<PAGE> 1
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
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SCOPE INDUSTRIES
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
SCOPE INDUSTRIES
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 27, 1998
To the Shareholders of
Scope Industries:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of Scope
Industries will be held on Tuesday, October 27, 1998, at 2:00 o'clock P.M.,
California time, at Scope Industries, 233 Wilshire Boulevard, Suite 310, Santa
Monica, California 90401, for the following purposes:
1. To elect a board of five directors to serve for the ensuing year
and until their successors have been elected and qualified. The nominees
for election to the board are Robert Henigson, Meyer Luskin, William H.
Mannon, Franklin Redlich, and Paul D. Saltman, Ph.D.
2. To transact such other business as may properly come before the
Annual Meeting or adjournments thereof.
Only holders of shares of record on the books of the Corporation at the
close of business on September 1, 1998 are entitled to notice of, and to vote
at, the Annual Meeting or any adjournment or adjournments thereof. The transfer
books will not be closed.
A Proxy Statement and a proxy are enclosed with this Notice. All
shareholders are requested to attend the Annual Meeting. However, whether or not
you plan to attend in person, you are requested to fill in, sign and mail the
enclosed proxy as promptly as possible in the enclosed envelope to which no
postage need be affixed if it is mailed in the United States. The giving of such
proxy will not affect your right to vote in person if you attend the Annual
Meeting.
By Order of the Board of Directors,
Eleanor R. Smith
Secretary
Santa Monica, California
September 11, 1998
<PAGE> 3
SCOPE INDUSTRIES
233 WILSHIRE BOULEVARD, SUITE 310,
SANTA MONICA, CALIFORNIA 90401
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 27, 1998
This statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Scope Industries (the "Corporation") for use at the
Annual Meeting of its shareholders to be held at Scope Industries, 233 Wilshire
Boulevard, Suite 310, Santa Monica, California 90401, on Tuesday, October 27,
1998 at 2:00 o'clock P.M., California time, or at any adjournment thereof, for
the purposes set forth in the accompanying Notice of said Annual Meeting.
INFORMATION CONCERNING PROXY
The persons named as proxies were selected by the Board of Directors. The
shares represented by the proxies will be voted at the Annual Meeting. The cost
of solicitation of proxies will be borne by the Corporation. Solicitation by the
Board of Directors will be by mail. In addition to solicitation by mail, certain
officers and agents of the Corporation may solicit proxies by telephone,
telegraph and personal interview (the cost of which will be nominal). It is
anticipated that banks, brokerage houses and other custodians, nominees and
fiduciaries will be requested to forward soliciting material to beneficial
owners and to obtain authorizations for the execution of proxies. They will be
reimbursed by the Corporation for their out-of-pocket expenses incurred in
connection therewith.
The only matter of business which the Corporation's management intends to
present at the Annual Meeting is the election of five directors to serve for the
ensuing year and until their successors are elected and qualified.
Shareholders who execute proxies may revoke them at any time before they
are voted. Revocation may be effected by filing with the Secretary of the
Corporation either an instrument revoking the proxy or a proxy bearing a later
date, duly executed by the shareholder, or by written notice to the Corporation
of the death or incapacity of the shareholder who executed the proxy. In
addition, the powers of a proxy holder are suspended if the person executing the
proxy is present at the Annual Meeting and elects to vote in person.
An Annual Report with certified financial statements for the fiscal year
ended June 30, 1998 accompanied by a letter from the President to the
shareholders, is included herewith. Such report and letter are not incorporated
in, and are not a part of, this Proxy Statement and do not constitute
proxy-soliciting material. The Corporation intends to mail this Proxy Statement
and accompanying material on or about September 11, 1998.
INFORMATION CONCERNING THE CORPORATION'S SECURITIES
Shares of common stock (hereinafter sometimes called "shares") are the only
voting securities of the Corporation. There were issued and outstanding at July
31, 1998, a total of 1,121,467 shares, all of which may be voted at the Annual
Meeting. Only holders of shares of record on the books of the Corporation at the
close of business on September 1, 1998 will be entitled to vote at the Annual
Meeting.
In the election of directors, shareholders are entitled to cumulate their
votes for candidates whose names have been placed in nomination prior to the
voting, if a shareholder has given notice at the Annual Meeting prior to the
voting of his or her intention to cumulate votes. If votes for directors are to
be cumulated, each share has the number of votes equal to the number of
directors to be elected, which votes may be cast for one
<PAGE> 4
candidate or distributed among two or more candidates. On all matters other than
election of directors, each share has one vote.
The proxies solicited by the Corporation's Board of Directors will be voted
for the election of the nominees named below and votes will be cumulated, if
applicable, in such manner as the proxy holders may determine in their
discretion unless, and to the extent, authority to do so is withheld in the
enclosed proxy. If for any reason, one or more of the nominees should be unable
to serve or refuse to serve as director (an event which the Board of Directors
does not anticipate), the persons named in the enclosed proxy will vote for
another candidate or candidates nominated by the Corporation's Board of
Directors, and discretionary authority to do so is included in the proxy.
The following table presents the beneficial ownership of the Corporation's
shares by each beneficial owner of more than 5% of the Corporation's shares on
July 31, 1998. Except as indicated below, there is no person known to the
Corporation who owns beneficially 5% or more of the Corporation's shares.
<TABLE>
<CAPTION>
PERCENT OF
NAME OF AMOUNT AND NATURE OUTSTANDING
BENEFICIAL OWNER(1) OF BENEFICIAL OWNER(2) COMMON STOCK
------------------- ---------------------- ------------
<S> <C> <C>
Meyer Luskin....................................... 605,550 shares(3) 53.8%
Paul D. Saltman, Ph.D. ............................ 71,000 shares 6.3%
Robert Henigson.................................... 63,100 shares 5.6%
Dimensional Fund Advisors, Inc..................... 73,150 shares(4) 6.5%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- ---------------
(1) The address of each person named in the table (except Dimensional Fund
Advisors, Inc.) is c/o Scope Industries, 233 Wilshire Blvd., Ste. 310, Santa
Monica, California 90401.
(2) The named beneficial owners have sole voting and investment power with
respect to the listed shares, except as otherwise indicated in the footnotes
below.
(3) Includes 3,750 currently unissued shares, subject to options, which shares
Mr. Luskin has a right to acquire within 60 days. Mr. Luskin holds the
shares jointly with his wife as co-trustees of a family trust.
(4) Dimensional Fund Advisors, Inc., a registered investment advisor, is deemed
to have a beneficial interest of 73,150 shares, all of which shares are held
in several portfolios for which Dimensional Fund Advisors, Inc. serve as
investment managers. Dimensional Fund Advisors, Inc. disclaims the
beneficial ownership of all such shares.
The following table presents the beneficial ownership of the Corporation's
shares by each director, each nominee for director and each executive officer
named in the Summary Compensation Table and all directors and executive officers
as a group on July 31, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF OF BENEFICIAL OUTSTANDING
BENEFICIAL OWNER(1) OWNER(2) COMMON STOCK
------------------- ------------------- ------------
<S> <C> <C>
Meyer Luskin......................................... 605,550 shares(3) 53.8%
Paul D. Saltman, Ph.D. .............................. 71,000 shares 6.3%
Robert Henigson...................................... 63,100 shares 5.6%
Franklin Redlich..................................... 1,200 shares 0.1%
William H. Mannon.................................... 13,264 shares 1.2%
F. Duane Turney...................................... 0 shares 0.0%
John J. Crowley...................................... 7,750 shares(3) 0.7%
Eleanor R. Smith..................................... 13,432 shares(3) 1.2%
All Directors and Executive Officers
as a group (8 persons)............................. 775,296 shares(4) 68.4%
</TABLE>
- ---------------
(1) The address of each person named in the table is c/o Scope Industries, 233
Wilshire Blvd., Suite 310, Santa Monica, California 90401.
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(2) The named beneficial owners have sole voting and investment power with
respect to the listed shares, except as otherwise indicated in the footnotes
below.
(3) Includes 3,750, 3,750 and 3,750 currently unissued shares, subject to
options, which Messrs. Luskin, and Crowley, and Ms. Smith, respectively,
have a right to acquire within 60 days. Mr. Luskin holds his shares jointly
with his wife as co-trustees of a family trust.
(4) Includes 11,250 currently unissued shares, subject to options, which certain
executive officers have a right to acquire within 60 days.
ELECTION OF DIRECTORS AND INFORMATION AS TO NOMINEES
Each of the five incumbent directors who comprise the Board has been
elected to serve until the next succeeding Annual Meeting of Shareholders and
the election and qualification of his successor. The term of office of each
present director of the Corporation expires October 27, 1998, which is the date
of the Annual Meeting. Five directors of the Corporation will be elected at the
Meeting. The nominees of the Board of Directors for election at the Meeting as
directors of the Corporation and certain information concerning such nominees
follows.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION
OF EACH NOMINEE AS A DIRECTOR OF THE CORPORATION.
ROBERT HENIGSON, a director of the corporation since October 1996, is an
investor and retired attorney. He was previously a director of the Corporation
from May 1969 until August 1987. Mr. Henigson holds Bachelor of Science and
Master of Science degrees from the California Institute of Technology. He
received his L.L.B. from Harvard Law School. Mr. Henigson is a director of
Myricom, Incorporated, Reliance Steel & Aluminum Co. and Stamet, Incorporated.
He is 72 years old.
Member: Audit Committee; Compensation Committee; Stock Option Committee
MEYER LUSKIN, the Chairman of the Board of Directors, President and Chief
Executive Officer of the Corporation since 1961, has been a director of the
Corporation since November 1958. He also serves as president of Scope Products,
Inc., the Corporation's largest subsidiary. Mr. Luskin received a Bachelor of
Arts degree from University of California at Los Angeles and a Master of
Business Administration degree from Stanford University. Mr. Luskin is
responsible primarily for the formation of overall corporate policy and
operations of the Corporation's main business groups and has been an employee of
the Corporation since 1961. Mr. Luskin is a director of OSI Systems, Inc.,
Stamet, Incorporated and Chromagen, Inc. He is 72 years old.
Member: Retirement Savings Plan Committee; Retirement Profit Sharing Plan
Committee
WILLIAM H. MANNON, a director of the Corporation since September 1966,
served as Vice President and Secretary of the Corporation from 1966 until his
retirement in August 1986. Since his retirement, Mr. Mannon has served as a
consultant to the Corporation. He was previously a director of the Corporation
from May 1953 until May 1958 and again from September 1962 until November 1965.
Mr. Mannon holds a Bachelor of Arts degree from Stanford University in Mineral
Sciences. Mr. Mannon is a director of Ojai Oil Company. He is 77 years old.
Member: Audit Committee
FRANKLIN REDLICH, a director of the Corporation since September 1968, was
the President of Holiday Stores, a retail dealer in hardware from 1956 until his
retirement in 1993. Mr. Redlich received his Bachelor of Arts and Master of
Business Administration degrees from Stanford University. He is 71 years old.
Member: Audit Committee; Compensation Committee; Stock Option Committee
PAUL D. SALTMAN, PH.D., a director of the Corporation since September 1969,
has been professor of biology at the University of California at San Diego since
1972. Dr. Saltman holds Bachelor of Science and Doctorate degrees from the
California Institute of Technology. He is 70 years old.
Member: Audit Committee; Stock Option Committee; Compensation Committee
It is intended that proxies given to the persons named in the accompanying
proxy will be voted for the election of the nominees above named unless directed
otherwise. In voting the proxies for election of directors,
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<PAGE> 6
the persons named in the proxies have the right to cumulate the votes for
directors covered by said proxies (unless otherwise instructed) on the principle
described above under the caption "Information Concerning the Corporation's
Securities" and may do so if such action is deemed desirable.
The term of office for each director elected at the annual meeting will
expire on October 26, 1999, provided that, if for any reason an election of
directors is not held on October 26, 1999, the directors who are elected at the
Annual Meeting on October 27, 1998 will continue to serve until their respective
successors have been elected and qualified.
All of the nominees for the office of director are currently directors of
the Corporation. Each of the directors was elected to his present term of office
by vote of the shareholders of the Corporation at the Annual Meeting of
Shareholders held October 28, 1997.
Although it is not contemplated that any nominee will decline or be unable
to serve as a director, in the event that at the date of the Annual Meeting or
any adjournment thereof any nominee declines or is unable to serve, the proxies
will be voted for such other person for director as the Board of Directors may
select or, if no person is so selected, as the persons named in the proxies may,
in their discretion, select.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR ALL NOMINEES TO BE MEMBERS
OF THE BOARD OF DIRECTORS.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
FISCAL YEAR -------------------- ------------ ALL OTHER
ENDED SALARY BONUS OPTIONS/SARS COMPENSATION
NAME AND POSITION JUNE 30 ($) ($) (#) ($)(1)
----------------- ----------- --------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Meyer Luskin........................ 1998 $505,333 $ 0 0 $ 76,088
Chairman, President and 1997 480,769 0 0 131,340
Chief Executive Officer 1996 454,808 0 3,000 127,259
F. Duane Turney..................... 1998 134,480 7,000 0 13,000
President of subsidiary 1997 135,000 8,000 0 13,520
(Scope Beauty Enterprises, Inc.) 1996 128,475 0 0 6,600
John J. Crowley..................... 1998 140,244 10,000 0 26,967
Vice President -- Finance and 1997 133,615 0 0 53,470
Chief Financial Officer 1996 125,546 0 3,000 51,704
Eleanor R. Smith.................... 1998 108,710 0 0 20,966
Secretary and Controller 1997 104,135 0 0 41,681
1996 98,961 0 3,000 40,742
</TABLE>
- ---------------
(1) "All Other Compensation" includes the Corporation's 100% matching
contributions to the Retirement Savings Plan for Officers and Executives and
contributions to the Retirement Profit Sharing Plan.
No other executive officer of the Corporation received salary and bonus of
more than $100,000 during fiscal 1998.
FISCAL 1998 OPTION GRANTS
No options were granted during fiscal 1998 to any of the executive officers
identified in the Summary Compensation Table.
4
<PAGE> 7
FISCAL YEAR 1998 AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE FISCAL YEAR END AT FISCAL YEAR END(1)
ACQUIRED REALIZED --------------------------- ---------------------------
ON EXERCISE ON EXERCISE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($)(1) (#) (#) ($) ($)
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Meyer Luskin............ 0 0 3,750 2,250 $148,526 $84,749
F. Duane Turney......... 0 0 0 0 0 0
John J. Crowley......... 0 0 3,750 2,250 159,047 91,453
Eleanor R. Smith........ 0 0 3,750 2,250 159,047 91,453
</TABLE>
- ---------------
(1) The values represent the difference between the exercise price of the
options and the market price of the underlying securities on the date of
exercise and at fiscal year-end, respectively.
No Stock Appreciation Rights (SARS) are held by any of the named executive
officers.
CERTAIN RELATED TRANSACTIONS
At July 1, 1997, the Corporation held 1,875,000 common shares of OSI
Systems, Inc. (OSI), representing approximately 30% of OSI's outstanding common
stock. An initial public offering of OSI's stock took place in October 1997. The
Corporation sold 227,097 of its shares through the offering and received
proceeds of $2,816,388. At June 30, 1998, the Corporation held 1,647,903 shares,
representing approximately 17% of the outstanding OSI common stock. Meyer
Luskin, an officer and director of the Corporation, is a director of OSI.
During the fiscal year ended June 30, 1998 the Corporation purchased
707,693 shares of Chromagen, Inc. at cost of $2,000,002, representing
approximately 10% of Chromagen's outstanding capital stock. The Corporation also
provided Chromagen a loan in the principal amount of $335,175, secured by
property and equipment. Chromagen is a privately held "Enterprise in the
Development Stage". It functions as a biotech research company for
pharmaceutical industry applications. Meyer Luskin, an officer and director of
the Corporation, is a director of Chromagen.
During the fiscal year ended June 30, 1998 the Corporation loaned $428,800
to Stamet, Inc. Stamet, Inc. is a privately held "Enterprise in the Development
State", holding patents on a unique method for pumping dry bulk materials. The
Corporation holds approximately 10% equity ownership of Stamet. Meyer Luskin, an
officer and director of the Corporation, is a director of Stamet.
During the fiscal year ended June 30, 1998, the Corporation paid fees to
Arter & Hadden LLP, in the approximate amount of $55,000 for legal services
rendered. Robert Henigson, a director of the Corporation, was formerly a partner
of Lawler, Felix & Hall, the predecessor to Arter & Hadden.
William H. Mannon, who is a director of the Corporation, has acted as a
consultant to the Corporation since his retirement in 1986 and has been
compensated for his services at the rate of $1,000 per month. The Corporation
expects to continue to consult with Mr. Mannon in the near future.
DIRECTORS' COMPENSATION
From July 1, 1997 through June 30, 1998, each outside director of the
Corporation received a compensation of $4,000 annually plus a $1,000 fee and
reimbursements for certain expenses for each of the Board of Directors meetings
attended.
5
<PAGE> 8
MEETINGS OF THE BOARD OF DIRECTORS
AND FUNCTIONS OF COMMITTEES
During the fiscal year July 1, 1997 through June 30, 1998, the Board of
Directors of the Corporation held four regular meetings. No person attended
fewer than 75% of the aggregate of the total number of Board meetings and the
total number of committee meetings held by the committee on which he served.
The committees of the Board of Directors are the Audit Committee, the
Compensation Committee, the Retirement Savings Plan Committee, the Retirement
Profit Sharing Plan Committee and the Stock Option Committee. In addition to Mr.
Luskin, Mr. Crowley and Ms. Smith serve on both the Retirement Savings Plan
Committee and the Retirement Profit Sharing Plan Committee. Messrs. Henigson,
Redlich, Mannon and Saltman currently serve on the Audit Committee. Messrs.
Henigson, Redlich and Saltman currently serve on the Stock Option Committee and
the Compensation Committee. All of the committees met once formally during the
last fiscal year, although the members of each committee confer informally from
time to time.
The Audit Committee confers formally with the Corporation's independent
auditor once annually, as well as with the members of the Corporation's
management and those performing internal accounting functions, to inquire as to
the manner in which the respective responsibilities of these groups and
individuals are being discharged. Reports of the Audit Committee's findings are
made to the Board of Directors. The Audit Committee makes recommendations to the
Board of Directors with respect to the scope of the audit conducted by the
independent auditors of the Corporation and the related fees, the accounting
principles being applied by the Corporation in financial reporting, the scope of
internal financial accounting procedures and the adequacy of internal controls.
The Compensation Committee reviews and approves the salaries of all
officers of the Corporation. It also reviews and makes recommendations as
appropriate for compensation plans of subsidiary and division officers.
The Retirement Savings Plan, Retirement Profit Sharing Plan and Stock
Option Committees monitor the respective plans. Their functions include an
overview of proper compliance with the requirements of the respective plans and
periodic reports to the Board of Directors.
The Corporation has no standing Nominating Committee at the present time.
Nominations for the Board of Directors are made and considered by the Board of
Directors as a whole. Compensation policies are also considered and established
by the Board of Directors acting as a whole.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation:
It is the responsibility of the Compensation Committee to set policy for
administering the Company's executive compensation plans and to make
recommendations to the Board as appropriate. These plans for executive officers
include base salaries, stock options, and any other forms of remuneration.
The Committee annually reviews in detail all aspects of compensation for
the Chief Executive Officer and other executive officers. The Committee also
reviews executive compensation surveys, compensation reports of other public
companies of similar size, and other data in determining policies.
Cash compensation is provided to officers in the form of base salaries.
Base salaries are reviewed to determine if adjustment is necessary based on
competitive practices and economic conditions. Salaries are adjusted, if
appropriate, based on individual performance and for changes in job content and
responsibilities. None of the officers or executives is compensated under an
employment agreement.
The Committee may grant incentive awards to corporate and division
executives. Officers and facility managers of Scope Products, Inc. are entitled
to participate in the Corporation's Retirement Profit Sharing Plan which, by
formula, determines the share of profits of that subsidiary which is to be
contributed to the Plan for the benefit of the participants. The Compensation
Committee has no authority to change that share but the Plan participants,
nevertheless, are incentivized by virtue of the performance of Scope Products,
Inc.
6
<PAGE> 9
The Committee evaluates the combination of base pay and incentive awards so
that, in combination, highly talented executives can be attracted, retained and
motivated to consistently improve the financial performance of the Company.
Long term incentive awards in the form of stock options are available to be
awarded to executive officers and key employees of the Company under the 1992
Stock Option Plan. Options to purchase shares of the Company's stock at not less
than the fair market value of shares on the date the option is granted, have a
term of five years and become exercisable on a cumulative basis at 25% each year
after one year. No options were granted under the Plan in fiscal 1998. There are
currently 25,000 shares available under the Plan for future options grants. The
Stock Option Plan provides a link between executive compensation and increasing
shareholder value through stock performance over an extended period.
Mr. Luskin, Chief Executive Officer, participates in the same compensation
programs provided to the other executives. The Committee based the fiscal 1998
compensation of Mr. Luskin on the policies and procedures described above. Among
the factors considered by the Committee in determining the Chief Executive
Officer's compensation is the performance of the corporation as a whole and his
individual performance both as CEO of the Corporation and as the President of
Scope Products, Inc., the Corporation's largest subsidiary.
No member of the Committee is a former or current officer or employee of
the Company or any of its subsidiaries.
Compensation Committee:
Robert Henigson
Franklin Redlich
Paul Saltman, Ph.D.
August 25, 1998
7
<PAGE> 10
PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return on the
Corporation's common stock with the cumulative total return of the Standard &
Poor's Composite 500 Stock Index (S&P 500), the Standard & Poor's Small Cap 600
Index and the Standard & Poor's Waste Management Industry Index for the
five-year period ended June 30, 1998. It assumes the investment of $100 at the
beginning of the five-year period in the Corporation's common stock, the S&P
500, the Small Cap 600 Index and the Waste Management Index and the reinvestment
of all dividends.
TOTAL SHAREHOLDER RETURNS
<TABLE>
<CAPTION>
S&P WASTE
SCOPE MANAGEMENT S&P SMALL
INDUSTRIES INDEX S&P 500 INDEX CAP 600 INDEX
<S> <C> <C> <C> <C>
JUN-93 100.00 100.00 100.00 100.00
JUN-94 96.47 91.06 101.41 101.87
JUN-95 95.52 102.95 127.84 122.61
JUN-96 142.84 114.10 161.08 154.50
JUN-97 213.52 127.85 216.98 188.01
JUN-98 284.73 140.44 282.42 224.60
</TABLE>
- ---------------
The Corporation has a unique combination of businesses, including the hauling,
processing and distribution of bakery waste products and cosmetology vocational
schools. There is no published industry or line of business index that
accurately reflects either of these lines of business alone nor is there one
for the combination. Similarly, the Corporation has been unable to establish a
peer group because few companies in these lines of business are
publicly-traded, and, consequently, limited or no information is available for
the Corporation's competitors in each of these industries. The Corporation has
elected to show on its Performance Graph a comparison of the Corporation's
stock performance with the performance of the Standard & Poor's Waste
Management Index and, the Standard & Poor's Small Cap 600 Index with the hope
that this information will be helpful. The Corporation has selected the
Standard & Poor's Waste Management Index, which consists principally of
companies engaged in hauling wastes, but does not include companies engaged in
processing or recycling such wastes, because it is the index closest to the
Corporation's primary line of business. It does not contain comparable
information with respect to the Corporation's vocational schools, however, and
does not accurately reflect the waste recycling business in which the
Corporation is engaged. The Standard & Poor's Small Cap 600 Index reflects
information for companies in various lines of business but with similar market
capitalization to that of the Corporation.
8
<PAGE> 11
COMPLIANCE WITH SECTION 16(a)
The Corporation is not aware of any officer, director or beneficial owner
of more than 10% of the Corporation's common stock who failed to file on a
timely basis any reports required by Section 16(a) of the Securities and
Exchange Act of 1934, as amended, during the fiscal year ended June 30, 1998.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche LLP has acted as the Corporation's independent auditors
since April 1988. A representative of Deloitte & Touche LLP will be present at
the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions.
OTHER MATTERS
While management has no reason to believe that any other business will be
presented, if any other matters should properly come before the Annual Meeting,
the proxies will be voted as to such matters in accordance with the best
judgment of the proxy holders.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1999 Annual Meeting
and included in the Corporation's proxy materials relating to such meeting must
be received not later than May 12, 1999. Such proposals must be addressed to the
Secretary of the Corporation.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO ANY SHAREHOLDER, UPON
WRITTEN REQUEST DIRECTED TO THE SECRETARY OF THE CORPORATION AT ITS ADDRESS
APPEARING AT THE TOP OF THE FIRST PAGE OF THIS PROXY STATEMENT, A COPY OF ITS
MOST RECENT ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
By Order of the Board of Directors,
Eleanor R. Smith
Secretary
Santa Monica, California
September 11, 1998
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<PAGE> 12
LOGO
SCOPE INDUSTRIES PROXY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 27, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of SCOPE INDUSTRIES (the "Corporation") hereby
appoints MEYER LUSKIN, ELEANOR R. SMITH, and JOHN J. CROWLEY, and each of them
proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote all shares of
stock of the Corporation to be held at Scope Industries, 233 Wilshire Blvd.,
Suite 310, Santa Monica, CA 90401, at the hour of 2:00 o'clock P.M., California
time on Tuesday, October 27, 1998 or at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
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<S> <C> <C>
(1) ELECTION OF DIRECTORS FOR all nominees listed below (except WITHHOLD AUTHORITY
as marked to the contrary below) [ ] to vote for all nominees listed
below [ ]
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(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Robert Henigson, Meyer Luskin, William H. Mannon, Franklin Redlich, Paul D.
Saltman, Ph.D.
(2) In their discretion on such matters as may properly come before the
meeting or any adjournment thereof.
CONTINUED ON THE OTHER SIDE. PLEASE DATE AND SIGN ON REVERSE SIDE AND RETURN
PROMPTLY.
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(CONTINUED FROM OTHER SIDE)
Any proxy heretofore given with respect to the shares covered by this proxy
is hereby revoked. A majority of said proxies present and acting at the meeting
(or if only one shall be present and acting, then that one) shall have and may
exercise all of the powers of all said proxies hereunder. THE SHARES REPRESENTED
HEREBY SHALL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE SUCH SHARES
SHALL BE VOTED FOR THE ELECTION AS A DIRECTOR OF EACH NOMINEE NAMED ABOVE (AND
VOTES WILL BE CUMULATED, IF APPLICABLE, IN SUCH MANNER AS THE PROXY HOLDERS MAY
DETERMINE IN THEIR DISCRETION) AND AS THE PROXY HOLDERS DETERMINE IN THEIR
DISCRETION AS TO ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING.
Receipt of the accompanying proxy statement is hereby acknowledged by the
undersigned shareholder.
The giving of this proxy
does not affect the right
of the undersigned
shareholder to vote in
person should such
shareholder attend the
meeting. This proxy may
be revoked at any time
before it is voted.
Dated this ___ day of
_________, 1998
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(Signature)
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(Signature if held
jointly)
(Please sign as name
appears herein. Joint
owners should each sign.)
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
