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:
[ ] Preliminary Proxy Statement
[X] 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 2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2000
The Annual Meeting of Stockholders of Catalina Lighting, Inc., a
Florida corporation (the "Company"), will be held on May 9, 2000 at 9:00 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 ending September 30, 2000; 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 5, 2000
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
/s/ Thomas M. Bluth
THOMAS M. BLUTH, Secretary
Miami, Florida
April 11, 2000
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
2000 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 9, 2000
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 2000 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 9, 2000 at 9:00 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 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 Annual Report of the Company for the fiscal year ended September
30, 1999 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 April 5, 2000 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 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.
2
<PAGE>
Each share of the common stock of the Company, $.01 par value (the
"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 5, 2000, the Record Date, there were 7,132,380 issued and
outstanding shares of the Common Stock. The holders of a majority of the shares
of stock entitled to vote at any meeting of stockholders must be present in
person or represented by proxy to constitute a quorum for the transaction of any
business at the Annual Meeting. Each share of Common Stock entitles the holder
to one vote on all matters brought before the Annual Meeting.
3
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth 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 April 5, 2000 and, other than as provided by
community property and other such laws, consists of sole voting and investment
power.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON STOCK
BENEFICIAL OWNER BENEFICIALLY OWNED 1 PERCENTAGE
- ---------------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Heartland Advisors, Inc............. 1,384,700 2 19.4%
789 North Water Street
Milwaukee, WI 53202
Robert Hersh........................ 1,150,800 3 15.6%
18191 N.W. 68th Avenue
Miami, Florida 33015
Dean Rappaport...................... 1,082,600 4 14.6%
18191 N.W. 68th Avenue
Miami, Florida 33015
Nathan Katz......................... 630,742 5 8.6%
55 Norfolk Avenue
Easton, MA
Wai Check Lau.......................
6/F, Kenning Industrial Bldg. 558,200 6 7.8%
19 Wang Hoi Road
Kowloon, Hong Kong
Dimensional Fund Advisors, Inc. 471,600 7 6.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
David Moss
6073 N.W. 167th Street 443,082 8 6.2%
Building C-5
Miami, FL 33015
<FN>
1. Includes shares which may be acquired pursuant to vested stock options and options which become exercisable
through June 4, 2000 or shares for which the stockholder has the power to direct the vote. Percentage
ownership based upon 7,132,380 shares outstanding as of April 5, 2000.
2. Heartland Advisors, Inc., a registered investment advisor, is deemed to have beneficial ownership of 1,384,700
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 715,500 shares as to which voting power is shared (see note 6 below) and shares purchasable through
the exercise of options as follows: 45,000 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.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
<FN>
4. Includes 715,500 shares as to which voting power is shared (see note 6 below) and shares purchasable through
the exercise of options as follows: 50,000 shares at $1.75 per share and 212,500 shares at $2.4375 per share.
5. Includes 162,500 shares purchasable through the exercise of options at $ 2.4375 per share.
6. Of the number of shares beneficially owned by Wai Check Lau, 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 Cheng. In July 1994, as
part of Company's acquisition of Go-Gro Industries Limited ("Go-Gro"), Wai Check Lau and Amy Yuen Ying Lau
Cheng 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 157,300 shares of the
Company also issued to previous stockholders of Go-Gro upon the acquisition. The 715,500 shares are voted at
the direction of Messrs. Hersh and Rappaport, members of the Board of Directors of Catalina Asia. Except as to
such shared voting power, each of Messrs. Hersh and Rappaport disclaims beneficial ownership of such shares.
7. Based solely upon a Schedule 13G filed with the Securities and Exchange Commission as of December 31, 1999,
Dimensional Fund Advisors Inc. ("Dimensional"), an investment adviser registered under Section 203 of 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 commingled group trusts and
separate accounts. These investment companies, trusts and accounts are the "Funds". In its role as investment
adviser or investment manager, Dimensional possesses both voting and investment power over 471,600 shares of
Catalina Lighting, Inc., stock. The Funds own all securities and Dimensional disclaims beneficial ownership of
such securities.
8. Based solely on a Schedule 13D filed with the Securities and Exchange Commission on April 30, 1999. This
amount includes 34,600 shares held in trust for the benefit of Mr. Moss' children and 14,000 shares are owned
directly by a Florida limited partnership whose general partner DMM Investments, Inc. is wholly owned by Mr.
Moss.
</FN>
</TABLE>
5
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS, DIRECTOR NOMINEE AND MANAGEMENT
The following table sets forth, to the best knowledge of the Company,
the shares of Common Stock beneficially owned at April 5, 2000 by each Director,
Director Nominee and Executive Officer and by all Directors, Director Nominee
and Executive Officers of the Company as a group.
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED 1 PERCENTAGE
- ---------------------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Robert Hersh......................... 1,150,800 2,11 15.6%
Dean Rappaport....................... 1,082,600 3,11 14.6%
Ryan Burrow.......................... 22,478 4,10 *
Robert Lanzillotti................... 0 *
Henry Latimer........................ 16,273 5,10 *
Jesse Luxton......................... 1,778 10 *
Leonard Sokolow...................... 42,778 6,10 *
Howard Steinberg..................... 21,778 10 *
Brion Wise........................... 1,778 10 *
Nathan Katz.......................... 630,742 7 8.6%
David W. Sasnett..................... 27,000 8 *
Thomas M. Bluth...................... 24,500 9 *
All Directors, Director Nominee and
Executive Officers of the Company and
its subsidiaries as a group (12
persons)............................. 2,307,005 11 29.1%
* less than 1%
- -------------------------------------------------------------------------------------------------------------------
<FN>
1 Includes shares which may be acquired pursuant to vested stock options and options which become exercisable
through June 4, 2000. Percentage ownership based upon 7,132,380 shares outstanding as of April 5, 2000.
2 Includes shares purchasable through the exercise of options as follows: 45,000 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: 50,000 shares at $1.75 per share and
212,500 shares at $2.4375 per share.
</FN>
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
<FN>
4 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.
5 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.
6 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.
7 Includes 162,500 shares purchasable upon the exercise of options at $2.4375 per share.
8 Includes shares purchasable through the exercise of options as follows: 5,000 shares at $2.125 per share and
20,000 shares at $2.4375 per share.
9 Includes 22,500 shares purchasable through the exercise of options at $2.4375 per share.
10 Includes 1,778 shares received on May 10, 1999 as annual retainer for serving on the Company's Board of
Directors. The shares are restricted and vest after one year or on a pro rata basis if the Director ceases to
serve on the Board during the year.
11 Includes 715,500 shares owned by previous shareholders of Go-Gro Industries Limited which Messrs. Hersh and
Rappaport jointly have a power to vote pursuant to irrevocable proxies. Except as to such shared voting power,
Messrs. Hersh and Rappaport disclaim beneficial ownership of these shares.
</FN>
</TABLE>
7
<PAGE>
PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
Pursuant to its authority under the Company's Certificate of
Incorporation and Bylaws, the Board of Directors has set the number of Directors
on the Board at seven. 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. Mr. Robert Lanzillotti is being
nominated for the first time, and he is "independent" of the Company, as the
term is used by the Council of Institutional Investors. The Council of
Institutional Investors (an organization of over 100 public, Taft-Hartley and
corporate pension funds which seek to address investment issues that affect its
members as shareholders of public companies) defines an independent director as
someone whose only nontrivial connection to the corporation is that person's
directorship and who does not have certain types of relationships with a
corporation. For example, under the Council's definition, a director will not
generally be considered independent if he or she has been employed by the
corporation or an affiliate in an executive capacity or has in the past two
years had a personal services contract with the corporation or one of its
affiliates. The other six nominees currently serve as Directors and all of them,
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. Each of the
Company's nominees has consented to being named as such in this proxy statement
and to serve as a Director if elected. 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 at 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
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION WITH THE COMPANY SINCE
- ---------------------------- --------- ---------------------------------------------- ------------
<S> <C> <C> <C>
Robert Hersh 53 Chairman, Chief Executive Officer, 1988
President, Director
Ryan Burrow 39 Director 1994
Henry Latimer 62 Director 1996
Jesse Luxton 57 Director 1999
Howard Steinberg 69 Director 1999
Brion Wise 54 Director 1999
Robert Lanzillotti 78 Director Nominee _
</TABLE>
8
<PAGE>
ROBERT HERSH is 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.
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 $3.4 billion in assets. Mr.
Burrow was Managing Director for STI Capital Management, a wholly owned
investment management subsidiary of SunTrust Banks, Inc., 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.
HENRY LATIMER has been a Director of the Company since February 1996.
Mr. Latimer has since 1994 been a partner with the law firm of Eckert, Seamans,
Cherin & Mellott, a national law firm employing over 200 attorneys in nine
cities. He is the Managing Partner of the Fort Lauderdale office and 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 Boca
Resorts, Inc., formerly Florida Panthers Holding, Inc., a company which owns
luxury resort hotels with shares traded on the New York Stock Exchange under the
symbol "RST". 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.
JESSE LUXTON has been a Director of the Company since May 1999. He has
since 1997 served as a consultant to manufacturers and distributors of houseware
consumer products on issues raised in exporting from Asia and importing and
selling products in the U.S. 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 million in 1997, whose
shares were traded on the NASDAQ from 1993 until 1997 under the symbol "NPAF".
Mr. Luxton serves on the Board of Directors of Glass Master Group, LLC, a
company involved in automotive and commercial replacement glass, is a
facilitator for the National Housewares Manufacturing Association and has
extensive experience in sales to retailers such as mass merchants, home centers,
hardware and specialty and warehouse clubs. Mr. Luxton serves on the marketing
advisory board of International Resources, Inc., a company that designs, sources
and markets Christmas collectibles to department and gift retailers and has
served 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 has been a Director of the Company since May 1999. He
has since August 1997 served as Chief Executive Officer and Director of PGM
Products, LLC, a supplier of wood products and ceramic tile to PlyGem
Industries, Inc., which was acquired by Nortek Industries in August 1997. From
1975 until 1997, Mr. Steinberg served as Chief Executive Officer of the Ply*Gem
Manufacturing division of PlyGem Industries, Inc. From 1964 until 1975, he
served as President and Chief Operating Officer of Ply*Gem Paneling Centers, a
paneling retail division of Ply*Gem Industries, Inc. Mr. Steinberg is also the
President and a Director of Acorn USA Holding LLC, a holding company owning a
majority interest in PGM Products, 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.
9
<PAGE>
BRION WISE has been a Director of the Company since May 1999. He is a
founder of Western Gas Resources ("WGR") and from 1972 to 1999 served as Chief
Executive Officer of WGR. He has served as Chairman of the Board of WGR since
1972. 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 is also a Chemical Engineer. Prior to founding WGR, Mr.
Wise worked as a gas processing engineer for Shell Oil Company.
ROBERT LANZILLOTTI has since 1986 held the position of Dean Emeritus,
Eminent Scholar, Emeritus and Professor, Emeritus of Economics at the University
of Florida Graduate School of Business. From 1969 to 1986 Mr. Lanzillotti served
as the Dean of the Graduate School of Business of the University of Florida. Mr.
Lanzillotti has served as a consultant for a number of major corporations
including General Electric, International Materials Corp., Hughes Helicopters,
Jaguar Motor Company, Imperial Chemicals, Inc.; several large law firms in
Washington, D.C., New York and Miami, a number of governmental entities
including the ten states Attorneys General, The Federal Trade Commission, The
United States Department of Justice, United Arab Emirates, U.S. Government
Accounting Office, the U.S. Department of Commerce, and U.S. Census Bureau. Mr.
Lanzillotti also received a Presidential appointment as a member of the Unites
State Price Commission (1971-1973). Mr. Lanzillotti has published extensive
articles and books regarding economic analysis of industry and competition and
has served as a Director of numerous public corporations including Florida
Progress, Jim Walter, Talquin Corporation and Florida First Service Corporation.
He holds Doctoral honorary degrees in Literature (University of Tampa, 1979) and
in Science (Florida Institute of Technology, 1979). He is President Elect of the
International Schumpeter Society and is a member of the Antitrust Committee of
the American Bar Association; honorary member of the Florida Council of 100; Phi
Beta Kappa; Beta Gamma Sigma; Omicron Delta Kappa; Florida Blue Key
(Distinguished Faculty); Who's Who in America; Who's Who in Mid-West; Who's Who
in the South and Southwest; Who's Who in American Education; Who's Who in the
World and American Men in Science.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE COMPANY'S
NOMINEES. 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.
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 2000. 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.
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.
10
<PAGE>
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 unanimous written consent on five
occasions. During fiscal 1999, 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. Since May 1999, the Committee has consisted of Messrs. Burrow,
Steinberg and Leonard Sokolow, all of whom are independent non-employee
Directors. During fiscal 1999, 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 in writing a sufficient time
in advance of the Annual Meeting of Stockholders. Since May 1999, the Committee
has consisted of Messrs. Latimer, Luxton and Wise. During fiscal 1999, 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. Since May
1999, the Committee has consisted of Messrs. Luxton, Wise and Leonard Sokolow.
During fiscal 1999, the Audit Committee met one time.
COMPENSATION OF DIRECTORS
Salaried employees of the Company do not receive any additional
compensation for serving as a Director or Committee member. For 1999,
non-employee Directors received 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. Directors also receive
$1,000 per Board meeting and Committee meeting attended. Messrs. Burrow, Luxton,
Steinberg and Wise are reimbursed for their travel expenses to the meetings.
11
<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 53 Chairman, Chief Executive Officer,
President, Director
Dean Rappaport 48 Executive Vice President, Chief
Operating Officer
Nathan Katz 44 Executive Vice President
David W. Sasnett 43 Senior Vice President and
Chief Financial Officer
Thomas M. Bluth 43 Senior Vice President, Secretary,
Treasurer
DEAN RAPPAPORT became an Executive Vice President of the Company in
January 1988 and was a Director of the Company from April 1988 until May 1999.
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.
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 became a Vice President of the Company in November
1994. In November 1997, Mr. Sasnett became a Senior Vice President of the
Company. In November 1996, Mr. Sasnett became the 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 became a Vice President of the Company in August 1994
and Secretary of the Company in November 1994. In December 1999, Mr. Bluth
became a Senior Vice President of the Company. 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.
12
<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, 1999, 1998
and 1997 for services in all capacities.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION 1
------------------------------- LONG TERM COMPENSATION AWARDS
NAME AND PRINCIPAL FISCAL ----------------------------- ALL OTHER
POSITION YEAR SALARY ($) BONUS ($) 2 SECURITIES UNDERLYING OPTIONS 3 COMPENSATION ($) 4
- --------------------- ------------ -------------- -------------- ---------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
Robert Hersh 1999 314,109 168,500 - 2,480
Chairman, CEO 1998 299,151 26,190 - 1,600
and President 1997 284,905 - - 1,500
Dean Rappaport 1999 282,697 168,500 212,500 6 2,480
Executive Vice 1998 269,235 26,190 - 1,600
President, Chief 1997 256,414 - - 1,500
Operating Officer
William D.Stewart 5 1999 282,697 168,500 212,500 6 2,480
Executive Vice 1998 269,235 26,190 - 1,600
President 1997 256,414 - - 1,500
Nathan Katz 1999 282,697 168,500 162,500 6 2,480
Executive Vice 1998 269,235 26,190 - 1,600
President 1997 256,414 - - 1,500
David W. Sasnett 1999 169,100 20,000 42,000 7 2,480
Senior Vice 1998 151,068 15,000 - 1,549
President, Chief 1997 136,603 15,000 - 1,216
Financial Officer
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
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 are equal to
1.67% of consolidated pre-tax income for the respective fiscal years ended September 30 - see separate section "Employment
Contracts and Termination of Employment and Change-in-Control Arrangements."
3 Stock options vest annually in increments of one-third of the options granted.
4 The amounts disclosed in this column represent the Company's matching contributions to the Company's 401(k) plan.
5 Pursuant to a reorganization of the Company's executive management structure, Mr. Stewart left the employ of the Company in
December 1999.
6 Represents options granted in prior years which were repriced on December 11, 1998 - see separate section "Repricing of Stock
Options."
7 Includes 20,000 options granted in prior years which were repriced on December 11, 1998 - see separate section "Repricing of
Stock Options."
</FN>
</TABLE>
13
<PAGE>
OPTIONS GRANTED
The following table shows all grants and repricing of options to the
named Executive Officers of the Company during the fiscal year ended September
30, 1999. Pursuant to SEC rules, the table also shows the value of the options
granted at the end of the option terms (ten years) or the remaining option terms
for options repriced if the price of the Company's stock was to appreciate
annually by 5% and 10%, respectively. There is no assurance that such stock
price will appreciate at the rates shown in the table. The Company does not have
a plan whereby tandem stock appreciation rights ("SARS") are granted.
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR 1999 POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM ($) 3
----------------------------------------------------------------------- ------------------------------
% Total
Options
Granted to
Number of Employees
Underlying or Repriced Exercise
Name Options in Fiscal Price Per
Granted 1 Year 1999 Share ($) 2 Expiration Date 5% 10%
- --------------------- ------------ ------------- --------------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh 4 - - - - - -
Dean Rappaport 50,000 4.2% 2.4375 10/01/01 17,867 37,391
50,000 4.2% 2.4375 01/03/02 19,916 41,963
50,000 4.2% 2.4375 10/07/02 24,854 53,318
62,500 5.3% 2.4375 12/01/04 51,811 117,542
William D. Stewart 30,000 2.5% 2.4375 09/24/01 10,720 22,435
20,000 1.7% 2.4375 10/01/01 7,147 14,957
50,000 4.2% 2.4375 01/03/02 19,916 41,963
50,000 4.2% 2.4375 10/07/02 24,854 53,318
62,500 5.3% 2.4375 12/01/04 51,811 117,542
Nathan Katz 50,000 4.2% 2.4375 01/03/02 19,916 41,963
50,000 4.2% 2.4375 01/15/03 27,006 58,347
62,500 5.3% 2.4375 12/01/04 51,811 117,542
David W. Sasnett 12,500 1.1% 2.4375 12/01/04 10,362 23,508
7,500 0.6% 2.4375 10/27/05 7,320 17,020
15,000 1.3% 2.1250 01/12/09 20,081 50,681
7,000 0.6% 4.0000 06/07/09 17,640 44,520
<FN>
1 All options granted (excluding the 22,000 options granted to Mr. Sasnett at $2.125 and $4.00) represent options granted in
prior years which were repriced on December 11, 1998 - see separate section "Repricing of Stock Options." The 22,000 options
granted to Mr. Sasnett vest annually in increments of one-third of the amount of the grant.
2 Represents the fair market value of the common stock on the date of grant or repricing. For purposes of the option plan, fair
market value is the closing market price of the common stock as reported on the New York Stock Exchange.
3 The amounts disclosed in these columns, which reflect appreciation of the Company's common stock price at the 5% and 10% rates
dictated by the Securities and Exchange Commission, are not intended to be a forecast of the Company's common stock price and
are not necessarily indicative of the actual values which may be realized by the named Executive Officers or the shareholders.
4 Mr. Hersh declined to have his options repriced on December 11, 1998.
</FN>
</TABLE>
14
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information as to options exercised by
each of the named Executive Officers of the Company during the fiscal year ended
September 30, 1999 and the value of options held by such officers at September
30, 1999 in terms of the closing price of the Company's stock on September 30,
1999.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND FISCAL YEAR END 1999 OPTION VALUES
<TABLE>
<CAPTION>
Shares Value of
Name Acquired on Value Number of Securities Underlying In-the-Money Options at
Exercise Realized ($) 1 Options at September 30, 1999 September 30, 1999 ($) 2
- --------------------- -------------- -------------- --------------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh 59,600 72,375 257,500 - 144,125 -
Dean Rappaport 54,600 173,313 262,500 - 477,344 -
William D. Stewart 20,000 67,500 212,500 - 358,594 -
Nathan Katz - - 217,500 - 404,844 -
David W. Sasnett - - 20,000 22,000 33,750 30,875
<FN>
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 option was exercised.
2 Based on the closing price of the Company's stock on September 30, 1999 of $4.125.
</FN>
</TABLE>
15
<PAGE>
REPRICING OF STOCK OPTIONS
The following table sets forth information about the repricing of stock
options held by the Company's CEO and each of the other most highly compensated
Executive Officers of the Company during the last ten fiscal years ended
September 30, 1999. Mr. Hersh, Chairman, Chief Executive Officer and President
declined to have his options repriced on December 11, 1998.
<TABLE>
<CAPTION>
TEN YEAR OPTION REPRICINGS
NUMBER OF
SECURITIES
UNDERLYING MARKET PRICE OF EXERCISE PRICE LENGTH OF ORIGINAL OPTION
OPTIONS/SARS STOCK AT TIME OF AT TIME OF NEW TERM REMAINING AT DATE OF
DATE OF REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR AMENDMENT
NAME REPRICING AMENDED AMENDMENT($) AMENDMENT($)) PRICE($) (YEARS)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert Hersh - - - - - -
Dean Rappaport 12/11/98 50,000 2.4375 3.375 2.4375 2.8
Executive Vice 12/11/98 50,000 2.4375 4.875 2.4375 3.1
President, Chief 12/11/98 50,000 2.4375 4.125 2.4375 3.8
Operating Officer 12/11/98 62,500 2.4375 6.750 2.4375 6.0
William D.Stewart 12/11/98 30,000 2.4375 2.500 2.4375 2.8
Executive Vice 12/11/98 20,000 2.4375 3.375 2.4375 2.8
President 12/11/98 50,000 2.4375 4.875 2.4375 3.1
12/11/98 50,000 2.4375 4.125 2.4375 3.8
12/11/98 62,500 2.4375 6.750 2.4375 6.0
Nathan Katz 12/11/98 50,000 2.4375 4.875 2.4375 3.1
Executive Vice 12/11/98 50,000 2.4375 5.250 2.4375 4.1
President 12/11/98 62,500 2.4375 6.750 2.4375 6.0
David W. Sasnett 12/11/98 12,500 2.4375 4.125 2.4375 6.0
Senior Vice 12/11/98 7,500 2.4375 4.125 2.4375 6.9
President, Chief
Financial Officer
</TABLE>
16
<PAGE>
REPORT ON REPRICING OF STOCK OPTIONS
The Company's employee stock option plans are administered by the
Compensation and Stock Option Committee ("the Committee"). All options issued
pursuant to the Company's stock option plans were issued at the market price at
the date of the grant. The market price for the Company's stock, however, had
declined, and as a result, a majority of the employee stock options were
substantially above the current market price, thereby significantly undermining
the incentives intended to be created by the option grants. The Committee
believed that such incentives are a significant factor in the Company's ability
to attract, retain and motivate employees who are critical to the Company's long
term success. The Committee concluded that to allow the options to remain "out
of the money" did not serve the best interests of the Company and its
shareholders. The Committee believed that a repricing of these "out of the
money" options would allow the options to serve their intended purpose and
enhance the Company's ability to retain important employees. Consequently, on
December 11, 1998, the Committee approved the repricing of 1,074,733 options
issued to employees (including the named Executive Officers) with exercise
prices ranging from $2.50 to $6.75 to be repriced to $2.4375, the market value
on such date. Mr.Hersh, Chairman, Chief Executive Officer and President,
declined to have his options repriced.
SUBMITTED BY THE 1998 COMPENSATION AND STOCK
OPTION COMMITTEE
RYAN BURROW
HENRY LATIMER
JEFFREY SILVERMAN (FORMER DIRECTOR)
LEONARD SOKOLOW
17
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company entered into employment agreements with Robert Hersh, Dean
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 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 fiscal years 1994, 1996, 1997, 1998 and 1999. The aforementioned
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 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 one-fourth of
the Pool. Bonuses were waived in 1990, no amounts were distributed in 1991 and
1997 due to pre-tax losses and amounts earned under the Pool in fiscal 1993,
1994, 1995, 1996, 1998, and 1999 totaled approximately $356,000, $614,000,
$60,000, $175,000, $105,000 and $674,000, respectively. In October 1999, the
Company amended their employment agreements to eliminate the pool. The Company
anticipates establishing a new bonus arrangement with Messrs. Hersh, Rappaport
and Katz for fiscal years 2000 and 2001.
Pursuant to a reorganization of the Company's executive management
structure, Mr. Stewart left the Company in December 1999. The Company agreed to
settle its contractual employment obligation to Mr. Stewart for a payment of
approximately $800,000. Mr. Stewart will continue to provide consulting services
under a three-year non-compete and consulting agreement for annual payments of
$250,000 through December 2002.
The employment agreements with Messrs. Hersh, Rappaport 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 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 has entered into Change in Control agreements with David W.
Sasnett and Thomas M. Bluth. The agreements expire in September 2001. Such
agreements provide that, in the event of a change in control of the Company, if
the Company terminates the employment of either individual within certain time
18
<PAGE>
periods or the Company fails to negotiate an acceptable employment agreement
with the individual, the Company shall pay the individual two times his annual
base salary. In addition, the agreement provides that in the event Mr. Sasnett
or Mr. Bluth is terminated "without cause" where there has been no change in
control, he is entitled to a severance payment equal to his annual base salary.
The Company pays its proportional share of a reverse split-dollar life
insurance policy for Mr. Rappaport and Mr. Katz. In the event of the death of
Mr. Rappaport or Mr. Katz during the term of their employment agreements, the
Company would receive $1,000,000.
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 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.
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 and Directors
and persons who hold more than 10% of the Common Stock were complied with during
the 1999 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, Leonard Sokolow and Howard Steinberg.
The Committee is charged with reviewing and approving compensation of
the Company's Executives each year. The Company's four most senior Executive
Officers, including the Chief Executive Officer, 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 reviewing these Executives' compensation for 1999, the Committee
subjectively determined that corporate and individual performance was adequately
compensated under the terms of the Executive's employment agreements.
Accordingly, the Executives' salaries and bonuses were established at the
minimum level prescribed under such agreements, with bonuses being based upon
the Company's profitability as measured by a percentage of pretax earnings and
in certain cases the Company advancing amounts toward the cost of reverse
split-dollar life insurance policies. The Executives also participated in the
Company-wide 401(k) plan, under which the Company, subject to the statutory
limits, matches 25% of an employee's contributions up to 1% of the employee's
salary. For the Company's other Executive Officers, the Compensation Committee's
determinations regarding base salary and cash bonuses are based upon the
Committee's determinations regarding individual experience and capabilities,
performance issues specific to the Executive's particular responsibilities, and
salaries paid by other companies for comparable positions. Consistent with its
policies for the Executive Officers with whom the Company has employment
agreements and in order to assist in retaining key executives, in 1999 the
Compensation Committee authorized the execution of change-in-control agreements
with Executives who are not parties to employment agreements.
The Compensation Committee did not grant any stock options or
restricted stock to Executive Officers during fiscal 1999, other than 22,000
stock options granted to David W. Sasnett and 10,000 stock options granted to
Thomas M. Bluth, in light of the limited number of shares available for new
grants under the Company's 1987 Stock Option and Stock Appreciation Rights Plan.
On December 11, 1998, the Compensation Committee approved the repricing of
1,074,733 options issued to employees (including the
19
<PAGE>
named Executive Officers). Mr. Hersh, Chairman, Chief Executive Officer and
President declined to have his options re-priced. See section on "Repricing of
Stock Options" and "Report on Repricing of Stock Options."
The compensation for Mr. Hersh for 1999 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 (calculated prior to any
bonus accruals). Mr. Hersh's bonus was $168,500 in fiscal 1999. Mr. Hersh is not
a beneficiary under Company sponsored reverse split-dollar life insurance
policies such as those that cover certain other Executive Officers.
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 purpose 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. The Compensation Committee has not adopted
a policy requiring that all compensation arrangements qualify for deductibility
under Code Section 162(m), meaning that options granted after April 10, 1997 may
not be deductible if and to the extent their value ever causes one of the
Company's Executives to receive more than $1 million in compensation during any
one year. However, all options granted to the named executive officers prior to
April 10, 1997, the date of the Company's 1997 Annual Meeting, are exempt from
Code Section 162(m) under a "grandfather" provision.
SUBMITTED BY THE 1999 COMPENSATION AND STOCK
OPTION COMMITTEE
RYAN BURROW
LEONARD SOKOLOW
HOWARD STEINBERG
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee is composed of Messrs.
Burrow, Steinberg and Leonard Sokolow.
20
<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 six stocks for the five year period from
September 30, 1994 through September 30, 1999. The graph assumes $100 invested
at the beginning of the period and reinvestment of dividends.
The Peer Group consists of Windmere-Durable Holdings, Inc., Helen of
Troy Corporation, Thomas Industries, Inc., Genlyte Group, Inc., Craftmade
International, Inc. and Beverly Hills Fan Company. 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.
CUMULATIVE TOTAL RETURN
--------------------------------------------------------
9/94 9/95 9/96 9/97 9/98 9/99
CATALINA LIGHTING, INC. 100.00 44.21 31.58 48.42 18.95 34.74
PEER GROUP 100.00 103.78 148.49 289.07 245.32 218.48
S & P 500 100.00 129.74 156.13 219.28 239.12 305.61
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leased a facility located in Massachusetts from an entity
in which an officer and a former officer had an ownership interest. The lease
expired in June 1999. Rent expense related to this lease was approximately
$99,000, $159,000, and $164,000 for the years ended September 30, 1999, 1998 and
1997, respectively.
The Company leases its Hong Kong office from a company owned by Wai
Check Lau, a shareholder 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
for the years ended September 30, 1999 and 1998 and $270,000 for the year ended
September 30, 1997.
During the years ended September 30, 1999, 1998 and 1997, Go-Gro, a
wholly-owned subsidiary of the Company, purchased $1.7 million, $1.0 million and
$2.1 million, respectively, in raw materials from an affiliate which is fifty
percent owned by the Company and which includes a shareholder of the Company as
one of its directors.
Notes and advances receivable from Dean Rappaport totaled approximately
$129,000 at February 29, 2000 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 the Company and maturing in December 2000.
Notes and advances receivable from Nathan Katz totaled approximately
$79,000 at February 29, 2000 and included a $70,000 note bearing interest at
LIBOR plus 250 basis points, collaterized by stock option agreements to purchase
50,000 shares of the Company and maturing in January 2001.
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 December 24, 2000 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.
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 10, 2001, unless the date of the next
Annual Meeting changes by more than 40 days from the date of the 2000 Annual
Meeting. If the date of the next Annual Meeting changes by more than 40 days
from the date of the 2000 Annual Meeting, such proposal or nomination must be
delivered no 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
21
<PAGE>
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>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL AGENDA ITEMS. Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS: ROBERT HERSH, RYAN BURROW, HENRY
LATIMER, JESSE LUXTON, BRION
FOR all nominees WITHHOLD WISE, HOWARD STEINBERG, ROBERT
listed (except as AUTHORITY LANZILLOTTI
indicated to the to vote for all (INSTRUCTION: To withhold
right) nominees authority to vote for any
listed individual nominee, write that
[ ] [ ] nominee's name in the space
provided below.)
--------------------------------
2. Proposal to ratify the appointment of In their discretion,
Deloitte & Touche LLP as the independent the Proxies are authorized
certified public accountants of the to vote upon such other
Company for the current year. business as may properly
come before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
_ _
|
|
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__________, 2000
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
FOLD AND DETACH HERE
<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 5, 2000, at the Annual Meeting of
Stockholders to be held on May 9, 2000 at 9:00 a.m. local time at 18191 N. W.
68th Avenue, Miami, Florida 33015, 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 VOTE ON THESE MATTERS AS THE PROXIES NAMED HEREIN
MAY DETERMINE IN THEIR SOLE DISCRETION.
(continued and to be signed on the reverse side)
FOLD AND DETACH HERE
