<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
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(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 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:
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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 17, 2000
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 17, 2000, 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 Babette Heimbuch, Robert Henigson, Meyer
Luskin, William H. Mannon and Franklin Redlich.
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, 2000 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 13, 2000
<PAGE> 3
SCOPE INDUSTRIES
233 WILSHIRE BOULEVARD, SUITE 310
SANTA MONICA, CALIFORNIA 90401
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 17, 2000
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 17,
2000 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 Board of Directors selected the persons named as proxies. 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 affected 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, 2000 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 13, 2000.
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, 2000, a total of 1,042,867 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, 2000 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, 2000. 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....................................... 606,050 shares(3) 57.9%
Estate of Paul D. Saltman.......................... 71,000 shares(4) 6.8%
Robert Henigson.................................... 62,900 shares 6.0%
Dimensional Fund Advisors, Inc..................... 72,650 shares(5) 7.0%
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 Boulevard, Suite 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 3,000 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) Paul D. Saltman served as a director of the Company from 1969 until his
passing away last year. Meyer Luskin is executor of the Estate of Paul D.
Saltman.
(5) Dimensional Fund Advisors, Inc., a registered investment advisor, is deemed
to have a beneficial interest of 72,650 shares, all of which shares are held
in several portfolios for which Dimensional Fund Advisors, Inc. serves as
investment managers. Dimensional Fund Advisors, Inc. disclaims the
beneficial ownership of all such shares.
2
<PAGE> 5
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, 2000.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF AMOUNT AND NATURE OUTSTANDING
BENEFICIAL OWNER(1) OF BENEFICIAL OWNER(2) COMMON STOCK
------------------- ---------------------- -------------
<S> <C> <C>
Meyer Luskin....................................... 606,050 shares(3) 57.9%
Robert Henigson.................................... 62,900 shares 6.0%
Franklin Redlich................................... 3,400 shares 0.3%
William H. Mannon.................................. 13,264 shares 1.3%
Babette Heimbuch................................... 400 shares 0.0%
Robert E. McMullen................................. 500 shares 0.0%
F. Duane Turney.................................... 0 shares 0.0%
John J. Crowley.................................... 7,000 shares(5) 0.7%
Eric M. Iwafuchi................................... 0 shares 0.0%
Eleanor R. Smith................................... 14,682 shares(3) 1.4%
All Directors and Executive Officers as a group (10
persons)......................................... 708,196 shares(4) 67.5%
</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.
(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 3,000 each currently unissued shares, subject to options, which Mr.
Luskin 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 6,000 currently unissued shares, subject to options, which certain
executive officers have a right to acquire within 60 days.
(5) John J. Crowley retired on March 3, 2000.
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 17, 2000, 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
follow.
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 74 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 Chief Executive Officer 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
3
<PAGE> 6
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 74 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 79 years old.
Member: Audit Committee, Stock Option 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 73 years old.
Member: Audit Committee; Compensation Committee; Stock Option Committee
Babette Heimbuch, a director of the Corporation since July 17, 2000, serves
as President and Chief Executive Officer of First Federal Bank of California and
its holding company FirstFed Financial Corp. She also serves on the Board of
Directors of both the Bank and holding company. She first joined the bank in
1982 as Chief Financial Officer. Ms. Heimbuch received her Bachelor of Science
degree from the University of California at Santa Barbara and is a Certified
Public Accountant. Ms. Heimbuch is a director of the Federal Home Loan Bank of
San Francisco, America's Community Bankers and the Western League of Savings
Institutions. She is 52 years old.
Member: Audit 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, 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 23, 2001, provided that, if for any reason an election of
directors is not held on October 23, 2001, the directors who are elected at the
Annual Meeting on October 17, 2000 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 26, 1999, except Ms. Heimbuch. Ms. Heimbuch was
elected a director by vote of the Board of Directors effective at the Board of
Directors meeting on July 17, 2000.
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.
4
<PAGE> 7
EXECUTIVE COMPENSATION
The following table summarizes certain information concerning the
compensation paid by the Corporation during fiscal years 1998, 1999 and 2000 to
its chief executive officer and each of the other four most highly compensated
executive officers whose aggregate salary and bonus exceeded $100,000 for
services rendered in all capacities to the Corporation during the fiscal 2000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ------------
FISCAL YEAR ------------------- OPTIONS/ ALL OTHER
ENDED SALARY BONUS SARS COMPENSATION
NAME AND POSITION JUNE 30 ($) ($) (#) ($)(1)
----------------- ----------- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Meyer Luskin.................... 2000 $543,320 $ 0 0 $54,947
Chairman, President and 1999 529,264 0 0 52,920
Chief Executive Officer 1998 505,323 0 0 76,088
Robert E. McMullen.............. 2000 208,821 10,000 0 20,686
President of subsidiary
(Scope Products, Inc.)
F. Duane Turney................. 2000 145,000 0 0 13,832
President of subsidiary 1999 134,823 0 0 13,520
(Scope Beauty Enterprises,
Inc.) 1998 134,480 7,000 0 13,000
John J. Crowley(2).............. 2000 108,413 0 0 10,170
Vice President-Finance and 1999 146,115 0 0 14,600
Chief Financial Officer 1998 140,244 10,000 0 26,967
Eric M. Iwafuchi................ 2000 102,358 0 0 0
Vice President-Finance and
Chief Financial Officer
Eleanor R. Smith................ 2000 116,867 0 0 11,911
Secretary and Controller 1999 113,293 0 0 11,370
1998 108,710 0 0 20,966
</TABLE>
---------------
(1) "All Other Compensation" includes the Corporation's 100% matching
contributions to the Retirement Savings Plan for Officers and Executives;
contributions to the Retirement Profit Sharing Plan and Company sponsored
401(k) Retirement Plan.
(2) Mr. Crowley retired on March 3, 2000.
No other executive officer of the Corporation received salary and bonus of
more than $100,000 during fiscal 2000.
FISCAL 2000 OPTION GRANTS
No options were granted during fiscal 2000 to any of the executive officers
identified in the Summary Compensation Table.
5
<PAGE> 8
FISCAL YEAR 2000 AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE MONEY
SHARES VALUE OPTIONS AT OPTIONS
ACQUIRED REALIZED FISCAL YEAR END AT FISCAL YEAR END(1)
ON ON --------------- ---------------------
EXERCISE EXERCISE EXERCISABLE EXERCISABLE
NAME (#) ($)(1) (#)(2) ($)(2)
---- -------- -------- --------------- ---------------------
<S> <C> <C> <C> <C>
Meyer Luskin......................... 3,000 $100,011 3,000 $28,650
John J. Crowley...................... 5,600 146,525 0 0
Eleanor R. Smith..................... 2,500 89,688 3,000 38,250
</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.
(2) All outstanding options at June 30, 2000, are exerciseable.
No Stock Appreciation Rights (SARS) are held by any of the named executive
officers.
CERTAIN RELATED TRANSACTIONS
During the fiscal year ended June 30, 2000, the Corporation paid fees to
Arter & Hadden LLP in the approximate amount of $27,000 for legal services
rendered. Robert Henigson, a director of the Corporation, was formerly a partner
of Lawler, Felix & Hall, and 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.
During the fiscal year ended June 30, 2000, the Company loaned $200,000 to
Robert McMullen to help in his relocation from Georgia to California. The note
bears interest only of 6% for the first two years and then quarterly principal
and interest payments until the balance is paid in May 2011. The note is secured
by a second trust deed on his home.
During fiscal year 2000, the Corporation purchased for $122,500, 2,000
shares of its common stock from Mr. John J. Crowley. The Corporation also
purchased for $41,000, 1,000 shares of its common stock from Ms. Eleanor R.
Smith. The purchase price in both transactions equaled the closing market price
on the date of purchase.
DIRECTORS' COMPENSATION
From July 1, 1999 through June 30, 2000, 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.
MEETINGS OF THE BOARD OF DIRECTORS
AND FUNCTIONS OF COMMITTEES
During the fiscal year July 1, 1999 through June 30, 2000, 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 they 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. Iwafuchi and Ms. Smith serve on both the Retirement Savings Plan
Committee and the Retirement Profit Sharing Plan Committee. Messrs. Henigson,
Redlich, Mannon and Ms. Heimbuch currently serve on the Audit Committee. Messrs.
Henigson and Redlich currently serve on both the Compensation Committee and
along with Mr. Mannon serve on the Stock Option Committee. All of
6
<PAGE> 9
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.
7
<PAGE> 10
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 Corporation'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 that, 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. 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 Corporation.
Long-term incentive awards in the form of stock options are available to be
awarded to executive officers and key employees of the Corporation under the
1992 Stock Option Plan. Options to purchase shares of the Corporation'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 2000.
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 2000
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 Chief Executive Officer of the Corporation and as
the Chief Executive Officer of Scope Products, Inc., the Corporation's largest
subsidiary.
No member of the Committee is a former or current officer or employee of
the Corporation or any of its subsidiaries.
Compensation Committee:
Robert Henigson
Franklin Redlich
September 13, 2000
8
<PAGE> 11
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, 2000. 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.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SCOPE INDUSTRIES, THE S&P 500 INDEX,
THE S&P SMALLCAP 600 INDEX
AND THE S&P WASTE MANAGEMENT INDEX
[PERFORMANCE GRAPH]<QC>
YEARS ENDING
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
COMPANY/INDEX JUN95 JUN96 JUN97 JUN98 JUN99 JUN00
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Scope Industries 100 150 224 298 281 189
S&P 500 Index 100 126 170 221 271 291
S&P Small Cap 600
Index 100 126 153 183 186 201
S&P Waste
Management Index 100 105 115 126 142 58
--------------------------------------------------------------------------------
</TABLE>
---------------
* $100 Invested on 6/30/95 in stock or index -- including reinvestment of
dividends, fiscal year ending June 30.
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.
9
<PAGE> 12
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, 2000.
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 2001 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2001 Annual Meeting
and included in the Corporation's proxy materials relating to such meeting must
be received not later than May 17, 2001. 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 13, 2000
10
<PAGE> 13
LOGO
SCOPE INDUSTRIES PROXY
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 17, 2000
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 ERIC M. IWAFUCHI, 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 17, 2000 or at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:
<TABLE>
<S> <C> <C>
(1) ELECTION OF DIRECTORS FOR all nominees listed below WITHHOLD AUTHORITY
(except to vote for all nominees listed
as marked to the contrary below) [ below [ ]
]
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW.)
Babette Heimbuch, Robert Henigson, Meyer Luskin, William H. Mannon, Franklin
Redlich
(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.
<PAGE> 14
(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
or 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
________ , 2000
-------------------------
(Signature)
-------------------------
(Signature if held
jointly)
(Please sign as name
appears herein.
Joint owners should each
sign.)
PLEASE RETURN THIS PROXY IN THE ENCLOSED ENVELOPE PROMPTLY.
