SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
CATALINA LIGHTING, INC.
(Name of Registrant as Specified in Its Charter)
CATALINA LIGHTING, INC.
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) 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:
[ ] 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 1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
----------
The Annual Meeting of Stockholders of Catalina Lighting, Inc., a
Florida corporation (the "Company"), will be held on May 26, 1999 at 10:00 a.m.
local time at the Company's corporate office located at 18191 N.W. 68th Avenue,
Miami, Florida 33015, for the following purposes:
1. To elect seven 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, 1999; 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 April 1, 1999
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
April ___, 1999
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 GOLD 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
----------
1999 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
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 1999 Annual Meeting of Stockholders of the
Company (the "Annual Meeting") to be held at the Company's corporate office,
18191 N.W. 68th Avenue, Miami, Florida 33015, on May 26, 1999 at 10:00 a.m.
local time, and at any and all adjournments or postponements thereof.
The purpose of the Annual Meeting is to elect seven persons to the
Board of Directors, to ratify the appointment of auditors and to transact such
other business as may properly come before the meeting. The Company's nominees
for election to the Board of Directors include three new independent
director-candidates.
According to a report on Schedule 13D filed on February 10, 1999 under
the Securities Exchange Act of 1934, as amended, by David M. Moss, Moss
indicated that he intends to propose as nominees for directors at the 1999
Annual Meeting two director candidates, himself and Mr. Richard Duball, the
president of a competitor of the Company.
Management and all members of the Board of Directors believe that
election of Moss' nominees to serve on the Board of Directors would be contrary
to the interests of the Company and its stockholders.
You are urged to date, sign and promptly mail the enclosed gold proxy
in the enclosed addressed envelope, which requires no postage in the United
States. The Board of Directors recommends that you discard and not vote any
proxy card sent to you by Moss.
The Annual Report of the Company for the fiscal year ended September
30, 1998 accompanies this Proxy Statement. This proxy statement is first being
mailed to stockholders on April __, 1999.
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 April 1, 1999 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 has the
power to revoke it by notice of revocation
2
<PAGE>
directed to the proxy-holders or the Company at any time before it is voted.
Proxies which are properly executed will be voted in accordance with the
instructions contained therein. If instructions are not given therein, unless
authority is withheld, properly executed proxies will be voted FOR the election
of the directors nominated by the Board of Directors of the Company and FOR
ratification of the appointment of auditors. 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.
Each share of Common Stock outstanding on the record date will be
entitled to one vote on all matters. The seven candidates for election as
directors at the Annual Meeting who receive the highest number of affirmative
votes will be elected. The ratification of the independent auditors for the
Company for the current year will require the affirmative vote of a majority of
the shares of the Company's Common Stock present or represented and entitled to
vote at the Annual Meeting. Because abstentions with respect to any matter other
than the election of directors are treated as shares present or represented and
entitled to vote for the purposes of determining whether that matter has been
approved by the stockholders, abstentions have the same effect as negative votes
for each proposal other than the election of directors. Broker non-votes are not
deemed to be present or represented for purposes of determining whether
stockholder approval of that matter has been obtained, but they are counted as
present for purposes of determining the existence of a quorum at the Annual
Meeting.
As of April 1, 1999, the Record Date, there were _____ 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.
3
<PAGE>
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 by
those who were the beneficial owners of more than 5% of the Company's stock.
Except as otherwise noted, beneficial ownership is as of January 8, 1999 and,
other than as provided by community property and other such laws, consists of
sole voting and investment power.
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED(1) PERCENTAGE
- -------------------- --------------------- ----------
Heartland Advisors, Inc....... 1,442,7002(2) 20.1%
790 North Milwaukee Street
Milwaukee, WI 53202
Nathan Katz................... 630,742(3) 8.5%
55 Norfolk Avenue
Easton, MA
Wai Check Lau................. 558,200(4) 7.8%
6/F, Kenning Industrial Bldg.
19 Wang Hoi Road
Kowloon, Hong Kong
Dimensional Fund Advisors, Inc. 450,000(5) 6.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 9040
Robert Hersh.................. 435,300(4),(6) 5.8%
18191 N.W. 68th Avenue
Miami, Florida 33015
David M. Moss................. 394,482(7) 5.5%
6073 N.W. 167th Street
Building C-5
Miami, FL 33015
Dean Rappaport................ 367,100(4),(8) 4.9%
18191 N.W. 68th Avenue
Miami, Florida 33015
William D. Stewart............ 265,500(4),(9) 3.6%
18191 N.W. 68th Avenue
Miami, Florida 33015
4
<PAGE>
- ---------------------------------
1 Includes shares which may be acquired pursuant to vested stock options and
options which become exercisable through March 9, 1999 or shares for which
the stockholder has the power to direct the vote.
2 Based solely upon a Schedule 13G filed with the Securities and Exchange
Commission, Heartland Advisors, Inc., a registered investment advisor, is
deemed to have beneficial ownership of 1,442,700 shares of Catalina
Lighting, Inc. stock, all of which shares are held in investment advisory
accounts. As a result, various persons have the right to receive or the
power to direct the receipt of dividends from, or the proceeds from the
sale of, the securities. The interest of one such account, Heartland Value
Fund, a series of Heartland Group, Inc., a registered investment company,
relates to more than 5% of the stock.
3 Includes shares purchasable through the exercise of options as follows:
55,000 shares at $1.75 per share and 162,500 shares at $2.4375 per share.
4 Of this total, 477,500 shares are owned by Go-Gro Holdings Limited, which
is owned by Wai Check Lau, 6,000 shares are owned by Amy Yuen Ying Lau
Cheung, the wife of Wai Check Lau and 21,500 shares are owned jointly by
Wai Check Lau and Amy Yuen Ying Lau Cheung. In July 1994, as part of the
Company's acquisition of Go-Gro Industries Limited ("Go-Gro"), Wai Check
Lau and Amy Yuen Ying Lau Cheung each delivered an irrevocable proxy to
Catalina Asia, an entity controlled by the Company. Catalina Asia has a
proxy to vote the 558,200 shares beneficially owned by Mr. Lau and an
additional 191,800 shares of the Company also issued to previous
stockholders of Go-Gro upon the acquisition. The 750,000 shares are voted
at the direction of Messrs. Hersh, Rappaport, and Stewart, members of the
Board of Directors of Catalina Asia. Each of Messrs. Hersh, Rappaport and
Stewart disclaims beneficial ownership of such shares.
5 Based solely upon a Schedule 13G filed with the Securities and Exchange
Commission, Dimensional Fund Advisors, Inc. ("Dimensional"), an investment
advisor registered under the Investment Advisors Act of 1940, furnishes
investment advice to four investment companies registered under the
Investment Company Act of 1940, and serves as investment manager to certain
other investment vehicles, including commingled group trusts. (These
investment companies and investment vehicles are the "Portfolios"). In its
role as investment advisor and investment manager, Dimensional possesses
both voting and investment power over all the securities of the Issuer that
are owned by the Portfolios. All securities reported are owned by the
Portfolios, and Dimensional disclaims beneficial ownership of such
securities.
6 Includes shares purchasable through the exercise of options as follows:
100,000 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
62,500 shares at $6.75 per share.
7 According to a Schedule 13D filed with the Securities and Exchange
Commission on February 10, 1999, this amount excludes 34,600 shares held in
trust for the benefit of Mr. Moss' children, the beneficial ownership of
which shares Mr. Moss disclaims.
8 Includes shares purchasable through the exercise of options as follows:
100,000 shares at $1.75 per share and 212,500 shares at $2.4375 per share.
9 Includes shares purchasable through the exercise of options as follows:
20,000 shares at $1.75 per share and 212,500 shares at $2.4375 per share.
5
<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 January 8, 1999 by each
director, director nominee and executive officer and by all directors and
executive officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY
NAME OF BENEFICIAL OWNER OWNED(1) PERCENTAGE
- ------------------------------------- -------------- ---------------
<S> <C> <C>
Robert Hersh......................... 435,300(2),(13) 5.8%
Dean Rappaport....................... 367,100(3),(13) 4.9%
William D. Stewart................... 265,500(4),(13) 3.6%
Ryan Burrow.......................... 20,700(5) *
Henry Latimer........................ 14,495(6) *
Jesse Luxton......................... 0 *
Jeffrey Silverman..................... 27,000(7) *
Leonard Sokolow...................... 41,000(8) *
Howard Steinberg..................... 10,000(9) *
Brian Wise........................... 0 *
Nathan Katz.......................... 630,742(10) 8.5%
David W. Sasnett..................... 21,300(11) *
Thomas M. Bluth...................... 24,500(12) *
All directors and executive officers
of the Company and its subsidiaries as
a group (10 persons)................ 2,533,137(14) 30.2%
* less than 1%
</TABLE>
- ---------------------------
1 Includes shares which may be acquired pursuant to vested stock options and
options which become exercisable through March 9, 1999.
6
<PAGE>
2 Includes shares purchasable through the exercise of options as follows:
100,000 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
62,500 shares at $6.75 per share.
3 Includes shares purchasable through the exercise of options as follows:
100,000 shares at $1.75 per share and 212,500 shares at $2.4375 per share.
4 Includes shares purchasable through the exercise of options as follows:
20,000 shares at $1.75 per share and 212,500 shares at $2.4375 per share.
5 Includes 500 shares owned by Mr. Burrow's wife and shares purchasable
through the exercise of options as follows: 2,000 shares at $6.625 per
share, 2,000 shares at $10.75 per share, 2,000 shares at $6.25 per share
and 12,000 shares at $3.75 per share.
6 Includes shares purchasable through the exercise of options as follows:
2,000 shares at $6.25 per share and 12,000 shares at $3.75 per share.
7 Includes 2,000 shares purchasable through the exercise of options at $3.75
per share.
8 Includes shares purchasable through the exercise of options as follows:
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 per share, 2,000 shares at
$6.25 per share and 2,000 shares at $3.75 per share.
9 Amount does not include 5,000 shares over which Mr. Steinberg has the power
to vote but as to which shares Mr. Steinberg disclaims beneficial
ownership.
10 Includes shares purchasable upon the exercise of options as follows: 55,000
shares at $1.75 per share and 162,500 shares at $2.4375 per share.
11 Includes 20,000 shares purchasable through the exercise of options at
$2.4375 per share.
12 Includes 22,500 shares purchasable through the exercise of options at
$2.4375 per share.
13 Messrs. Hersh, Rappaport and Stewart, jointly as members of the Board of
Directors of Catalina Asia, have a power to vote 750,000 shares owned by
previous stockholders 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 and these executive officers disclaim
beneficial ownership of such shares.
14 Includes 750,000 shares owned by previous stockholders of Go-Gro Industries
Limited which Messrs. Hersh, Rappaport and Stewart jointly have a power to
vote pursuant to irrevocable proxies.
7
<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
The Nominating Committee of the Board has recommended, and the Board of
Directors has nominated, the seven persons named below for election as directors
at the Annual Meeting. Three of the Company's nominees, Messrs. Luxton,
Steinberg and Wise, are nominated as independent directors and are being
nominated for the first time. The other four nominees currently serve as
directors and, except for Mr. Hersh, are independent 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 following 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 certain information with respect to the
Company's nominees for director.
NOMINEES OF THE COMPANY
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ---------------- --- ------------------------- ----------
Robert Hersh 52 Chairman, Chief Executive
Officer, President, Director 1988
Ryan Burrow 38 Director 1994
Henry Latimer 61 Director 1996
Leonard Sokolow 42 Director 1990
Jesse Luxton 56 Director Nominee -
Howard Steinberg 68 Director Nominee -
Brion Wise 53 Director Nominee -
ROBERT HERSH, a co-founder of the Company, 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. Since 1991, when Mr. Hersh became
President and Chief Executive Officer, the Company's sales have increased from
$88 million to $161 million for fiscal 1998. Over that same period, the Company
has grown from a small scale domestic wholesaler/distributor with a customer
base of mostly small and medium-sized companies into an international
manufacturer and distributor of lighting products with operations worldwide and
a customer base comprising many of the world's largest retailers of these
products.
RYAN BURROW has been a Director of the Company since April 1994. Since
March 1997, Mr. Burrow has been the President of BPI Global Asset Management
LLP, an investment management company managing over $1.6 billion in assets. Mr.
Burrow was Managing Director for STI Capital Management from August 1993 to
March 1997. 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.
8
<PAGE>
HENRY LATIMER has been a Director of the Company since February 1996.
Mr. Latimer is the Managing Partner, Fort Lauderdale office, of the law firm of
Eckert, Seamans, Cherin & Mellott, a national law firm employing over 200
attorneys in nine cities. He also serves on the National Executive Committee and
Compensation Committee of Eckert Seamans Cherin & Mellott. Mr. Latimer was
formerly a partner with the law firm of Fine, Jacobson, Schwartz, Nash & Block
from 1983 to 1994, served as a Circuit Court Judge in and for the Seventeenth
Circuit, Broward County, Florida, from 1979 to 1983 and each year, was voted the
most qualified Judge in that circuit by lawyers in that circuit. Mr. Latimer
presently serves as a director of Florida Panthers Holdings, Inc, an
entertainment company with shares traded on the New York Stock Exchange (PAW).
Mr. Latimer also serves on the Orange Bowl Committee, the Board of Trustees of
the University of Miami, the Broward Workshop and the Broward Partnership for
the Homeless.
LEONARD SOKOLOW has been a Director of the Company since March 1990.
Mr. Sokolow has been the President of Union Atlantic LC, a private merchant,
banking and strategic consulting firm specializing domestically and
internationally in technology industries. Since August 1993 Mr. Sokolow has been
President of Genesis Partners, Inc., a private consulting firm. Mr. Sokolow was
Chairman and Chief Executive Officer of the Americas Growth Fund, Inc. from
August 1994 to December 1998. 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 is also a Certified
Public Accountant. Mr. Sokolow presently serves as a director of Ezcony
Interamerica, Inc. The shares of Ezcony Interamerica are traded over the
counter.
JESSE LUXTON serves as a consultant to manufacturers of houseware
consumer products, serves on the Board of Directors of Glass Master Group, LLC,
a company involved in automotive and commercial replacement glass and is a
facilitator for the National Housewares Manufacturing Association. From 1987 to
1997, Mr. Luxton served as a Director, the President and Chief Executive Officer
of National Picture and Frame Company, a manufacturer of picture frames with
annual sales of $73,000,000 in 1997, whose shares were traded on the NASDAQ from
1993 until 1997 under the symbol "NPAF." Mr. Luxton has extensive experience in
sales to retailers such as mass merchants, home centers, hardware and specialty
and warehouse clubs. Mr. Luxton also serves on the Board of the National
Housewares Manufacturing Association and Southwest Texas State University
Development Foundation. Mr. Luxton was also honored as a Distinguished Alumnus
in 1998 from Southwest Texas State University.
HOWARD STEINBERG is currently Chief Executive Officer and Director of
PGM Products, LLC., a company that is a supplier of wood products and ceramic
tile to the country's major home centers. PGM Products is the successor to
Ply*Gem Manufacturing, a division of PlyGem Industries, Inc. Mr. Steinberg
served as President and Chief Operating Officer of Ply*Gem Paneling Centers, a
paneling retail division of Ply*Gem Industries, Inc. from 1964 to 1975 and in
1975, he assumed the duties of Chief Executive Officer of the Ply*Gem
Manufacturing division. Mr. Steinberg is also the President and a Director of
Acorn USA Holding LLC., and is also a member of the Board of Directors of the
"International Wood Products Association", which represents the wood industry on
legislative and regulatory matters affecting imported wood products.
BRION WISE is a founder of Western Gas Resources ("WGR"), a company
with annual sales in 1998 of $2.1 billion. WGR is an independent gas gathering,
processor, energy marketer, and oil and gas producer. Its shares are traded on
the New York Stock Exchange under the symbol WGR. Mr. Wise has served as Chief
Executive Officer, Chairman of the Board of WGR since 1967. Mr. Wise is also a
Chemical Engineer. Prior to founding WGR, Mr. Wise worked as a gas processing
engineer for Shell Oil Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE COMPANY'S
NOMINEE. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY THE BOARD
OF DIRECTORS WILL BE VOTED IN FAVOR OF EACH OF THE COMPANY'S NOMINEES.
9
<PAGE>
POSSIBLE THIRD-PARTY NOMINATIONS
According to a report on Schedule 13D filed on February 10, 1999 under
the Securities Exchange Act of 1934, as amended, by David M. Moss, Moss
indicated that he intends to propose as nominees for directors at the 1999
Annual Meeting two director candidates: himself and Mr. Richard Duball, the
president of a competitor of the Company. That Schedule 13D also reported that
Moss had sole voting and investment power over 394,482 shares of the Company's
Common Stock, or 5.5% of the Company's outstanding stock (which amount does not
include 34,600 shares held in a trust for the benefit of Moss' children, as to
which shares Moss disclaims ownership).
Management and all members of the Board of Directors believe that the
election of Moss' nominees to serve on the Board of Directors would be contrary
to the interests of the Company and its stockholders for the following reasons:
--> Richard Duball is the President of a competitor of the Company. The
Company believes that Duball's membership on the Board of Directors
could provide a competitive benefit to Mr. Duball in running his
company, while having significant adverse consequences to the Company
and all other stockholders such as, for example: (1) having a
competitor gain access to confidential Company information which could
seriously undermine the Company's position with its customers, or (2)
causing possible violations of Federal and State antitrust laws because
suppliers who are also competitors are not permitted to agree on
certain business transactions which may affect competition.
--> Mr. Moss has no experience with the management or oversight of a
business of the size and complexity of the Company's, nor does he
bring new expertise to the Company. At the recommendation of the
Board, Moss stepped down from the Board and all management positions
with the Company in August of 1988, at which time the Company was a
small scale domestic wholesaler/distributor without internal
manufacturing capabilities, and with a sales volume of approximately
$27 million derived from a customer base of mostly small and
medium-sized companies. Under present management, the Company has
evolved to become an international manufacturer and distributor of
lighting products with operations in the U.S., Canada, Mexico, Europe,
China and Hong Kong; annual sales of as much as $197 million; ISO 9002
certified manufacturing capabilities; and a customer base comprising
many of the world's largest retailers of these products. The
sophistication and business acumen required to run the Company's
business have increased dramatically since Moss' employment with the
Company. The Company believes that many of the business practices Moss
employs in running his private operations are inappropriate for the
Company and could adversely impact the business, resulting in a loss
of sales and profits.
The Company has undertaken recent strategic initiatives that
demonstrate management's commitment to improving profitability and enhancing
stockholder value, as well as its ability to adapt and position the Company for
future success. These initiatives include:
/bullet/ Initiation of stock repurchase plan under which the Board of
Directors has authorized the Company to purchase up to $2,000,000
of the Company common stock.
/bullet/ The addition of three new independent and experienced executives
from diverse industries to serve on the Company's Board of
Directors.
10
<PAGE>
/bullet/ Construction of the Company's new 300,000 square foot ISO 9002
certified manufacturing complex located in Shenzhen, China. This
factory completed its first full year of production in 1998 and
significantly expands the Company's production capabilities in
terms of quantity and quality. Management strongly believes these
manufacturing capabilities provide the Company with a major
competitive advantage for continued partnerships with major global
retailers.
/bullet/ The consolidation of inventories previously held in a public
facility in California into the Mississippi distribution center,
which eliminates significant annual warehousing costs formerly
associated with the California facility while simultaneously
improving overall inventory management and customer service.
/bullet/ Relocation of Catalina Canada's offices to Toronto from Montreal.
This move simplifies Canadian operations and brings the Company
closer to most of its important Canadian customers.
/bullet/ A major upgrade of the computer systems and automated business
applications for domestic operations. This new enterprise system
replaces the former business applications supporting sales,
purchasing, distribution, inventory management, product
development and finance and greatly expands the functionality and
efficiency of the Company's business processes.
/bullet/ The introduction of a wide variety of exciting new products (such
as flashlights, GE brand fluorescent torchieres, worklights,
ENERGY STAR energy efficient lighting, and fashion portable
lighting) and the aggressive expansion of product development
capabilities through a substantial commitment of resources,
including the hiring of separate industry - recognized designers
for the U.S. and European markets.
The Company returned to profitability and reported other financial
measures of success for the recently completed 1998 fiscal year, such as:
-> Gross profit as a percentage of sales increased to 19.2%, the highest
rate in the Company's history.
-> Cash generated from operations reached $16 million.
-> Outstanding debt fell to its lowest level in five years.
Management believes these initiatives will also positively impact
future results. The strategic initiatives and resulting improvements are the
direct result of the ideas and contributions of key members of senior
management. Management believes Moss' presence at the Company could lead to the
departure of several of these key contributors, which would severely disrupt the
positive momentum established over the past year and the Company's initiatives
for the future.
It is not certain that Moss will in fact seek to nominate himself and
Mr. Duball for election as directors or, if he does, whether he will solicit
proxies from stockholders. IF MOSS SOLICITS STOCKHOLDERS TO VOTE FOR HIS
NOMINEES, THE BOARD OF DIRECTORS RECOMMENDS THAT YOU NOT SIGN ANY PROXY CARD
SOLICITED BY MOSS.
11
<PAGE>
PROPOSAL NUMBER TWO
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 1999. 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.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR THE COMPANY FOR
THE CURRENT YEAR. UNLESS A CONTRARY CHOICE IS SPECIFIED, PROXIES SOLICITED BY
THE BOARD OF DIRECTORS WILL BE VOTED FOR RATIFICATION OF THE APPOINTMENT.
MEETINGS AND COMMITTEES OF DIRECTORS
Four meetings of the Board of Directors were held during the past
fiscal year; in addition, the Directors acted through unanimous written consent
on one occasion. During fiscal 1998, each director attended at least 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 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 Messrs. Burrow, Latimer, Silverman and
Sokolow, all of whom are independent non-employee directors. During fiscal 1998,
the Compensation and Stock Option Committee met two times.
NOMINATING COMMITTEE - 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. The Nominating Committee is composed of
Messrs. Latimer, Silverman and Hersh. During fiscal 1998, the Nominating
Committee met one time.
AUDIT COMMITTEE - 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. The
Committee is composed of Messrs. Sokolow and Burrow. During fiscal 1998, the
Audit Committee met two times.
COMPENSATION OF DIRECTORS
Salaried employees of the Company do not receive any additional
compensation for serving as a director or committee member. Commencing with this
year's Annual Meeting of Stockholders, non-employee directors will receive an
annual retainer of $14,000 payable $7,000 in cash and in the number of shares
equal to $7,000 calculated on the basis of the fair market value of the common
stock on the date of the Annual Meeting. The stock is restricted and vests after
one year or on a pro rata basis if the director ceases to serve on the Board
during the year. For 1998, non-employee directors received an annual retainer of
$14,000 per year in cash. Directors also have and will continue to receive
$1,000 per Board meeting and Committee meeting attended. Mr. Burrow is
reimbursed for his travel expenses to the meetings.
12
<PAGE>
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Company's executive officers. Mr. Hersh's biography is set forth above under
"Election of Directors."
NAME AGE POSITION WITH THE COMPANY
- --------------- --- -----------------------------------------
Robert Hersh 52 Chief Executive Officer, President
Dean Rappaport 47 Executive Vice President, Chief Operating Officer
William D. Stewart 50 Executive Vice President
Nathan Katz 43 Executive Vice President
David W. Sasnett 42 Senior Vice President, Chief Financial Officer
Thomas M. Bluth 41 Vice President, Secretary, Treasurer
DEAN 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 of Crest
Industries, Inc., a distributor of home improvement products.
NATHAN KATZ has been an Executive Vice President of the Company since
October 1, 1993 and Chief Executive Officer of Catalina Industries (formerly
known as Dana Lighting), a wholly-owned subsidiary of the Company since August
1989. From October 1983 to August 1989, Mr. Katz was the Chief Executive Officer
of Dana Imports, Inc., an importer of lamps located in Boston, Massachusetts.
DAVID W. SASNETT has been Vice President of the Company since
November1994. In November 1997, Mr. Sasnett became a Senior Vice President of
the Company. In November 1996, Mr. Sasnett was promoted to Chief Financial
Officer of the Company. Prior to that time, he was the Company's Controller.
From 1993 until he joined the Company, Mr. Sasnett was the Vice President -
Finance and Controller of Hamilton Bank, N.A. and from 1980 to 1993 was employed
by the international accounting firm of Deloitte & Touche.
THOMAS M. BLUTH has been Vice President since August 1994 and Secretary
of the Company since November 1994. Mr. Bluth became Treasurer of the Company in
November 1996. From 1989 until he joined the Company, Mr. Bluth was Vice
President and General Counsel for Ellis Diversified, Inc. From 1987 to 1989, Mr.
Bluth was the Assistant Tax Director for Southwestern Bell Corporation.
13
<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 ended September 30, 1998, 1997
and 1996 for services in all capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
----------------------- -------------
SECURITIES
NAME AND FISCAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) OPTIONS(3) COMPENSATION(4)
- --------------------- ------ --------- -------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Robert Hersh 1998 $ 299,151 $26,190 - $ 1,600
Chairman, CEO 1997 284,905 - - 1,500
and President 1996 271,338 43,787 - 1,500
Dean Rappaport
Executive Vice 1998 269,235 26,190 - 5,688
President, Chief 1997 256,414 - - 6,059
Operating Officer 1996 244,204 43,787 - 6,496
William D. Stewart 1998 269,235 26,190 - 6,907
Executive Vice 1997 256,414 - - 7,426
President 1996 244,204 43,787 - 7,987
Nathan Katz 1998 269,235 26,190 - 1,600
Executive Vice 1997 256,414 - - 1,500
President 1996 244,204 43,787 - 1,500
David W. Sasnett
Senior Vice 1998 151,068 15,000 - 1,549
President, Chief 1997 136,603 15,000 - 1,216
Financial Officer 1996 103,740 10,000 7,500 655
</TABLE>
- -------------------------------
1 Perquisites and personal benefits furnished to the named executive officers
do not meet the disclosure thresholds established under SEC regulations.
2 In accordance with their employment agreements, amounts for each of Messrs.
Hersh, Rappaport, Stewart and Katz represent 1.67% of consolidated pretax
income for the respective fiscal years ended September 30.
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 $4,088 in 1998, $4,559 in 1997 and $4,996 in 1996 for
Mr. Rappaport, and $5,307 in 1998, $5,926 in 1997 and $6,487 in 1996
for Mr. Stewart.
(b) The Company's matching contributions to the Company's 401(k) plan of
$1,600 in 1998, $1,500 in 1997 and $1,500 in 1996 for each of Messrs.
Hersh, Rappaport, Stewart and Katz, and $1,549 in 1998, $1,216 in 1997
and $655 in 1996 for Mr. Sasnett.
14
<PAGE>
OPTIONS GRANTED IN LAST FISCAL YEAR
No stock options were granted to the named executive officers of the
Company during the fiscal year ended September 30, 1998.
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, 1998 and the value of options held by such officers at September
30, 1998 based on the closing price of the Company's stock on that date.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR END 1998 OPTION VALUES
<TABLE>
<CAPTION>
SHARES VALUE OF
ACQUIRED ON VALUE NUMBER OF SECUTIRIES UNDERLYING IN-THE-MONEY OPTIONS AT
NAME EXERCISE REALIZED(1) OPTIONS AT SEPTEMBER 30, 1998 SEPTEMBER 30, 1998(2)
- ----------------- ------------- ------------ ------------------------------- ---------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh 4,600 $11,788 317,100 0 $ 52,300 0
Dean Rappaport 2,000 $ 4,375 317,100 0 $ 52,300 0
William D. Stewart 0 0 232,500 0 $ 10,000 0
Nathan Katz 0 0 217,500 0 $ 27,500 0
David W. Sasnett 0 0 17,500 2,500 $ 0 0
</TABLE>
- ---------------------------
1 The value realized is computed by multiplying the difference between the
exercise price of the stock option and the market price of the Common Stock
on the date of exercise by the number of shares of Common Stock with
respect to which the options was exercised.
2 Based on the closing price of the Common Stock on September 30, 1998 of
$2.25.
EMPLOYMENT CONTRACTS; 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 which expire on September
30, 2001. 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
fiscal years 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 awarded during fiscal years 1994, 1996, 1997 and 1998. The
15
<PAGE>
aforementioned options were issued under the Company's 1987 Stock Option and
Stock Appreciation Rights Plan.
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 pretax 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 and 1997 due to pretax losses and aggregate amounts earned by all
participating executives under the Pool in fiscal 1993, 1994, 1995, 1996 and
1998 totaled approximately $356,000, $614,000, $60,000, $175,000 and $105,000,
respectively.
The employment agreements with Messrs. Hersh, Rappaport, Stewart and
Katz 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 annual 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-competition 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.
On May 7, 1998, the Company entered into Change in Control Agreements
with David Sasnett and Thomas M. Bluth. The Agreements expire in March 2001.
Such Agreements provide that, in the event of a change in control of the
Company, if the Company terminates the employment of either employee within
certain time periods or the Company fails to negotiate an acceptable employment
agreement with the employee, the Company shall pay the employee two times his
annual base salary. In addition, the agreements with Messrs. Bluth and Sasnett,
respectively, provide that in the event they are terminated "without cause"
where there has been no change in control, Messrs. Bluth and Sasnett,
respectively, are entitled to a severance payment equal to their annual base
salary.
The Company pays its proportional share of a reverse split-dollar life
insurance policy for Mr. Rappaport, Mr. Stewart and Mr. Katz. In the event of
the death of Mr. Rappaport, Mr. Stewart or Mr. Katz during the term of their
employment agreements, the Company would receive $1,000,000.
16
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% 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.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons, the Company
believes that all filing requirements applicable to its officers, directors and
persons who hold more than 10% of the Common Stock were complied with during the
1998 fiscal year.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Stock Option 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 Burrow, Henry Latimer, Jeffrey Silverman and Leonard 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 pretax earnings. Salary and bonus are also subject to terms of
employment agreements the Company has previously entered into with certain of
its executive officers. Four 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 Contracts and Termination of Employment and
Change-in-Control Arrangements" above for a discussion of the Company's
employment and other agreements with its executive officers.
In addition, the Committee has from time to time granted 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. No options were granted to executive officers during
fiscal 1998.
The Chairman of the Board and Chief Executive Officer of the Company is
Robert Hersh. Mr. Hersh's 1998 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 pretax earnings. Mr. Hersh's bonus was
$26,190 in fiscal 1998.
17
<PAGE>
POLICY WITH RESPECT TO 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 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 million, compensation from the exercise of
stock options could potentially cause a named executive officer to have
compensation in excess of $1 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.
In ____, the Board of Directors 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 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 BURROW
HENRY LATIMER
JEFFREY SILVERMAN
LEONARD SOKOLOW
18
<PAGE>
PERFORMANCE GRAPHS
The following line graph compares 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, 1993 through September 30, 1998. The graph assumes $100 invested
at the beginning of the period and reinvestment of dividends.
The Peer Group consists of Windmere-Durable Holding, Inc., 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.
<TABLE>
<CAPTION>
9/30/93
% PEER GROUP
WEIGHTED CUMULATIVE TOTAL RETUEN MARKET CAP
---------------------------------- ------------
9/93 9/94 9/95 9/96 9/97 9/98 9/30/98
<S> <C> <C>
Peer Group Weighted Average: 100 125 133 195 303 257 100 %
1,543
BHFC 100 192 100 200 0.1 %
CRFT 100 112 79 78 148 248 2.60%
GLYT 100 181 200 348 648 781 14.53%
HELE 100 107 125 203 268 163 34.87%
TII 100 137 197 194 305 331 20.53%
WND 100 133 92 176 308 73 27.46%
</TABLE>
19
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases a facility located in Massachusetts from entities in
which an officer and a former officer had an ownership interest. The lease
expires in June 1999. Rent expense related to this lease was approximately
$159,000, $164,000 and $540,000 for years ended September 30, 1998, 1997 and
1996, respectively.
The Company leases its Hong Kong office from a company owned by Wai
Check Lau, a stockholder of the Company. The lease expires in 2001 but may be
extended for an additional year. Rent expense related to this lease was
$257,000, $270,000 and $258,000, for the years ended September 30, 1998, 1997
and 1996, respectively.
During the years ended September 30, 1998, 1997 and 1996, Go-Gro, a
stockholder of the Company, purchased $1.0 million, $2.1 million and $1.8
million, respectively, in raw materials from an affiliate which is fifty percent
owned by the Company and which has as one of its directors an officer of the
Company.
Notes and advances receivable from Dean Rappaport totaled approximately
$129,000 at January 31, 1999 and included a $100,000 note bearing interest at
LIBOR plus 250 basis points, collateralized by stock option agreements to
purchase 100,000 shares of Common Stock and maturing in December 1999.
Notes and advances receivable from William D. Stewart totaled
approximately $75,000 at January 31, 1999 and included a $50,000 note bearing
interest at LIBOR plus 250 basis points, collaterized by stock option agreements
to purchase 50,000 shares of Common Stock and maturing in January 2000.
Notes and advances receivable from Nathan Katz totaled approximately
$77,000 at January 31, 1999 and included a $70,000 note bearing interest at
LIBOR plus 250 basis points, collaterized by stock option agreements to purchase
45,000 shares of Common Stock and maturing in January 2000.
PARTICIPANTS IN THE SOLICITATION
Under applicable regulations of the Commission, each of the directors,
director nominees and executive officers of the Company may be deemed to be a
"participant" in the Company's solicitation of proxies, as well as the Company.
Information about the principal occupations of directors, director nominees and
executive officers is set forth under the section entitled "Election of
Directors" and "Executive Officers." Information about the present ownership of
the Company's Common Stock, including the right to acquire shares of Common
Stock, by directors, director nominees and executive officers is provided in the
sections entitled "Security Ownership of Certain Beneficial Owners," "Security
Ownership of Directors and Management," "Compensation of Executive Officers" and
"Compensation of Directors." Information about employment arrangements with
executive officers is provided in the section entitled "Compensation of
Executive Officers - Employment Contracts and Termination of Employment and
Change-in-Control Arrangements." Information about other transactions between
the Company and each of the directors and director nominees is provided in the
section entitled "Certain Relationships and Related Transactions." The business
address for each participant is c/o Catalina Lighting, Inc., 18191 N.W. 68th
Avenue, Miami, Florida 33015. The following sets forth certain additional
information regarding the Company's directors, director nominees and executive
officers.
20
<PAGE>
TRANSACTIONS IN THE COMPANY'S SECURITIES IN THE LAST TWO YEARS
Listed below are the only purchases and sales of Common Stock within
the last two years by the Company, the Company's directors, director nominees
and executive officers and certain information regarding such transactions. This
table does not include information with respect to stock option grants made
under the Company's Employee Stock Option Plan.
PURCHASES AND SALES OF COMMON STOCK
NUMBER OF SHARES
NAME PURCHASED (SOLD) DATE OF TRANSACTION(S)
- -------------------- ------------------ --------------------------
Robert Hersh 5,000 December 30, 1997
4,600 May 12, 1998
2,000 June 17, 1998
4,600 November 11, 1998
50,000 March 10, 1999
5,000 March 19, 1999
Dean Rappaport (1,000) October 6, 1997
2,000 May 28, 1998
4,600 November 11, 1998
William D. Stewart 15,000 January 8, 1998
Ryan Burrow - -
Henry Latimer - -
Jeffrey Silverman 25,000 January 2, 1998
Leonard Sokolow - -
David W. Sasnett 300 July 2, 1997
300 January 6, 1998
400 May 18, 1998
700 February 16, 1999
Jesse Luxton - -
Howard Steinberg - -
Brion Wise - -
21
<PAGE>
CERTAIN INFORMATION
Except as disclosed elsewhere in this Proxy Statement, to the knowledge
of the Company, none of the Company's directors, director nominee or executive
officers: (I) owns of record any securities of the Company that are not also
beneficially owned by them; (ii) is, or was within the past year, a party to any
contract, arrangement or understanding with any person with respect to the
securities of the Company, including, but not limited to, joint ventures, loan
or option arrangements, puts or calls, guarantees against loss or guarantees of
profit, division of loses or profits, or the giving or withholding of proxies;
(iii) has any substantial interest, direct or indirect, by security holdings or
otherwise, in any matter to be acted upon at the Annual Meeting, (iv)
beneficially owns any securities of any parent or subsidiary of the Company, or
(v) borrowed any funds to purchase any securities set forth under "Participants
in the Solicitation." Except as disclosed elsewhere in this Proxy Statement, to
the knowledge of the Company, none of the Company's directors, director nominees
or executive officers nor any of their associates has any arrangement or
understanding with any person with respect to future employment by the Company
or its affiliates or with respect to any future transactions to which the
Company or any of its affiliates will or may be a party, nor any material
interest, direct or indirect, in any transaction which has occurred since ___ or
any currently proposed transaction, or series of similar transactions, to which
the Company or any of its affiliates was or is to be a party and in which the
amount involved exceeds $60,000.
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 pursuant to
Rule 14a-8 under the Securities Exchange Act of 1934, in the proxy materials of
the Company at its next Annual Meeting must be received by the Company no later
than ____, 1999 to be eligible for consideration. Such a proposal must comply
with requirements as to form and substance established by Rule 14a-8 and other
applicable laws and regulations in order to be included in the proxy statement.
Alternatively, under the Company's Bylaws, a proposal or nomination
that the stockholder does not seek to include the Company's proxy materials for
the next Annual Meeting pursuant to Rule 14a-8 must be submitted in writing to
the Secretary of the Company by January 27, 2000, unless the date of the next
Annual Meeting changes by more than 40 days from the date of the 1999 Annual
Meeting. If the date of the next Annual Meeting changes by more than 40 days
from the date of the 1999 Annual Meeting, such proposal or nomination must be
delivered not later than the close of business on the later of 120 days
preceding the next Annual Meeting or 10 days after the public announcement of
the date for the next Annual Meeting. The stockholder's submission must include
certain specified information concerning the proposal or nominee, as the case
may be, and information as to the stockholder's ownership of the Common Stock of
the Company. Proposals or nominations not meeting these requirements will not be
entertained at the next Annual Meeting. If the stockholder does not also comply
with the requirements of Rule 14a-4 under the Securities Exchange Act of 1934,
the Company may exercise discretionary voting authority under proxies it
solicits to vote in accordance with its best judgment on any such proposal or
nomination submitted by a stockholder.
22
<PAGE>
EXPENSE OF SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, proxies may be solicited by officers and
directors of the Company personally or by telephone or facsimile for no
additional compensation. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to forward solicitation materials to
beneficial owners of the Common Stock held of record by such person, and the
Company will reimburse such persons for reasonable out-of-pocket expenses
incurred by them in so doing.
The Company has retained MacKenzie Partners, Inc. ("MacKenzie") to
assist in the solicitation of proxies. Pursuant to the Company's agreement with
MacKenzie, it will provide various proxy advisory and solicitation services for
the Company at a cost of up to $50,000 plus reasonable out-of-pocket expenses
and indemnification against certain liabilities. It is expected that MacKenzie
will use up to approximately 30 persons in such solicitation.
Although no precise estimate can be made at this time the Company
anticipates that the aggregate amount to be spent by the Company in connection
with the solicitation of proxies by the Company will be approximately $___ of
which approximately $___ has been incurred to date. This amount includes legal
fees, printing costs and the fees payable to MacKenzie, but excludes (i) the
salaries and fees of officers, directors, and employees of the Company and (ii)
the normal expenses of an uncontested election. The aggregate amount to be spent
will vary depending on, among other things, any developments that may occur in
the election contest discussed herein.
23
<PAGE>
IMPORTANT
Your vote is important. Regardless of the number of shares of
stock you own, please support your Board of Directors by promptly taking these
few easy steps:
1. Please sign, date and mail promptly the enclosed Gold Proxy Card in the
post-paid envelope provided.
2. Your Board of Directors recommends that you NOT sign any proxy card sent to
you by Moss, not even as a vote of protest.
3. If your shares are held in the name of a brokerage firm or bank nominee,
only it can sign a Gold Proxy Card with respect to your shares and only
after receiving your specific instructions. Accordingly, please provide
your instructions by signing, dating and mailing the enclosed Gold Proxy
Card in the postage-paid envelope provided. Please do so for each account
you maintain. To ensure that your shares are voted, you should also contact
the person responsible for your account and give instructions for a Gold
Proxy Card to be issued representing your shares.
4. AFTER signing the enclosed Gold proxy card, the Board of Directors
recommends that you not sign any other cards. If you wish to vote for the
Company's nominees as directors, do not vote "against" on the Moss proxy
card; rather, discard any proxy cards sent to you by Moss.
IF YOU HAVE RECEIVED AND VOTED A PROXY CARD FROM MOSS BEFORE RECEIVING YOUR
CATALINA LIGHTING GOLD PROXY CARD, YOU HAVE EVERY RIGHT TO CHANGE YOUR VOTE
SIMPLY BY SIGNING, DATING AND MAILING THE ENCLOSED GOLD PROXY CARD. THIS WILL
CANCEL YOUR EARLIER VOTE SINCE ONLY YOUR LATEST DATED PROXY CARD WILL COUNT.
If you have any questions or require assistance, please call:
MACKENZIE PARTNERS, INC.
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500 (COLLECT)
OR
(800) 322-2885 (TOLL FREE)
24
<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, revoking all other proxies previously given, hereby appoints
Robert Hersh and Thomas M. Bluth, and each of them, as Proxies, each with the
power to appoint his substitute, and hereby authorizes each of them to represent
and to vote all the shares of common stock of CATALINA LIGHTING, INC. held of
record by the undersigned on April 1, 1999, at the Annual Meeting of
Stockholders to be held on May 26, 1999 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 AND 2. IF ANY OTHER MATTERS ARE PROPERLY BROUGHT BEFORE
THE ANNUAL MEETING, PROXIES WILL BE VOTED ON THESE MATTERS AS THE PROXIES NAMED
HEREIN MAY DETERMINE IN THEIR SOLE DISCRETION.
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL AGENDA ITEMS. Please mark /X/
your vote as
indicated. See
example.
1. ELECTION OF DIRECTORS: Robert Hersh, Ryan Burrow, Henry Latimer,
Jesse Luxton, Leonard Sokolow, Howard Steinberg,
Brion Wise.
FOR ALL NOMINESS WITHHOLD AUTHORITY
LISTED (EXCEPT AS
INCLUDED TO THE INSTRUCTION: To withhold authority to vote for any
RIGHT). individual 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 accountant of the Company for the current year.
FOR AGAINST ABSTAIN
/ / / / / /
Where shares are held by joint benefiaries,
both should sign. When signing as
attorney, executor, adminsitrator,
trustee or guardian, please sign full
title as such, If a corporation, please
sign in full corporate name by President
or other authoirzed officer. If a
partnership, please sign in partnership
name by authorized person.
SIGNATURE(S) SIGNATURE(S) DATE , 1999
-------------- --------------------- -------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
