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 ss. 240.14a-11(c) or ss. 240.14a-12
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STARCRAFT CORPORATION
(Name of Registrant as Specified In Its Charter)
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(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>
[STARCRAFT LOGO]
P.O. Box 1903
2703 College Avenue
Goshen, Indiana 46527-1903
(219) 533-1105
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
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To Be Held On February 18, 1999
Notice is hereby given that the Annual Meeting of Shareholders of Starcraft
Corporation (the "Company") will be held at the Goshen Inn and Conference
Center, 1375 Lincoln Way East (U.S. 33 East), Goshen, Indiana, on Thursday,
February 18, 1999 at 9:00 A.M., Goshen time.
The Annual Meeting will be held for the following purposes:
1. Election of Director. Election of one director of the Company in Class
II for a term to expire in the year 2002.
2. Ratification of Auditors. Ratification of the appointment of Crowe,
Chizek and Company LLP as auditors for the Company for the fiscal year
ending October 3, 1999.
3. Other Business. Such other matters as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on December 23, 1998, are
entitled to vote at the meeting or any adjournment thereof.
We urge you to read the enclosed Proxy Statement carefully so that you may
be informed about the business to come before the meeting, or any adjournment
thereof. At your earliest convenience, please sign and return the accompanying
proxy in the postage-paid envelope furnished for that purpose.
A copy of our Annual Report for the fiscal year ended September 27, 1998,
is enclosed. The Annual Report is not a part of the proxy soliciting material
enclosed with this letter.
By Order of the Board of Directors
/s/ Kelly L. Rose
Kelly L. Rose, Chairman of the Board
and Chief Executive Officer
Goshen, Indiana
January 15, 1999
IT IS IMPORTANT THAT THE PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU PLAN TO BE PRESENT IN PERSON AT THE ANNUAL MEETING, PLEASE SIGN, DATE
AND COMPLETE THE ENCLOSED PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE WHICH
REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
[STARCRAFT LOGO]
P.O. Box 1903
2703 College Avenue
Goshen, Indiana 46527-1903
(219) 533-1105
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PROXY STATEMENT
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FOR
ANNUAL MEETING OF SHAREHOLDERS
February 18, 1999
This Proxy Statement is being furnished to the holders of common stock,
without par value (the "Common Stock"), of Starcraft Corporation (the
"Company"), an Indiana corporation, in connection with the solicitation of
proxies by the Board of Directors of the Company to be voted at the Annual
Meeting of Shareholders to be held at 9:00 A.M., Goshen time, on February 18,
1999, at the Goshen Inn and Conference Center, 1375 Lincoln Way East (U.S. 33
East), Goshen, Indiana, and at any adjournment of such meeting. This Proxy
Statement is expected to be mailed to shareholders on or about January 15, 1999.
The proxy solicited hereby, if properly signed and returned to the Company
and not revoked prior to its use, will be voted in accordance with the
instructions contained therein. If no contrary instructions are given, each
proxy received will be voted for each of the matters described below and, upon
the transaction of such other business as may properly come before the meeting,
in accordance with the best judgment of the persons appointed as proxies.
Any shareholder giving a proxy has the power to revoke it at any time
before it is exercised by (i) filing with the Secretary of the Company written
notice thereof (Michael H. Schoeffler, P.O. Box 1903, 2703 College Avenue,
Goshen, Indiana 46527-1903), (ii) submitting a duly executed proxy bearing a
later date, or (iii) by appearing at the Annual Meeting and giving the Secretary
notice of his or her intention to vote in person. Proxies solicited hereby may
be exercised only at the Annual Meeting and any adjournment thereof and will not
be used for any other meeting.
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only voting shareholders of record at the close of business on December 23,
1998 ("Voting Record Date"), will be entitled to vote at the Annual Meeting. On
the Voting Record Date, there were 4,133,600 shares of the Common Stock issued
and outstanding, and the Company had no other class of equity securities
outstanding. Each share of Common Stock is entitled to one vote at the Annual
Meeting on all matters properly presented at the Annual Meeting. The following
table provides certain information regarding the beneficial ownership of the
Common Stock as of December 23, 1998, by each person who is known by the Company
to own beneficially 5% or more of the Common Stock. Unless otherwise indicated,
the named beneficial owner has sole voting and dispositive power with respect to
the shares reported.
<TABLE>
<CAPTION>
Number of Shares
Name and Address of of Common Stock Percent of
Beneficial Owner Beneficially Owned(1) Class (1)
- ---------------- --------------------- ---------
<S> <C> <C>
Kelly L. Rose 1,553,179 (2) 35.2%
2703 College Avenue
Goshen, Indiana 46528
Heartland Advisors, Inc. 996,200 (3) 24.1%
790 North Milwaukee Street
Milwaukee, Wisconsin 53202
Investment Counselors of Maryland, Inc. 210,000 (4) 5.1%
803 Cathedral Street
Baltimore, Maryland 21201
</TABLE>
- -----------------
(1) Based upon 4,133,600 shares of Common Stock outstanding (and in the case of
Mr. Rose, 75,000 exercisable stock options and 200,000 warrants held by Mr.
Rose). The number of shares deemed outstanding does not include exercisable
stock options and warrants held by other employees, management and
directors for 678,349 shares of Common Stock including options which
currently are or will become exercisable within the next 60 days.
(2) Includes 100,000 shares owned by Karen K. Rose, Mr. Rose's spouse, 75,000
stock options and 200,000 warrants which are or will become exercisable
within the next 60 days, and 10,450 shares held in a charitable foundation
as to which Mr. Rose disclaims beneficial ownership.
(3) Heartland Advisors, Inc. has dispositive power with respect to all such
shares and voting power with respect to 500,100 shares.
(4) Investment Counselors of Maryland, Inc. has dispositive power with respect
to all such shares and voting power with respect to 210,000 shares.
<PAGE>
PROPOSAL I -- ELECTION OF DIRECTORS
The Board of Directors will have four members effective as of the 1999
Annual Meeting.
Frank K. Martin, a Class II Director whose term expires as of the 1999
Annual Meeting, declined to stand for re-election. The Board, in accordance with
the Articles of Incorporation and By-laws of the Company, adopted a resolution
to reduce the size of the Board from five members to four effective as of the
date of the Annual Meeting. Additionally, L. Craig Fulmer, a Class III Director,
resigned as Director of the Company, effective December 18, 1998. In accordance
with the Company's Articles of Incorporation and By-laws, the remaining members
of the Board acting by unanimous written consent appointed G. Raymond Stults to
fill the vacancy created by Mr. Fulmer's resignation until 2001, when Mr.
Fulmer's term would have expired.
The Company's Articles of Incorporation provide that the Board of Directors
is comprised of three classes as nearly equal in number as possible. The members
of each class are to be elected for a term of three years and until their
successors are elected and qualified. One class of directors is to be elected
annually.
The sole nominee for director from Class II is Allen H. Neuharth. Mr.
Neuharth is a current director of the Company. If elected by the shareholders at
the Annual Meeting, the term of Mr. Neuharth will expire in 2002.
Unless otherwise directed, each proxy executed and returned by a
shareholder will be voted for the election of Mr. Neuharth. If Mr. Neuharth
should be unable or unwilling to stand for election at the time of the Annual
Meeting, the proxy holders will nominate and vote for a replacement nominee
recommended by the Board of Directors. At this time, the Board of Directors
knows of no reason why the nominee may not be able to serve as director if
elected.
The following table sets forth certain information regarding the nominee
for election as director and the other incumbent directors, including the number
and percent of shares of Common Stock beneficially owned by such persons as of
the Voting Record Date. No director or nominee for director is related to any
other director or nominee for director or executive officer of the Company by
blood, marriage, or adoption, and there are no arrangements or understandings
between any nominee and any other person pursuant to which such nominee was
selected. The table also sets forth the number of shares of Common Stock
beneficially owned by each executive officer of the Company and by all directors
and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Common Stock
Director of Beneficially
Expiration of Company Owned as of Percentage
Name Term as Director Since December 23, 1998(1) of Class
- ---- ---------------- ------------ -------------------- ----------
Directors and Nominees
Class I:
<S> <C> <C> <C> <C>
Kelly L. Rose 2000 1991 1,553,179 (2)(3)(6) 35.2%
David J. Matteson 2000 1993 1,500 *
Class II:
Allen H. Neuharth (Nominee) 1999 1993 11,100 (5) *
Class III:
G. Raymond Stults 2001 1998 200,000 (6) 4.6%
Other Executive Officers
Michael H. Schoeffler 122,500 (3) 2.9%
President, Chief Operating Officer,
Chief Financial Officer, Treasurer
and Secretary
All directors and executive officers
as a group (5 persons) 1,888,279 (4) 40.0%
_____________
</TABLE>
<PAGE>
* Indicates less than 1%.
(1) Based upon information furnished by the respective director nominees.
Under applicable regulations, shares are deemed to be beneficially
owned by a person if he directly or indirectly has or shares the power
to vote or dispose of the shares, whether or not he has any economic
power with respect to the shares. Includes shares beneficially owned
by members of the immediate families of the directors or director
nominees residing in their homes and also includes options held by the
individual or group that currently are or will become exercisable
within the next 60 days.
(2) Includes 100,000 shares owned by Mr. Rose's spouse, and 10,450 shares
held in a charitable foundation as to which Mr. Rose disclaims
beneficial ownership.
(3) Includes the following shares subject to currently exercisable options
granted under the Starcraft Corporation 1993 Stock Incentive Plan (the
"1993 Incentive Plan") and/or the Starcraft Corporation 1997 Stock
Incentive Plan ("1997 Incentive Plan" and together with the 1993
Incentive Plan, the "Incentive Plans"): 75,000 shares subject to
currently exercisable options held by Mr. Rose; 105,000 shares subject
to currently exercisable options held by Mr. Schoeffler.
(4) This total includes 180,000 shares subject to stock options granted
under the Incentive Plans which are exercisable or will be exercisable
within the next 60 days.
(5) Includes 100 shares currently held by trust under which Mr. Neuharth
serves as Trustee.
(6) Includes 400,000 warrants issued (200,000 each) to Messrs. Rose and
Stults in connection with the November 1998 refinancing of the
Company's revolving credit arrangements.
The business experience of each director, director nominee and executive officer
is set forth below.
Class I
Mr. Rose (age 46) founded the Company in 1990. He has served as Chairman of
the Board since January 18, 1991, and as Chief Executive Officer since April 16,
1993. He also serves as Chairman of the Board and Chief Executive Officer of
Starcraft Automotive Group, Inc., Imperial Automotive Group, Inc., National
Mobility Corporation and Tecstar, Inc. Mr. Rose was co-founder and 50% owner of
ASA Corporation from January 1977 to July 1990. ASA Corporation is an importer
and international distributor of electronic components to manufacturers in the
van conversion and recreational vehicle industries. Mr. Rose is immediate past
Chairman and serves on the Executive Board of the Recreational Vehicle Industry
Association and serves on the boards of numerous charitable organizations.
Mr. Matteson (age 62) was elected Director of the Company in April 1993.
Presently retired, he served as the Associate Pastor of Granger Missionary
Church in Granger, Indiana, from September 1985 to May 1994. Prior to that
appointment, he was associated with Bethel College, Mishawaka, Indiana, where he
served as Vice President for Business and Finance, Registrar, Director of
Admissions, and Director of Financial Aid over a period of twenty years.
<PAGE>
Class II - Director Nominee
Mr. Neuharth (age 74) was elected Director of the Company in September
1993. The founder of the nationally distributed daily newspaper, USA TODAY, Mr.
Neuharth retired as Chairman and CEO of Gannet Co., Inc. in March 1989.
Presently, he serves as Chairman of the Freedom Forum, which he founded, and is
self-employed as an author, columnist, consultant and public speaker.
Class III
Mr. Stults (age 50) was appointed Director of the Company in December 1998.
He is currently owner and Chairman of Babsco Supply Company, an electrical
contractor supplier and Galleries, Ltd., a retail lighting company. Previously,
Mr. Stults was President of Shelter Components Corporation until the corporation
was sold in early 1998 and President and owner of Babsco, Inc. from January 1981
through January 1995. He is also a director and part owner of CopperCon Wire and
Cable, LLP, a manufacturer of wire products.
THE DIRECTOR SHALL BE ELECTED UPON RECEIPT OF A PLURALITY OF VOTES CAST IN
PERSON OR BY PROXY AT THE ANNUAL SHAREHOLDERS' MEETING OR AT ANY ADJOURNMENT
THEREOF.
Other Executive Officer
Mr. Schoeffler (age 38) a Certified Public Accountant, joined the Company
in 1995 as Senior Vice President, Treasurer, and Chief Financial Officer and was
appointed Secretary in 1995. Effective December 12, 1996, Mr. Schoeffler was
appointed President and Chief Operating Officer. Prior to joining the Company he
was Executive Vice President/Chief Financial Officer of General Products
Corporation, an automotive parts supplier, from 1989 to 1995; Assistant
Controller for Sudbury, Inc., a diversified manufacturer, from 1986 to 1989; and
a Certified Public Accountant with Ernst & Whinney from 1982 to 1986.
Meetings and Committees of the Board of Directors
During the fiscal year ended September 27, 1998, the Board of Directors of
the Company met six times, including teleconferences, in addition to taking a
number of actions by unanimous written consent. During fiscal 1998, no incumbent
director of the Company attended fewer than 75% of the aggregate of the total
number of Board meetings and the total number of meetings held by the committees
of the Board of Directors on which he served.
The Company's Audit Committee is responsible for recommending the
appointment of the Company's independent accountants; meeting with the
independent accountants to outline the scope and review the results of the
annual audit; and reviewing with the internal auditor the systems of internal
control and audit reports. The current members of this committee are directors
Stults (Chairman), Matteson, Neuharth and Rose. The Audit Committee held two
meetings during the year ended September 27, 1998.
The Compensation Committee of the Board of Directors is comprised of
Messrs. Matteson, Martin, Neuharth and Stults. The Compensation Committee
recommends employee compensation, benefits and personnel policies to the Board
of Directors and establishes for Board approval salary and cash bonuses for
senior officers. The Compensation Committee also administers the Incentive Plans
and has certain interpretive responsibilities for the Directors' Share Plan. The
Compensation Committee met once during the fiscal year ending September 27,
1998.
<PAGE>
Management Remuneration and Related Transactions
Report of the Compensation Committee
The objectives of the Compensation Committee with respect to executive
compensation are the following:
(1) provide compensation opportunities generally comparable to those
offered by other similarly situated companies to ensure the Company's
ability to attract and retain talented executives who are essential to
the Company's long-term success;
(2) reward executive officers based upon their ability to achieve
short-term and long-term strategic goals and objectives and to enhance
shareholder value; and
(3) align the interests of the executive officers with the long-term
interests of shareholders by granting stock options which will become
more valuable to the executives as the value of the Company's shares
increases.
At present, the Company's executive compensation program is comprised of
base salary, annual incentive bonuses and long-term incentive opportunities
provided in the form of stock options. The Company has employment contracts with
the named executives which help the Company retain its executive officers and
currently provide for the executives' base salaries. Annual incentive bonuses
are tied to the Company's financial performance during the fiscal year and the
executive's individual performance, and stock options have a direct relation to
long-term enhancement of shareholder value. In years in which the Company's
performance goals are met or exceeded, executive compensation should tend to be
higher than in years in which performance is below expectations.
Base Salary. The base salary levels of the Company's executive officers are
intended to be generally comparable to those offered to executives with similar
talent and experience by other similarly situated public companies. In
determining base salaries, the Compensation Committee also takes into account
individual performance and experience. While desiring to maintain executive
salaries at competitive levels, the Compensation Committee does not give
particular weight to compensation paid by any specific comparable public
company.
For fiscal year 1998, under the terms of Mr. Rose's employment agreement,
his base salary was $300,000. Such base salary was determined by the
Compensation Committee after considering the individual performance and
experience of Mr. Rose and the base salary levels of executives with similar
talent and experience who are employed with similarly situated public companies.
Effective December 15, 1997, Mr. Rose proposed to the Compensation Committee and
agreed that he would forgo his base salary during the remainder of fiscal year
ending September 30, 1998 (a total of $240,000) in view of the difficult
conditions under which the Company was operating.
Under Mr. Schoeffler's employment agreement, his base salary for fiscal
1998 was $200,000. Such base salary for Mr. Schoeffler was determined by the
Compensation Committee after considering the individual performance and
experience of Mr. Schoeffler and the base salaries of executives with similar
talent and experience employed by similarly situated public companies.
<PAGE>
Annual Incentive Bonuses. In December 1996 the Compensation Committee
approved a new bonus arrangement based on the Company's return on assets. The
Committee believes this arrangement will better serve the objectives of the
Committee to link the compensation of management with the enhancement of value
for shareholders. Since the Company's performance did not exceed expectations,
no bonuses were paid in fiscal years 1996, 1997 or 1998.
Stock Options and Restricted Stock. The 1997 Incentive Plan and the 1993
Incentive Plan are the Company's long-term incentive plans for directors,
executive officers and other key employees. The objective of the Incentive Plans
is to align executive and shareholder long-term interests by creating a strong
and direct link between executive compensation and shareholder return, and to
enable executive officers and other key employees to develop and maintain a
significant long-term ownership position in the Company's Common Stock. The
Incentive Plans authorize the Compensation Committee to award executive officers
and other key employees stock options, shares of restricted stock or certain
cash awards.
No options were granted to Mr. Rose or Mr. Schoeffler under the Incentive
Plans in fiscal year 1998.
To date the Compensation Committee has not taken steps to cause the
Company's executive compensation arrangements to accommodate the provisions of
ss.162(m) of the Internal Revenue Code of 1986, which limit the deductibility of
an executive's compensation to $1 million annually, because it does not
presently anticipate that any executive officer's remuneration will exceed $1
million per year.
The Compensation Committee believes that linking executive compensation
generally to corporate performance results in better alignment of compensation
with corporate goals and the interests of the Company's shareholders. As
performance goals are met or exceeded, most probably resulting in increased
value to shareholders, executives are appropriately rewarded. Fiscal 1998 was a
particularly challenging year for the Company and its executive officers. The
Committee believes that compensation levels during fiscal 1998 for Mr. Rose and
Mr. Schoeffler adequately reflect the Company's compensation goals and policies.
Mr. Rose's salary, however, is not fully commensurate with the demands the
Company's executives faced during the year and the Compensation Committee may
consider Mr. Rose's decision to forgo compensation in 1998 in determining his
future compensation.
Compensation
Committee Members
---------------------------
David J. Matteson, Chairman
Frank K. Martin
Allen H. Neuharth
G. Raymond Stults
<PAGE>
Remuneration of Named Executive Officers
The following table sets forth for each of the Company's last three fiscal
years information with respect to Mr. Rose and Mr. Schoeffler who are the
executive officers of the Company.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards All
Other Annual Securities Other
Fiscal Compen- Underlying Compen-
Name and Principal Position Year Salary Bonus sation (1) Options/SARs (#) sation (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Kelly L. Rose (3) 1998 $ 56,500 $ --- $25,878 --- $ 0
Chairman and 1997 271,500 --- 24,204 --- 3,750
Chief Executive Officer 1996 257,700 --- 13,169 25,000 3,750
Michael H. Schoeffler (3) 1998 $198,000 $ --- $ 5,985 --- $ 0
President, Chief Operating 1997 180,400 --- 6,709 15,000 33,750
Officer, Chief Financial 1996 143,900 --- 2,456 15,000 3,159
Officer, Treasurer and Secretary
</TABLE>
- -----------------------
(1) Other annual compensation for 1996, 1997 and 1998 consisted of taxes paid
and other various benefits. The value of perquisites or other personal
benefits received by the named executives in 1996, 1997 and 1998 did not
exceed the lesser of $50,000 or 10% of the executive's salary and bonus.
(2) These amounts represent Company contributions, on behalf of each of the
named executives, to the 401(k) Plan. In January, 1997 Mr. Schoeffler
received a $30,000 special commitment fee in connection with his execution
of his employment agreement.
(3) Mr. Rose agreed to forgo $240,000 in salary during fiscal 1998. Mr.
Schoeffler's annual base salary was $150,000 during calendar 1996 and
$200,000 for calendar 1997 and 1998.
Stock Incentive Plans
The executive officers named above had received options to purchase 130,000
shares of Common Stock under the Incentive Plans as of the end of fiscal 1998.
The purpose of the Incentive Plans is to provide to certain directors, officers
(including officers who are members of the Board of Directors) and other key
employees of the Company who are materially responsible for the management or
operations of the Company and have provided valuable services to the Company a
favorable opportunity to acquire Common Stock of the Company, thereby providing
them with an increased incentive to work for the success of the Company and
better enabling the Company to attract and retain capable directors and
executive personnel.
<PAGE>
The following table includes the number of shares covered by both
exercisable and unexercisable stock options held by the executive officers as of
September 27, 1998.
Fiscal Year-End Option/SAR Values
<TABLE>
<CAPTION>
Number of Unexercised Options Value of the Unexercised
at Fiscal Year End In-the-Money Options
-------------------------------------- -----------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Kelly L. Rose 75,000 -0- $ --- (1) -0-
Michael H. Schoeffler 55,000 -0- $ --- (1) -0-
</TABLE>
- ------------
(1) Since the market value of the Company's Common Stock was $1.75 per share at
September 27, 1998, none of the options held at the end of fiscal 1998 were
"in-the-money."
Employment Agreements
The Company has entered into a five-year employment contract with Kelly
L. Rose ("Rose"). The contract, effective as of December 12, 1996, extends
annually to maintain its five-year term unless notice not to extend is properly
given by either party to the contract. Rose is entitled to receive a base salary
under the contract for 1999 of $300,000. Mr. Rose's base salary is subject to
increases as approved by the Company. The contract also provides, among other
things, for participation in other fringe benefits and benefit plans available
to the Company's employees. Rose may terminate his employment upon sixty days'
written notice to the Company. The Company may discharge Rose for "cause" (as
defined in the contract) at any time. If Rose terminates his own employment for
"cause" (as defined in the contract), or if the Company, in arbitration or
judicial proceedings, is found to have breached any of the material terms or
conditions of the agreement, Rose shall be entitled to receive his base
compensation under the contract for an additional five years from the
termination date. In addition, during such period, Rose shall be entitled to
continue to participate in the Company's group insurance plans or receive
comparable benefits. Alternatively, Rose may elect to receive his base
compensation under the contract for such five year period, payable in one lump
sum payment within thirty days of the date of termination; but shall not be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. Moreover, within the three month period after
Rose's employment is terminated for any reason including Rose's termination of
his employment with the Company without cause, Rose will have the right to cause
the Company to purchase any stock options he holds for a price equal to the fair
market value (as defined in the contract) of the shares subject to such options
minus their option price. In the event of Rose's disability, Rose will be
entitled to receive his base compensation for five additional years during the
continuance of such disability. In addition, during such period, Rose shall be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. In the event of Rose's death, Rose's spouse will be
entitled to receive Rose's base compensation for an additional five years.
During such period, Rose's spouse will also continue to receive the benefit of
the Company's insurance plans. The contract provides for certain additional
insurance coverage and other perquisites to be paid for by the Company. The
contract also requires Rose to protect the confidential business information of
the Company.
<PAGE>
On December 12, 1996, the Company entered into a one-year employment
contract with Michael H. Schoeffler ("Schoeffler"). The contract was
automatically extended for an additional one year term on December 12, 1998.
Schoeffler is entitled to receive a base salary under the contract for 1999 of
$200,000. Mr. Schoeffler's base salary is subject to increases approved by the
Company. Additionally, prior to a "change of control" (as defined in the
contract), the Company may decrease the salary it pays to Schoeffler if the
operating results of the Company are significantly less favorable than those for
the fiscal year then ending, and the Company decreases the salaries it pays to
all other senior executive officers. The contract also provides, among other
things, for participation in other fringe benefits and benefit plans available
to the Company's employees. Schoeffler may terminate his employment upon sixty
days' written notice to the Company. The Company may discharge Schoeffler for
"cause" (as defined in the contract) at any time. If the Company terminates
Schoeffler's employment for other than cause or if Schoeffler terminates his own
employment for "cause" (as defined in the contract), Schoeffler shall be
entitled to receive his base compensation under the contract for an additional
one year from the termination date, provided, that in the event such termination
follows a change of control, Schoeffler shall be entitled to receive his base
compensation under the contract for an additional three years from the
termination date. In addition, during such period Schoeffler shall be entitled
to continue to participate in the Company's group insurance plans or receive
comparable benefits, unless substantially equivalent and no less favorable
benefits are provided by a subsequent employer. In the event that Schoeffler is
entitled to receive his base salary for an additional three years, he may elect
to receive such compensation in one lump sum payment within thirty days of the
date of termination. If Schoeffler makes such an election he shall not be
entitled to continue to participate in the Company's group insurance plans or
receive comparable benefits. Moreover, within a period of three months after the
Company terminates Schoeffler's employment for other than cause or if Schoeffler
terminates his own employment for cause, Schoeffler shall have the right to
cause the Company to purchase any stock options he holds for a price equal to
the fair market value (as defined in the contract) of the shares subject to such
options minus their option price. The employment contract provides the Company
protection for two years from competition by Schoeffler should he voluntarily
terminate his employment without cause or be terminated by the Company for
cause. The employment contract also requires protection of confidential business
information.
Defined Benefit Plans
401(k) Savings Plan. The employees of the Company with more than six months
of service and who have attained age 18 are entitled to participate in the
401(k) Savings Plan of the Company (the "401(k) Plan"). The Company has
discretion to make a matching contribution to each participating employee based
on the employee's contribution up to a maximum of 6% of the employee's
compensation. The Company also has discretion to make additional profit-sharing
contributions. Benefits under the 401(k) Plan are payable upon the employee's
retirement, death, disability or other termination of employment.
Compensation of Directors
Director Compensation. Directors of the Company who are salaried employees
of the Company do not receive additional compensation for serving as director.
Non-employee directors of the Company receive a retainer of $5,000 per year for
serving on the Board of Directors and $1,250 for each meeting of the Board of
Directors of the Company, $625 for each committee meeting of the Board of
Directors and $625 for a meeting of the Board of Directors of one of the
Company's subsidiaries. Pursuant to the Directors' Share Plan and a related
compensation deferral plan, non-employee directors may elect to receive their
cash director fees in the form of Company Common Stock or to have the payment of
their fees deferred. In the event of deferral, the director may elect to have
the deferred amount deemed invested in Company shares (with dividend-equivalent
value deemed reinvested in shares) or as a general interest bearing obligation
of the Company.
<PAGE>
Non-employee directors are eligible to receive supplemental life,
accidental death and disability and health insurance. Premiums paid for Messrs.
Neuharth, Matteson, Martin and Fulmer during fiscal 1998 were $432 $1,187, $714
and $854, respectively. Non-employee directors are also eligible to receive
personal use of a demonstrator Starcraft conversion vehicle. The estimated
values of vehicles provided to Messrs. Neuharth and Matteson were approximately
$5,700 and $1,700, respectively, during fiscal 1998. Vehicles were not provided
to Mr. Martin or Mr. Fulmer during fiscal 1998.
The Company entered into a consulting agreement with Allen H. Neuharth as
of September 15, 1993 for a period of one year, subject to automatic extension
unless cancelled by either party upon thirty days' written notice. The agreement
is intended to help the Company take optimal advantage of Mr. Neuharth's
experience and expertise in entrepreneurship, public relations, management
motivation and the investment community. Mr. Neuharth will be available to the
Company to provide consultation, assistance and advice, generally as management
requests. He will also make at least two speaking appearances on the Company's
behalf each year. Under the agreement, Mr. Neuharth receives $6,500 per month
for his consulting services, reimbursement for reasonable out-of-pocket
expenses, including first-class travel and lodging accommodations, and certain
other perquisites appropriate to the performance of his services. As a Director
of the Company, Mr. Neuharth is also entitled to receive such retainers, fees,
stock options and other benefits that accrue to non-employee members of the
Board of Directors.
See "Certain Transactions" below.
Performance Graph
The graph below shows the performance of the Company's Common Stock for
fiscal years 1993 through 1998, in comparison to the NASDAQ Composite Index and
certain peer groups described below.
COMPARATIVE PERFORMANCE GRAPH
[graph omitted]
1993 1994 1995 1996 1997 1998
---- ------ ------ ------ ------ ------
Starcraft 100 68.92 68.92 61.35 22.3 18.92
Peers(1) 100 86.5 76.29 83.19 98.96 65.99
NASDAQ Composite Index 100 105.82 128.48 150 203.88 211.88
(1) Simpson Industries, Inc., Excel Industries, Inc., Walbro Corporation
Peer group comparisons. Management believes the vehicle conversion business
has similarities to, and can be affected by factors in the general automotive
industry. The Company is the only publicly-traded company whose principal line
of business is vehicle conversions, so a directly comparable peer group is not
available. The peer group presented consists of companies in the automotive
business, primarily suppliers to original equipment manufacturers.
Compensation Committee Interlocks and Insider Participation
During fiscal 1998 the members of the Company's Compensation Committee have
been outside directors Matteson, Fulmer, Martin and Neuharth. See
"--Compensation of Directors" above.
<PAGE>
Certain Transactions
In November 1998, the Company refinanced its revolving and term credit
arrangements and entered into a new credit agreement with a financial
institution. The Company's former principal lending bank retained a subordinated
term loan position. To induce such bank to proceed with the refinancing, Kelly
L. Rose and G. Raymond Stults guaranteed up to $500,000 each of the Company's
indebtedness ($1 million in the aggregate) and provided a letter of credit to
secure payment. To induce Mr. Rose and Mr. Stults to provide the Company with
such credit support, the Company issued to each of Mr. Rose and Mr. Stults a
warrant to purchase 200,000 shares of the Company's common shares at a purchase
price of $2.20 per share. The warrants have a term of five years. The exercise
price represents the average market value of the Company's Common Stock for the
ten trading days preceding the date of the issuance.. Mr. Stults was not a
director of the Company at the time of this transaction. The issuance of the
warrants to both Mr.
Rose and Mr. Stults was approved by the independent directors of the Company.
In June, 1998, Kelly L. Rose agreed to guaranty up to $750,000 of bank
indebtedness of Tecstar, Inc., a 51% owned joint venture of the Company. Such
indebtedness was refinanced in connection with the Company's refinancing
transaction in November, 1998 and such guaranty was released.
The Company from time to time utilizes an airplane for business
transportation purposes which is owned by a partnership in which Mr. Rose holds
a one-third interest. During 1998, payments by the Company for use of the plane
were $53,000.
PROPOSAL II-- RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors proposes the ratification by the shareholders at the
Annual Meeting the appointment of the accounting firm of Crowe, Chizek and
Company LLP as independent auditors for the fiscal year ended October 3, 1999.
The Board of Directors of the Company approved the engagement of Crowe, Chizek
and Company LLP as the Company's independent auditors by unanimous written
resolution dated July 24, 1998 upon the recommendation of the Audit Committee.
Crowe, Chizek and Company has served as auditors for the Company since July 27,
1998.
Prior to the appointment of Crowe, Chizek and Company, Ernst & Young LLP,
served as auditors for the Company during fiscal years 1996 and 1997. On July
21, 1998, the Company received a letter dated July 17, 1998, from Ernst & Young
LLP terminating the client-auditor relationship between Starcraft Corporation
and Ernst & Young LLP.
The reports of Ernst & Young LLP on the Company's financial statements for
the past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audits of the Company's financial statements for the
fiscal years ended September 28, 1997 and September 29, 1996, and in the
subsequent interim period, there were no disagreements with Ernst & Young LLP on
any matters of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures which, if not resolved to the
satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to make
reference to the matter in its report. The Company requested Ernst & Young LLP
to furnish it a letter addressed to the Commission stating whether it agrees
with the above statements. A copy of that letter, dated July 24, 1998 was filed
as an exhibit to a Form 8-K filed by the Company as of July 24, 1998.
<PAGE>
A representative of Crowe, Chizek and Company LLP is expected to be present
at the Annual Meeting with the opportunity to make a statement if he so desires.
He will also be available to respond to any appropriate questions shareholders
may have.
RATIFICATION OF THE APPOINTMENT OF AUDITORS REQUIRES THAT THE VOTES CAST IN
PERSON OR BY PROXY AT THE ANNUAL MEETING OR AT ANY ADJOURNMENT THEREOF IN FAVOR
OF RATIFICATION EXCEED THOSE CAST AGAINST.
SHAREHOLDER PROPOSALS
Any proposal that a shareholder wishes to have presented at the next Annual
Meeting of the Company to be held in 2000 must be received at the main office of
the Company for the inclusion in the proxy statement no later than 120 days in
advance of January 15, 2000. Any such proposal should be sent to the attention
of Michael H. Schoeffler, Secretary of the Company, at P.O. Box 1903, 2703
College Avenue, Goshen, Indiana 46527-1903.
FILINGS UNDER SECTION 16(a) OF THE 1934 ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's officers and directors and persons who own more than 10% of
the Company's Common Stock file reports of ownership and changes in ownership
with the Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than 10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on its review of the copies of such forms received by it,
and/or written representations from certain reporting persons that no Forms 5
were required for those persons, the Company believes that during the fiscal
year ended September 27, 1998, all filing requirements applicable to its
officers, directors and greater than 10% beneficial owners with respect to
Section 16(a) of the 1934 Act were complied with.
OTHER MATTERS
Management is not aware of any business to come before the Annual Meeting
other than those matters described in the Proxy Statement. However, if any other
matters should properly come before the Annual Meeting, it is intended that the
proxies solicited hereby will be voted with respect to those other matters in
accordance with the judgment of the persons voting the proxies.
The cost of solicitation of proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy material
to the beneficial owners of the Common Stock. In addition to solicitation by
mail, directors, officers, and employees of the Company may solicit proxies
personally or by telephone without additional compensation.
Each Shareholder is urged to complete, date and sign the proxy and return
it promptly in the enclosed return envelope.
Insofar as any of the information in this Proxy Statement may rest within
the knowledge of persons other than the Company, the Company relies upon
information furnished by others for the accuracy and completeness thereof.
By Order of the Board of Directors
/s/ Kelly L. Rose
Kelly L. Rose, Chairman of the Board
and Chief Executive Officer
January 15, 1999
<PAGE>
REVOCABLE PROXY REVOCABLE PROXY
STARCRAFT CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS, FEBRUARY 18, 1999
The undersigned hereby appoints Kelly L. Rose and Michael H. Schoeffler, with
full powers of substitution, to act as attorneys and proxies for the undersigned
to vote all shares of capital stock of Starcraft Corporation (the "Company")
that the undersigned is entitled to vote at the Annual Meeting of Shareholders
to be held at the Company's office at 2703 College Avenue, Goshen, Indiana, on
Thursday, February 18, 1999, at 9:00 A.M., Goshen time, and at any and all
adjournments thereof, as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS
IS PRESENTED AT SUCH MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS
PROXY IN THEIR BEST JUDGMENT. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS
OF NO OTHER BUSINESS TO BE PRESENTED AT THE MEETING.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
(Continued and to be signed on reverse side.)
STARCRAFT CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
The Board of Directors recommends a vote "FOR"
each of the listed propositions.
1. Election of Director to serve for a three year term
expiring in 2002. For Withhold
Nominee: Allen H. Neuharth [ ] [ ]
2. Ratification of the appointment of Crowe, For Against Abstain
Chizek and Company LLP as auditors [ ] [ ] [ ]
for the year ending October 3, 1999.
[ ] Please check this box if you intend to attend the Annual Meeting of
Shareholders.
In their discretion, the proxies are authorized to vote on any other
business that may properly come before the Meeting or any adjournment
thereof.
This Proxy may be revoked at any time prior to the voting thereof.
The undersigned acknowledges receipt from the Company, prior to the
execution of this proxy, of notice of the meeting, a proxy statement and an
Annual Report to Shareholders.
Dated:______________________ , 1999
Signature ______________________________
Please sign as your name appears on the envelope in which this card was mailed.
When signing as attorney, executor, administrator, trustee or guardian, please
give your full title. If shares are held jointly, each holder should sign.
