SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 ss.240.14a-11(c) or ss.240.14a-12
Kleinert's Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than 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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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/_/ Fee paid previously with preliminary materials.
/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount previously paid:
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2) Form, Schedule or Registration No.
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3) Filing Party:
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4) Date Filed:
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<PAGE>
KLEINERT'S, INC.
MEETINGHOUSE BUSINESS CENTER
120 W. GERMANTOWN PIKE
PLYMOUTH MEETING, PENNSYLVANIA 19462
------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 17, 1997
------------------------------
The annual meeting of shareholders of Kleinert's, Inc. (the "Company") will
be held at 10:00 a.m. on April 17, 1997 at the Locust Club of Philadelphia, 1614
Locust Street, Philadelphia, Pennsylvania 19103, for the following purposes:
1. To elect directors to hold office until the next annual meeting of
shareholders and until their successors are duly elected and qualified.
2. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on March 13, 1997 as
the record date for the meeting. Only shareholders of record as of that date are
entitled to notice of and to vote at the meeting and any adjournment and
postponement thereof.
The accompanying form of proxy is solicited by the Board of Directors of
the Company. Reference is made to the attached Proxy Statement for further
information with respect to the business to be transacted at the meeting.
You are cordially invited to attend the meeting. Whether or not you plan to
be present, please promptly sign, date and mail the enclosed proxy in the
enclosed return envelope which requires no postage if mailed within the United
States.
E. GERALD RIESENBACH,
Secretary
March 17, 1997
<PAGE>
KLEINERT'S, INC.
MEETINGHOUSE BUSINESS CENTER
120 W. GERMANTOWN PIKE
PLYMOUTH MEETING, PENNSYLVANIA 19462
------------------------------
PROXY STATEMENT
------------------------------
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 17, 1997
GENERAL INFORMATION
This proxy statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Kleinert's, Inc. (the "Company") for use
at the Company's annual meeting of shareholders (the "Meeting") to be held on
the date, at the time and place and for the purposes set forth in the foregoing
notice. This proxy statement, the foregoing notice and the enclosed proxy are
being mailed to shareholders on or about March 17, 1997.
If the enclosed proxy is properly executed and returned prior to voting at
the Meeting, the shares represented thereby will be voted in accordance with the
instructions marked thereon. In the absence of instructions, the shares will be
voted "FOR" the nominees of the Board of Directors in the election of directors.
Management does not intend to bring any matter before the Meeting other than as
indicated in the notice and does not know of anyone else who intends to do so.
If any other matters properly come before the Meeting, however, the persons
named in the enclosed proxy, or their duly constituted substitutes acting at the
Meeting, will be deemed authorized to vote or otherwise act thereon in
accordance with their judgment on such matters. Any proxy may be revoked at any
time prior to its exercise by notifying the Secretary in writing, by delivering
a duly executed proxy bearing a later date or by attending the Meeting and
voting in person.
OUTSTANDING VOTING SECURITIES, VOTING RIGHTS
AND PRINCIPAL SHAREHOLDERS
VOTING SECURITIES
The holders of record of the Company's common stock at the close of
business on March 13, 1997, the record date for the Meeting, will be entitled to
notice of and to vote on all matters brought before the Meeting. Each
shareholder will be entitled to one vote for each share of common stock held by
him. Shareholders are not entitled to cumulative voting rights in the election
of directors. On the record date for the Meeting, there were 3,694,181
outstanding shares of common stock of the Company, and 1,847,092 shares are
necessary to constitute a quorum for the Meeting. Abstentions and
broker-non-votes will be included for purposes of determining a quorum for the
Meeting but will not be considered as a vote in opposition of any matter on
which a vote is taken at the Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information concerning the holdings
of each person who was known to the Company to be the beneficial owner of more
than five percent (5%) of the Company's common stock and all shares beneficially
owned by each director, each nominee for director, each executive officer and by
all directors and executive officers as a group at the close of business on the
record date, March 13, 1997. Each of the persons named below has sole voting
power and sole investment power with respect to the shares set forth opposite
his name, except as otherwise noted.
1
<PAGE>
<TABLE>
<CAPTION>
TITLE OF CLASS NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- -------------- ------------------------ ---------------- ----------------
<S> <C> <C> <C>
Common Stock Jay B. Andrews 87,500(1) 2.3%
Common Stock Jack Brier 1,265,854(2) 32.9%
Common Stock Kenneth Brier 97,427(3) 2.6%
Common Stock Joseph J. Connors 46,671(4) 1.3%
Common Stock William Forman 215,256(5) 5.8%
Common Stock Nathan Greenberg 54,440(6) 1.5%
Common Stock Marvin Grossman 124,507(7) 3.3%
Common Stock E. Gerald Riesenbach 36,976(8) 1.0%
Common Stock Estate of Louis Yaeger in care of
The Bank of New York 274,900(9) 7.4%
Common Stock All Directors and Executive Officers as a
Group (eight persons) 1,928,631(1)-(8) 50.7%
</TABLE>
- ------------------
(1) Represents options to purchase 87,500 shares of common stock granted under
the 1991 Stock Option Plan. (See "Management Compensation").
(2) Includes 49,586 shares of common stock owned by Mr. Brier's wife as to which
Mr. Brier disclaims any beneficial interest. Also includes immediately
exercisable options to purchase 150,000 shares of common stock granted under
a Non-Qualified Option Agreement. See "Management Compensation." The address
of Mr. Brier is c/o Kleinert's, Inc., 120 W. Germantown Pike, Plymouth
Meeting, Pennsylvania 19462.
(3) Includes 404 shares of common stock owned by Mr. Brier's wife and 911 shares
of common stock owned by their minor children, as to which Mr. Brier
disclaims any beneficial interest. Also includes immediately exercisable
options to purchase 25,000 shares of common stock granted under a
Non-Qualified Stock Option from the 1991 Stock Option Plan, as well as a
Non-Qualified Stock Option to purchase 25,000 shares of common stock granted
under the 1996 Stock Option Plan. (See "Management Compensation").
(4) Includes immediately exercisable options to purchase 25,000 shares of common
stock granted under the 1991 Stock Option Plan. Also includes 3,454 shares
of common stock owned by Mr. Connors minor children, as to which Mr. Connors
disclaims any beneficial interest. (See "Management Compensation").
(5) Includes a Non-Qualified Stock Option to purchase 25,000 shares of common
stock granted under the 1996 Stock Option Plan. The address of Mr. Forman is
8302 Old York Road, B66, Elkins Park, Pennsylvania 19117.
(6) Includes a Non-Qualified Stock Option to purchase 25,000 shares of common
stock granted under the 1996 Stock Option Plan.
(7) Includes immediately exercisable options to purchase 37,500 shares of common
stock granted under the 1991 Stock Option Plan. (See "Management
Compensation").
(8) Includes a Non-Qualified Stock Option to purchase 25,000 shares of common
stock granted under the 1996 Stock Option Plan. Also includes 11,856 shares
of common stock held as trustee under an Indenture of Trust for the benefit
of Jack Brier's children, as to which shares Mr. Riesenbach disclaims
beneficial ownership.
(9) The address of The Bank of New York is 48 Wall Street, New York, NY 10015.
ELECTION OF DIRECTORS
Currently, the Board of Directors consists of seven members. All of the
present members of the Board of Directors, other than William Forman, are
nominees for election as director at the Meeting. The Board has determined to
continue to fix the number of directors at seven persons, but has concluded at
this time not to nominate any person to fill the vacancy to be created on the
Board. Election of each director requires the affirmative vote of a majority of
the voting stock of the Company
2
<PAGE>
which is present in person or by proxy at the Meeting. As stated above, the
enclosed proxy will be voted FOR the election as directors of such persons
unless a contrary instruction is given.
The Company believes that all of the nominees are willing and able to serve
the Company as directors. If any nominee at the time of election is unable or
unwilling to serve or is otherwise unavailable for election, and as a
consequence thereof, other nominees are designated, the persons named in the
proxy or their substitutes will have the discretion and authority to vote or to
refrain from voting for other nominees in accordance with their judgment. The
Board of Directors does not have a nominating committee.
The following is a description of the nominees for election as directors
and of the executive officers of the Company.
Jay B. Andrews, age 52, became a director in February 1988. In June 1996,
Mr. Andrews became president of Kleinert's, Inc. of Alabama, the Company's
wholly owned subsidiary. Prior to 1996, Mr. Andrews was employed as Executive
Vice President of Sales and Marketing for the Company. Prior to his employment
with the Company, Mr. Andrews was employed by Health-tex, Inc. for 16 years
where he held several positions, the last of which was Senior Vice President and
General Sales Manager.
Jack Brier, age 71, has been Chairman of the Board and Chief Executive
Officer of the Company since 1969. (See "Certain Relationships and Related
Transactions").
Kenneth Brier, age 47, became a director in January 1985. Since December
1991, Mr. Brier has been the President and Chairman of the Board of Mountbatten,
Inc., a standard Pennsylvania domiciled surety company. Mr. Brier also has been
President of Hammarskjold of Jonkoping Incorporated, a real estate development
corporation, since July 1985. Mr. Brier is the son of Jack Brier.
Nathan Greenberg, age 75, became a director in March 1992. Mr. Greenberg
founded the accounting firm of Greenberg, Rosenblatt, Kull & Bitsoli, P.C. in
Worcester and Springfield, Massachusetts in 1958, and has been a member of that
firm since its founding. Mr. Greenberg is a member of the American Institute of
Certified Public Accountants and Massachusetts and Florida Societies of CPAs. He
also is a director of Advanced Detectors, Inc. (See "Certain Relationships and
Related Transactions").
Marvin Grossman, age 59, became a director in December 1981. In June 1996,
Mr. Grossman became Vice Chairman of Kleinert's Inc. of Alabama. From 1982
through 1996, Mr. Grossman served as President of Kleinert's, Inc. of Alabama.
E. Gerald Riesenbach, age 58, became a director in April 1989. Since
February 1995, Mr. Riesenbach has been a partner in the law firm of Cozen and
O'Connor, general counsel to the Company. Previously, and for more than five
years, he had been a partner in the law firm of Wolf, Block, Schorr and
Solis-Cohen. Mr. Riesenbach also serves on the Board of Directors of Autolend
Group, Inc. (See "Certain Relationships and Related Transactions").
Joseph J. Connors, age 40, became Executive Vice President and Assistant
Secretary of the Company in December 1993. Previously, Mr. Connors was Vice
President -- Finance from December 1986 to November 1993, and Treasurer from
January 1983 to November 1986. Mr. Connors is also a director of Mountbatten
Surety, Inc.
Gerald E. Monigle, age 52, has been employed as Vice President -- Finance
of the Company since February 1995. Prior to his employment with the Company,
Mr. Monigle was employed by Tasty Baking Company for 15 years as Controller and
Chief Accounting Officer.
COMMITTEES
The Board of Directors maintains an Audit Committee to review findings and
recommendations of the Company's independent auditors. During fiscal year 1996,
Kenneth Brier and Nathan Greenberg constituted the committee. The committee met
once during fiscal year 1996.
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<PAGE>
The Compensation Committee is empowered to review the performance of
executive personnel other than the members of the committee and award
appropriate bonuses. During fiscal year 1996, Messrs. Forman, Greenberg and
Riesenbach served on the committee. The committee met three times during fiscal
year 1996.
A Stock Option Committee is responsible for establishing and recommending
to the Board of Directors those executive officers to whom stock options should
be granted and the number of shares of common stock to which such options should
be subject. During fiscal year 1996, Messrs. Forman, Greenberg and Riesenbach
served on the committee. The committee met two times during fiscal year 1996.
BOARD MEETINGS
The Board of Directors held three meetings during the fiscal year ended
November 30, 1996. All Directors attended greater than 75% of the board meetings
and meetings of committees on which they served during 1996.
COMPENSATION OF DIRECTORS
During 1996, the Board of Directors voted to change the compensation paid
to outside directors. Previously, each outside director received an annual
retainer of $10,000 and $1,000 for each meeting of the Board of Directors and
each committee meeting of the Board of Directors which they attended. Beginning
with the third fiscal quarter of 1996, each outside director will receive $6,000
per quarter as compensation in their capacity as director which includes meeting
attendance.
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<PAGE>
MANAGEMENT COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Company's last three fiscal years to the Company's Chief
Executive Officer and to each of the Company's other four executive officers
whose salary and bonuses during fiscal year 1996 exceeded $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------------- SECURITIES
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION FISCAL YEAR SALARY($) BONUS($) COMPENSATION(1) OPTIONS (#) COMPENSATION($)(2)
- -------------------------- ----------- ----------- ----------- ----------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Jack Brier(3)............. 1996 400,000 --(4) -- -- 140,000
Chairman of the Board; 1995 400,000 153,000(4) -- -- --
Chief Executive Officer 1994 300,000 124,000(4) -- -- --
Marvin Grossman........... 1996 300,000 -- -- -- 35,000
Vice Chairman Kleinert's, 1995 300,000 -- 61,381(5) -- --
Inc. of Alabama 1994 298,000 -- 34,353(5) -- --
Jay Andrews............... 1996 305,000 30,000 -- -- --
President of Kleinert's 1995 300,000 30,000 -- -- --
Inc. of Alabama 1994 298,000 -- -- -- --
Joseph J. Connors......... 1996 225,000 -- -- -- 8,750
Executive Vice President 1995 200,000 10,000 -- -- --
1994 190,000 -- -- -- --
Gerald Monigle(6)......... 1996 110,000 -- -- -- --
Vice President -- Finance 1995 71,077 -- -- -- --
1994 -- -- -- -- --
</TABLE>
- ------------------
(1) Except as set forth in the above table regarding Marvin Grossman, such
compensation did not exceed for any named officer the lesser of $50,000 or
10% of such officer's total annual salary and bonus for 1996.
(2) Represents annual pre-retirement death benefits and annual retirement
benefits payable under the Company's Supplemental Income Plan, which for Mr.
Grossman and Mr. Connors are payable under a 15-year certain and life
annuity. Mr. Brier's benefit becomes payable at age 73 and is payable over 7
years. Mr. Grossman's benefit became vested ratably through 1995. Mr.
Connors' benefit becomes vested at age 65.
(3) The compensation set forth opposite Mr. Brier's name in the table above for
fiscal years 1995 and 1994 reflects compensation paid by the Company only
and excludes amounts paid to Mr. Brier for Scott Mills, Inc. in his capacity
as Chairman and Chief Executive Officer of Scott Mills, Inc.
(4) See "Employment Agreement."
(5) Includes the value of commissions paid to Mr. Grossman, $34,143 in 1994 and
$61,381 in 1995.
(6) The compensation set forth opposite Mr. Monigle's name in the table above
for fiscal year 1995 reflects compensation paid by the Company only and
excludes amounts paid to Mr. Monigle by Scott Mills, Inc. in his capacity as
Assistant Secretary of Scott Mills, Inc.
5
<PAGE>
OPTION GRANTS DURING FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE GAIN
VALUES AT ASSUMED ANNUAL
PERCENTAGE OF RATES OF STOCK PRICE
TOTAL OPTIONS APPRECIATION FOR OPTION
GRANTED TO EXERCISE OR TERM COMPOUNDED ANNUALLY
EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME OPTIONS FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ------- ------------ ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jack Brier....................... 150,000 52% $15.50 4/17/06 $642,000 $1,419,000
Jay Andrews...................... 25,000 9% $15.50 2/15/98 $107,000 $ 236,500
</TABLE>
- ------------------
(1) Represents immediately exercisable options to purchase 150,000 shares of
common stock granted under a Non-Qualified Stock Option.
(2) Options were granted on February 15, 1996 with one-third of the options
exercisable immediately. The remaining two-thirds become exercisable in two
equal annual installments commencing February 15, 1997.
FISCAL YEAR END 1996 OPTION VALUES
The following table sets forth certain information relating to the number
and value of unexercised options at November 30, 1996. No options were granted
to the named executive officers during fiscal year 1996 other than to Mr. Jack
Brier who was granted options to purchase 150,000 shares of common stock under
the 1996 Stock Option Plan and Mr. Jay Andrews who was granted options to
purchase 25,000 shares of common stock under the 1991 Stock Option Plan. During
fiscal year 1996, Mr. Jack Brier exercised his option to purchase 375,000 shares
of common stock granted to him under the 1991 Stock Option Plan.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT NOVEMBER 30, 1996 AT NOVEMBER 30, 1996
(EXERCISABLE/UNEXERCISABLE) (EXERCISABLE/UNEXERCISABLE)(1)
----------------------------- ---------------------------
<S> <C> <C>
Jack Brier....................... 150,000/-- $300,000/--
Marvin Grossman.................. 37,500/-- $397,500/--
Jay Andrews...................... 62,500/25,000 $662,500/$43,750
Joseph J. Connors................ 25,000/-- $265,000/--
</TABLE>
- ------------------
(1) Values are calculated by subtracting the exercise price from the fair market
value of the common stock at November 30, 1996.
EMPLOYMENT AGREEMENT
In June 1996, Jack Brier, Chairman of the Company's Board of Directors and
Chief Executive Officer, entered into a new three-year employment agreement with
the Company pursuant to which Mr. Brier is paid an annual salary of $450,000.
Pursuant to his current employment agreement, Mr. Brier is entitled to receive
an incentive bonus equal to 5% (increased from 3.1% beginning with fiscal year
ended November 30, 1996) of the Company's pre-tax income in excess of $1,901,000
(representing pre-tax income for fiscal year 1989) for any fiscal year ending
during the employment term. In fiscal year 1994, Mr. Brier earned $124,000 under
this bonus agreement, which was paid in fiscal year 1995. In fiscal year 1995,
Mr. Brier earned a bonus of $153,000, which was paid in fiscal year 1996. In
fiscal year 1996, Mr. Brier declined a bonus of $293,600.
PENSION PLANS
The Company has a retirement program for substantially all of its
employees, including officers and directors who are employees, subject to
certain age and service requirements. The retirement program is composed of a
formula, which is .8% of annual earnings for each year of service. Normal
retirement is at age 65.
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<PAGE>
Total projected annual pension benefits at age 65 for Messrs. Brier,
Connors, Grossman and Andrews approximate $30,615, $42,191, $23,522, and $29,150
respectively, and estimated credited years of service for each is 13, 38, 17 and
22 years respectively.
REPORTS OF THE COMPENSATION AND STOCK OPTION COMMITTEES
ON
EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Compensation
Committee"), composed of outside directors of the Board of Directors of the
Company, reviews the performance of the Company's executive personnel, develops
and makes recommendations to the Board with respect to executive compensation
policies and is empowered by the Board to award appropriate bonuses. The Stock
Option Committee of the Board of Directors (the "Option Committee"), composed of
disinterested persons (as defined under Rule 16b-3 of the Securities Exchange
Act of 1934), recommends to the Board those executive officers to whom stock
options should be granted and the number of shares of common stock to which such
options should be subject. (The Compensation Committee and the Option Committee
are sometimes together referred to herein as the "Committees").
The Committees have access to independent compensation data and are
authorized, if determined appropriate in any particular case, to engage outside
compensation consultants.
The objectives of the Committees are to support the achievement of desired
Company performance, to provide compensation and benefits that will attract and
retain superior talent and reward performance, and to fix a portion of
compensation to the outcome of corporate performance.
The executive compensation program is generally composed of base salary,
discretionary bonuses and long term incentives in the form of stock options. The
compensation program also includes various benefits, including a supplemental
retirement income plan, health insurance plan and a pension plan in which
substantially all of the Company's employees participate.
Base salary levels for the Company's executive officers are competitively
set relative to salaries of officers of companies comparable to the Company in
business, size and location. In the case of the Chief Executive Officer of the
Company, base salary is fixed by an employment contract over a multi-year
period. In June 1996, the Compensation Committee recommended to the Board of
Directors the terms of a new employment agreement for Jack Brier, the Company's
Chief Executive Officer. Compensatory terms under the employment agreement were
determined on the basis of Mr. Brier's prior employment agreement with the
Company, his contributions to the Company and the base salary and other benefits
granted to chief executive officers of companies within the Company's industry
and within the Company's proximate geographic area.
In other cases, base salary levels are fixed on an annual basis by the
Chief Executive Officer of the Company. In each instance, base salary takes into
account individual experience and performance specific to the Company. Other
than for the Chief Executive Officer, whose annual bonus is fixed by contract
and determined by reference to an amount by which pre-tax income for any fiscal
year exceeds a predesignated threshold, the Compensation Committee is empowered,
upon recommendation by the Chief Executive Officer of the Company, to recommend
for full Board approval the payment of cash bonuses to other executive officers
of the Company. Bonus levels typically are based on factors relating to overall
corporate performance, division and/or identified product line performance and
personal performance. Factors reviewed in determining corporate, divisional and
product line performance are generally based on achievement of preset financial
objectives, for example, by reference to sales and operating profit targets
established on an annual and quarterly basis by the Board of Directors. Factors
determinative of personal performance include participation and contribution in
strategic and business plan objectives, organizational and management
development and progress and other similar more qualitative factors. The payment
of all cash bonuses, other than to the Chief Executive Officer which is
determined by contract, are entirely discretionary. Mr. Brier earned a bonus for
fiscal years 1994, 1995, and 1996 under the terms of his employment agreement
(Mr. Brier
7
<PAGE>
declined the 1996 bonus) and two other officers were granted bonuses for fiscal
year 1994 which were paid during fiscal year 1995. One officer earned a bonus in
1995 which was paid in 1996.
The Option Committee believes that employee equity ownership provides
significant additional motivation to executive officers to maximize value for
the Company's shareholders and, therefore, periodically recommends to the Board
of Directors grants of stock options to the Company's executive officers. Stock
options are granted typically at prevailing market price and, therefore, will
only have value if the Company's stock price increases over the exercise price.
The Option Committee believes that the grant of stock options provides a long
term incentive to such persons to contribute to the growth of the Company and
establishes a direct link between compensation and shareholder return, measured
by the same index used by shareholders to measure Company performance. The terms
of options granted by the Board of Directors, including vesting, exercisability
and option term, are determined by the Board of Directors upon recommendation by
the Option Committee, which recommendation is based upon relative position and
responsibility of each executive officer, historical and expected contributions
of each officer to the Company, previous option grants to executive officers and
a review of competitive equity compensation for executive officers of similar
rank in companies that are comparable to the Company's industry, geographic
location and size. For information regarding recent options granted to the
Company's executive officers, reference is made to the table set forth in the
proxy statement under the caption "Management Compensation."
<TABLE>
<S> <C>
Compensation Committee: Stock Option Committee:
E. Gerald Riesenbach, E. Gerald Riesenbach,
Chairman Chairman
Nathan Greenberg, Member Nathan Greenberg, Member
William Forman, Member William Forman, Member
</TABLE>
8
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the cumulative total shareholders return on the
common stock of the Company for the last five fiscal years with the cumulative
return on the S&P 500 Index, the S&P Midcap 400 Index and the S&P
Textile-Apparel Manufacturers Index over the same period (assuming the
investment of $100 in the Company's common stock and such indices during the
fiscal years 1991-1996):
In the printed version there appears a line graph depicting the following
plot points.
Base
Period
Company/Index Nov 91 Nov 92 Nov 93 Nov 94 Nov 95 Nov 96
- ------------------------------------------------------------------------------
KLEINERTS INC 100 146.95 202.26 277.14 262.98 296.37
TEXTILES (APPAREL)-500 100 128.80 92.79 96.42 98.87 142.24
S&P 500 INDEX 100 118.47 130.44 131.80 180.54 230.84
S&P MIDCAP INDEX 100 121.08 136.28 136.24 180.48 214.36
9
<PAGE>
COMPLIANCE WITH SECTION 16(A)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors and persons who own more than ten percent (10%) of a
registered class of the Company's common stock (collectively, the "Reporting
Persons") to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and to furnish the Company with copies of
these reports. Based on the Company's review of the copies of these reports
received by it, the Company believes that all filings required to be made by the
Reporting Persons for the period December 3, 1995 through November 30, 1996 were
made on a timely basis except for the filings for all directors and officers
that received stock related to the Scott Mills merger which was filed subsequent
to the required filing date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SCOTT MILLS ACQUISITION
In September 1996, the Company acquired Scott Mills, Inc. ("Scott Mills")
by a merger of Scott Mills into Kleinert's, Inc. of Alabama. Scott Mills
operates a knitting mill in Gastonia, N.C. producing double knit, fleece,
terrycloth and jersey fabrics. It has been and will continue to be a large
supplier of fabric for Kleinert's as well as other customers. Scott Mills was
formerly a subsidiary of Kleinert's and was its textile division providing
knitting, dying and finishing services. On November 27, 1993, Scott Mills was
spun-off in a tax-free distribution to Kleinert's shareholders and was operated
as a separate Company until its acquisition in October 1996.
Pursuant to the Merger Agreement, each share of Scott Mills Common Stock
outstanding on September 30, 1996 was converted into the right to receive $.03
in cash and .0152 of a share of the Company's Common Stock, determined by the
division of $.27 for each share of Scott Mills' stock by $17.75 which
represented the average price of the Company's stock on the five trading days
immediately preceding the consummation of the Merger. Cash was paid in lieu of
fractional shares. The Company has issued approximately 51,000 shares of its
Common Stock and approximately $101,000 in cash in exchange for all the
outstanding shares of Common Stock of Scott Mills.
In December of 1994, Messrs. Greenberg and Riesenbach, together with
certain other persons affiliated with the Company, provided loans to Scott
Mills, Inc. in the aggregate amount of $500,000. These loans were evidenced by
subordinated convertible five year term notes bearing interest at 8.5% per
annum. Mr. Greenberg participated to the extent of $50,000 and Mr. Riesenbach
$10,000. These notes were assumed by the Company upon the acquisition and merger
of Scott Mills and were repaid on February 14, 1997.
COMMON OFFICERS, DIRECTORS AND SHAREHOLDERS
Certain of the current directors of the Company and its Chairman (Mr. Jack
Brier) also served as officers, directors or employees of Scott Mills, Inc. and
received compensation from Scott Mills, Inc. for such services prior to Scott
Mills merger.
Under the terms of his employment contract, Mr. Brier borrowed $373,920
from the Company which was paid in full plus accrued interest on the due date of
November 14, 1996.
CUSTOMER AND SUPPLIER RELATIONSHIP
The Company has an agreement with Precision Textile Company, Inc.
("Precision Textile"), a Florida corporation, pursuant to which Precision
Textile performs contract sewing on behalf of Kleinert's, Inc. of Alabama, the
Company's wholly-owned subsidiary. Payments to Precision Textile by the
Company's subsidiary accounted for more than five percent (5%) of the total
sales of Precision Textile in fiscal year 1996. The shareholders of Precision
Textile are Curt Forman, the son of William Forman and Doron Matzkin, the
son-in-law of Jack Brier, respectively.
10
<PAGE>
Pursuant to an exclusive licensing arrangement between the Company and
Hygienics Industries, Inc., ("Hygienics"), the Hygienics adult incontinence
products are distributed through Kleinert's. Hygienics is a Pennsylvania
corporation, the sole stockholder of which is Michael Brier, the son of Jack
Brier. Payments to Hygienics under the license agreement accounted for more than
five percent (5%) of the total sales of Hygienics during the fiscal year ended
November 30, 1996.
In general, the Company believes that the terms of the transactions
described in this section are at least as favorable as those that might have
been obtained from unaffiliated third parties.
PROPOSALS OF SECURITY HOLDERS
All proposals of any shareholder of the Company's voting securities which
the holder desires be presented at the next Annual Meeting of Shareholders and
be included in the proxy statement and form of proxy prepared for that meeting,
must be received by the Company at its principal executive offices no later than
November 13, 1997.
All such proposals must be submitted in writing to the Secretary of the
Company at the address on the notice accompanying this proxy statement.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Company engaged Ernst & Young LLP independent auditors to audit the
Company's financial statements for the fiscal year ending November 30, 1996. A
representative of Ernst & Young LLP will be present at the meeting with the
opportunity to make a statement if he desires to do so and to answer appropriate
questions.
SOLICITATION OF PROXIES
The cost of the solicitation of proxies will be borne by the Company. In
addition to the use of the mails, solicitations may be made by telephone and
personal interviews by officers, directors and regularly engaged employees of
the Company. It is not anticipated that anyone will be specifically engaged by
the Company or by any other person to solicit proxies. Brokerage houses,
custodians, nominees and fiduciaries will be requested to forward this proxy
statement to the beneficial owners of the stock held of record by such persons,
and the Company will reimburse them for their charges and expenses in this
connection.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON SOLICITED BY THIS
PROXY STATEMENT, AT THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR ITS
MOST RECENT FISCAL YEAR. SUCH WRITTEN REQUESTS SHOULD BE DIRECTED TO GERALD
MONIGLE, VICE PRESIDENT-FINANCE, AT THE ADDRESS OF THE COMPANY APPEARING ON THE
FIRST PAGE OF THIS PROXY STATEMENT.
11
<PAGE>
KLEINERT'S, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- APRIL 17, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Jack Brier and Joseph J.
Connors, or either one of them, as proxies, with full power of substitution, to
vote all shares of stock of Kleinert's, Inc. (the "Company") which the
undersigned would be entitled to vote if personally present at the annual
meeting of shareholders of the Company to be held at The Locust Club of
Philadelphia, 1614 Locust Street, Philadelphia, Pennsylvania, at 10:00 a.m. on
April 17, 1997, or at any adjournments or postponements thereof:
(1) ELECTION OF DIRECTORS
<TABLE>
<S> <C>
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) / / to vote for all nominees below / /
</TABLE>
J. ANDREWS, J. BRIER, K. BRIER, N. GREENBERG, M. GROSSMAN, E. G. RIESENBACH
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE ABOVE LIST.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS SPECIFIED, OR IF NO
SPECIFICATIONS ARE MADE, WILL BE VOTED FOR THE ELECTION OF THE ABOVE NOMINEES
FOR DIRECTORS AND TO USE THEIR DISCRETION TO VOTE ON ANY OTHER MATTER AS MAY
PROPERLY COME BEFORE THE MEETING.
<PAGE>
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF MEETING AND PROXY
STATEMENT FURNISHED HEREWITH, AND HEREBY CONFIRMS THAT THIS PROXY SHALL BE VALID
AND MAY BE VOTED WHETHER OR NOT THE SHAREHOLDER'S NAME IS SET FORTH BELOW OR A
SEAL IS AFFIXED OR THE DESCRIPTION, AUTHORITY OR CAPACITY OF THE PERSON SIGNING
IS GIVEN OR OTHER DEFECT OF SIGNATURE EXISTS.
Dated: , 1997
----------------------------------
Signature of Shareholder
Note: When signing as attorney-in-
fact, executor, administrator,
trustee or guardian, please add
your title as such, and if signer
is a corporation, please sign with
full corporate name by duly
authorized officer or officers
and affix the corporate seal. Where
stock is issued in the name of two
or more persons, all such persons
should sign.
PLEASE DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE
