SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [x]
Filed by 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
Catalina Lighting, Inc.
(Name of Registrant as Specified in Its Charter)
Janet P. Ailstock, Esq.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[x] No fee required.
[ ] Fee computed on the 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>
CATALINA LIGHTING, INC.
NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 10, 1997
----------
The Annual Meeting of Stockholders of Catalina Lighting, Inc., a
Florida corporation (the "Company"), will be held on April 10, 1997 at 10:00
a.m. local time at the offices of Catalina Lighting, Inc. located at One
Catalina Way, Baldwyn, MS 38824, for the following purposes:
1. To elect eight persons to the Company's Board of Directors to hold
office until their respective terms of office shall expire and until
their respective successors are duly elected and qualified;
2. To ratify the appointment of Deloitte & Touche LLP, independent
certified public accountants, as the Company's auditors for the year
ended September 30, 1997; and
3. To transact such other business as may properly come before the
Annual Meeting of Stockholders and any and all adjournments or
postponements thereof.
The Board of Directors has fixed the close of business on February 28,
1997 as the record date for determination of stockholders entitled to notice of,
and to vote at, the Annual Meeting of Stockholders and at any adjournments or
postponements thereof.
By order of the Board of Directors
THOMAS M. BLUTH, Secretary
Miami, Florida
March 5, 1997
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. THOSE
STOCKHOLDERS WHO ARE UNABLE TO ATTEND IN PERSON ARE RESPECTFULLY URGED TO
EXECUTE AND RETURN THE ENCLOSED PROXY CARD AT THEIR EARLIEST CONVENIENCE.
STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY ATTEND THE MEETING, REVOKE THEIR
PROXY, AND VOTE THEIR SHARES IN PERSON.
<PAGE>
CATALINA LIGHTING, INC.
18191 N.W. 68TH AVENUE
MIAMI, FLORIDA 33015
----------
PROXY STATEMENT
----------
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 10, 1997
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Catalina Lighting, Inc., a Florida corporation (the
"Company") of Proxies for use at the 1997 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at One Catalina Way, Baldwyn, MS
38824, on April 10, 1997 at 10:00 a.m. local time, and at any and all
adjournments or postponements thereof.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical
expense of transmitting copies of the proxy material to the beneficial owners of
stock held in their names will be borne by the Company. Certain officers and
regular employees of the Company or its subsidiaries, without additional
expense, may use their personal efforts, by telephone or otherwise, to obtain
proxies.
The Annual Report of the Company for the fiscal year ended September
30, 1996 accompanies this Proxy Statement.
You are urged to date, sign and promptly mail the enclosed proxy in the
enclosed addressed envelope, which requires no postage in the United States.
OUTSTANDING STOCK AND VOTING RIGHTS
In accordance with the Bylaws of the Company, the Board of Directors of
the Company (the "Board") has fixed the close of business on February 28, 1997
as the record date for determination of stockholders entitled to notice of, and
to vote at, the Annual Meeting (the "Record Date"). Only stockholders of record
on that date will be entitled to vote. A stockholder who submits a proxy on the
accompanying form has the power to revoke it by notice of revocation directed to
the proxy-holders or the Company at any time before it is voted. Unless
authority is withheld, proxies which are properly executed will be voted for the
proposal set forth thereon. Although a stockholder may have given a proxy, such
stockholder may nevertheless attend the Annual Meeting, revoke the proxy before
it is exercised and vote in person.
2
<PAGE>
As of February 28, 1997, the Record Date, there were 7,064,587 issued
and outstanding shares of the common stock of the Company, $.01 par value (the
"Common Stock"). Each share of Common Stock entitles the holder to one vote on
all matters brought before the Annual Meeting. The quorum necessary to conduct
business at the Annual Meeting consists of one third of the shares entitled to
vote at any meeting of stockholders. If a quorum exists, the proposals covered
by this Proxy Statement will require an affirmative vote of the holders of a
majority of the shares of Common Stock represented and voting in person or by
proxy at the Annual Meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth, to the best knowledge of the Company,
information with respect to the Company's Common Stock beneficially owned on
February 28, 1997 by those who were the beneficial owner of more than 5% of the
Company's' stock.
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENTAGE
- ----------------------------------- --------------------- ----------
Wai Check Lau...................... 615,000(2) 8.7%
6/F, Kenning Industrial Bldg.
19 Wang Hoi Road
Kowloon Bay, Hong Kong
Nathan Katz........................ 609,909(3) 8.4%
55 Norfolk Avenue
Easton, MA
Robert Hersh....................... 407,467(4,7) 5.5%
18191 N.W. 68th Avenue
Miami, Florida 33015
Dean S. Rappaport.................. 347,267(5,7) 4.7%
18191 N.W. 68th Avenue
Miami, Florida 33015
William D. Stewart................. 229,667(6,7) 3.2%
18191 N.W. 68th Avenue
Miami, Florida 33015
Dimensional Fund Advisors, Inc..... 449,200(8) 6.4%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
- ---------------------------------
(1) Includes shares which may be acquired pursuant to vested stock options and
options which become exercisable 60 days thereafter or shares for which the
stockholder has the power to direct the vote.
(2) Includes 477,500 shares issued to Go-Gro Holdings Limited, which is owned by
Wai Check Lau and 7,500 shares issued to Amy Yuen Ying Lau Cheung, the wife
of Wai Check Lau. In July 1994, as part of the Company's acquisition of
Go-Gro Industries Limited, Wai Check Lau and Amy Yuen Ying Lau Cheung each
delivered an irrevocable proxy to Catalina Asia, an entity controlled by the
Company. As a part of the same transaction, Catalina Asia received a proxy
to vote an additional 165,000 shares of the Company. The shares are voted at
the direction of Messrs. Hersh, Rappaport, and Stewart, members of the Board
of Directors of Catalina Asia.
3
<PAGE>
(3) Includes 55,000 shares purchasable upon the exercise of options at $1.75 per
share, 50,000 shares purchasable at $4.875 per share, 50,000 shares
purchasable at $5.25 per share and 41,667 shares purchasable at $6.75 per
share.
(4) Includes shares subject to options to purchase 109,200 shares at $1.75 per
share, 50,000 shares at $3.375 per share, 50,000 shares at $4.875 per share,
50,000 shares at $4.125 per share and 41,667 shares at $6.75 per share.
(5) Includes shares subject to options to purchase 106,600 shares at $1.75 per
share, 50,000 shares at $3.375 per share, 50,000 shares at $4.875 per share,
50,000 shares at $4.125 per share and 41,667 shares at $6.75 per share.
(6) Includes shares subject to options to purchase 20,000 shares at $1.75 per
share, 30,000 shares at $2.50 per share, 20,000 shares at $3.375 per share,
50,000 shares at $4.875 per share, 50,000 shares at $4.125 per share and
41,667 shares at $6.75 per share.
(7) In addition, Messrs. Hersh, Rappaport and Stewart, jointly have a power to
vote 750,000 shares owned by previous shareholders of Go-Gro Industries
Limited pursuant to irrevocable proxies. These shares are not included in
their amounts of shares beneficially owned.
(8) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 449,200 shares of
Catalina Lighting, Inc. stock as of December 31, 1996, 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 Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
4
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth, to the best knowledge of the Company,
the shares of Common stock beneficially owned at February 28, 1997 by each
Director and Executive Officer and by all Executive Officers and Directors of
the Company as a group.
COMMON STOCK
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) PERCENTAGE
- ------------------------------------- ------------ ----------
Robert Hersh......................... 407,467 (2), (14) 5.5%
Dean S. Rappaport.................... 347,267 (3), (14) 4.7%
William D. Stewart................... 229,667 (4), (14) 3.2%
Leonard Sokolow...................... 39,000 (5) *
Robert Wachs......................... 106,950 (6) 1.5%
Ryan R. Burrow....................... 6,700 (7) *
Henry Latimer........................ 2,495 (8) *
Nathan Katz.......................... 609,909 (9) 8.4%
Wai Check Lau........................ 615,000 (10) 8.7%
Janet P. Ailstock.................... 56,833 (11) *
Thomas Bluth......................... 18,667 (12) *
David Sasnett........................ 11,133 (13) *
All Executive Officers and
Directors of the Company and its
Subsidiaries as a Group
(12 persons)......................... 2,616,088 (15) 31.7%
* less than 1%
- ---------------------------
(1) Includes shares which may be acquired pursuant to vested stock options and
options which become exercisable 60 days thereafter.
(2) Includes shares subject to options to purchase 109,200 shares at $1.75 per
share, 50,000 shares at $3.375 per share, 50,000 shares at $4.875 per share,
50,000 shares at $4.125 per share and 41,667 shares at $6.75 per share.
(3) Includes shares subject to options to purchase 106,600 shares at $1.75 per
share, 50,000 shares at $3.375 per share, 50,000 shares at $4.875 per share,
50,000 shares at $4.125 per share and 41,667 shares at $6.75 per share.
5
<PAGE>
(4) Includes shares subject to options to purchase 20,000 shares at $1.75 per
share, 30,000 shares at $2.50 per share, 20,000 shares at $3.375 per share,
50,000 shares at $4.875 per share, 50,000 shares at $4.125 per share and 41,667
shares at $6.75 per share.
(5) Includes shares subject to options to purchase 25,000 shares at $4.875 per
share, 2,000 shares at $7.875 per share, 2,000 shares at $5.375 per share, 2,000
shares at $6.875 per share, 2,000 shares at $10.75 per share, 2,000 shares at
$6.625 and 2,000 shares at $6.25 per share.
(6) Includes shares subject to options to purchase 50,000 shares at $1.75 per
share, 25,000 shares options at $4.875 per share, 2,000 shares at $12.125 per
share, 2,000 shares at $7.875 per share, 2,000 shares at $3.375 per share, 2,000
shares at $5.375 per share, 2,000 shares at $6.875 per share, 2,000 shares at
$10.75 per share, 2,000 shares at $6.625 per share and 2,000 shares at $6.25 per
share. Also includes 2,150 shares owned by members of Mr. Wach's immediate
family.
(7) Includes 500 shares owned by Mr. Burrow's immediately family and shares
subject to options to purchase 2,000 shares at $6.625 and 2,000 shares at $6.25
per share.
(8) Includes 2,000 shares purchasable upon the exercise of options at $6.25 per
share.
(9) Includes 55,000 shares purchasable upon the exercise of options at $1.75 per
share, 50,000 shares purchasable at $4.875 per share, 50,000 shares purchasable
at $5.25 per share and 41,667 shares purchasable at $6.75 per share.
(10) Includes 477,500 shares issued to Go-Gro Holdings Limited, which is owned
by Wai Check Lau and 7,500 shares issued to Amy Yuen Ying Lau Cheung, the wife
of Wai Check Lau. As part of the acquisition of Go-Gro Industries Limited,
Catalina Asia was issued an irrevocable proxy to vote such shares. The shares
are voted at the direction of Messrs. Hersh, Rappaport and Stewart, the Board of
Directors of Catalina Asia.
(11) Includes shares subject to options to purchase 30,833 shares at $4.125 per
share.
(12) Includes 16,667 shares purchasable upon the exercise of options at $4.125
per share.
(13) Includes 10,833 shares purchasable upon the exercise of options at $4.125
per share.
(14) Messrs. Hersh, Rappaport and Stewart, jointly have a power to vote 750,000
shares owned by previous shareholders of Go-Gro Industries Limited pursuant to
irrevocable proxies. These shares are not included in the amount of shares
beneficially owned by these executive officers.
(15) Includes an additional 165,000 shares owned by previous shareholders of
Go-Gro Industries Limited. These shares are included in the 750,000 shares which
Messrs. Hersh, Rappaport and Stewart jointly have a power to vote pursuant to
irrevocable proxies.
6
<PAGE>
ELECTION OF DIRECTORS
The Bylaws of the Company provide that each director is to hold office
until the next Annual Meeting of Stockholders and until his successor is elected
and qualified or until his earlier death, resignation or removal. It is not
expected that any of the nominees will be unable to stand for election or be
unable to serve if elected. In the event that any nominee is unable to serve for
any reason, the proxies will be voted in the discretion of the proxy-holders.
The following table sets forth, as of February 28, 1997, certain
information with respect to the nominees for director.
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ------------------ --- ----------------------------- -----
Robert Hersh 50 Chairman, Chief Executive Officer, 1988
President, Director
Dean Rappaport 45 Executive Vice President, 1988
Chief Operating Officer, Director
William D. Stewart 48 Executive Vice President, Director 1994
Ryan R. Burrow 36 Director 1994
Henry Latimer 59 Director 1996
Jeffrey Silverman 50 Nominee for Director -
Leonard Sokolow 40 Director 1990
Robert Wachs 59 Director 1988
ROBERT HERSH has been the President and Chief Executive Officer of the
Company since April 1991, Chairman of the Board since June 1991 and a Director
of the Company since April 1988. Mr. Hersh served as the Executive Vice
President of the Company from 1985 to April 1991 and as Secretary from June 1989
until June 1991.
DEAN S. RAPPAPORT has been an Executive Vice President of the Company
since January 1988 and a Director of the Company since April 1988. From January
1988 to November 1996 Mr. Rappaport was Chief Financial Officer and Treasurer of
the Company. Mr. Rappaport was promoted to Chief Operating Officer of the
Company in November 1996.
WILLIAM D. STEWART has been an Executive Vice President of the Company
since 1989 and a Director of the Company since April 1994. From 1985 until he
joined the Company, Mr. Stewart was an Executive Vice President with Crest
Industries, Inc., a distributor of home improvement products.
RYAN R. BURROW has been a Director of the Company since April 1994. Mr.
Burrow has been Managing Director for STI Capital Management since August 1993.
Mr. Burrow served as a Senior Vice President of Sun Bank, N.A. from February
1990 to August 1993 and from September 1987 to February 1990 was a Senior Vice
President for the Bank of New York/Irving Trust Company.
7
<PAGE>
HENRY LATIMER has been a Director of the Company since February 1996.
Mr. Latimer is the Managing Partner, Fort Lauderdale office, of Eckert, Seamans,
Cherin & Mellott. He was formerly a partner with Fine, Jacobson, Schwartz, Nash
& Block from 1983 to 1994.
JEFFREY SILVERMAN joined Ply Gem Industries, Inc. as a Director in
1981. He became Executive Vice President in 1982, President in 1984 and has been
Chairman of the Board and Chief Executive Officer since 1985. Prior to joining
Ply Gem Industries he was managing general partner of an investment partnership.
Mr. Silverman was Man of the Year by the Building Materials Industry in 1987;
and Entrepreneur of the Year by Inc. Magazine, Ernst & Young, and Merrill Lynch
in 1991. Mr. Silverman was a member of the Board of Trustees of Long Island
University, the Board of Governors of the American Stock Exchange, the Howard
Samuels Center at CCNY and the American Business Conference.
LEONARD SOKOLOW has been a Director of the Company since March 1990.
Mr. Sokolow is the President of Union Atlantic LC. In August 1993 Mr. Sokolow
was appointed as President of Genesis Partners, Inc., which merged into Union
Atlantic LC in September 1996. Mr. Sokolow was Executive Vice
President-Operations, Administration and Finance of Windmere Corporation from
March 1990 to July 1993, and Senior Vice President of Windmere from February
1989 to March 1990 and General Counsel of Windmere from December 1988 to July
1993. Prior to joining Windmere, Mr. Sokolow was a partner with the law firm of
Hornsby and Whisenand, P.A., practicing in the area of international and
domestic corporate, securities and tax law. Mr. Sokolow presently serves as a
director of The Box Worldwide, Inc. (formerly Video Jukebox Network, Inc.), as a
director of Ezcony Interamerica, Inc. and as the Chairman and Chief Executive
Officer of The Americas Growth Fund, Inc. The shares of The Box Worldwide, The
America's Growth Fund and Ezcony Interamerica are traded on NASDAQ.
ROBERT WACHS has been a Director of the Company since April 1988. Since
1980 Mr. Wachs has served as President and Chairman of Robert Wachs Associates,
Inc., a manufacturer sales representative firm located in Los Angeles,
California. Robert Wachs Associates, Inc. acts as a sales representative for the
Company.
MEETINGS AND COMMITTEES OF DIRECTORS
Five meetings of the Board of Directors were held during the past
fiscal year; in addition, the Directors acted through three unanimous written
consents. The Company has a Compensation and Stock Option Committee, consisting
of Messrs. Burrow, Latimer and Sokolow, an Audit Committee composed of Messrs.
Sokolow and Burrow and a Nominating Committee consisting of Messrs. Latimer,
Wachs and Hersh. During fiscal 1996, no director attended fewer than 75% of the
aggregate of (1) the total number of meetings of the Board of Directors held
while he was a director and (2) the total number of meetings held by all
committees of the Board on which he served.
COMPENSATION AND STOCK OPTION COMMITTEE - The Compensation and Stock Option
Committee (the "Committee") is responsible for developing the Company's
executive compensation strategy and for administering the policies and programs
that implement this strategy. The Committee is composed of Ryan R. Burrow, Henry
Latimer and Leonard Sokolow, all of whom are independent non-employee directors.
NOMINATING - The Nominating Committee selects nominees to the Board of
Directors. The Board will consider nominees recommended by stockholders of the
Company if submitted to the Chairman of the Board not less than 150 days prior
to an Annual Meeting of Stockholders.
AUDIT - The Audit Committee of the Board of Directors recommends a firm to be
selected as the independent auditors to audit Catalina's financial statements
and to perform other audit-related services. In addition, the Audit Committee
reviews the scope and results of the audits that are conducted by the
independent auditors, reviews interim and year-end results with management and
considers the adequacy of Catalina's internal accounting procedures. During
1996, the Audit Committee met three times.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information about the compensation of
the Company's CEO and each of the other four most highly compensated executive
officers of the Company during the fiscal years ending September 30, 1996, 1995
and 1994 for services in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
-------------------------------------- ---------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL SECURITIES UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS(1) COMPENSATION(2) OPTIONS(3) COMPENSATION(4)
- --------------------- ------ ------ -------- --------------- -------------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh 1996 $271,338 $ 43,787 - $1,500
Chairman, CEO and 1995 258,418 14,917 62,500 794
President 1994 246,112 153,449 - -
Dean S. Rappaport
Executive Vice 1996 244,204 43,787 - 6,496
President, Chief 1995 232,575 14,917 62,500 6,033
Operating Officer 1994 221,500 153,449 - 5,894
William D. Stewart 1996 244,204 43,787 - 7,987
Executive Vice 1995 232,575 14,917 62,500 7,802
President 1994 221,500 153,449 - 7,479
Nathan Katz 1996 244,204 43,787 - 1,500
Executive Vice 1995 232,575 14,917 62,500 794
President 1994 221,500 153,449 - -
Wai Check Lau(5) 1996 180,000 - - -
President - Go-Gro 1995 180,000 - - -
Industries Limited 1994 30,000 - - -
</TABLE>
STOCK OPTIONS
No stock options were granted to the named executive officers of the
Company during the fiscal year ended September 30, 1996.
- --------
(1) Amounts represent 1.67% of consolidated pre-tax income for the respective
fiscal years ended September 30.
(2) Perquisites and personal benefits furnished to the named executive officers
do not meet the disclosure thresholds established under SEC regulations.
(3) Stock options vest annually in increments of one-third of the options
granted.
(4) The amounts disclosed in this column represent:
(a) The portion of premiums paid by the Company for reverse split-dollar
life insurance of $4,996 in 1996, $5,239 in 1995 and $5,894 in 1994
for Mr. Rappaport and $6,487 in 1996, $7,008 in 1995 and $7,479 in
1994 for Mr. Stewart.
(b) The Company's matching contributions to the Company's 401(k) plan of
$1,500 in 1996 and $794 in 1995 for each of Mr. Hersh, Mr. Rappaport,
Mr. Stewart and Mr. Katz.
(5) Mr. Lau joined the Company on July 30, 1994, upon the Company's acquisition
of Go-Gro Industries Limited.
9
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information as to options exercised by
each of the named executive officers of the Company during the fiscal year ended
September 30, 1996 and the value of options held by such officers at September
30, 1996 in terms of the closing price of the Company's stock on September 30,
1996.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1996 AND FISCAL YEAR END 1996 OPTION VALUES
SHARES VALUE OF
ACQUIRED ON VALUE NUMBER OF SECURITIES UNDERLYING IN-THE-MONEY OPTIONS AT
NAME EXERCISE REALIZED OPTIONS AT SEPTEMBER 30, 1996 SEPTEMBER 30, 1996(1)
- ---------------------------------------------------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ ------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh 0 0 280,033 41,667 $237,150 0
Dean S.
Rappaport 0 0 277,433 41,667 $231,950 0
William D.
Stewart 0 0 190,833 41,667 $ 85,000 0
Nathan Katz 0 0 175,833 41,667 $110,000 0
Wai Check Lau 0 0 0 0 0 0
</TABLE>
- ---------------------------
(1) Based on the closing price of the Company's stock on September 30, 1996
of $3.75.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with Robert Hersh,
Dean S. Rappaport, William D. Stewart and Nathan Katz for three year terms,
renewed each year on the Anniversary Date of each employment agreement.
Commencing October 1, 1993, Messrs. Hersh, Rappaport, Stewart and Katz's base
annual salaries were $246,112, $221,500, $221,500, and $221,500, respectively,
with annual increases of the greater of 5% or the percentage increases in the
consumer price index published by the U.S. Department of Labor ("U.S. Consumer
Price Index"). Messrs. Hersh, Rappaport and Stewart each received options to
purchase 50,000 shares of Common Stock during each of the fiscal years 1990
through 1993 under the terms of their respective contracts. Mr. Katz received
options to purchase 50,000 shares of common stock in both 1992 and 1993. Messrs.
Hersh, Rappaport, Stewart and Katz each received options to purchase 62,500
shares of Common Stock during fiscal year 1995. No options were given during
fiscals 1994 and 1996. The aforementioned were issued under the Company's 1987
Stock Option and Stock Appreciation Rights Plan.
10
<PAGE>
In connection with the employment agreements of Messrs. Hersh,
Rappaport, Stewart and Katz, the Company agreed to fund a management bonus pool
(the "Pool") with 6.67% of the Company's consolidated pre-tax profits, at the
end of each of the Company's fiscal years beginning with the year ending
September 30, 1990 (Mr. Katz was entitled to participate in the bonus pool
beginning October 1, 1993). Under the employment agreements described above,
Messrs. Hersh, Rappaport, Stewart and Katz were each entitled to not less than
one-fourth of the Pool. Bonuses were waived in 1990, no amounts were distributed
in 1991 due to pre-tax losses and amounts earned under the Pool in fiscal 1993,
1994, 1995 and 1996 totaled approximately $356,000, $614,000, $60,000 and
$175,000, respectively.
In connection with the Company's acquisition of Go-Gro Industries,
Limited ("Go-Gro") the Company entered into an employment agreement with the
previous majority stockholder of Go-Gro, Wai Check Lau, under which such
individual serves as President of Go-Gro. The term of the employment agreement
is from July 30, 1994 to July 30, 1999, renewable for a successive five-year
period under terms mutually acceptable to the Company and the employee. The
agreement provides for annual compensation of $180,000.
On April 1, 1992, the Company entered into an employment agreement with
Ms. Janet Ailstock for a two year term. Ms. Ailstock received a base annual
salary of $100,000 and an annual award of 5,000 shares of Company common stock,
with annual increases of the base salary of the greater of 5% or the percentage
increase in the U.S. Consumer Price Index. On April 1, 1994 and 1996, the term
of this employment agreement was extended for additional two year terms ending
March 31, 1998.
The employment agreements with Messrs. Hersh, Rappaport, Stewart, Katz
and Ms. Ailstock each provide that, if the employee terminates his employment
without good reason or is terminated for cause, such employee is subject to a
non-competition provision for a three year period. In the event of a change of
control of the Company preceded, accompanied or followed (within specified time
limits) by a reduction of the employee's compensation or a diminution of his
status or responsibilities, the employee is entitled to terminate his employment
and receive a lump sum distribution of compensation in an amount equal to three
times his then current effective yearly compensation, including, but not limited
to, salary and bonuses. If the employee elects to so terminate, he will have the
right to sell any shares of the Company's capital stock then owned to the
Company at their fair market value and the non-competitive provisions contained
in the employment agreements shall terminate. Payments under the agreements by
the Company after a change of control are, however, limited to the amount which
would be deductible by the Company under the Internal Revenue Code of 1986, as
amended. A "change of control" is deemed to occur upon (i) the acquisition of
21% of the Company's voting power, (ii) the election of three or more directors
without approval of the Incumbent Directors, as defined, within a twelve-month
period, or (iii) the Incumbent Directors becoming less than a majority of the
Board of Directors of the Company or its successor. The agreements also provide
for payments of three times annual compensation if the employment is terminated
without cause by the Company or for good reason by the employee.
The Company pays its proportional share of a reverse split-dollar life
insurance policy on Mr. Rappaport and Mr. Stewart's life. In the event of either
of Mr. Rappaport's or Mr. Stewart's death during the term of their employment
agreements, the Company would receive $1,000,000.
LEGAL PROCEEDINGS
On February 23, 1993, Dana Lighting (now Catalina Industries), a
subsidiary of the Company, was served with a copy of the Complaint in a matter
captioned HOLMES PRODUCTS CORPORATION VS. DANA LIGHTING, INC. AND NATHAN KATZ,
Case No. 93-0249 in the Superior Court of the Commonwealth of Massachusetts. The
Company and the directors believe that the Complaint is totally without merit
and are vigorously defending the same. The Company has agreed to indemnify each
of the individual directors and Mr. Katz against liabilities incurred in
connection with such proceeding to the extent permitted by Florida law and the
Company may advance expenses to the individual officers arising out of such
proceeding.
11
<PAGE>
COMPENSATION OF DIRECTORS
Salaried employees of the Company do not receive any additional
compensation for serving as a director or committee member. Non-employee
Directors receive an annual retainer of $14,000, plus $1,000 per Board meeting
and Committee meeting attended, and an option to purchase 2,000 shares of Common
Stock under the Company's Non-Employee Directors Stock Option Plan ("Directors
Plan") as compensation for services rendered. Mr. Wachs and Mr. Burrow are
reimbursed for their travel expenses to the meetings.
Under the Directors Plan, options are granted to purchase 2,000 shares
of the Company's Common Stock for each year served. Options are granted at the
annual meeting date which coincides with their election or appointment or, if
the date of appointment or election is between annual meetings, at the next
subsequent annual meeting. The exercise price is the fair market value of the
Common Stock on the date granted, and options are granted for a term of ten
years. An option may not be exercised before the next subsequent annual meeting
of stockholders following the date of the grant. Options are exercisable during
the term only by the non-employee Directors and are transferable only by will or
the laws of descent and distribution.
Robert Wachs and Associates, of which Robert Wachs is the President,
received commissions as a sales representative of approximately $11,000 during
fiscal 1996.
NONQUALIFIED STOCK OPTIONS
The Company from time to time issues non-qualified stock options to
purchase shares of Common Stock to its officers. All such options are issued
pursuant to individual stock option agreements and bear an exercise price equal
to or in excess of the market value of the Common Stock on the date of grant.
The period during which such options may be exercised varies, depending on the
optionee and the circumstances under which the options have been granted. The
exercise price of such options may be paid in cash or, under certain
circumstances, by delivery of shares of Common Stock or by a combination of the
foregoing. No non-qualified stock options were granted to directors or named
executive officers during fiscal 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Ryan
R. Burrow, Henry Latimer and Leonard Sokolow. Messrs. Burrow, Latimer and
Sokolow are independent directors of the Company, and neither is an officer of
the Company.
DIRECTOR AND OFFICER SECURITIES REPORTS
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 of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the New York Stock Exchange. Officers, directors and
greater than ten-percent beneficial owners are required by applicable
regulations to furnish the Company with copies of all Section 16(a) forms they
file. The Company is not aware of any beneficial owner of more than ten percent
of its Common Stock.
During August 1996, the daughter of Robert Wachs, a Director of the
Company, purchased 1,000 shares. Mr. Wachs notified the Company that he failed
to timely file one report on Form 4 concerning the purchase of such shares. Such
report was filed on December 17, 1996 which was due September 10, 1996. Based
solely upon a review of the copies of the forms furnished to the Company, or
written representations from certain reporting persons that no Form 5's were
required, the Company believes that, except for Mr. Wach's Form 4, all filing
requirements applicable to its officers and directors were complied with during
the 1996 fiscal year.
12
<PAGE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee (the "Committee") is
responsible for developing the Company's executive compensation strategy and for
administering the policies and programs that implement this strategy. The
Committee is composed of Ryan R. Burrow, Henry Latimer and Lenny Sokolow all of
whom are independent non-employee directors.
The executive compensation strategy reflects the Company's fundamental
philosophy of aligning the interests of management with the long-term
performance of the Company while providing competitive levels of compensation.
This strategy is designed to assist the Company in attracting and retaining
qualified management.
The Committee is charged with reviewing and approving compensation of
the Company's executives each year. Recommendations of base salary are based
upon the performance of the individual and cash bonuses are based upon the level
of profitability of the Company. In its base salary determinations, the
Committee takes into account individual experience, performance issues specific
to a particular division or subsidiary, and salaries paid by comparable
companies. Bonuses are based upon the Company's profitability as measured by a
percentage of pre-tax earnings. Salary and bonus are also subject to terms of
employment agreements the Company has previously entered into with certain of
its Executive Officers. Five of the Company's Executive Officers, all named in
the compensation tables, are parties to Employment Agreements with the Company.
Reference is made to "Employment Agreements" above for a discussion of the
Company's employment and other agreements with its Executive Officers.
In addition, the Committee grants stock options and restricted stock as
a means of rewarding performance and encouraging stock ownership in the Company
by its executives and thus to strengthen their personal commitment to the
Company. The Committee's policy is to grant stock option awards annually, based
on individual performance and the potential for the executive officer to
contribute to the future success of the Company.
The Chairman of the Board and Chief Executive Officer of the Company is
Robert Hersh. The 76 month cumulative chart on page 15 shows the cumulative
total return of the Company's stock since shortly before Mr. Hersh's appointment
as Chairman, President and Chief Executive Officer in April 1991. Mr. Hersh's
1995 compensation was determined in accordance with the provisions of his
employment agreement entered into in August 1989, which provided for a base
salary and a cash bonus based upon the Company's profitability as measured by
1.67% of pre-tax earnings. Mr Hersh's bonus was $43,787 in fiscal 1996 as
compared to $14,917 fiscal 1995, due to the increase in the Company's annual
earnings.
13
<PAGE>
POLICY WITH INTERNAL REVENUE CODE SECTION 162(M)
The Revenue Reconciliation Act of 1993 added Section 162(m) to the
Internal Revenue Code of 1986 (the "Code"). Code Section 162(m) provides that
compensation paid to a company's chief executive officer and the four other
highest paid executive officers employed by the company at year-end will not be
deductible by the Company for federal income tax purposes to the extent such
compensation individually exceeds $1.0 million. Code Section 162(m) excepts from
this limitation certain "performance-based compensation".
Although base salary and bonuses paid to the named Executive Officers
have traditionally been well under $1.0 million, compensation from the exercise
of stock options could potentially cause a named Executive Officer to have
compensation in excess of $1.0 million. However, all options granted to the
named Executive Officers prior to October 1993 are exempt from Code Section
162(m) under a "grandfather" provision.
The Board of Directors has approved an amendment to the terms of the
1987 Stock Option and Stock Appreciation Rights Plan ("Plan") so that future
awards under the Plan may qualify as "performance-based compensation" as defined
by the Code. Said amendment provides that no participant may be awarded in any
given fiscal year stock options, stock appreciation rights or other awards under
the 1987 Stock Option and Stock Appreciation Rights Plan that, in the aggregate,
represent more than 10% of the total authorized shares that may be issued under
the Plan.
SUBMITTED BY THE COMPENSATION AND STOCK OPTION
COMMITTEE
RYAN R. BURROW
HENRY LATIMER
LEONARD SOKOLOW
14
<PAGE>
PERFORMANCE GRAPHS
The following line graphs compare the cumulative total return of the
Company's common stock to the total return index for the Standard & Poors 500
Index and a Peer Group Index of five stocks for the five year period from
September 30, 1991 through September 30, 1996 and for a 76 month period from
September 30, 1990 to January 31, 1997. The graphs assume $100 invested at the
beginning of each period and reinvestment of dividends.
The Peer Group consists of Windmere Corporation, Helen of Troy
Corporation, Thomas Industries, Inc., Genlyte Group, Inc. and Craftmade
International Inc. The companies included as part of the Peer Group Index were
selected on the basis of the similarity of such companies to the Company,
considering such factors as products sold, sourcing of products, distribution
channels and the industry within which such companies operate.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CATALINA LIGHTING, INC., THE S & P 500 INDEX AND A PEER GROUP
CUMULATIVE TOTAL RETURN
---------------------------------------
9/91 9/92 9/93 9/94 9/95 9/96
CATALINA LIGHTING INC LTG 100 130 222 352 156 111
PEER GROUP PPEER1 100 94 116 150 156 223
S & P 500 1500 100 111 125 130 169 203
* $100 INVESTED ON 9/30/91 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
<TABLE>
<CAPTION>
COMPARISON OF 76 MONTH CUMULATIVE TOTAL RETURN*
AMONG CATALINA LIGHTING, INC., THE S & P 500 INDEX AND A PEER GROUP
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
9/90 9/91 9/92 9/93 9/94 9/95 9/96 1/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CATALINA LIGHTING INC LTG 100 117 152 261 413 183 130 174
PEER GROUP PPEER1 100 132 124 152 198 206 295 361
S & P 500 1500 100 131 146 165 171 221 266 307
</TABLE>
* $100 INVESTED ON 9/30/90 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING SEPTEMBER 30.
15
<PAGE>
STOCK OPTION PLANS
EMPLOYEE PLAN. The Company's 1987 Stock Option and Stock Appreciation
Rights Plan, as amended (the "Employee Plan"), is administered by the Stock
Option Compensation Committee of the Board of Directors (the "Committee) and is
designed to provide officers and other key employees with substantial
responsibilities for the direction and management of the Company with additional
incentive to promote the success of the Company. The Employee Plan provides for
both incentive and non-statutory stock options and stock appreciation rights
("SAR's"). The Employee Plan authorizes the grant of SAR's either in tandem
with, or separately and apart from, stock options granted to participants. An
SAR is the right to receive the amount by which the fair market value per share
of Common Stock on the date on which the SAR is exercised exceeds the fair
market value of Common Stock on the date on which the SAR was granted.
Under the Employee Plan, options may be granted for up to 1,750,000
shares of Common Stock, at a price of 100% of the fair market value of the
Common Stock on the date of grant (110% in the case of holders of more than 10%
of the stock). No participant may be awarded in any given fiscal year stock
options, stock appreciation rights or other awards that, in the aggregate,
represent more than 10% of the total authorized shares that may be issued under
the Plan. No option granted as an incentive stock option may extend for a period
of more than 10 years (5 years for a holder of more than 10% of the stock) from
the date granted. Options forfeited by employees, whether through expiration or
by the grantee's departure from the Company, become once again available under
the Plan. The Employee Plan permits cancellation and reissuance of previously
granted stock options, with such reissuance to be at a price not less than the
market price on the date of reissuance. Presently, as of January 31, 1997 there
are 1,350,801 options outstanding, 1,114,801 options exercisable under the Plan
and 8,756 shares available for options that could be granted.
The exercise price may be paid in full by a participant in cash,
previously acquired Common Stock valued at the fair market value thereof on the
date of exercise of the stock option by the participant, or a combination of
cash and Common Stock so valued. All options granted under the Employee Plan
through the date of this Proxy Statement vest annually in increments of
one-third of the amount of the grant, except that the option will vest
immediately in full upon a "Change of Control".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leased its two facilities located in Massachusetts from
entities in which an officer and a former officer had an ownership interest. One
of the leases expired in 1996 and the other one is on a month-to-month basis.
Rent expense related to these leases was approximately $530,000, $521,000 and
$512,000 for the years ended September 30, 1996, 1995 and 1994, respectively.
The Company leases its Hong Kong office from a company owned by the
President and former majority stockholder of Go Gro. The lease expires in August
1997 but may be extended for an additional two years. Rent expense related to
this lease was $258,000, $237,000 and $39,000 for the years ended September 30,
1996, 1995 and 1994, respectively.
During the years ended September 30, 1996 and 1995, Go-Gro purchased
$1.8 million and $1.1 million, respectively, in raw materials from an affiliate
which is fifty percent owned by the Company and which includes the President of
Go-Gro as one of its directors.
In January 1994, the Company delivered 32,644 restricted common shares
as consideration for the one-year extension, from May 1993 to May 1994, of its
non-compete contract with a former Chairman and Chief Executive Officer of the
Company. In January 1994, the Company elected to extend the term of this
non-compete agreement for the third year of its three-year option, from May 1994
to May 1995. The consideration for the one-year extension was satisfied in May
1994 by the issuance of 23,112 restricted shares of the Company's common stock.
16
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors recommends that the Stockholders ratify the
appointment of Deloitte & Touche LLP, independent certified public accountants,
as the Company's auditors for 1997. A representative of Deloitte & Touche LLP is
expected to appear at the Annual Meeting to make a statement if he so desires
and to be available to answer appropriate questions from stockholders.
OTHER MATTERS
Management is not aware of any other business that may come before the
Meeting. However, if additional matters properly come before the Meeting,
proxies will be voted at the discretion of the proxy-holders.
STOCKHOLDER PROPOSALS
Stockholder proposals which are requested to be included in the proxy
materials of the Company at its next Annual Meeting must be received by the
Company no later than November 4, 1997 to be eligible for consideration. Such a
proposal must comply with requirements as to form and substance established by
applicable laws and regulations in order to be included in the proxy statement.
17
<PAGE>
CATALINA LIGHTING, INC.
18191 N.W. 68TH AVENUE
MIAMI, FL 33015
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert Hersh and Dean S. Rappaport as Proxies,
each with the power to appoint his substitute, and hereby authorizes each of
them to represent and to vote, as designated below, all the shares of common
stock of CATALINA LIGHTING, INC. held of record by the undersigned on February
28, 1997, at the Annual Meeting of Stockholders to be held on April 10, 1997 or
any adjournment or postponement thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR PROPOSALS 1, 2 AND 3.
(continued and to be signed on the reverse side)
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL AGENDA ITEMS.
PLEASE MARK YOUR VOTE AS INDICATED IN THIS EXAMPLE [X]
1. Election of Directors: Robert Hersh, Dean S. Rappaport,
William Stewart, Ryan Burrow, Robert
FOR all nominees WITHHOLD Wachs, Jeffrey Silverman, Leonard
listed (except as AUTHORITY Sokolow, Henry Latimer
indicated to the to vote for all (INSTRUCTION: To withhold authority to
right) nominees vote for any individual
listed nominee, write that
nominee's name in the
[ ] [ ] space provided below.)
--------------------------------------
2. Proposal to ratify the appointment of Deloitte & Touche LLP as the
independent certified public accountants of the Company
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please sign full title as such. If a corporation, please
sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by
authorized person.
Signature(s)________________________ Signature(s)____________________________
Date___________________, 1997
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
