<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
KIT MANUFACTURING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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<PAGE> 2
KIT MANUFACTURING COMPANY
530 EAST WARDLOW ROAD
P.O. BOX 848
LONG BEACH, CALIFORNIA 90801
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 10, 1998
------------------------
The Annual Meeting of Shareholders of KIT Manufacturing Company ("KIT")
will be held at the Long Beach Airport Marriott, 4700 Airport Plaza Drive, Long
Beach, California 90815, on Tuesday, March 10, 1998, at 9:00 a.m., local time.
The Annual Meeting will be held (i) to elect a Board of Directors for the
ensuing fiscal year and (ii) to transact such other business as may properly
come before the Annual Meeting or at any adjournment thereof. At the Annual
Meeting, the Board of Directors of KIT intends to present Dan Pocapalia, Fred W.
Chel, Frank S. Chan, Jr., John W. H. Hinrichs and John F. Zaccaro as nominees
for election to the Board of Directors.
Only shareholders of record on the books of KIT at the close of business on
January 30, 1998, the record date with respect to this solicitation, will be
entitled to notice of and to vote at the Annual Meeting or at any adjournment
thereof.
All shareholders are cordially invited to attend the Annual Meeting in
person. If you are unable to do so, please execute the enclosed proxy and return
it in the enclosed addressed envelope, since a majority of the outstanding
shares must be represented at the meeting in order to transact business. Your
promptness in returning the proxy will assist in the expeditious and orderly
processing of the proxies. If you return your proxy, you may nevertheless attend
the Annual Meeting and vote your shares in person, if you wish.
By Order of the Board of Directors,
KIT MANUFACTURING COMPANY
/s/ MARLYCE A. FALDETTA
MARLYCE A. FALDETTA
Corporate Secretary
Long Beach, California
February 12, 1998
<PAGE> 3
KIT MANUFACTURING COMPANY
530 EAST WARDLOW ROAD
P.O. BOX 848
LONG BEACH, CALIFORNIA 90801
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 10, 1998
------------------------
PROXY STATEMENT
------------------------
SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of KIT
Manufacturing Company ("KIT") for use at KIT's Annual Meeting of Shareholders to
be held at the Long Beach Airport Marriott, 4700 Airport Plaza Drive, Long
Beach, California 90815, on Tuesday, March 10, 1998, at 9:00 a.m., local time,
or at any adjournment thereof. All shares represented by each properly executed
unrevoked proxy received in time for the Annual Meeting will be voted in the
manner specified therein. Any shareholder has the power to revoke his or her
proxy at any time before it is voted. A proxy may be revoked by delivering a
written notice of revocation to the Corporate Secretary of KIT, by a subsequent
proxy executed by the person executing the prior proxy and presented to the
Corporate Secretary at the Annual Meeting, or by attendance at the Annual
Meeting and voting in person by the person executing the proxy.
This Proxy Statement is being mailed to KIT's shareholders on or about
February 12, 1998. The solicitation will be made by mail and expenses, which
will be paid by KIT, will include reimbursements paid to brokerage firms and
others for their expenses in forwarding solicitation material regarding the
meeting to beneficial owners of KIT's Common Stock. Further solicitation of
proxies may be made by telephone or oral communication with some shareholders.
All such further solicitation will be made by KIT's regular employees who will
not receive additional compensation for the solicitation. The mailing address of
KIT's principal executive offices is 530 East Wardlow Road, P.O. Box 848, Long
Beach, California 90801.
OUTSTANDING SHARES AND VOTING RIGHTS
Only holders of record of the 1,110,934 shares of KIT's Common Stock
outstanding at the close of business on January 30, 1998, the record date with
respect to this solicitation, will be entitled to notice of and to vote at the
Annual Meeting or at any adjournment thereof. Votes cast by proxy or in person
at the Annual Meeting will be counted by persons appointed by KIT to act as
election inspectors for the meeting. The election inspectors will treat shares
represented by proxies that reflect abstentions as shares that are present and
entitled to vote, for purposes of determining the presence of a quorum and for
purposes of determining the outcome of any matter submitted to the shareholders
for a vote. Abstentions, however, do not constitute a vote "for" or "against"
any matter and thus will be disregarded in the calculation of a plurality or of
"votes cast."
The election inspectors will treat shares referred to as "broker non-votes"
as shares that are present and entitled to vote for purposes of determining the
presence of a quorum. However, for purposes of determining the outcome of any
matter as to which the broker has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect
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<PAGE> 4
to that matter (even though those shares are considered entitled to vote for
quorum purposes and may be entitled to vote on other matters).
In the election of directors, shares present but not voting will be
disregarded (except for quorum purposes). No shareholder will be entitled to
cumulate votes (i.e., cast for any candidate for election to the Board of
Directors, a number of votes greater than the number of the shareholder's
shares) unless the names of the candidate or candidates have been placed in
nomination prior to the voting and the shareholder has given notice at the
meeting, prior to the voting, of the shareholder's intention to cumulate votes.
If any one shareholder has given such notice, all shareholders may cumulate
their votes for candidates who have been nominated. If voting for directors is
conducted by cumulative voting, each share will be entitled to a number of votes
equal to the number of directors to be elected and the votes may be cast for a
single candidate or may be distributed among two or more candidates in such
proportions as the shareholder may determine. In the event of cumulative voting,
the proxy holders intend to distribute the votes represented by the proxies
solicited hereby in such proportions as they see fit. If the voting is not
conducted by cumulative voting, each share will be entitled to one vote and the
holders of a majority of the shares voting at the meeting will be able to elect
all of the directors if they choose to do so. In such event, the other
shareholders will be unable to elect any director. The candidates receiving the
highest number of votes, up to the number of directors to be elected, will be
elected. On all other matters, each share is entitled to one vote. Votes cast
against a candidate or votes withheld will have no legal effect. Any unmarked
proxies, including those submitted by brokers or nominees, will be voted as
indicated on the accompanying proxy card.
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<PAGE> 5
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth, as of January 30, 1998, certain information
as to the number of shares of KIT's Common Stock beneficially owned by each
person who is known by KIT to own more than five percent of the outstanding
shares of KIT's Common Stock and by all directors and officers as a group.
Except as otherwise indicated, beneficial ownership includes both voting power
and investment power.
SECURITY OWNERSHIP TABLE
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF CLASS
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP BENEFICIALLY OWNED
------------------------------------------ ------------------------ -------------------
<S> <C> <C>
Dan Pocapalia............................. 557,734 shares(1)(2)(3) 46.1%
c/o KIT Manufacturing Company
530 East Wardlow Road
Long Beach, CA 90801
Quest Advisory Corp....................... 64,200 shares(4) 5.8%
1414 Avenue of the Americas
New York, NY 10019
Dimensional Fund Advisors, Inc............ 78,700 shares(5) 7.1%
1299 Ocean Avenue, Suite 650
Santa Monica, CA 90401
Directors and Officers
as a group (nine persons)............... 608,935 shares(2)(3)(6) 50.3%
</TABLE>
- ---------------
(1) Includes 51,750 shares subject to options held by Mr. Pocapalia which are
exercisable on or before April 1, 1998.
(2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as
to which he may be said to share the voting and investment power. Also
includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the
benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said
to have sole voting and investment power.
(3) Includes 10,000 shares held of record by J.B.D. Partnership, a California
general partnership (the "J.B.D. Partnership"), of which Mr. Pocapalia owns
69%.
(4) According to information provided by Quest Advisory Corp., a registered
investment adviser ("Quest"), on an amended Schedule 13G, this number
includes 64,200 shares beneficially owned by Quest as of December 31, 1997.
Charles M. Royce may be deemed to be a controlling person of Quest, and as
such may be deemed to beneficially own all shares of KIT beneficially owned
by Quest. Mr. Royce does not own any shares outside of Quest and disclaims
beneficial ownership of the shares held by Quest.
(5) According to information provided by Dimensional Fund Advisors, Inc., a
registered investment advisor ("Dimensional"), as of December 31, 1997,
Dimensional is deemed to have beneficial ownership of 78,700 shares of KIT's
Common Stock, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of The DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and DFA Participation Group Trust, investment vehicles
for qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares. Dimensional has sole voting power as to 55,300 of such shares and
sole dispositive power as to 78,700 of such shares.
(6) Includes 99,000 shares subject to options held by the directors and officers
as a group which are exercisable on or before April 1, 1998.
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<PAGE> 6
I. ELECTION OF DIRECTORS
Directors are elected at each Annual Meeting of Shareholders and hold
office until their respective successors are duly elected and qualified. The
full Board consists of five directors. Certain information as of January 30,
1998 with respect to the five nominees for election as directors is set forth
below. All of the nominees are now serving as directors and were elected to
their present terms of office at the 1996 Annual Meeting of Shareholders.
Although it is anticipated that each nominee will be available to serve as a
director, should any nominee become unavailable to serve, the proxies will be
voted for such other person as may be designated by KIT's Board of Directors.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The following table provides information regarding each nominee for the
Board of Directors as of January 30, 1998. Except as otherwise indicated,
beneficial ownership includes both voting power and investment power.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
PRINCIPAL BUSINESS EXPERIENCE NATURE OF OF CLASS
NAME OF DURING THE PAST 5 YEARS BENEFICIAL BENEFICIALLY
INDIVIDUAL AGE AND DIRECTORSHIPS OWNERSHIP OWNED
- --------------------- ---- ------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
Dan Pocapalia 81 Director of KIT since 1947; 557,734(1)(2)(3) 46.1%
Chairman of the Board and Chief
Executive Officer of KIT since
1971; President of KIT from
1956 to 1978 and since November
1983.
Fred W. Chel 68 Director of KIT since 1987; 2,000 *
Business Consultant to Custom
Fibreglass Manufacturing
Company since 1989; President
and Chief Executive Officer of
Custom Fibreglass Manufacturing
Company from 1985 to 1989; Vice
President, Legal Counsel of
Custom Fibreglass Manufacturing
Company from 1977 to 1985;
Member of the California State
Assembly from 1974 to 1978.
Frank S. Chan, Jr. 53 Director of KIT since 1993; 150 *
Certified Public Accountant in
private practice since 1991;
Tax Partner of KPMG Peat
Marwick LLP from 1986 to 1991;
Tax Staff and Tax Manager of
KPMG Peat Marwick LLP from 1975
to 1991.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
PRINCIPAL BUSINESS EXPERIENCE NATURE OF OF CLASS
NAME OF DURING THE PAST 5 YEARS BENEFICIAL BENEFICIALLY
INDIVIDUAL AGE AND DIRECTORSHIPS OWNERSHIP OWNED
- --------------------- ---- ------------------------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. H. Hinrichs 59 Director of KIT since 1994; 250 *
Senior Vice President and
Cashier of Farmers & Merchants
Bank of Long Beach since 1964;
Member of Board of Trustees of
St. Mary's Medical Center;
Director of Goodwill
Industries.
John F. Zaccaro 63 Director of KIT since 1994; 100 *
Vice Chairman, Founder and
Director Personal Medical
Records, Inc. (PMRI); Executive
Producer of "The International
Health and Medical Film
Competition" (1991-1998); Vice
Chairman and Chief Operating
Officer of Physicians Computer
Network, Inc. from November
1988 to July 1991.
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares.
(1) Includes 51,750 shares subject to options held by Mr. Pocapalia which are
exercisable on or before April 1, 1998.
(2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as
to which he may be said to share the voting and investment power. Also
includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the
benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said
to have sole voting and investment power.
(3) Includes 10,000 shares held of record by the J.B.D. Partnership of which Mr.
Pocapalia owns 69%.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During fiscal 1997, all directors attended at least 75% of the Board of
Directors meetings held. The Board of Directors of KIT held four meetings during
the fiscal year ended October 31, 1997.
KIT's Board of Directors has an Audit Committee and a Compensation
Committee. The members of the Audit Committee are Frank S. Chan, Jr. (Chairman)
and Fred W. Chel. None of the members of the Audit Committee serves as an
executive officer of KIT. During the 1997 fiscal year, the Audit Committee held
no meetings. The members of the Compensation Committee are John F. Zaccaro
(Chairman), Frank S. Chan, Jr. and John W. H. Hinrichs. None of the members of
the Compensation Committee serves as an executive officer of KIT. During the
1997 fiscal year, the Compensation Committee held no meetings.
The functions of the Audit Committee include revising and making
recommendations to the Board of Directors with respect to the engagement or
re-engagement of an independent accounting firm to audit KIT's financial
statements for the then current fiscal year, and the terms of the engagement;
the policies and procedures of KIT and the management of KIT with respect to
maintaining KIT's books and records and furnishing the information necessary to
the independent auditors; the procedures to encourage access to the Audit
Committee and facilitate the timely reporting to the Audit Committee during the
year by duly authorized representatives of the recommendations and advice of the
independent auditors; the implementa-
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<PAGE> 8
tion by the management of KIT of the recommendations made by the independent
auditors; the adequacy and implementation of KIT's internal audit controls and
the adequacy and competency of the related personnel; and such other matters
relating to KIT's financial affairs and accounts as the Audit Committee may in
its own discretion deem necessary.
The functions of the Compensation Committee include assisting the Board of
Directors in evaluating and overseeing the compensation of senior management and
certain key employees of KIT, including the administration and interpretation of
KIT's Incentive Bonus Plan, KIT's 1994 Stock Option Plan and any other
compensation programs KIT may adopt. See "Report of the Compensation Committee."
DIRECTORS' FEES
All directors of KIT are reimbursed for their out of pocket expenses
incurred in connection with attending Board meetings. In addition, each director
received an annual fee of $6,000, payable in equal quarterly installments, for
his services as a director. Each member of the Audit Committee and the
Compensation Committee of the Board of Directors received $1,500 per Committee
meeting attended.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the executive compensation paid during the
fiscal years ended October 31, 1997, 1996 and 1995 to the Chief Executive
Officer and all other officers of KIT who earned more than $100,000 in combined
salary and bonus in the fiscal year ended October 31, 1997:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION(2)
COMPENSATION(1) ---------------
-------------------- OPTIONS ALL OTHER
NAME YEAR SALARY BONUS GRANTED COMPENSATION
- -------------------------------- ----- -------- ------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Dan Pocapalia................... 1997 $204,000 $ -0- $-0- $6,000(3)
Chairman, President 1996 200,000 93,000 -0- 6,000(3)
and Chief Executive Officer 1995 200,000 83,000 -0- 6,500(3)
Gerald R. Wannamaker............ 1997 103,000 -0- -0- 1,404(4)
Executive Vice 1996 100,000 93,000 -0- 1,404(4)
President, Operations 1995 100,000 92,727 -0- 1,404(4)
</TABLE>
- ---------------
(1) Except as noted below, no other annual compensation is required to be listed
pursuant to the rules and regulations of the Securities and Exchange
Commission.
(2) KIT has not issued stock appreciation rights or restricted stock awards. KIT
has no "long-term incentive plan" as that term is defined in the rules and
regulations of the Securities and Exchange Commission.
(3) Director's Fees. (See "Directors' Fees" section in this Proxy Statement.)
(4) Group-term life insurance premiums.
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<PAGE> 9
SUMMARY OF OPTIONS EXERCISED
The following table provides information with respect to the exercise of
stock options during the most recently completed fiscal year by the Chief
Executive Officer and all other officers of KIT who earned more than $100,000 in
combined salary and bonus in the fiscal year ended October 31, 1997.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
FISCAL YEAR-END(1) FISCAL YEAR-END(2)
-------------------- ---------------------
SHARES ACQUIRED VALUE(2) EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
--------------- --------- -------------------- ---------------------
NAME (#) ($) (#) ($)
- --------------------------------
<S> <C> <C> <C> <C>
Dan Pocapalia................... -0- -0- 51,750/17,250(3) $0/$0
Gerald R. Wannamaker............ -0- -0- 26,250/ 8,750 0/ 0
</TABLE>
- ---------------
(1) Granted pursuant to KIT's 1994 Stock Option Plan. The options become
exercisable subject to a four-year vesting schedule with 25% of the total
grant becoming exercisable one year after the effective date of the grant
(the "Award Date") and an additional 25% of the options becoming exercisable
on each successive anniversary of the Award Date. No shares may be purchased
by exercise of the option until the expiration of six months after the Award
Date. Except as otherwise noted, all options listed below are Incentive
Stock Options (as such term is defined in the 1994 Stock Option Plan).
(2) Market value of the securities underlying the options at exercise date or
year-end, as the case may be, minus the exercise or base price of
"in-the-money" options.
(3) 33,944 of the 69,000 total options are Non-Qualified Stock Options (as such
term is defined in the 1994 Stock Option Plan.)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
KIT's Compensation Committee consists of Messrs. John F. Zaccaro
(Chairman), Frank S. Chan, Jr. and John W. H. Hinnichs. No member of the
Compensation Committee serves as either an officer or employee of KIT.
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<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors oversees KIT's
compensation program for its officers. This task includes reviewing the salary
levels of officers, administering KIT's Incentive Bonus Plan and 1994 Stock
Option Plan, considering management succession and performing other related
matters.
KIT has a compensation program which rewards each of its officers in line
with KIT's operational goals and financial performance, including increases in
shareholder value, together with each officer's individual effectiveness in
bringing about those goals and performance. The goal of KIT's officer
compensation program is to attract, retain and reward executives who are capable
of leading KIT in achieving its business objectives. As a result, a portion of
the total compensation package for each KIT officer has traditionally consisted
of variable, performance-based bonuses which can be increased or decreased to
reflect changes in corporate and individual performance.
KIT's annual compensation package for officers currently consists of three
components: (a) base salary, (b) annual cash incentive or bonus based on KIT's
Incentive Bonus Plan, and (c) long-term incentive or non-cash awards, primarily
stock options, granted under KIT's 1994 Stock Option Plan (the "1994 Plan"). For
the 1997 fiscal year, no bonuses were paid to, or accrued for the benefit of,
any officer of the Company and no stock options were awarded to any of these
persons.
Base salary for each of KIT's officers is reviewed by the Compensation
Committee, including the base salary of Dan Pocapalia, KIT's Chairman of the
Board, President and Chief Executive Officer. In reviewing Mr. Pocapalia's base
salary, the Compensation Committee evaluates Mr. Pocapalia's total compensation
in light of information regarding the compensation practices at various
companies within KIT's industry peer group. KIT's industry peer group is
comprised of Fleetwood Enterprises, Inc., Skyline Corporation, Coachmen
Industries, Inc., Thor Industries, Inc., Champion Enterprises, Inc., Winnebago
Industries, Inc., Rexhall Industries, Inc. and KIT. The Compensation Committee
considers various indicators of qualitative and quantitative success on both a
corporate and an individual level. While the Compensation Committee considers
corporate performance measures such as net income, earnings per share,
contribution toward cost containment, revenue generation and sales expansion,
the Compensation Committee does not apply any specific quantitative formula in
reviewing compensation decisions. Decisions regarding the base salaries of Mr.
Pocapalia and other executive officers are based upon a subjective evaluation of
the performance of each officer and a subjective evaluation of KIT's performance
as a whole.
Mr. Pocapalia's base salary for the 1997 fiscal year remained relative with
his salary during the 1996 fiscal year at $200,000. A review of KIT's industry
peer group (as identified above) indicates that Mr. Pocapalia's compensation
remained at or below that of other chief executive officers within KIT's
industry based on his duties and responsibilities. Annual base salaries for
other officers of KIT are based on the recommendations of Mr. Pocapalia after
reviewing each officer's effectiveness and overall performance in his or her
respective areas of responsibility. These salary recommendations are then
reviewed by the Compensation Committee.
A portion of the annual compensation of each officer relates to, and is
contingent upon, the performance of KIT under KIT's Incentive Bonus Plan. All
officers participate in KIT's Incentive Bonus Plan. Under the Incentive Bonus
Plan, bonuses may be paid to officers pursuant to individual agreements relating
to targeted profitability goals in each participant's area of responsibility.
These profitability goals are a function of KIT's earnings per share during the
fiscal year, and, in some cases, the operating income for certain participants'
areas of responsibility. Time periods for which performance is measured include
fiscal years and, in some cases, fiscal quarters. Payments are typically made
within 75 days after the time period for which the performance is measured. The
individual agreements setting forth these profitability goals are reviewed
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<PAGE> 11
annually by the Committee. There were no annual bonuses paid or accrued to KIT's
officers for fiscal year 1997.
KIT also provides incentive compensation awards to certain members of its
management under KIT's 1994 Plan. The 1994 Plan provides KIT with the ability to
reward key employees periodically with options to purchase shares of KIT's
Common Stock. These long-term incentives are designed to couple the interests of
key employees with those of the shareholders of KIT. Stock option grants provide
an incentive that focuses the individual's attention on managing KIT from the
perspective of an owner, with an equity stake in the business. The value of
stock options is tied to the future performance of KIT's Common Stock and
provides value to the recipient only when the price of KIT's Common Stock
increases above the option grant price. Stock options reward management for
long-term strategic planning through the resulting enhancement of share price.
KIT believes that a compensation structure which includes the periodic granting
of long-term incentives such as stock options will help to attract and retain
senior managers with long-term management perspectives. No stock options were
granted to officers of the Company during the 1997 fiscal year.
The Compensation Committee has considered the anticipated tax treatment to
KIT regarding the compensation and benefits paid to the Chief Executive Officer
and all other officers of KIT who earned more than $100,000 in combined salary
and bonus during the 1997 fiscal year in light of Section 162(m) of the Internal
Revenue Code of 1986, as amended. The basic philosophy of the Compensation
Committee is to strive to provide such executive officers with a compensation
package which will preserve the deductibility of such payments for KIT. However,
certain types of compensation payments and their deductibility depend upon the
timing of an executive officer's vesting or exercise of previously granted
rights. Moreover, interpretations of and changes in the tax laws and other
factors beyond the Compensation Committee's control may affect the deductibility
of certain compensation payments. The Compensation Committee will consider
various alternatives to preserving the deductibility of compensation payments
and benefits to the extent reasonably practicable and to the extent consistent
with its other compensation objectives.
The Compensation Committee
John F. Zaccaro (Chairman)
Frank S. Chan, Jr.
John W. H. Hinrichs
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<PAGE> 12
PERFORMANCE GRAPH
The following graph shows a five year comparison of cumulative total
shareholder return* for KIT, the S&P 500 Composite Index and a Peer Group**
Index.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) KIT MANUFACTURING S&P 500 INDEX PEER GROUP
<S> <C> <C> <C>
Oct-92 100.00 100.00 100.00
Oct-93 155.56 114.94 127.56
Oct-94 224.44 119.39 143.96
Oct-95 213.33 150.96 142.85
Oct-96 204.44 187.33 237.97
Oct-97 162.22 247.48 219.55
</TABLE>
* Total shareholder return assumes reinvestment of dividends.
** The Peer Group includes Fleetwood Enterprises, Inc., Skyline Corporation,
Coachmen Industries, Inc., Thor Industries, Inc., Champion Enterprises, Inc.,
Winnebago Industries, Inc., Rexhall Industries, Inc. and KIT. Each company
within the Peer Group was selected based on its similar product lines and
marketing areas.
IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE
AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE.
THE FOREGOING REPORT OF THE BOARD OF DIRECTORS REGARDING COMPENSATION AND THE
PERFORMANCE GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED
TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, OR INCORPORATED BY REFERENCE IN ANY DOCUMENT
SO FILED.
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<PAGE> 13
EXECUTIVE OFFICERS
The following table provides information as of January 30, 1998, regarding
the executive officers of KIT, who serve at the pleasure of the Board of
Directors. Except as otherwise indicated, beneficial ownership includes both
voting power and investment power.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT
PRINCIPAL BUSINESS EXPERIENCE NATURE OF OF CLASS
NAME OF DURING THE PAST 5 YEARS AND BENEFICIAL BENEFICIALLY
INDIVIDUAL AGE POSITIONS WITH KIT OWNERSHIP OWNED
- ---------------------- ---- ----------------------------------- ----------- ------------
<S> <C> <C> <C> <C>
Dan Pocapalia 81 Director of KIT since 1947; 557,734(1)(2)(3) 46.1%
Chairman of the Board and Chief
Executive Officer of KIT since
1971; President of KIT from 1956 to
1978 and since November 1983.
Bruce K. Skinner 50 Vice President and Treasurer of KIT -0- *
since September 1997; Corporate
Controller of KIT from 1985 to June
1997.
Gerald R. Wannamaker 62 Executive Vice President-Operations 27,250(4) 2.3
of KIT since November 1992;
Builder/Realtor of Wannamaker
Enterprises from January 1992 to
November 1992; President of Barth,
Inc., from January 1991 to August
1991; President and Chief Executive
Officer of Dometic Corporation from
1971 to 1990; Manager of Greglund
Products, Ltd., from 1960 to 1971.
Matthew S. Pulizzi 54 Vice President-Customer Relations 3,750(5) *
of KIT since March 1982; Vice
President-Insurance and Legal
Affairs of KIT from 1980 to March
1982; Director of Insurance and
Legal Affairs of KIT from 1977 to
1980; Assistant to the President of
KIT from 1976 to 1977.
Marlyce A. Faldetta 62 Corporate Secretary of KIT since 2,351(6) *
1975.
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares.
(1) Includes 51,750 shares subject to options held by Mr. Pocapalia which are
exercisable on or before April 1, 1998.
(2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as
to which he may be said to share the voting and investment power. Also
includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the
benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said
to have sole voting and investment power.
(3) Includes 10,000 shares held of record by J.B.D. Partnership of which Mr.
Pocapalia owns 69%.
(4) Includes 26,250 shares subject to options held by Mr. Wannamaker which are
exercisable on or before April 1, 1998.
(5) Includes 3,750 shares subject to options held by Mr. Pulizzi which are
exercisable on or before April 1, 1998.
(6) Includes 2,250 shares subject to options held by Ms. Faldetta which are
exercisable on or before April 1, 1998.
11
<PAGE> 14
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Coopers & Lybrand L.L.P. will continue to serve KIT as
independent accountants for the fiscal year ending October 31, 1998. The
appointment of this firm was approved by the Audit Committee of the Board of
Directors. The firm of Coopers & Lybrand L.L.P. has served as independent
accountants for KIT since 1972. Representatives of Coopers & Lybrand L.L.P. are
expected to be present at the Annual Meeting and will have the opportunity to
make a statement and to respond to appropriate questions.
ANNUAL REPORT
KIT's Annual Report, containing audited financial statements for the fiscal
years ended October 31, 1997 and 1996 accompanies or has preceded the mailing of
this Proxy Statement. UPON YOUR WRITTEN REQUEST, KIT WILL SEND YOU, WITHOUT
CHARGE, A COPY OF THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
OCTOBER 31, 1997, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO,
WHICH KIT IS FILING WITH THE SECURITIES AND EXCHANGE COMMISSION. THE WRITTEN
REQUEST MUST BE DIRECTED TO THE ATTENTION OF THE CORPORATE SECRETARY OF KIT, AT
THE ADDRESS OF KIT SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at KIT's 1999 Annual
Meeting of Shareholders must be directed to the attention of the Corporate
Secretary of KIT, at the address of KIT set forth on the first page of this
Proxy Statement, before October 16, 1998, if they are to be considered for
inclusion in the proxy statement and form of proxy used in connection with such
meeting, in accordance with the rules and regulations of the Securities and
Exchange Commission.
12
<PAGE> 15
OTHER MATTERS
At the time of the preparation of this Proxy Statement, the Board of
Directors knows of no other matters which will be acted upon at the Annual
Meeting. If any other matters are properly presented for action at the Annual
Meeting or at any adjournment thereof, it is intended that the proxies will be
voted with respect thereto in accordance with the best judgment and in the
discretion of the proxy holders.
By Order of the Board of Directors,
KIT MANUFACTURING COMPANY
/s/ MARLYCE A. FALDETTA
MARLYCE A. FALDETTA
Corporate Secretary
Long Beach, California
February 12, 1998
13
<PAGE> 16
PROXY
KIT MANUFACTURING COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Dan Pocapalia and Marlyce A. Faldetta, and each of
them, proxies with full power of substitution, to vote all shares of Common
Stock of KIT Manufacturing Company ("KIT") held of record by the undersigned as
of January 30, 1998, the record date with respect to this solicitation, at KIT's
Annual Meeting of Shareholders to be held at the Long Beach Airport Marriott,
4700 Airport Plaza Drive, Long Beach, California 90815, on Tuesday, March 10,
1998, at 9:00 a.m., local time, or at any adjournment thereof, upon the
following matters:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 17
Please mark
your votes as / X /
indicated in
this example.
1. ELECTION OF DIRECTORS FOR WITHHOLD
each nominee AUTHORITY
listed below to vote for
(except as noted each nominee
to the contrary) listed below
/ / / /
Nominees: Dan Pocapalia, Fred W. Chel,
Frank S. Chan, Jr., John W. H. Hinrichs
and John F. Zaccaro
(Instructions: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below.)
- -----------------------------------------------------------------------------
2. OTHER MATTERS In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the meeting or at any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR
PROPOSAL (1) ABOVE. IF ANY NOMINEE DECLINES OR IS UNABLE TO SERVE AS A
DIRECTOR, THEN THE PERSONS NAMED AS PROXIES SHALL HAVE FULL DISCRETION TO VOTE
FOR ANY OTHER PERSON DESIGNATED BY THE BOARD OF DIRECTORS.
Signature(s) of shareholders(s)
-------------------------------------------
Dated , 1998
------------------------
(Your signature should conform to your name as printed hereon. Co-owners should
all sign.)
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FOLD AND DETACH HERE
