REXHALL INDUSTRIES, INC.
46147 North 7th Street West
Lancaster, California 93534
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Rexhall Industries, Inc. ("Company")
will be held at the Lancaster plant, 46147 North 7th Street West, Lancaster,
California, 93534 on Tuesday, May 26, 1998, at 2:00 p.m., California time for
the following purposes:
1. To elect its Board of Directors to serve for the ensuing year;
2. To ratify the selection of KPMG Peat Marwich LLP as the independent
public accountants of the Company for the year ending December 31, 1998;
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
The stock transfer books of the Company will not be closed, but only holders
of common stock of records at the close of business on April 20, 1998 will be
entitled to vote at the meeting.
Your proxy is enclosed. You are cordially invited to attend the meeting, but
if you do not expect to attend, or if you plan to attend, but desire the
proxy holders to vote your shares, please date and sign your proxy and return
it in the enclosed postage paid envelope. The giving of this proxy will not
affect your right to vote in person in the event you find it convenient to
attend.
Cheryl L. Rex
Secretary
DATED: April 20, 1998
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REXHALL INDUSTRIES, INC.
46147 North 7th Street West
Lancaster, California 93534
PROXY STATEMENT FOR ANNUAL MEETING TO BE HELD
MAY 26, 1998, 2:00 P.M.
Your proxy is solicited on behalf of the Board of Directors of Rexhall
Industries, Inc. ("Company") for use at the annual meeting of shareholders
to be held on the above date at 46147 7th Street West, Lancaster, California,
93534. If a proxy in the accompanying form is duly executed and returned, the
shares represented by the proxy will be voted as directed. If no direction
is given, the shares will be voted for the election of the four (4) nominees
for director named herein, for approval of the amendments of the Company's
1989 Incentive and Non-statutory Stock Option Plan, and for the approval of
KPMG Peat Marwich LLP as the Company's independent accountants for the year
ending December 31, 1998. A proxy given by a shareholder may be revoked at
any time before it is exercised by notifying the Secretary of the Company in
writing of such revocation, by giving another proxy bearing a later date or
by voting in person at the meeting.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made by mail. In addition the officers and regularly
engaged employees of the Company may, in a limited number of instances,
solicit proxies personally or by telephone. The Company will reimburse
banks, brokerage firms, other custodians, nominees and fiduciaries for
reasonable expenses incurred in sending proxy materials to beneficial owners
of common stock of the Company.
The Company's annual report, including financial statements for its fiscal
year ended December 31, 1997, is being mailed to all shareholders
concurrently herewith. The annual report is not part of the proxy materials.
The Company's annual report on Form 10-K for the year ended December 31,
1997, as filed with the Securities and Exchange Commission, is available
without charge upon written request from the Secretary of the Company at the
address set forth above.
Holders of common stock of record at the close of business on April 17, 1998
will be entitled to vote at the meeting. There were 2,713,891 shares of
common stock outstanding on that date. Each share is entitled to one vote
and a majority of the shares of common stock outstanding is necessary to
constitute a quorum for the meeting. The shareholders have cumulative voting
rights in the election of directors. Under the cumulative voting method, a
shareholder may multiply the number of shares owned by the number of
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directors to be elected and cast this total number of votes for any one
candidate or distribute the total number of votes in any proportion among as
many candidates as the shareholder desires. A shareholder may not
cumulate his votes for a candidate unless such candidate's name has been
placed in nomination prior to the voting and unless a shareholder has given
notice at the meeting prior to the voting of his intention to cumulate his
votes. If any shareholders give such notice, all shareholders may then
cumulate their votes.
ELECTION OF DIRECTORS
The Company's directors are elected annually to serve until the next annual
meeting of shareholders and until their successors are elected and qualified.
The number of directors presently authorized by the By-laws of the Company
is four (4).
Unless otherwise directed by shareholders, the proxy holders will vote all
shares represented by proxies held by them for the election of the maximum
number of the following nominees, all of whom are now members of and
constitutes the Company's Board of Directors. The Company is advised that
all of the nominees have indicated their availability and willingness to
serve if elected. In the event that any nominees become unavailable or
unable to serve as a director of the Company prior to voting, the proxy
holders will vote for a substitute nominee in the exercise of their best
judgment.
Information Concerning Nominees
Information concerning the nominees based on data furnished by them is set
forth below:
William J. Rex, age 47, a founder of the Company, has served as the Company's
Chief Executive Officer from its inception as a general partnership to date.
Upon commencing operations in corporate form, Mr. Rex became the Company's
President and Chairman of the Board, offices which he continues to hold.
From March 1983 until founding the Company, Mr. Rex served in various
executive capacities for Establishment Industries, Inc., a manufacturer of
Class A and Class C motorhomes which was acquired in June 1985 by Thor
Industries, Inc., a large manufacturer of recreational vehicles. His last
position with Establishment Industries, Inc. was President. From 1970 until
March 1983, Mr. Rex was employed in various production capacities by Dolphin
Trailer Company, a manufacturer of a wide range of recreational vehicles
products. At the time he left Dolphin Trailer Company (which changed its
name to National R.V., Inc. in 1985), Mr. Rex was Plant Manager in charge of
all production and research and development.
Donald C. Hannay, Sr., age 70, joined the Company in December 1987 and is
responsible for product sales. He became a director in May 1989. From April
1982 until August 1987, he was employed by Establishment Industries, Inc. as
Vice President, Sales and Marketing, where he built Establishment's dealer
network and was responsible for dealer sales. From August 1987 until joining
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the Company, he was employed as General Sales Manager by Komfort Industries
of California, Inc., a recreational vehicle manufacturer located in
Riverside, California.
Al J. Theis, age 80, joined the Company as its Chief Financial Officer and a
member of the Board of Directors in August 1987. In February 1991, he
resigned as Chief Financial Officer and began serving the Company as a
consultant, for financial matters and in development of global sales. He
continues to serve as a member of the Board of Directors. From July 1984
until joining the Company, Mr. Theis was self-employed as a management
consultant to recreational vehicles industry manufacturers. From February
1982 until June 1984, he was employed by Establishment Industries, Inc. as
Chief Financial Officer and Corporate Planner.
Robert A. Lopez, age 58, is President of Nickerson Lumber and Plywood.
Mr. Lopez started his employment with Nickerson as an outside salesman in
1969 and in 1980 he became a partner and purchased Nickerson Lumber stock.
He was elected as President of Nickerson in 1981. His background in
marketing products is primarily to residential builders, manufactured housing
and recreational vehicle assemblers. Mr. Lopez will be a great asset to
further developments of marketing Rexhall products in both the domestic and
global markets. In his spare time, if any, Mr Lopez is captain of the San
Fernando Rangers, a non-profit organization working to use horses as
therapeutic conditioning for mentally and physically disabled children.
Information Concerning Directors and Committees
During 1997, there were four meetings of the Board of Directors. Outside
directors receive $350 per meeting for serving the Company as members of the
Board. Directors may also be reimbursed for reasonable expenses relating to
attendance at Meetings of the Board or a Committee of the Board. Each
director attended all of the board meetings held during his tenure as a
director in 1997.
These are the following Committees of the Board of Directors:
Audit Committee. The Audit Committee consist of William J. Rex, Al J. Theis
and Robert A. Lopez. The Audit Committee is to meet with representatives of
the Company's independent auditors and with representatives of senior
management. The committee recommends the engagement or discharge of the
Company's independent auditors, consults with the auditors as to the adequacy
of internal accounting procedures and reviews and approves financial
statements and reports. The Audit Committee met one time in 1997.
Compensation Committee. The Compensation Committee consists of William
J. Rex, Al J. Theis and Robert A. Lopez. The Compensation Committee is
responsible for reviewing and reporting to the Board on the recommended
annual compensation for officers including salary, bonuses, and other forms
of compensation and renumeration and also administers the Company's Stock
Option Plan. The Compensation Committee four times in 1997.
The Company has no standing nominating or similar committee whose function
is to consider or recommend nominees to the Board of Directors.
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Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth information regarding the ownership of the
Company's Common Stock by (I) each person known by the Company to be the
beneficial owner of more than 5% of the outstanding shares of Common Stock,
(ii) each of the Company's directors beneficially owning Common Stock and
(iii) all of the Company's officers and directors as a group as:
Number of Percent of
Name of Beneficial Owner Shares Outstanding
or Indentity of Group Beneficially Shares at
Owned (1) March 31, 1998
William J. Rex (1)..... 1,360,485 50.13%
c/o Rexhall Industries
46147 7th Street West
Lancaster, California 93534
All Directors and
Officers as a Group (5
persons) 1,372,612 50.57%
(1) The persons named in the table have sole voting and investment power
with respect to all shares of Common Stock Shown as Beneficially owned by
him, subject to applicable community property law.
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Executive Compensation
The following table sets forth certain information as to each of the three
highest paid(1) of the Company's executive officers whose cash compensation
exceeds $100,000 for the year ended December 31, 1997.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Other Annual
Principal Position Year Salary ($) Bonus($) Compensation (2)
William J. Rex 97 250,000 168,243
President & CEO 96 250,000 199,890 ______
95 250,000 324,000 ------
Donald C. Hannay, Sr. 97 52,800 170,391
V.P. of Sales & Marketing 96 52,800 171,550 ______
95 53,800 168,000 ------
Juan Arias(3) 97 ------ ------- ------
V.P. of Production 96 73,600 99,000 ______
95 85,000 114,000 ------
Marco A. Martinez 97 101,000 ------- ------
(1) Note: Only three executive officers received cash compensation in
excess of $100,000.
(2) The unreimbursed incremental cost to the Company of providing
perquisites and other personal benefits during 1997 did not exceed, as to
any named officer, the lesser of $50,000 or 10% of the total 1997 salary and
bonus paid to such named officer and, accordingly, is omitted from the
table. These benefits included (I) reimbursement for medical expenses and
(ii) amounts allocated for personal use of a company-owned automobile
provided to Mr. Rex.
(3) Not a complete year for Juan Arias, resigned November 1996.
Compensation Committee Report
On August 1, 1996, the Company renewed for 5 years (expires July 31, 2001)
an employment agreement with William Rex. The employment agreement provides
for an annual salary of $250,000 plus a bonus determined monthly in the
amount of 10% before bonus and taxes. Other Executive Officers are
compensated based on the following factors as determined by the Board of
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Directors: (1) the financial result of the Company during the prior year,
(2) compensation paid to executive officers in prior years,
(3) extraordinary performance during the year and (4) compensation of
executive officers employed by competitors.
Directors who are not Executive Officers are paid $350 per Board Meeting and
there are four Board Meetings per year.
The Company also has an incentive program under which it pays supervisory
employees involved in sales and production a cash bonus based on specific
performance criteria. Committee members: William J. Rex, Robert A. Lopez
and Al J. Theis.
Stock Option Plan
In May 1989, the Company adopted the 1989 Incentive and Nonstatutory Stock
Option pursuant to Section 422A of the Internal Revenue Code of 1986, as
amended to (i) key employees, and (ii) to directors and consultants to the
Company designed by the Board as eligible under the Option Plan. Under the
Option Plan, options for up to 225,000 shares maybe granted.
The following table sets forth information as to all options to purchase
Common Stock which were granted to Executive Officers specified in the table
under "Cash Compensation" above who received options during the year ended
December 31, 1997:
Option/SAR Grants
# of Securities % of Total
Underlying Options/SARs
Name Options/SARs Grant to Exercise Expiration
Year Granted(#) Employees in or Base Date
Fiscal Year Price ($/Sh)
William J. Rex 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 -0- -0- -0-
William M. Hill(1) 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 10,000 48% $3.25 2/2000
Donald C. Hannay 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 11,000 52% $3.25- 2/2000
(1) Mr. Hill resigned from the Company in February, 1995.
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Option/SAR grants Canceled
Number of % of Total Option
Securities Grants canceled
Underlying to employees Base Price
Name Year Options/SARs (S/SH)
Grants Canceled (#)
William J. Rex 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 -0- -0- -0-
William M. Hill(1) 1997 -0- -0- -0-
1996 10,000 100% $3.25
1995 -0- -0- -0-
Donald C. Hannay 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 -0- -0- -0-
Juan Arias 1997 -0- -0- -0-
1996 -0- -0- -0-
1995 11,000 39% $3.25
(1) Mr. Hill resigned from the Company in February 1995.
No director who was not an Executive Officer was granted any stock options
during the year ended December 31, 1997. There were no stock options granted
in 1997.
Recent Accounting Pronouncements - The Company adopted State of Financial
Accounting Standard No. 129 (SFAS No. 129), Disclosure of Information about
Capital Structure in fiscal 1997. Statements No. 129 require the disclosure
of information about an entity's capital structure. SFAS No. 129 applies to
all entities. Adoption of this statement was immaterial to the financial
statements.
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income ("SFAS No. 130"). SFAS No. 130 establishes standards for the
reporting and display of comprehensive income and its components (revenue,
expenses, gains and losses) in a full set of general-purpose financial
statements. SFAS No. 130 requires all items thatare required to be
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recognized under accounting standards as components of comprehensive income
to be reported in a financial statement that is displayed with the same
prominence as other financial statements. SFAS No. 130 does not requires
specific format for that financial statement but requires that an enterprise
display an amount representing total comprehensive income for the period
covered by that financial statement. SFAS No. 130 requires an enterprise to
(a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997.
Management has not determined whether the adoption of SFAS No. 130 will have
a material impact on the Company's consolidated financial position or
results of operations.
The Company adopted Statement of Financial Accounting Standard No. 131,
Disclosures about Segments of an Enterprise and Related Information,
(SFAS No. 131), for the preparation of the December 31, 1997 financial
statements. SFAS No. 131 changes the way companies report segment
information and requires segments to be determined based on how management
measures performance and makes decisions about allocating resources. It
also establishes standards for related disclosures about products, services,
geographic areas and major customers. This statement superseded FASB
Statement No. 14, Financial Reporting for Segments of a Business Enterprise,
but retains the requirement to report information about major customers.
SFAS No. 131 requires, among other items, that a public business enterprise
report a measure of segment profit or loss, certain specific revenue and
expense items, and segment assets, information about the revenues derived
from the enterprise's products or services and services provided by operating
segments.
The Company intends to adopt Statement of Financial Accounting Standard
No. 132, Employers' Disclosures about Pensions and Other Post Retirement
Benefits (SFAS No. 132) in fiscal 1998. SFAS No. 132 supersedes the
disclosure requirements of previously issued statements of Financial
Accounting Standards, and amends the requirements for disclosure of such
plans. As the Company does not currently offer any pension are post
retirement benefits, management anticipates the impact of this statement to
be immaterial.
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Aggregated Option/SAR Exercises in last FY
and Fy-End Options/SAR Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable Exercisable
Name On Exercise (#) Realized Unexercisable Unexercisable(1)
William J. Rex -0- -0- 112,000/-0- $253,000/0
Donald C. Hannay -0- -0- 22,000/-0- $ 46,750/0
Juan Arias -0- -0- -0- -0-
(1) 12/31/97 close price $5-3/8 vs. option price.
No options have been granted under the Option Plan in 1997. The following
table sets forth information from inception of Option Plan through
December 31, 1997 concerning the net number of options under the Option Plan
that has been received by (i) each of the Company's current executive
officers, (ii) each nominee for election as director, (iii) all current
executive officers as a group, (iv) all current directors who are not
executive officers as a group, and (v) all employees who are not executive
officers:
No. of shares
covered by
Name of Person/Group Position with the Company Options
William J. Rex Chairman of the Board, President
and Chief Executive
Officer; and Nominated Director 112,000
Donald C. Hannay, Sr. Vice President of Sales and Marketing;
and Nominated Director 22,000
All current executive officers as a group........................134,000
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SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwich LLP as independent
accountants of the Company for the year ending December 31, 1997 and further
directed that the Company submit the selection of independent accountants for
ratification by shareholders at the Company's annual meeting. Deloitte &
Touche acted for the Company in such capacity for the year ended
December 31, 1996. Representatives of KPMG Peat Marwich LLP are expected to
be present at the annual meeting and will have the opportunity to make a
statement if they desire to do so. They will also be available to respond to
appropriate questions.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the 1998 Annual Meeting
must be received at the Company's principal office no later than
December 28, 1998 in order to be considered for inclusion in the proxy
statement and form of proxy related to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other matter to be acted upon at the
meeting. However, if any other matter shall properly come before the
meeting, the proxy holders named in the proxy accompanying this statement
will have discretionary authority to vote all proxies in accordance with
their best judgement.
By order of the Board of Directors
Cheryl L. Rex
Secretary
DATED: April 20, 1998
Lancaster, California
