEY PLAN TO ATTEND THE ANNUAL MEETING,
TO COMPLETE, SIGN, AND DATE THE ACCOMPANYING PROXY CARD AND TO RETURN IT
PROMPTLY IN THE POSTAGE-PAID RETURN ENVELOPE PROVIDED.Shareholders are urged, whether or not they plan to attend the Annual Meeting, to complete, sign, and date the accompanying Proxy Card and to return it promptly in the postage-paid return envelope provided. A shareholder who has returned a Proxy Card may withdraw the Proxy by sending the Company a written notice of revocation or by attending the Annual Meeting and voting in person.
By Order of the Board of Directors,
/s/ TIMOTHY W. BYRNE
Timothy W. Byrne
President and Chief Executive Officer
| By Order of the Board of Directors, | ||
| ||
| Timothy W. Byrne | ||
| President and Chief Executive Officer |
Dallas, Texas
April 4, 2003
(LOGO)
5, 2004
UNITED STATES LIME & MINERALS, INC.
13800 MONTFORT DRIVE
SUITEMontfort Drive
Suite 330
DALLAS, TEXAS
Dallas, Texas 75240
PROXY STATEMENT
FOR
2003
2004 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 2, 2003
To Be Held On May 5, 2004
INTRODUCTION
The accompanying form of proxy (the "Proxy Card"“Proxy Card”), mailed together with this proxy statement (the "Proxy Statement"“Proxy Statement”), is solicited by and on behalf of the Board of Directors of United States Lime & Minerals, Inc., a Texas corporation (the "Company"“Company”), for use at the 20032004 Annual Meeting of Shareholders of the Company (the "Annual Meeting"“Annual Meeting”) to be held at the time and place and for the purposes set forth in the accompanying Notice. The approximate date on which this Proxy Statement and the Proxy Card were first sent to shareholders of the Company is April 4, 2003.5, 2004.
Shares of the Company'sCompany’s common stock, par value $0.10 per share (the "Common Stock"“Common Stock”), represented by valid Proxy Cards, duly signed, dated, and returned to the Company and not revoked, will be voted at the Annual Meeting in accordance with the directions given. In the absence of directions to the contrary, such shares will be voted:
| FOR the election of the five nominees named in the Proxy Card to the Board of Directors of the Company. |
If any other matter is properly brought before the Annual Meeting for action at the Meeting, which is not currently anticipated, the persons designated to serve as proxies will vote on such matters in accordance with their best judgment.
Any shareholder of the Company returning a Proxy Card has a right to withdraw the Proxy at any time before it is exercised by attending the Annual Meeting and voting in person or by giving written notice of such revocation to the Company addressed to Timothy W. Byrne, President and Chief Executive Officer, United States Lime & Minerals, Inc., 13800 Montfort Drive, Suite 330, Dallas, Texas 75240; however, no such revocation shall be effective unless such notice of revocation has been received by the Company at or prior to the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
Only holders of record of Common Stock at the close of business on March 21, 2003,26, 2004, the record date for the Annual Meeting, are entitled to notice of and to vote at the Annual Meeting or any adjournment thereof. The presence of the holders of a majority of the outstanding shares of Common Stock is necessary to constitute a quorum. On the record date for the Annual Meeting, there were issued and outstanding 5,799,8455,822,596 shares of Common Stock. At the Annual Meeting, each shareholder of record on March 21, 200326, 2004 will be entitled to one vote for each share of Common Stock registered in such shareholder'sshareholder’s name on the record date.
The following table sets forth, as of March 21, 2003,26, 2004, information with respect to shareholders known to the Company to be the beneficial owners of more than five percent of the issued and outstanding shares of Common Stock:
| Name and Address | Number of Shares | Percent | ||||||
| of Beneficial Owner | Beneficially Owned (2) (3) | of Class (2) | ||||||
| Inberdon Enterprises Ltd. | 3,542,033 | 60.17 | % | |||||
1020-789 West Pender Street Vancouver, British Columbia Canada V6C 1H2 (1) | ||||||||
| Robert S. Beall | 674,899 | 11.52 | % | |||||
| 5300 Miramar Lane Colleyville, Texas 76034 | ||||||||
| (1) | Inberdon Enterprises Ltd. | |
| (2) | In the case of Inberdon, based on the Company’s records as of March 26, 2004. In the case of Robert S. Beall, | |
| (3) | Includes the following shares subject to purchase pursuant to warrants exercisable within the next 60 days: Inberdon, 63,643; and Robert S. Beall, 37,714. |
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SHAREHOLDINGS OF COMPANY DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the number of shares of Common Stock beneficially owned, as of March 21, 2003,26, 2004, by all directors and named executive officers of the Company individually and all directors and executive officers as a group:
| Number of Shares | Percent | |||||||
| Name | Beneficially Owned(1) | of Class | ||||||
| Timothy W. Byrne | 132,845 | (2)(4) | 2.24 | % | ||||
| Richard W. Cardin | 4,000 | (4) | (5 | ) | ||||
| Antoine M. Doumet | 2,000 | (3)(4) | (5 | ) | ||||
| Wallace G. Irmscher | 11,000 | (4) | (5 | ) | ||||
| Edward A. Odishaw | 9,400 | (4) | (5 | ) | ||||
| Johnney G. Bowers | 22,493 | (2)(4) | (5 | ) | ||||
| Billy R. Hughes | 62,063 | (2)(4) | 1.06 | % | ||||
| Richard D. Murray | 35,500 | (2)(4) | (5 | ) | ||||
| M. Michael Owens | 4,000 | (4) | (5 | ) | ||||
| All Directors and Executive Officers as a Group (9 persons) | 283,301 | (2)(4) | 4.68 | % | ||||
| (1) | All shares are directly held with sole voting and dispositive power unless otherwise indicated. | |
| (2) | Includes 6,845, 493, 3,860, and 500 shares allocated to Messrs. Byrne, Bowers, Hughes, and Murray, respectively, under the Company’s Employee Stock Ownership Plan (“ESOP”), which was merged with the Company’s 401(k) profit-sharing plan effective July 31, 1999. | |
| (3) | The named individual is the brother of | |
| (4) | Includes the following shares subject to stock options exercisable within the next 60 days granted under the 1992 Stock Option Plan, as Amended and Restated (the “1992 Plan”) or the 2001 Long-Term Incentive Plan (the “2001 Plan”): Mr. Byrne, 110,000; Mr. Cardin, 2,000; Mr. Doumet, 2,000; Mr. Irmscher, | |
| (5) | Less than 1%. |
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PROPOSAL 1: ELECTION OF DIRECTORS
Five directors, constituting the entire Board of Directors, are to be elected at the Annual Meeting to serve until the next annual meeting of shareholders and until their respective successors have been duly elected and qualified. All of the nominees are currently directors of the Company. Mr. John
J. Brown served as a Director of the Company from July 1993 until his untimely
passing in August 2002.
Directors are elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at the Annual Meeting. The Company'sCompany’s Restated Articles of Incorporation prohibit cumulative voting for the election of directors. All duly submitted and unrevoked Proxy Cards will be voted FOR the nominees selected by the Board of Directors except where authorization so to vote is withheld. Votes withheld and broker non-votes are not counted in the election of directors.
The Board of Directors recommends that all shareholders vote "FOR"“FOR” the election of all such nominees. If any nominee should become unavailable for election for any presently unforeseen reason, the persons designated to serve as proxies will have full discretion to vote for another person nominated by the Board.
NOMINEES FOR DIRECTOR
The five nominees for director are named below. Each has consented to serve as a director if elected. Set forth below is pertinent information with respect to each nominee:
TIMOTHY
Timothy W. BYRNE
Mr. Byrne age 45, rejoined the Company on December 8, 2000 as its
President and Chief Executive Officer, positions he previously held
during 1997 and 1998. Mr. Byrne has served the Company as a director
since 1991, and served in various positions including Senior Vice
President and Chief Financial Officer and Vice President of Finance and
Administration from 1990 to 1998. Prior to rejoining the Company in
2000, Mr. Byrne was President of Rainmaker Interactive, Inc., an
Internet services and communications company focused on strategy,
marketing, and technology.
RICHARD
| Mr. Byrne, age 46, rejoined the Company on December 8, 2000 as its President and Chief Executive Officer, positions he previously held during 1997 and 1998. Mr. Byrne has served the Company as a director since 1991, and served in various positions including Senior Vice President and Chief Financial Officer and Vice President of Finance and Administration from 1990 to 1998. Prior to rejoining the Company in December 2000, Mr. Byrne was President of Rainmaker Interactive, Inc., an Internet services and communications company focused on strategy, marketing, and technology. |
Richard W. CARDIN
Mr. Cardin age 67, has served as a director of the Company since
August 1998. He is a consultant and retired partner of Arthur Andersen
LLP since 1995, having spent 37 years with that firm. He was Office
Managing partner with Arthur Andersen LLP in Nashville, Tennessee from
1980 until 1994. He is a member of the Board of Directors of Atmos
Energy Corporation, a natural gas utility company, and Intergraph
Corporation, a provider of end-to-end technical solutions and systems
integration services.
ANTOINE
| Mr. Cardin, age 68, has served as a director of the Company since August 1998. He is a consultant and retired partner of Arthur Andersen LLP since 1995, having spent 37 years with that firm. He was Office Managing partner with Arthur Andersen LLP in Nashville, Tennessee from 1980 until 1994. He is a member of the Board of Directors of Atmos Energy Corporation, a natural gas utility company, and Intergraph Corporation, a provider of end-to-end technical solutions and systems integration services. |
Antoine M. DOUMET
Mr. Doumet age 43, has served as a director of the Company since July
1993 in the capacity of Vice Chairman. He is a private businessman and
investor. From 1989 to 1995, he served as a director of MELEC, a French
electrical engineering and contracting company. From 1988 to 1992, Mr.
Doumet served as vice president and a director of Lebanon Chemicals
Company. Mr. Doumet is the brother of Mr. George M. Doumet, who
indirectly owns all of the outstanding shares of Inberdon.
WALLACE
| Mr. Doumet, age 44, has served as a director of the Company since July 1993 in the capacity of Vice Chairman. He is a private businessman and investor. From 1989 to 1995, he served as a director of MELEC, a French electrical engineering and contracting company. From 1988 to 1992, Mr. Doumet served as vice president and a director of Lebanon Chemicals Company. Mr. Doumet is the brother of Mr. George M. Doumet, who indirectly owns all of the outstanding shares of Inberdon. |
Wallace G. IRMSCHER
Mr. Irmscher age 80,
| Mr. Irmscher, age 81, has served as a director of the Company since July 1993. He was a senior executive with 44 years of diversified experience in the construction and construction materials industry. From 1995 to 2003, Mr. Irmscher served as a director of N-Viro International Corporation, a company involved in the recycling of industrial waste. He also serves as an advisory board member of U.S. Concrete, Inc., a producer of construction materials. He is past Chairman of the American Concrete Paving Association (ACPA) and is presently a board member |
4
advisory board member of U.S. Concrete, Inc., a producer of
construction materials. He is past Chairman of the American Concrete
Paving Association (ACPA) and is presently a Board member of National
Ready Mix Concrete Association (NRMCA). Mr. Irmscher has performed
consulting services for various companies in the cement, construction,
and environmental industries.
EDWARD
| of the National Ready Mix Concrete Association (NRMCA). Mr. Irmscher has performed consulting services for various companies in the cement, construction, and environmental industries. |
Edward A. ODISHAW
Mr. Odishaw age 67, has served as a director and Chairman of the Board
of the Company since July 1993. Mr. Odishaw is Chairman of Austpro
Energy Corporation, a public Canadian corporation. Between 1964 and
1999, he practiced law in Saskatchewan and British Columbia, Canada,
with emphasis on commercial law, corporate mergers, acquisitions, and
finance. Between 1992 and 1999, Mr. Odishaw was a Barrister and
Solicitor with the law firm of Boughton Peterson Yang Anderson, located
in Vancouver, Canada. From 1972 to 1992, Mr. Odishaw was a Barrister
and Solicitor with the law firm of Swinton & Company, Vancouver,
Canada. Mr. Odishaw holds directorships in numerous companies in
Canada. Mr. Odishaw is a member in good standing of the Law Society of
British Columbia and the Canadian Bar Association and is a
non-practicing member of the Law Society of Saskatchewan.
| Mr. Odishaw, age 68, has served as a director and Chairman of the Board of the Company since July 1993. Mr. Odishaw is Chairman of Austpro Energy Corporation, a public Canadian corporation. Between 1964 and 1999, he practiced law in Saskatchewan and British Columbia, Canada, with emphasis on commercial law, corporate mergers, acquisitions, and finance. Between 1992 and 1999, Mr. Odishaw was a Barrister and Solicitor with the law firm of Boughton Peterson Yang Anderson, located in Vancouver, Canada. From 1972 to 1992, Mr. Odishaw was a Barrister and Solicitor with the law firm of Swinton & Company, Vancouver, Canada. Mr. Odishaw holds directorships in numerous companies in Canada. Mr. Odishaw is a member in good standing of the Law Society of British Columbia and the Canadian Bar Association and is a non-practicing member of the Law Society of Saskatchewan. |
EXECUTIVE OFFICERS
WHO ARE NOT ALSO DIRECTORS
JOHNNEY
Johnney G. BOWERS
Mr. Bowers age 56, joined the Company in June 1997 and has served as
Vice President - Manufacturing since that date. He has over 25 years of
engineering and operating experience. From May 1991 until he joined the
Company, Mr. Bowers served as director of engineering with Chemical
Lime Company. Prior to May 1991, Mr. Bowers held various senior process
engineering and project manager positions in the mining and processing
industry.
BILLY
| Mr. Bowers, age 57, joined the Company in June 1997 and has served as Vice President – Manufacturing since that date. He has over 25 years of engineering and operating experience. From May 1991 until he joined the Company, Mr. Bowers served as director of engineering with Chemical Lime Company. Prior to May 1991, Mr. Bowers held various senior process engineering and project manager positions in the mining and processing industry. |
Billy R. HUGHES
Mr. Hughes age 64, joined the Company in June 1973 and has served as
Senior Vice President - Sales & Marketing since December 1998. He has
more than 25 years of experience in the lime and limestone industry.
Mr. Hughes began his employment with the Company as a salesperson for
the Arkansas Lime plant. In 1978, he was promoted to sales manager for
Arkansas Lime. In 1983, Mr. Hughes was appointed Vice President - Sales
and Marketing for both Arkansas Lime and Texas Lime.
RICHARD
| Mr. Hughes, age 65, joined the Company in June 1973 and has served as Senior Vice President – Sales & Marketing since December 1998. He has more than 25 years of experience in the lime and limestone industry. Mr. Hughes began his employment with the Company as a salesperson for the Arkansas Lime plant. In 1978, he was promoted to sales manager for Arkansas Lime. In 1983, Mr. Hughes was appointed Vice President – Sales and Marketing for both Arkansas Lime and Texas Lime. |
Richard D. MURRAY
Mr. Murray age 62, joined the Company in May 1995 and served as Vice
President - Engineering until March 2001, when he was appointed Vice
President and Plant Manager for Texas Lime Company. He has over 35
years of experience in various management and engineering positions.
Prior to joining the Company, he was Vice President - Operations for
Lone Star Industries, Inc., a leading cement manufacturer.
| Mr. Murray, age 63, joined the Company in May 1995 and served as Vice President – Engineering until March 2001, when he was appointed Vice President and Plant Manager for Texas Lime Company. He has over 35 years of experience in various management and engineering positions. Prior to joining the Company, he was Vice President – Operations for Lone Star Industries, Inc., a leading cement manufacturer. |
M. MICHAEL OWENS
Mr.Michael Owens age 49, joined the Company in August 2002 as its Vice
President and Chief Financial Officer, Secretary and Treasurer. He has
over 25 years of financial and accounting experience. Prior to joining
the Company, Mr. Owens was Vice President - Finance at Sunshine Mining
and Refining Company ("Sunshine"), a silver mining company. Mr. Owens
held various financial and accounting officer positions with Sunshine
from 1983 to 2002.
| Mr. Owens, age 50, joined the Company in August 2002 as its Vice President and Chief Financial Officer, Secretary and Treasurer. He has over 25 years of financial and accounting experience. Prior to joining the Company, Mr. Owens was Vice President – Finance at Sunshine Mining and Refining Company (“Sunshine”), a silver mining company. Mr. Owens held various financial and accounting officer positions with Sunshine from 1983 to 2002. |
5
CORPORATE GOVERNANCE
The Company has adopted a policy for Corporate Governance which is
broadlycorporate governance practices in lineaccordance with the listing standards of The Nasdaq Stock Market and commensurate with its size and stage of development.
The Board consists of five directors, four of whomdirectors. The Board has determined that Messrs. Odishaw, Cardin, Doumet and Irmscher are independent within the meaning of the Nasdaq rules. The fifth director is Mr. Byrne, the Company'sCompany’s President and Chief Executive Officer.
The Board meets at least four times each year, and more frequently as required, and is responsible for supervising the management of the business and affairs of the Company, including the development of major policy and strategy. The Board has a standing Executive Committee, Nominating and Corporate Governance Committee, Audit Committee and Compensation Committee, but does not have a standing nominating committee.Committee.
During the year ended December 31, 2002,2003, the Board held ninesix meetings (including sixone combined meetingsmeeting with the Audit Committee), the Executive Committee held one meeting, the Audit Committee held elevenseven meetings (including sixone combined meetingsmeeting with the Board), and the Compensation Committee held one
meeting.two meetings. The Nominating and Corporate Governance Committee was formed in March 2004. During the year ended December 31, 2002,2003, each director attended at least 75% of the aggregate of (a) the total number of meetings held by the Board and (b) the total number of meetings held by all committeesCommittees on which he served. The Board has a policy encouraging each director to attend the Company’s annual meeting of shareholders, and all of the Company’s directors attended the 2003 annual meeting. The Board also has a policy that, in conjunction with each regularly scheduled meeting of the Board, on
which he served.the Board’s independent directors will meet in executive session.
Governance responsibilities are undertaken by the Board as a whole, with certain specific responsibilities delegated to the threefour Committees as described below:
o
6
| be capable of making a contribution to the Company. Shareholders wishing to recommend a director candidate for consideration by the Nominating Committee should send all relevant information with respect to the individual to the Chairman of the Committee, at the address of the Company’s executive offices. A copy of the Nominating Committee’s Charter, which was adopted by the Board effective March 25, 2004, and the Board’s process for shareholders to send communications to the Board are available on the Company’s website located at www.uslm.com. |
Notwithstanding anything to the contrary, the following reports of the Audit Committee and the Compensation Committee and the Performance Graph set forth below shall not be deemed to be incorporated by reference by any general statement incorporating by reference the Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference. This information shall not otherwise be deemed to be filed under such Acts.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee (the "Committee") is composed of three directors who are independent directors as defined under the applicable rules of Nasdaq.the Nasdaq Stock Market, Section 10A(m)(3) of the Securities Exchange Act of 1934, and the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Committee operates under a written charter adopted by the Board of Directors and oversees the Company'sCompany’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the Company’s financial statements and the
reporting process, including the systems of internal controls. Ernst & Young LLP, the Company'sCompany’s independent auditors, is responsible for expressing an opinion, on
the financial statements based on its audits. The principal duties and
responsibilitiesaudit, on the conformity of the audited financial statements with generally accepted accounting principles in the United States. In light of certain new Nasdaq Stock Market listing requirements, the Audit Committee are to:
o Reviewreviewed its Charter and determined that it was appropriate to amend the financial information that will be providedCharter. A copy of the Amended and Restated Charter is attached as Exhibit A to the shareholdersProxy Statement.
7
In the performance of its oversight function, the Audit Committee has reviewed and others;
o Reviewdiscussed the accounting policies that management has established;
o Review the systems of internal controls thataudited financial statements with management and the Board have
established;
o Recommend to the Board a firm to be selected as the Company's independent auditors;
o Review the audit scope and plan and the results of the independent audit;
o Confirm the independence of the independent auditors, reviewing as
necessary all relationships and services which might bear on the
objectivity of the auditors;
o Review the non-audit services provided by the independent auditors, and the
fees for such services and conclude that the non-audit services provided
were compatible with maintaining the auditors' independence;
o Convey information among the Board and the independent auditors;
o Involve the independent auditors in the Committee's review of the Company's
financial statements and related reports with management;
o Provide the independent auditors with full access to theauditors. The Audit Committee and the
Board to report on any and all appropriate matters;
o Discusshas discussed with the independent auditors all matters required to be reviewed
by generally accepted auditing standards.
o Investigate any matter brought to the attention of the Committee within the
scope of its duties, with the power to retain outside counsel, or other
advisors, if judged appropriate; and
o Submit the minutes of all Committee meetings and report the results of the
Committee activities to the Board.
In fulfilling its oversight responsibilities, the Committee reviewed the audited
financial statements in the Company's 2002 Annual Report with both management
and the Company's independent auditors, Ernst & Young LLP, which included a
discussion of the quality as well as the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Committee has discussed with Ernst & Young LLP the matters required to be discussed pursuant toby Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended by Statement on Auditing Standards No. 90 (Audit Committee Communications). In addition, 7
and reviewedfrom the independent auditors the written disclosures from Ernst &
Young LLP required by the pronouncements on the Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has also discussed with Ernst & Young LLPthem their independence from the Company and its management. The Audit Committee has considered whether the independent auditors’ provision of non-audit services to the Company is compatible with the auditors’ independence.
In reliance
The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s financial reporting.
Based on the reviews and discussions referred to above, the Audit Committee recommended toand the Board of Directors (andhas approved the Board has approved) thatinclusion of the Company'sCompany’s audited financial statements be included in itsthe Annual Report on Form 10-K for the year ended December 31, 20022003, for filing with the Securities and
Exchange Commission.
SEC.
Respectfully submitted by the members of the Audit Committee of the Board of Directors,
Richard W. Cardin, Chairman
Wallace G. Irmscher
Edward A. Odishaw
| Richard W. Cardin, Chairman | |
| Wallace G. Irmscher | |
| Edward A. Odishaw |
REPORT OF THE COMPENSATION COMMITTEE
The members of the Compensation Committee of the Board of Directors (the "Committee"“Committee”) havehas the responsibility for administering the executive compensation program of the Company. The Compensation Committee reviews and makes recommendations to the full Board of Directors regarding the base salaries and annual incentive compensation for executive officers, and administers the Company'sCompany’s 1992 Stock Option Plan, as Amended and Restated (the "1992 Plan"“1992 Plan”), and the Company'sCompany’s 2001 Long-Term Incentive Plan (the "2001 Plan"“2001 Plan”).
COMPENSATION POLICIES.
Compensation Policies.The principal executive compensation policy of the Company, which is endorsed by the Committee, is to provide a compensation program that will attract, motivate, and retain persons of high quality and will support a long-standing internal culture of loyalty and dedication to the interests of the Company and its shareholders. In administering the executive compensation program, the Committee is mindful of the following principles and guidelines which are supported by the full Board:
Base salaries for executive officers should be competitive. A sufficient portion of annual compensation should be at risk in order to align the interests of executives with those of the shareholders of the Company. This variable part of annual compensation should reflect both individual and corporate performance. As a person'sperson’s level of responsibility increases, a greater portion of total compensation should be at risk, and the mix of total compensation should be weighted more heavily in favor of stock-based compensation. Stock options, restricted shares of stock, and other stock-based compensation provide executives long-term incentive and help align the interests of executives and shareholders in the enhancement of shareholder value.
As discussed elsewhere in thisthe Proxy Statement, the Company has entered into employment agreements with Messrs. Bowers, Hughes, and Byrne. These agreements provide for an annual base salary, bonuses, the use of a Company car, reimbursement of business expenses, participation in the 401(k) profit-sharing plan, severance arrangements, and other benefits. The Committee has determined that such agreements are appropriate means to achieve the Company'sCompany’s overall compensation policies.
2002 COMPENSATION.
8
2003 Compensation.The Company'sCompany’s executive compensation packages have three separate elements;elements consisting of base salary, annual incentive compensation, and long-term incentive compensation. The compensation packages of Mr. Byrne and the other executive officers are designed to be competitive within the industry and to provide incentives for both short- and long-term performance in line with the financial interests of the shareholders.
8
BASE SALARIES.
Base Salaries.The Committee determines levels of the executive officers'officers’ base salaries so as to be competitive with amounts paid to executives performing similar functions in comparable size non-durable manufacturing companies. The amount of each executive'sexecutive’s annual increase in base salary, if any, will be based on a number of largely subjective factors, including the personal performance of such executive officer, the performance of the Company, cost-of-living increases, and such other factors as the Committee deems appropriate, including the individual'sindividual’s overall mix between fixed and variable compensation and between cash and stock-based compensation. Executive officer raises in 20022003 averaged approximately 2.5%. Mr. Byrne'sByrne’s base salary, didwhich had not increasebeen adjusted since he rejoined the Company in 2002.
ANNUAL INCENTIVE COMPENSATION. December 2000, was increased approximately 4.2% to $250,000 in 2003.
Annual Incentive Compensation.Each of the Company'sCompany’s executive officers is eligible to receive annual cash bonus awards based on determinations made by the Committee. Except in the case of Mr. Byrne, the Company has not adopted a formal annual bonus plan. Rather, the determination to pay a cash bonus, if any, is based on the Committee'sCommittee’s subjective judgment with respect to the past performance of the individual, or on the individual'sindividual’s attainment of objective performance goals. In either such case, the bonus may be based on the specific accomplishments of the individual, or on the overall success of the Company. The Committee awarded the following bonuses for 2002: Mr. Bowers, $2,000; Mr.
Hughes, $7,500; Mr. Murray, $5,000; and Mr. Owens, $4,0002003 which were paid in 2003.
2004: Mr. Bowers, $3,000; Mr. Hughes, $30,000; Mr. Murray, $30,000; and Mr. Owens, $15,000.
As described elsewhere in thisthe Proxy Statement, Mr. Byrne'sByrne’s employment agreement provides for an objective annual cash bonus based on percentage increases in the Company'sCompany’s EBITDA (earnings before interest, taxes, depreciation, and amortization) using 2000compared to certain EBITDA as a base,levels set forth in Mr. Byrne’s employment agreement, as well as the possibility of a subjective cash bonus in the discretion of the Committee. For 2002,2003, the increase in the Company'sCompany’s EBITDA resulted in Mr. Byrne'sByrne’s earning an objective bonus of approximately $90,000. In addition, the Committee awarded Mr. Byrne a
discretionary bonus of $10,000, for a total bonus of $100,000 for 2002$250,000, which was paid in 2004. No subjective bonus was awarded for 2003.
LONG-TERM INCENTIVE COMPENSATION.
Long-Term Incentive Compensation.The Committee also administers the 1992 Plan and the 2001 Plan to provide long-term incentives to its key employees, including executive officers. Grants of stock options, restricted shares of stock, and other stock-based compensation are based on each individual'sindividual’s position within the Company, level of responsibility, past performance, and expectation of future performance. NoStock options or other stock-based compensation were granted during 2002.
2003 were: Mr. Byrne, 30,000; Mr. Hughes, 10,000; Mr. Murray, 6,000; and Mr. Owens, 12,000.
Internal Revenue Code of 1986 ("Code"(“Code”) Section 162(m) generally limits the corporate income tax deduction for compensation paid to certain named executive officers to $1 million per year, except for certain qualified and performance-based compensation. The Committee has not seen any need to adopt a policy with regard to qualifying bonus awards for tax deductibility under Code Section 162(m), since Company cash compensation is well below the level at which this tax limitation would apply, and most of the Company's stock options granted
previously were not subject to the limitation. Options that were granted in 1999 and thereafter under the 1992 Plan, as amended and restated in 1999, and that were or will be granted under the 2001 Plan are intended to constitute performance-based compensation not subject to the Code Section 162(m) limitation.
COMPENSATION COMMITTEE
Edward A. Odishaw, Chairman
Antoine M. Doumet
Wallace G. Irmscher
| COMPENSATION COMMITTEE | ||
| Edward A. Odishaw, Chairman | ||
| Antoine M. Doumet | ||
| Wallace G. Irmscher |
9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Summary Compensation Table
The following table sets forth the cash and non-cash compensation for each of the last three fiscal years earned by the current President and Chief Executive Officer, and the four other executive officers of the Company:
| Long-Term | All Other | |||||||||||||||||||
| Annual Compensation | Compensation | Compensation | ||||||||||||||||||
| Securities | ||||||||||||||||||||
| Name and | Underlying | |||||||||||||||||||
| Principal Position | Year | Salary | Bonus(1) | Options(#) | 401(k)(2) | |||||||||||||||
| Timothy W. Byrne | 2003 | $ | 250,000 | $ | 100,000 | 30,000 | $ | 4,000 | ||||||||||||
| President and Chief | 2002 | $ | 240,000 | $ | 175,000 | — | $ | 4,000 | ||||||||||||
| Executive Officer | 2001 | $ | 240,000 | — | 80,000 | $ | 3,400 | |||||||||||||
| Billy R. Hughes | 2003 | $ | 157,833 | $ | 7,500 | 10,000 | $ | 3,234 | ||||||||||||
| Senior Vice President - | 2002 | $ | 155,813 | $ | 10,000 | — | $ | 3,163 | ||||||||||||
| Sales and Marketing | 2001 | $ | 153,750 | — | — | $ | 3,125 | |||||||||||||
M. Michael Owens (3) | 2003 | $ | 117,291 | $ | 4,000 | 12,000 | $ | 617 | ||||||||||||
| Vice President and Chief | 2002 | $ | 45,337 | — | — | — | ||||||||||||||
| Financial Officer | ||||||||||||||||||||
| Johnney G. Bowers | 2003 | $ | 143,830 | $ | 2,000 | — | $ | 2,976 | ||||||||||||
| Vice President - | 2002 | $ | 141,965 | $ | 2,000 | — | $ | 2,945 | ||||||||||||
| Manufacturing | 2001 | $ | 141,965 | — | — | $ | 2,921 | |||||||||||||
| Richard Murray | 2003 | $ | 112,291 | $ | 5,000 | 6,000 | $ | 2,360 | ||||||||||||
| Vice President - | 2002 | $ | 109,406 | $ | 10,000 | — | $ | 2,299 | ||||||||||||
| Texas Lime | 2001 | $ | 107,625 | — | — | $ | 2,261 | |||||||||||||
| (1) | Bonuses were earned in the previous year and paid in the year shown. | |
| (2) | Company contribution to defined contribution plan. | |
| (3) | Mr. Owens was elected Vice President and Chief |
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Option Grants in Last Fiscal Year
The following table sets forth information with respect to stock options granted to executive officers during 2003 and the previous yearpotential realizable value at assumed annual rates of stock price appreciation over the term of the options.
| Potential Realizable | ||||||||||||||||||||||||
| Value at Assumed Annual | ||||||||||||||||||||||||
| Rates of Stock Price | ||||||||||||||||||||||||
| Appreciation for Option | ||||||||||||||||||||||||
| Individual Grants | Term | |||||||||||||||||||||||
| Number of | % of Total | |||||||||||||||||||||||
| Securities | Options | |||||||||||||||||||||||
| Underlying | Granted to | Exercise or | ||||||||||||||||||||||
| Options Granted | Employees in | Base Price | Expiration | 5% | 10% | |||||||||||||||||||
| Name | # | Fiscal Year | ($/Sh) | Date | ($) | ($) | ||||||||||||||||||
| Timothy W. Byrne | 30,000 | 28.2 | % | 3.26 | 5/14/13 | 61,506 | 155,868 | |||||||||||||||||
| Billy R. Hughes | 10,000 | 9.4 | % | 3.85 | 1/30/13 | 24,212 | 61,359 | |||||||||||||||||
| M. Michael Owens | 12,000 | 11.3 | % | 3.85 | 1/30/13 | 29,055 | 73,631 | |||||||||||||||||
| Richard Murray | 6,000 | 5.6 | % | 3.85 | 1/30/13 | 14,527 | 36,815 | |||||||||||||||||
Aggregated Option Exercises in Last Fiscal Year and paid in the year shown.
(2) Mr. Byrne was granted options pursuant to the 1992 Plan for 30,000 shares
on February 22, 2001 at $5.50 per share and for 50,000 shares under the
2001 Plan on June 30, 2001 at $4.94 per share.
(3) Company contribution to defined contribution plan.
(4) Mr. Byrne was elected President and Chief Executive Officer on December 8,
2000.
(5) Mr. Owens was elected Vice President and Chief Financial Officer on August
9, 2002.
10
AGGREGATED OPTION EXERCISES IN LAST YEAR AND YEAR-END OPTION VALUESYear-End Option Values
The following table sets forth information with respect to stock options exercised by the named executive officers during 20022003 and the number and value of unexercised options held by such executive officers at year end:
| Shares | Value | Number of Securities | Value of Unexercised | |||||||||||||||||||||
| Acquired on | Realized | Underlying Unexercised Options | In-the-Money Options | |||||||||||||||||||||
| Name | Exercise (#) | ($) (1) | at Year-End (#) | at Year-End ($) | ||||||||||||||||||||
| Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||||
| Timothy W. Byrne | — | — | 110,000 | 30,000 | $ | 128,000 | $ | 104,700 | ||||||||||||||||
| Billy R. Hughes | 10,000 | 16,800 | 42,000 | 10,000 | — | $ | 29,000 | |||||||||||||||||
| M. Michael Owens | — | — | 12,000 | 12,000 | — | $ | 34,800 | |||||||||||||||||
| Johnney G. Bowers | — | — | 22,000 | — | — | — | ||||||||||||||||||
| Richard D. Murray | — | — | 39,000 | 6,000 | — | $ | 17,400 | |||||||||||||||||
| (1) | Market value of |
Equity Compensation Plan Information
The following table sets forth information with respect to the Company'sCompany’s equity compensation plans as of December 31, 2002:
| Number of shares to be issued | Weighted average exercise | Number of shares | ||||||||||
| upon exercise of outstanding | price of outstanding | remaining available | ||||||||||
| Plan Category | options, warrants and rights | options, warrants and rights | for future issuance | |||||||||
| Equity compensation plans approved by security holders | 319,500 | $ | 5.92 | 310,500 | ||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||
| Total | 319,500 | $ | 5.92 | 310,500 | ||||||||
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EXECUTIVE EMPLOYMENT AND TERMINATION AGREEMENTS
Executive Employment and Termination Agreements
The Company has employment agreements with Messrs. Bowers, Hughes, and Byrne. Such employment agreements are designed to ensure that the Company will be able to attract, motivate, and retain highly qualified talent, which is critical to both the short- and long-term success of the Company.
The employment agreements provide for a base salary to be reviewed annually. Mr. Byrne and the Company entered into an amended and restated employment agreement as of December 8, 2000,May 2, 2003, which provides him with an annual base salary of at least $240,000.$250,000. In addition to the base salary, the agreements for Messrs. Byrne, Bowers, and Hughes provide for a discretionary bonus to be determined by the Compensation Committee of the Board of Directors. In addition to the possibility of a discretionary bonus, Mr. Byrne's agreement provides that Mr. Byrne is eligible to receive an objective bonus determined by percentage increases inbased on the Company'sCompany’s earnings before interest, taxes, depreciation, and amortization ("EBITDA"(“EBITDA”). compared to certain levels set forth in Mr. Byrne’s employment agreement. Mr. Byrne is also entitled to an annual $30,000 contribution to fund a life insurance or retirement arrangement and a country club membership. In the event of a change of control of the Company, and Mr. Byrne'sByrne’s termination, Mr. Byrne is entitled to severance payments equal to his then-current annual base salary, benefits, and bonuses for at least one year,and a half years, depending on the reason for and date of his termination in relation to the change in control. The employment agreements also provide for use of a Company
car, reimbursement of business expenses, and participation in the Company's
401(k) profit-sharing plan. Participation in the Company's ESOP ceased on July
31, 1999 when the ESOP was merged with the 401(k) profit-sharing plan. In the
case of Mr. Bowers, his severance payment would be six months' compensation. Mr.
Hughes does not have a severance arrangement, but is generally entitled to
one-year's notice before termination. Mr. Byrne is entitled to severance payments equal to his then-current annual base salary, benefits, and bonuses for one yearand a half years if he is terminated without cause. In the case of Mr. Hughes'Bowers, his severance payment would be six months’ compensation. Mr. Hughes does not have a severance arrangement, but is generally entitled to one-year’s notice before termination. Mr. Hughes’ and Mr. Byrne'sByrne’s agreements contain certain post-termination covenants not to compete. The employment agreements also provide for use of a Company car, reimbursement of business expenses, participation in the Company’s 401(k) profit-sharing plan and other benefit programs on the same basis as other salaried employees. Mr. Bower'sBower’s and Mr. Hughes'Hughes’ agreements have no expiration dates. Mr. Byrne'sByrne’s agreement expires on December 31, 2003,2008, and is thereafter renewable for successive one-year periods, unless the agreement is terminated earlier by him or the Company. Pursuant to Mr. Byrne'sByrne’s employment agreement, the Company agreed to use its best efforts to cause Mr. Byrne to remain on the Board and to be appointed a member of the Executive Committee of the Board.
COMPENSATION OF DIRECTORS
Compensation of Directors
Directors who are not employees of the Company, other than the Chairman of the Board of Directors and the Chairman of the Audit Committee, are paid an annual retainer of $11,000$14,000 plus $600$800 per day on Company business. The Chairman of the Audit Committee is paid an annual retainer of $26,000 plus $800 per day on Company business, and the Chairman of the Board is paid an annual retainer of $40,000$45,000 plus $800$1,000 per day on Company business. Telephonic meeting fees are paid at one-half the normal per day rate.
Non-employee directors of the Company are also granted 2,000 stock options annually under the Company’s 2001 Plan. During 2003, each non-employee director was granted a ten year stock option exercisable immediately for 2,000 shares at an exercise price of $3.27 per share.
Section 16(a) Beneficial Ownership Reporting Compliance
Each of Messrs. Hughes, Murray, and Owens filed a Form 4 reporting the January 31, 2003 grant of stock options covering 10,000, 12,000 and 6,000 shares, respectively, late.
12
PERFORMANCE GRAPH
The graph below compares the cumulative five-year total shareholders'shareholders’ return on the Company'sCompany’s Common Stock with the cumulative total return on The Nasdaq Stock Market Index and a peer group consisting of Florida Rock Industries, Lafarge Corporation, Martin Marietta Materials, Inc. and Oglebay Norton Company. The graph assumes that the value of the investment in the Company'sCompany’s Common Stock and each index was $100 on December 31, 1997,1998, and that all dividends have been reinvested.
(GRAPH)
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG U.S. LIME & MINERALS, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
ASSUMES $100 INVESTED ON DECEMBER 31, 1997
1998
ASSUMES DIVIDENDS REINVESTED THROUGH
FISCAL YEAR ENDED DECEMBER 31, 2002
2003
12/31/97 12/31/98 12/31/99 12/31/00 12/31/01 12/31/02
-------- -------- -------- -------- -------- --------
U.S. LIME & MINERALS, INC. $100 $ 99.61 $ 97.45 $ 70.69 $ 81.46 $ 54.52
PEER GROUP INDEX $100 $148.02 $107.47 $105.64 $142.74 $118.71
NASDAQ MARKET INDEX $100 $141.04 $248.76 $156.35 $124.64 $ 86.94
| 1998 | 1999 | 2000 | 2001 | 2002 | 2003 | |||||||||||||||||||
| U.S. LIME & MINERALS, INC. | 100.00 | 97.83 | 70.96 | 81.78 | 54.74 | 101.25 | ||||||||||||||||||
| PEER GROUP INDEX | 100.00 | 72.59 | 71.36 | 96.42 | 80.18 | 111.17 | ||||||||||||||||||
| NASDAQ MARKET INDEX | 100.00 | 176.37 | 110.86 | 88.37 | 61.64 | 92.68 | ||||||||||||||||||
13
INDEPENDENT AUDITORS
A summary of
Fees for professional services provided by our independent auditors, Ernst & Young LLP'sLLP, for the last two fiscal years, in each of the following categories, are:
| 2003 | 2002 | |||||||
| Audit | $ | 142,444 | $ | 84,500 | ||||
| Audit-Related | 8,000 | 80,000 | ||||||
| Tax | 15,225 | 35,324 | ||||||
| Total | $ | 165,669 | $ | 199,824 | ||||
Audit Fees.Fees for audit services include fees billedassociated with the annual audit and the reviews of the Company’s quarterly reports on Form 10-Q.
Audit-Related Fees. Audit-related fees principally include fees relating to an employee benefit plan audit and accounting consultations. The 2002 audit-related fees included fees related to the Company for the
year ended December 31, 2002 are as follows:
Tax Fees.Tax fees include fees relating to reviews and preparation of tax returns and tax consultations.
The Audit Committee has consideredadopted a pre-approval policy relating to the compatibilityproviding of nonaudit
services withby the auditors' independence.
Audit fees include fees forCompany’s independent auditors. Under the auditCommittee’s pre-approval procedures, all services to be provided by the auditors must be approved in advance by the Committee. The Committee has delegated to the Chairman of the December 31, 2002
financial statements and related quarterly reviews performed duringCommittee the year.
Audit related fees include typical assuranceauthority to approve such services up to $25,000 each in the case of either a change in the scope or cost of previously approved services, or an additional type of services that are excluded from the
restrictive definitionwas not covered by a prior Committee approval. The Audit Committee does not delegate any of audit fees and embezzlement investigation and related
restatement costs.its approval authority to management.
Representatives of the firm of Ernst & Young LLP are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
OTHER MATTERS
The Board does not intend to present any other matters at the Annual Meeting and knows of no other matters that will be presented. However, if any other matters properly come before the Annual Meeting, the persons designated as proxies on the enclosed Proxy Card intend to vote thereon in accordance with their best judgment.
CERTAIN TRANSACTIONS
On August 5, 2003, the Company sold $14,000,000 of unsecured Subordinated Notes along with detachable warrants, in a private placement under Section (2) of the Securities Act of 1933, as amended, to three accredited investors, one of which is an affiliate of Inberdon, the Company’s majority shareholder, and another of which is an affiliate of Robert S. Beall, who at the time beneficially owned approximately 11% of the Company’s outstanding shares of Common Stock. The terms of the transaction
14
were reviewed and approved by the Company’s Audit Committee. The Company believes that the terms of the private placement were more favorable to the Company than the proposals previously received. The Company’s financial advisor provided an opinion to the Company’s Board of Directors that, from a financial point of view, the private placement was fair to the unaffiliated holders of the Company’s Common Stock in relation to other potential subordinated debt transactions then available to the Company.
SHAREHOLDER PROPOSALS
Shareholder proposals submitted to the Company under Securities and
Exchange Commission ("SEC")SEC Rule 14a-8 under the Securities Exchange Act of 1934 for inclusion in the Company's Proxy StatementCompany’s proxy statement for its 20042005 Annual Meeting of Shareholders must be received by the Company at its office in Dallas, Texas, addressed to Timothy W. Byrne, President and Chief Executive Officer of the Company, not later than December 3, 2003.6, 2004. Such Rule 14a-8 shareholder proposals must comply with SEC rules.
The Company must receive notice of other matters, including non-Rule 14a-8 proposals, that shareholders may wish to raise at the 20042005 Annual Meeting of Shareholders by February 16, 2004.19, 2005. If the Company does not receive timely notice of such other matters, the persons designated as proxies for such meeting will retain general discretionary authority to vote on such matters under SEC rules. Such notices should be addressed to Timothy W. Byrne, President and Chief Executive Officer of the Company.
The costs of solicitation of Proxies for the Annual Meeting will be borne by the Company. Solicitation may be made by mail, personal interview, telephone, and/or telegraphfacsimile by officers and regular employees of the Company who will receive no additional compensation therefor. The Company may specifically engage a firm to aid in the solicitation of Proxies, for which services the Company would anticipate paying a standard reasonable fee plus out-of-pocket expenses. The Company will bear the reasonable expenses incurred by banks, brokerage firms, and other custodians, nominees, and fiduciaries in forwarding proxy materials to beneficial owners.
| UNITED STATES LIME & MINERALS, INC. | ||
| ||
| Timothy W. Byrne | ||
| Dallas, Texas | President and Chief Executive Officer | |
| April 5, 2004 |
15
Exhibit A
United States Lime & Minerals, Inc.
Amended and Restated
Audit Committee Charter
| I. | Organization | |||
| This Charter governs the organization of the Audit Committee and the scope of its duties and responsibilities. The Audit Committee shall, at least annually, review and assess the Charter, report to the Board of Directors the results of that review and assessment, and recommend any changes for the approval of the Board. | ||||
| The Audit Committee shall be appointed by and serve at the pleasure of the Board of Directors and shall be composed of at least three members of the Board who, as determined by the Board, are independent and meet the other qualification standards set by federal and state legislation and regulation, applicable listing standards of the Nasdaq Stock Market, and this Charter. Each member of the Audit Committee shall be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement. At least one member of the Audit Committee shall have past employment experience in finance or accounting, requisite professional certification in accounting, or any comparable experience or background which results in the individual’s financial sophistication. The Audit Committee shall determine whether one of its members qualifies as an “audit committee financial expert” as defined by the Securities and Exchange Commission. Unless the Board of Directors has previously designated the Audit Committee Chairman, the members of the Audit Committee shall elect a Chairman by majority vote. The duties and responsibilities of the Chairman of the Audit Committee shall be to call meetings of the Audit Committee and to preside at such meetings and to perform such other functions of the Audit Committee as may be delegated to him. | ||||
| II. | Statement of Policy | |||
| The Audit Committee shall assist the Board of Directors in overseeing the integrity of the Company’s financial statements and financial reporting and accounting processes, the Company’s compliance with financial regulatory requirements, the performance of the Company’s internal audit function, if any, the outside auditors’ qualifications and independence, the performance of the outside auditors, and the audits of the Company’s financial statements and of the Company’s internal accounting controls for financial reporting when required. The Audit Committee shall be directly responsible for the appointment, compensation, retention, evaluation, and oversight of the work of the outside auditors (including the resolution of any disagreements between management and the outside auditors regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review, or attest services for the Company, and the outside auditors shall report directly to the Audit Committee. In so doing, it is the duty and responsibility of the Audit Committee to maintain free and open communication between and among the Committee, the outside auditors, and the management of the Company. In discharging its duties and responsibilities, the Audit Committee is empowered to investigate any matter with full access to all books, data, records, facilities and personnel of the Company. The Audit Committee shall have the power to retain independent counsel and other advisors (including the Company’s regular counsel or other advisors) at the Company’s expense and to pay | ||||
1
| ordinary administrative expenses of the Audit Committee that it determines are necessary or appropriate in carrying out its duties and responsibilities. | ||||
| III. | Oversight Duties and Responsibilities | |||
| The Audit Committee’s oversight function recognizes that the Company’s management is responsible for preparing the Company’s financial statements and that the outside auditors are responsible for auditing those financial statements. Additionally, the Audit Committee recognizes that the Company’s financial management, as well as its outside auditors, has more knowledge and more detailed information regarding the Company and its financial reports than do Audit Committee members. Consequently, the Audit Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the outside auditors’ independence or the performance of their work; similarly, the Audit Committee is not independently verifying management representations, conducting an audit or investigation of the financial statements, or determining that the financial statements are true and complete, have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”), or fairly present the financial condition, results of operations, or cash flow of the Company in accordance with GAAP. | ||||
| The directors serving on the Audit Committee shall have no greater standard of liability in the performance of their duties and responsibilities than the standard of liability applicable to all directors. Audit Committee members who were previously employed by the Company or who have special training or experience in financial, accounting, or auditing matters shall have no greater duty or responsibility as a result of such prior training, services or experience. Members of the Audit Committee shall have the full protection against personal liability for breach of fiduciary duties as set forth in the NINTH Article of the Articles of Incorporation, adopted by the shareholders in the meeting of January 25, 1994. In addition, members of the Audit Committee shall be entitled to be indemnified against liability by the Company as provided in the NINTH Article of the Articles of Incorporation and Article Nine of the Bylaws. | ||||
| IV. | Functions | |||
| The following functions shall be the principal recurring activities of the Audit Committee in carrying out its oversight duties and responsibilities. The functions are set forth as minimum duties and responsibilities with the understanding that the Audit Committee may undertake such additional duties and responsibilities as the Board of Directors or the Audit Committee may deem necessary or appropriate given the circumstances. The duties and responsibilities of the Audit Committee shall include all of the duties and responsibilities set forth in Rules 10A-3(b)(2), (3), (4) and (5) under the Securities Exchange Act of 1934, as amended. | ||||
2
| – | Establish hiring policies for employees or former employees of the outside auditors; | |||
| – | Pre-approve all auditing services to be provided by the outside auditors; | |||
| – | Pre-approve all permissible non-auditing services, including tax services, to be provided by the outside auditors, subject to such exceptions as may be determined by the Audit Committee to be appropriate and consistent with applicable legal and regulatory provisions; | |||
| – | Receive reports from the outside auditors regarding critical accounting policies and practices, alternative treatments of financial information and GAAP, the effects of regulatory and accounting initiatives, off-balance sheet arrangements, and other developments that could have a significant effect on the Company’s financial statements; the use of non-GAAP financial information; any audit problems or difficulties encountered by the outside auditors, including any | |||
3
| restrictions on the outside auditors’ access to information or personnel, and management’s response to same; any material communications from the outside auditors to management, such as any management letter, report of possible fraud or illegality, or schedule of significant unadjusted differences; and such other information as may be required by legal and regulatory provisions; | ||||
| – | Receive from the outside auditors annually a formal statement regarding the outside auditors’ internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review of the firm, and any steps taken by the firm to address the issues raised; and all relationships between the outside auditors and the Company consistent with Independence Standards Board Standard No. 1, as may be modified or supplemented by such other standards as may be set by law or regulation, the Nasdaq Stock Market rules or the rules of the Public Company Accounting Oversight Board; | |||
| – | Discuss with the outside auditors in an active dialogue any such disclosed relationships or services that may impact the objectivity and independence of the auditors and take, or recommend that the full Board of Directors take, appropriate action to oversee the independence of the outside auditors; and | |||
| – | Evaluate, at least annually, the outside auditors’ independence and performance, including a review of the audit engagement team, the lead audit partner, and the rest of the firm, and report to the Board of Directors the Committee’s determinations with respect thereto. | |||
| • | The Audit Committee and its members shall have complete access to the management of Company and the Company’s financial and accounting personnel, recognizing that it is expected that members of the Audit Committee will use judgment to ensure that such access is not distracting to the business operations of the Company. | |||
| • | The Committee shall receive reports from the principal executive and financial officers of the Company regarding: their evaluation of the effectiveness of the Company’s disclosure controls and procedures and the Company’s internal control over financial reporting; any significant deficiencies and internal weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize, and report financial information and whether they have identified for the outside auditors any material weaknesses in internal controls; any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting; and any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. | |||
| • | The Audit Committee shall establish procedures for the receipt, retention, and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and for the confidential anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. | |||
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| V. | Meetings and Reports |
| The Audit Committee shall meet at least four times annually and more frequently as necessary or appropriate, including teleconferences when appropriate. Special meetings of the Audit Committee may be called on one day’s notice by the Chairman of the Board of Directors, the Chairman of the Audit Committee, or a majority of the members of the Audit Committee. The Audit Committee shall meet in separate executive sessions with the Company’s management and the independent auditors annually or as otherwise required by applicable law or regulation. A majority of the Audit Committee shall constitute a quorum, and the Audit Committee shall act only on the affirmative vote of a majority of the members present at the meeting. Attendance by other directors and by members of management and financial and accounting personnel shall be at the invitation of the Audit Committee Chairman or a majority of the members of the Committee. The Audit Committee shall maintain minutes of all meetings documenting its activities and recommendations to the Board of Directors. | ||||
| The Audit Committee shall report significant matters discussed, determinations made, and actions taken to the Board of Directors. The Audit Committee shall prepare the report of the Committee required to be included in the Company’s proxy statement for its annual meeting of shareholders | ||||
| The Audit Committee shall, at least annually, review and access the performance of the Committee and its members. The Audit Committee shall report to the Board of Directors the results of its review and assessment and recommend any changes for the approval of the Board. | ||||
| Adopted March 4, 2004 | ||||
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Proxy — United States Lime & Minerals, Inc.
Proxy Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Edward A. Odishaw and Timothy W. Byrne, and either of them, proxies, with power of substitution in each, and hereby authorizes them to represent and to vote, as designated below, all shares of Common Stock of UNITED STATES LIME & MINERALS, INC. /s/ TIMOTHY W. BYRNE
TIMOTHY W. BYRNEstanding in the name of the undersigned on March 26, 2004, at the Annual Meeting of Shareholders to be held on May 5, 2004, at the Crowne Plaza Suites, 7800 Alpha Road, Dallas, Texas President75240, and Chief Executive Officerat any adjournment thereof, and especially to vote on the item of business specified below, as more fully described in the Notice of the Meeting dated April 2, 2003
15
EXHIBIT A
UNITED STATES LIME & MINERALS, INC.
AUDIT COMMITTEE CHARTER
Organization
The Audit Committee (the "Committee")5, 2004, and the Proxy Statement accompanying the same, the receipt of which is hereby acknowledged.
You are encouraged to record your vote on the following items of business to be brought before the Annual Meeting, but you need not mark any box if you wish to vote in accordance with the Board of Directors (the
"Board") shall be composed of three independent directors, all of whom are
financially literate. At least one member will have accountingDirectors’recommendation. The proxies cannot vote your shares unless you sign, date, and return this Proxy Card. Remember, you can revoke this Proxy Card and vote in person by attending the Annual Meeting, or related
financial management expertise.
Role of the Committee
To assist the Board in fulfilling its responsibility for overseeing the
corporate accounting and reporting practices of the Company.
Principal Duties and Responsibilities
The principal duties and responsibilities of the Audit Committee are
to:
o Review the financial information that will be providedby submitting to the shareholders and others;
o Review the accounting policies that management has established;
o Review the systems of internal controls that management and the
Board have established;
o RecommendCompany prior to the BoardAnnual Meeting, a firmwritten notice of revocation.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN, AND DATE THIS PROXY CARD AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(Continued and to be selected as the Company's
independent auditors;
o Review the audit scope and plan and the results of the
independent audit;
o Confirm the independence of the independent auditors, reviewing
as necessary all relationships and services which might bearsigned on the objectivity of the auditors;
o Review the non-audit services provided by the independent
auditors, the fees for such services and conclude that the other
services provided were compatible with maintaining the auditors'
independence;
o Convey information among the Board and the independent auditors;
o Involve the independent auditors in the Committee's review of the
Company's financial statements and related reports with
management;
o Provide the independent auditors with full access to the
Committee and the Board to report on any and all appropriate
matters;
o Discuss with the independent auditors all matters required to be
reviewed by generally accepted auditing standards;
o Investigate any matter brought to the attention of the Committee
within the scope of its duties, with the power to retain outside
counsel, or other advisors, if judged appropriate; and
o Submit the minutes of all Committee meetings and report the
results of the Committee activities to the Board.
Disclosure to Shareholders
The Audit Committee Charter will be reproduced in the Company's annual
proxy statement to shareholders together with a report from the Committee and
any required disclosure.
Effective: February 27, 2003
United States Lime & Minerals, Inc. | 000000 0000000000 0 0000 |
MR A SAMPLE
DESIGNATION (IF ANY)
ADD 1
ADD 2
ADD 3
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ADD 5
ADD 6
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
000000000.000 ext
C 1234567890 JNT
 | ||
| o Mark this box with an X if you have made changes to your name or address details above. |
Annual Meeting Proxy Card
A Election of Directors
The Board of Directors recommends a voteFOR all nominees in the Election of Directors.
01-T. W. Byrne, 03-A. M. Doumet, 05-E. A. Odishaw | For All o | Withhold All o | For All Except o | |||
(Except nominee(s) written above.) | ||||||
| In their discretion, the proxies are authorized to vote upon such other business as may properly be brought before the Annual Meeting or any adjournment thereof. | ||||||
B Authorized Signatures — Sign Here — This section must be completed for your instructions to be executed.
Please sign exactly as name appears. Joint owners should each sign personally. Where applicable, indicate your official position or representative capacity.
| Signature 1 | Signature 2 | Date (mm/dd/yyyy) | ||
| / / | ||||
1 U P X H H H P P P P 003276