<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / 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 sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
NITCHES, INC.
- --------------------------------------------------------------------------------
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / 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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
NITCHES, INC.
10280 Camino Santa Fe
San Diego, California 92121
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 18, 1996
Notice is hereby given that the annual meeting of the Shareholders of
Nitches, Inc. (the "Company") will be held at the Company's offices at 10280
Camino Santa Fe, San Diego, California 92121, at 4:30 p.m. on December 18, 1996
for the following purposes:
1. To elect a board of five Directors.
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent certified public accountants for the fiscal year ended August 31,
1997.
3. To transact such other business as may properly be brought before
the meeting or any adjournments thereof.
November 15, 1996 is the record date for the determination of
shareholders entitled to notice of, and to vote at, the meeting and any
adjournment thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU PLAN TO ATTEND IN PERSON, YOU ARE URGED TO FILL IN
THE ENCLOSED PROXY AND TO SIGN AND FORWARD IT IN THE ENCLOSED BUSINESS REPLY
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IT IS
IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED. ANY SHAREHOLDER WHO SIGNS AND SENDS IN A
PROXY MAY REVOKE IT BY EXECUTING A NEW PROXY WITH A LATER DATE, BY WRITTEN
NOTICE OF REVOCATION TO THE SECRETARY OF THE COMPANY AT ANY TIME BEFORE IT IS
VOTED, OR BY ATTENDANCE AT THE MEETING AND VOTING IN PERSON.
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES OF STOCK THAT
YOU HOLD. YOUR COOPERATION IN PROMPTLY RETURNING YOUR PROXY WILL HELP LIMIT
EXPENSES INCIDENT TO PROXY SOLICITATION.
By Order of the Board of Directors
/s/ Steven P. Wyandt
---------------------------
November 20, 1996 Steven P. Wyandt, President
<PAGE> 3
NITCHES, INC.
10280 Camino Santa Fe
San Diego, California 92121
--------------------
PROXY STATEMENT
--------------------
This proxy statement is solicited by and is forwarded in connection
with solicitation of proxies by the Board of Directors of Nitches, Inc. for the
annual meeting of shareholders to be held on Wednesday, December 18, 1996. Only
shareholders of record at the close of business on November 15, 1996 are
entitled to notice of, and to vote at, the meeting. Proxies and proxy statements
were first given to shareholders on approximately November 16, 1996. The number
of outstanding Common Shares entitled to be voted at the meeting is 1,210,296.
The expense of soliciting proxies and the cost of preparing, assembling
and mailing material in connection with the solicitation of proxies will be paid
by the Company. Approximately three employees of the Company may solicit proxies
by telegraph, telephone and personal interviews.
The Company's Annual Report on Form 10-K for the year ended August 31,
1996 is being sent, simultaneously herewith, to each shareholder of record. The
Annual Report on Form 10-K is not incorporated in this Proxy Statement and is
not to be considered a part of the proxy soliciting material.
The Company's management knows of no matter to be brought before the
meeting other than those matters mentioned herein. If, however, any other
matters properly come before the meeting, it is intended that the proxies will
be voted in accordance with the judgment of the person or persons voting such
proxies.
PROPOSALS OF SHAREHOLDERS
For proposals of shareholders to be included at the 1997 annual meeting
of shareholders, anticipated to be held in December 1997, such proposals must be
received by the Company not later than July 19, 1997. The acceptance of such
proposals is subject to Securities and Exchange Commission guidelines.
VOTING
Each shareholder of record is entitled to one vote for each share held
on all matters to come before the meeting, except that shareholders may have
cumulative voting rights with respect to the election of Directors. All proxies
which are returned will be counted by the Inspector of Elections in determining
the presence of a quorum and on each issue to be voted on. An abstention from
voting or a broker non-vote is not counted in the voting process under
California law. The proxy process does not permit shareholders to cumulate
votes. No shareholder can cumulate votes unless the candidate or candidates'
names for which such votes are to be cast have been placed in nomination prior
to voting and a shareholder has given notice of the shareholder's intention to
cumulate the shareholder's votes at the meeting and prior to the voting. If any
shareholder has given such notice, all shareholders may cumulate their votes for
candidates in nomination. Management does not, at this time, intend to give
notice of cumulative voting or to cumulate the votes it may hold pursuant to the
proxies solicited herein unless the required notice by a shareholder is given in
proper format at the meeting, in which instance management intends to
cumulatively vote all of the proxies held by it in favor of the nominees for
office as set forth herein.
<PAGE> 4
In the event cumulative voting shall be utilized, each shareholder may give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of shares voted, to which the shareholder's shares are
entitled, or distribute the shareholder's votes on the same principle among as
many candidates as the shareholder wishes. The candidates receiving the highest
number of votes of the shares entitled to be voted for them, up to the number of
directors to be elected by such shares, are elected. Only shareholders of record
at the close of business on November 15, 1996 are entitled to notice of, and to
vote at, the meeting. Shareholders may revoke any proxy before it is voted by
attendance at the meeting and voting in person, by executing a new proxy with a
later date, or by giving written notice of revocation to the Secretary of the
Company.
The shares represented by proxies which are returned properly signed
will be voted in accordance with the shareholders' directions. If the proxy card
is signed and returned without direction as to how they are to be voted, the
shares will be voted as recommended by the Board of Directors.
ELECTION OF THE DIRECTORS OF THE COMPANY AND
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE
OFFICERS OF THE COMPANY
The Directors of the Company are elected annually and hold office until
the next annual meeting of shareholders and until their successors shall have
been elected and shall have qualified. In the event any nominee is unable to or
declines to serve as Director at the time of the annual meeting, the proxy will
be voted for a substitute selected by the Board of Directors. Management has no
reason to believe, at this time, that the persons named will be unable, or will
decline, to serve if elected.
During fiscal year 1996 the Board held 8 meetings. The Company has
standing Audit and Compensation Committees. The Company does not have a
Nominating Committee. The Audit Committee, which oversees the financial affairs
of the Company and meets with the independent auditors, consists of Mr.
Henderson and Mr. Price. The Audit Committee met two times during fiscal 1996.
The Compensation Committee, which sets executive compensation and bonuses and
authorizes the issuance of stock options, consists of Mr. Henderson and Mr.
Hoese and met during fiscal 1996 on one occasion. During fiscal 1996, all
directors attended at least 75% of the meetings of the Board and the Board
Committee of which they were members.
All directors who are not also employees of the Company receive $12,000
annually, plus $1,000 for attendance at each Board of Directors and Committee
meeting and reimbursement of reasonable expenses. The $1,000 fee is not paid for
attendance at a Committee meeting that is held on the same day the Board of
Directors meets.
Effective March 14, 1996, each member of the Board of Directors was
granted 25,000 options to purchase shares of the Company's common stock under
the Company's Executive Option Plan (with the exception of Mr. Waney who
received options to purchase 17,000 shares) at an exercise price equal to the
fair market value of the common stock at the date of grant. The options vest
over two years, with the unvested portion of any option expiring upon a
Director's termination. The option grant was designed to induce the Directors to
remain on the Board and to provide them with an interest in the long-term growth
of the Company.
On August 24, 1996, management of the Company recommended, and the
Board of Directors approved, a one-time cash bonus of $15,000 to be paid to each
independent Director. The one-time bonus was paid in August 1996 to compensate
independent Directors for added responsibilities and contributions undertaken by
the independent Directors in researching, evaluating and analyzing opportunities
and strategies in connection with the Company's successful restructuring
throughout the fiscal year.
Both the option grant under the Executive Option Plan and the cash
bonus were non-recurring transactions. Neither the option grant nor the cash
bonus were part of any compensation plan. There are currently no other
arrangements for the compensation of Directors.
2
<PAGE> 5
Directors and executive officers are elected annually. The following
table sets forth certain information with respect to the Directors, all of whom
are also nominees, and executive officers of the Company.
The Board recommends that the shareholders vote "FOR" all five nominees
listed below.
DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Arjun C. Waney 56 Chairman of the Board of Directors
Steven P. Wyandt 52 Director, President, Chief Financial
Officer and Secretary
Luther A. Henderson 76 Director
William L. Hoese 59 Director
Eugene B. Price II 54 Director
</TABLE>
Mr. Waney has been a director of the Company since 1973. From 1973
until October 1987, when he was elected Chairman of the Company's Board of
Directors, Mr. Waney was the President of the Company. From October, 1991 to
November, 1993, Mr. Waney was also a director of Body Drama, Inc., which, at the
time, was a publicly held majority-owned subsidiary of the Company.
Mr. Wyandt was elected as a director in 1989. He has been President
of the Company since 1987. Mr. Wyandt is also a director and Chairman of Body
Drama, Inc., a wholly-owned subsidiary of the Company.
Mr. Henderson has been a director of the Company since 1981. Since
prior to 1980, he has been President of Pirvest, Inc., which is engaged in
private investing. Since 1990, he has been Chairman of Medical Ventures, Inc.,
which owns and operates medical resonance imaging equipment centers. He is also
a director of Ridgewood Properties, Inc., which owns and operates mobile home
parks, and The Leather Factory which sells leather furniture.
Mr. Hoese has been a director since 1995. Since November 1994, he
has been Senior Vice President and General Counsel of American Tool Companies,
Inc., a privately-held manufacturer of hand tools and power tool accessories.
For 28 years prior to 1994, Mr. Hoese was a partner with Luce, Forward, Hamilton
& Scripps LLP, counsel to the Company.
Mr. Price has been a director of the Company since 1973. From 1973
until he retired in May 1987, Mr. Price was a Vice President of the Company with
primary responsibilities in sales and administration. He is currently President
of Trinidad Tees, an importer of cotton clothing.
COMPENSATION AND BENEFITS
The compensation and benefits program of the Company is designed to
attract, retain and motivate employees to operate and manage the Company for the
best interests of its constituents.
Executive compensation is designed to provide incentives for those
senior members of management who bear responsibility for the Company's goals and
achievements. The compensation philosophy is based on a base salary, with
opportunity for significant bonuses to reward outstanding performance, and a
stock option program.
EXECUTIVE OFFICER COMPENSATION
The following tables and notes show the compensation provided to
the Chief Executive Officer and the other most highly compensated executive
officers, who served as such at the end of fiscal 1996 and whose annual
compensation exceeds $100,000.
3
<PAGE> 6
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ALL OTHER
ANNUAL COMPENSATION LONG TERM COMPENSATION COMP.
---------------------------------- ------------------------------------------ --------------
AWARDS PAYOUTS
------------------------------------------ --------------
SECURITIES
OTHER RESTRICTED UNDERLYING
ANNUAL STOCK OPTIONS/ LTIP
NAME/TITLE SALARY BONUS COMP.(2) AWARDS SARs PAYOUTS
YEAR $(1) $ $ $ #(3) $
- ------------------------ ------ ------ ------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Arjun C. Waney
Chairman
1996 143,333 -- -- -- 17,000 -- --
1995 250,000 -- -- -- -- -- --
1994 -- -- -- -- -- -- --
Steven P. Wyandt
Chief Executive Officer
and President
1996 193,500 -- -- -- 55,000 -- --
1995 168,173 -- 1,500 -- -- -- --
1994 185,147 -- 4,854 -- -- -- --
</TABLE>
- -----------
1 Includes the Company's allocation of profit sharing to the Retirement
Savings Plan during the year.
2 Consists entirely of the Company's matching contributions to the Employee
Stock Purchase Plan during the year.
3 Consists of options granted under the Company's Executive Option Plan.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
INDIVIDUAL GRANTS STOCK PRICE APPRECIATION FOR
OPTION TERM
- ----------------------------------------------------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARs
UNDERLYING GRANTED TO EXERCISE OR
OPTIONS/SARs EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Arjun C. Waney 15,000 10.2% $4.25 3/13/99 $10,048.59 $21,101.25
2,000 1.4 4.25 3/13/00 1,831.80 3,944.85
Steven P. Wyandt 45,000 30.6 4.25 3/13/99 30,145.78 63,303.75
5,000 3.4 4.25 3/13/00 4,579.50 9,862.13
5,000 3.4 4.25 3/13/01 5,870.98 12,973.34
</TABLE>
4
<PAGE> 7
AGGREGATED OPTION SAR/EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES "IN THE MONEY"
UNDERLYING UNEXERCISED OPTIONS/SARs AT FISCAL
SHARES OPTIONS/SARs AT FISCAL YEAR-END(1)
ACQUIRED VALUE YEAR-END $
ON EXERCISE REALIZED ______________________ ______________________
Name #(2) $(3) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Arjun C. Waney -- -- 15,000/2,000 $ 73,250/9,750
Steven P. Wyandt -- -- 71,335/10,000 $288,504/48,750
</TABLE>
- ----------------
1 All options granted at 100% of fair market value. Optionees may satisfy the
exercise price by submitting currently owned shares, in-the-money options
and/or cash.
2 Fair market value of underlying security at exercise minus exercise price.
3 Calculated based upon the August 31, 1996 fair market value share price of
$9.125 less the share price to be paid upon exercise.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for setting base
compensation, awarding bonuses and setting the number and terms of options for
the executive officers. None of the current Committee members are employees of
the Company.
Compensation Committee Interlocks and Insider Participation. The
Committee currently consists of Luther A. Henderson and William L. Hoese. Mr.
Henderson was Chairman of the Company from 1981 until 1987, but did not receive
a salary for such service. Mr. Hoese has never been an officer or employee of
the Company. Arjun C. Waney served on the Committee until August 24, 1996. Mr.
Waney has been the Chairman of the Company since 1987. He also served as
President of the Company from 1973 to 1987.
Discussion. The Company's compensation structure is designed with the
fundamental philosophy of providing executives with an interest in both the
Company's short and long term profitability. The Company's executive officer
compensation program consists of a base salary component, a component providing
the potential for an annual bonus based on overall Company performance, and a
component providing the opportunity to earn stock options based on overall
Company performance or individual performance that focus executive officers on
building shareholder value through meeting longer-term financial and strategic
goals.
The Committee establishes base salaries for executive officers at a
modest level which it believes are sufficient to attract and retain such
executives. In May, 1995, the Company entered into Employment Agreements with
its key executive
5
<PAGE> 8
officers which provide for a formula bonus based exclusively upon achieving
specified levels of pretax income. The Employment Agreements are discussed in
more detail below. The Company's stock option awards are designed to compliment
the annual incentive program, by providing an interest in long-term
profitability. In past years, option grants have been most frequently awarded at
the inception of employment as an inducement to attract key employees.
During fiscal 1996, the Company completed a restructuring in which it
eliminated some clothing lines and focused on lines in niche markets. In
conjunction with that restructuring, the Company reduced both the dollar and
unit volume of its business. The Company also reduced a number of management
personnel. Mr. Wyandt took on added responsibilities as the Company's Chief
Financial Officer and Secretary. Accordingly, Mr. Wyandt was awarded 30,000
options during Fiscal 1996 as a bonus in compensation for the added
responsibilities he has undertaken and his performance in guiding the Company
through its restructuring process.
Compensation Committee. Luther A. Henderson, William L. Hoese.
Employment Agreements
The Company has entered into Employment Agreements with Mr. Arjun C.
Waney and Mr. Steven P. Wyandt, effective as of May 9, 1995. The Agreements for
each are substantially similar in form. Pursuant to the Agreements, Mr. Waney
will serve as Chairman of the Company and Mr. Wyandt will serve as President of
the Company. The Agreements provide for a base annual salary of $250,000 and
$180,000, respectively for each of Messrs. Waney and Wyandt, or a higher amount
as the Board of Directors may determine. However, in light of the Company's
recent restructuring, Mr. Waney took a voluntary base salary cut in Fiscal 1996
and has agreed to a base salary cut to $100,000 in Fiscal 1997.
In addition to base salary, each executive officer is entitled to a
bonus under certain conditions. Effective August, 1996, the Employment
Agreements were amended to provide that for fiscal year 1996, each will be paid
a bonus in an amount not less than 7.82% of the excess of the pretax book income
of the Company (exclusive of the bonus) over $750,382. The same formula applies
for the bonuses for fiscal years ending 1997 and 1998, however, $895,618 is
substituted for $750,382. Both Messrs. Waney and Wyandt waived the bonuses they
would be entitled to under the Employment Agreements in fiscal 1996, in favor of
providing a profit sharing allocation for all employees into the Company's
Retirement Savings Plan. Under this arrangement, Mr. Waney did not receive any
bonus compensation for fiscal year 1996. Mr. Wyandt received a profit sharing
allocation into his Retirement Savings Plan in the amount of $13,500.
The Agreements expire on August 31, 1998. In the event that the Company
liquidates after Fiscal 1996, the executives will receive an additional one year
salary. In the event the executives are terminated without cause, the executives
will receive the salary remaining through the end of the term of the Employment
Agreement, a pro rata portion of his bonus and continuation of certain employee
benefits.
6
<PAGE> 9
PERFORMANCE GRAPH
The following graph compares the performance of the Company for the
five-year period ending August 31, 1996 with the performance of the NASDAQ
market index and the average performance of companies consisting of the Dow
Jones Clothing and Fabrics group, which for this year numbered 106 companies,
which group is published by Media General Financial Services. The index reflects
reinvested dividends and is weighted by the sum of the closing price times the
shares outstanding divided by the total shares outstanding for the group.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG NITCHES, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
COMPANY FISCAL YEAR ENDING
- ----------------------------------------------------------------------------------------------------------
1992 1993 1994 1995 1996
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Nitches, Inc. 105.68 72.67 39.68 64.48 90.52
Industry Index 123.73 121.55 118.51 123.03 140.56
Broad Market 101.69 132.39 144.65 172.11 193.26
</TABLE>
ASSUMES $100 INVESTED ON SEP. 1, 1991
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING AUG. 31, 1996
7
<PAGE> 10
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of October 31, 1996, certain
information with respect to the beneficial ownership of Common Stock by (a) each
person known by the Company to be the beneficial owner of more than 5% of its
outstanding Common Stock, (b) each of the Company's directors and (c) all
directors and officers as a group. Except as noted below, to the best of the
Company's knowledge, each of such persons has sole voting and investment power
with respect to the shares beneficially owned.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF
BENEFICIAL OWNER SHARES PERCENT OF CLASS
---------------- ------ ----------------
<S> <C> <C>
Arjun C. Waney(1) 247,723 20.22%
10280 Camino Santa Fe
San Diego, CA 92121
Grace & White, Inc.(2) 126,228 10.43%
515 Madison Avenue, Suite 1700
New York, NY 10022
Luther A. Henderson(3) 100,986 8.24%
5608 Malvey Ave., #104A
Ft. Worth, TX 76107
Steven P. Wyandt(4) 71,335 5.57%
10280 Camino Santa Fe
San Diego, CA 92121
Eugene B. Price II(5) 36,782 3.00%
10280 Camino Santa Fe
San Diego, CA 92121
William L. Hoese(5) 16,000 1.31%
2800 West Higgins Road, Suite 805
Hoffman Estates, IL 60195
All directors and current 472,826 35.24%
officers as a group (5 persons)(6)
</TABLE>
- ---------------------
1 Includes 3,648 shares held in a trust for the benefit of Mr. Waney's
daughter and 15,000 shares which are issuable upon the exercise of
outstanding stock options.
2 Based upon filings with the NASDAQ at June 30, 1996. Those filings indicate
that Grace & White, Inc. does not have voting authority over any of the
shares held in its name.
3 85,986 of the shares attributed to Mr. Henderson are held in the name of
Pirvest, Inc., a corporation in which Mr. Henderson owns 100% of the
outstanding common stock. Also includes 15,000 shares issuable upon the
exercise of outstanding stock options.
4 Includes 71,335 shares issuable upon the exercise of outstanding stock
options.
5 Includes 15,000 shares which are issuable upon the exercise of outstanding
stock options.
8
<PAGE> 11
6 This number includes 131,335 shares as to which certain officers have the
right to acquire beneficial ownership by exercising options which were
granted pursuant to the Plans.
CERTAIN TRANSACTIONS
The Company leases a 30,000 square foot warehouse and administrative
office building, a building owned by Kuma Sport, Inc., a California corporation.
Arjun C. Waney, Chairman of the Company is a 40% shareholder of Kuma Sport, Inc.
Mr. Waney has also guaranteed payments on a SBA loan which encumbers the Kuma
Sport, Inc. warehouse. The Company leases the facilities on a month-to-month
basis at a rent of $15,000 per month, which it believes is consistent with the
fair market rental value of the facility.
Certain employees of Kuma Sport, Inc. also perform warehouse and
related services for the Company at the facilities. The Company reimburses Kuma
Sport, Inc. for such services at rates which the Company believes are consistent
with rates that are generally available from third party providers in the
industry.
Kuma Sport, Inc. was a manufacturer and importer of athletic jogging
suits. During fiscal 1996, the Company acquired certain assets from, and took
over the business operations of Kuma Sport, Inc. In that transaction the Company
acquired the customer list, goodwill, inventory, and backlog of Kuma Sport, Inc.
and a license to use certain trade names and trademarks. The Company did not pay
any consideration for those assets and did not assume any liabilities of Kuma
Sport, Inc. The acquisition of this business did not impact the lease of
warehouse and office space, or the hiring of warehouse services from Kuma Sport,
Inc. as set forth above.
RATIFICATION OF SELECTION OF AUDITORS
Based upon the recommendation of the Audit Committee, the Board of
Directors has authorized the firm of Deloitte & Touche, LLP, independent
certified public accountants, to serve as auditors for the fiscal year ended
August 31, 1997. A representative of Deloitte & Touche, LLP will be present at
the shareholders' meeting and will have the opportunity to make a statement if
he or she desires to do so. Further, the representative of Deloitte & Touche,
LLP will be available to respond to appropriate questions.
The Board of Directors recommends that shareholders vote "FOR" this
proposal.
9
<PAGE> 12
OTHER ITEMS
THE COMPANY, ON WRITTEN REQUEST OF ANY PERSON BEING SOLICITED BY THIS
PROXY STATEMENT, SHALL PROVIDE, WITHOUT CHARGE TO SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K (INCLUDING THE FINANCIAL STATEMENTS AND THE
SCHEDULES THERETO), REQUIRED TO BE FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 13a-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, FOR THE COMPANY'S MOST RECENT FISCAL YEAR. WRITTEN REQUESTS SHOULD BE
DIRECTED TO:
NITCHES, INC.
10280 CAMINO SANTA FE
SAN DIEGO, CALIFORNIA 92121
ATTENTION: STEVEN P. WYANDT
By Order of the Board of Directors
/s/ Steven P Wyandt
----------------------------------------
Steven P. Wyandt, President
San Diego, California
November 16, 1996
10
<PAGE> 13
NITCHES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, DECEMBER 18, 1996
The undersigned hereby appoints Steven P. Wyandt his and/or her proxy with
full power of substitution, to vote all of the stock of Nitches, Inc. the
undersigned would be entitled to vote at the Annual Meeting of Shareholders of
Nitches, Inc. to be held at 4:30 p.m. Pacific Standard Time, on Wednesday,
December 18, 1996, or at any adjournment thereof, at 10280 Camino Santa Fe, San
Diego, California.
The undersigned instructs that the shares of the undersigned be voted as
follows:
<TABLE>
<S> <C> <C>
1. Election of Directors. [ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote
(except as marked to the contrary for all nominees listed below.
below).
</TABLE>
Arjun C. Waney, Steven P. Wyandt, Luther A. Henderson, William L. Hoese,
Eugene B. Price II
(Instructions: To withhold authority for an individual nominee, write the
nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. Ratification of the Selection of Deloitte & Touche LLP as Auditors for
Fiscal Year 1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The undersigned confers upon the proxy discretion to act upon all other
matters that may properly be brought before the annual meeting or any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN,
BUT IF NO CONTRARY DIRECTION IS MADE IT WILL BE VOTED FOR PROPOSALS 1 AND 2.
(Please sign and date on reverse side)
<PAGE> 14
(Continued from other side)
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting
of Shareholders and Proxy Statement, dated November 16, 1996.
Dated: , 1996
-----------------------------------
SIGNATURE OF SHAREHOLDER
-----------------------------------
SIGNATURE OF SHAREHOLDER
NOTE: Please sign, date and return
in the enclosed business reply
envelope. Signatures must
correspond with the name(s) shown
on the attached label. Each joint
owner should sign; executors,
administrators, trustees, and other
persons signing in representative
capacity should give full titles.
