DEF 14A 1 a69023ddef14a.txt DEFINITIVE NOTICE & PROXY STATEMENT 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 [X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2)) [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
KIT MANUFACTURING COMPANY -------------------------------------------------------------------------------- (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] Fee not 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: ---------------------------------------------------------------------- (2) Aggregate number of securities to which transaction applies: ---------------------------------------------------------------------- (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): ---------------------------------------------------------------------- (4) Proposed maximum aggregate value of transaction: ---------------------------------------------------------------------- (5) Total fee paid: ---------------------------------------------------------------------- [ ] 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: ---------------------------------------------------------------------- (2) Form, Schedule or Registration Statement No.: ---------------------------------------------------------------------- (3) Filing Party: ---------------------------------------------------------------------- (4) Date Filed: ---------------------------------------------------------------------- 2 KIT MANUFACTURING COMPANY 530 EAST WARDLOW ROAD P.O. BOX 848 LONG BEACH, CALIFORNIA 90801 ------------------------ NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 13, 2001 ------------------------ The Annual Meeting of Shareholders of KIT Manufacturing Company ("KIT") will be held at the Long Beach Airport Marriott, 4700 Airport Plaza Drive, Long Beach, California 90815, on Tuesday, March 13, 2001, at 9:00 a.m., local time. The Annual Meeting will be held (i) to elect a Board of Directors for the ensuing fiscal year and (ii) to transact such other business as may properly come before the Annual Meeting or at any adjournment thereof. At the Annual Meeting, the Board of Directors of KIT intends to present Dan Pocapalia, Fred W. Chel, Frank S. Chan, Jr., John W. H. Hinrichs and John F. Zaccaro as nominees for election to the Board of Directors. Only shareholders of record on the books of KIT at the close of business on February 5, 2001, the record date with respect to this solicitation, will be entitled to notice of and to vote at the Annual Meeting or at any adjournment thereof. All shareholders are cordially invited to attend the Annual Meeting in person. If you are unable to do so, please execute the enclosed proxy and return it in the enclosed addressed envelope, since a majority of the outstanding shares must be represented at the meeting in order to transact business. Your promptness in returning the proxy will assist in the expeditious and orderly processing of the proxies. If you return your proxy, you may nevertheless attend the Annual Meeting and vote your shares in person, if you wish. By Order of the Board of Directors, KIT MANUFACTURING COMPANY /s/ Marlyce A. Faldetta MARLYCE A. FALDETTA Corporate Secretary Long Beach, California February 27, 2001 3 KIT MANUFACTURING COMPANY 530 EAST WARDLOW ROAD P.O. BOX 848 LONG BEACH, CALIFORNIA 90801 ------------------------ ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MARCH 13, 2001 ------------------------ PROXY STATEMENT ------------------------ SOLICITATION OF PROXIES The accompanying proxy is solicited by the Board of Directors of KIT Manufacturing Company ("KIT") for use at KIT's Annual Meeting of Shareholders to be held at the Long Beach Airport Marriott, 4700 Airport Plaza Drive, Long Beach, California 90815, on Tuesday, March 13, 2001, at 9:00 a.m., local time, or at any adjournment thereof. All shares represented by each properly executed unrevoked proxy received in time for the Annual Meeting will be voted in the manner specified therein. Any shareholder has the power to revoke his or her proxy at any time before it is voted. A proxy may be revoked by delivering a written notice of revocation to the Corporate Secretary of KIT, by a subsequent proxy executed by the person executing the prior proxy and presented to the Corporate Secretary at the Annual Meeting, or by attendance at the Annual Meeting and voting in person by the person executing the proxy. This Proxy Statement is being mailed to KIT's shareholders on or about February 27, 2001. The solicitation will be made by mail and expenses, which will be paid by KIT, will include reimbursements paid to brokerage firms and others for their expenses in forwarding solicitation material regarding the meeting to beneficial owners of KIT's Common Stock. Further solicitation of proxies may be made by telephone or oral communication with some shareholders. All such further solicitation will be made by KIT's regular employees who will not receive additional compensation for the solicitation. The mailing address of KIT's principal executive offices is 530 East Wardlow Road, P.O. Box 848, Long Beach, California 90801. OUTSTANDING SHARES AND VOTING RIGHTS Only holders of record of the 1,027,334 shares of KIT's Common Stock outstanding at the close of business on February 5, 2001, the record date with respect to this solicitation, will be entitled to notice of and to vote at the Annual Meeting or at any adjournment thereof. Votes cast by proxy or in person at the Annual Meeting will be counted by persons appointed by KIT to act as election inspectors for the meeting. The required quorum for transaction of business at the Annual Meeting will be a majority of the shares entitled to vote that are issued and outstanding as of the record date. The election inspectors will treat shares represented by proxies that reflect abstentions as shares that are present and entitled to vote, for purposes of determining the presence of a quorum and for purposes of determining the outcome of any matter submitted to the shareholders for a vote. Abstentions, however, do not constitute a vote 1 4 "for" or "against" any matter and thus will be disregarded in the calculation of a plurality or of "votes cast." If you are the beneficial owner of shares held in "street name" by a broker, the broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. If you do not give instructions to the broker, the broker will nevertheless be entitled to vote the shares with respect to "discretionary" items but will not be permitted to vote the shares with respect to "non-discretionary" items (in which case, the shares will be treated as "broker non-votes"). The election inspectors will treat shares referred to as "broker non-votes" as shares that are present and entitled to vote for purposes of determining the presence of a quorum. However, for purposes of determining the outcome of any matter as to which the broker has physically indicated on the proxy that it does not have discretionary authority to vote, those shares will be treated as not present and not entitled to vote with respect to that matter (even though those shares are considered entitled to vote for quorum purposes and may be entitled to vote on other matters). In the election of directors, shares present but not voting will be disregarded (except for quorum purposes). No shareholder will be entitled to cumulate votes (i.e., cast for any candidate for election to the Board of Directors, a number of votes greater than the number of the shareholder's shares) unless the names of the candidate or candidates have been placed in nomination prior to the voting and the shareholder has given notice at the meeting, prior to the voting, of the shareholder's intention to cumulate votes. If any one shareholder has given such notice, all shareholders may cumulate their votes for candidates who have been nominated. If voting for directors is conducted by cumulative voting, each share will be entitled to a number of votes equal to the number of directors to be elected and the votes may be cast for a single candidate or may be distributed among two or more candidates in such proportions as the shareholder may determine. In the event of cumulative voting, the proxy holders intend to distribute the votes represented by the proxies solicited hereby in such proportions as they see fit. If the voting is not conducted by cumulative voting, each share will be entitled to one vote and the holders of a majority of the shares voting at the meeting will be able to elect all of the directors if they choose to do so. In such event, the other shareholders will be unable to elect any director. The candidates receiving the highest number of votes, up to the number of directors to be elected, will be elected. On all other matters, each share is entitled to one vote. Votes cast against a candidate or votes withheld will have no legal effect. Any unmarked proxies, including those submitted by brokers or nominees, will be voted as indicated on the accompanying proxy card. 2 5 SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT The following table sets forth, as of February 2, 2001, certain information as to the number of shares of KIT's Common Stock beneficially owned by each person who is known by KIT to own more than five percent of the outstanding shares of KIT's Common Stock and by all directors and officers as a group. Except as otherwise indicated, beneficial ownership includes both voting power and investment power. SECURITY OWNERSHIP TABLE
NAME AND ADDRESS AMOUNT AND NATURE PERCENT OF CLASS OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP BENEFICIALLY OWNED ------------------- ----------------------- ------------------ Dan Pocapalia................................... 539,928 shares(1)(2)(3) 50.9% c/o KIT Manufacturing Company 530 East Wardlow Road Long Beach, CA 90801 Michael J. Seaman............................... 55,000 shares(4) 5.4% 78610 Coco Bay Drive, Naples, FL 34108 Dimensional Fund Advisors, Inc. ................ 53,900 shares(5) 5.2% 1299 Ocean Avenue, Eleventh Floor Santa Monica, CA 90401 Prudential Insurance Co. of America............. 59,048 shares(6) 5.7% 751 Broad Street Newark, NJ 07102 Directors and Officers as a group (nine persons)..................... 564,774 shares(2)(3)(7) 52.3%
--------------- (1) Includes 33,944 shares subject to options held by Mr. Pocapalia which are exercisable on or before April 6, 2001. (2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as to which he may be said to share the voting and investment power. Also includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said to have sole voting and investment power. (3) Includes 10,000 shares held of record by J.B.D. Partnership, a California general partnership (the "J.B.D. Partnership"), of which Mr. Pocapalia owns 69%. (4) According to information provided by Michael J. Seaman, Mr. Seaman and members of his immediate family own 55,000 shares of the Company. Mr. Seaman is the managing trustee of the George J. Seaman, MD P.C. Wasting Trust ("Trust"). Mr. Seaman has sole voting and dispositive powers over those shares owned by the Trust and him personally. Mr. Seaman has shared voting and dispositive powers over those shares owned by his wife, Phyllis Seaman, and by his children, Kimberly Seaman, Jordan Seaman and Sloane Seaman. (5) According to information provided by Dimensional Fund Advisors, Inc., a registered investment advisor ("Dimensional"), as of February 2, 2001, Dimensional is deemed to have beneficial ownership of 53,900 shares of KIT's Common Stock, all of which shares are held in portfolios of DFA Investment Dimensions Group Inc., a registered open-end investment company, or in series of The DFA Investment Trust Company, a Delaware business trust, or the DFA Group Trust and 3 6 DFA Participation Group Trust, investment vehicles for qualified employee benefit plans, all of which Dimensional serves as investment manager. Dimensional disclaims beneficial ownership of all such shares. Dimensional has sole voting and sole dispositive power as to the 53,900 such shares. (6) According to information provided by Prudential Insurance Company of America ("Prudential"), Prudential may have direct or indirect voting and/or investment discretion over 59,048 shares of KIT's Common Stock which are held for the benefit of its clients by its separate accounts, externally managed accounts, registered investment companies, subsidiaries and/or other affiliates. Prudential reports the combined holdings of these entities for the purpose of administrative convenience. (7) Includes 51,944 shares subject to options held by the directors and officers as a group which are exercisable on or before April 6, 2001. 4 7 I. ELECTION OF DIRECTORS Directors are elected at each Annual Meeting of Shareholders and hold office until their respective successors are duly elected and qualified. The full Board consists of five directors. Certain information as of February 5, 2001 with respect to the five nominees for election as directors is set forth below. All of the nominees are now serving as directors and were elected to their present terms of office at the 2000 Annual Meeting of Shareholders. Although it is anticipated that each nominee will be available to serve as a director, should any nominee become unavailable to serve, the proxies will be voted for such other person as may be designated by KIT's Board of Directors. INFORMATION REGARDING THE BOARD OF DIRECTORS The following table provides information regarding each nominee for the Board of Directors as of February 5, 2001. Except as otherwise indicated, beneficial ownership includes both voting power and investment power.
PERCENT OF CLASS PRINCIPAL BUSINESS EXPERIENCE DURING AMOUNT AND NATURE BENEFICIALLY NAME OF INDIVIDUAL AGE THE PAST 5 YEARS AND DIRECTORSHIPS OF BENEFICIAL OWNERSHIP OWNED ------------------ --- ------------------------------------ ----------------------- ---------------- Dan Pocapalia........... 84 Director of KIT since 1947; Chairman 539,928(l)(2)(3) 50.9% of the Board and Chief Executive Officer of KIT since 1971; President of KIT from 1956 to 1978 and from November 1983 to June 1999. Fred W. Chel............ 71 Director of KIT since 1987; Retired 4,000 * Attorney at Law and State Legislator; Business Consultant to Custom Fibreglass Manufacturing Company since 1989; President and Chief Executive Officer of Custom Fibreglass Manufacturing Company from 1985 to 1989; Vice President Legal Counsel of Custom Fibreglass Manufacturing Company from 1977 to 1985. Frank S. Chan, Jr. ..... 56 Director of KIT since 1993; 300 * Certified Public Accountant in Private practice since 1991; Tax Partner of KPMG Peat Marwick LLP from 1986 to 1991; Tax Staff and Tax Manager of KPMG Peat Marwick LLP from 1975 to 1986.
5 8
PERCENT OF CLASS PRINCIPAL BUSINESS EXPERIENCE DURING AMOUNT AND NATURE BENEFICIALLY NAME OF INDIVIDUAL AGE THE PAST 5 YEARS AND DIRECTORSHIPS OF BENEFICIAL OWNERSHIP OWNED ------------------ --- ------------------------------------ ----------------------- ---------------- John W. H. Hinrichs..... 62 Director of KIT since 1994; Senior 1,000 * Vice President and Cashier of Farmers & Merchants Bank of Long Beach since 1964; Member of Board of Trustees of St. Mary's Medical Center, Director of Goodwill Industries; Director/Treasurer of St. Mary Catholic Housing Corp; Foundation Board Member of St. Mary's Medical Center. John F. Zaccaro......... 66 Director of KIT since 1994; 100 * President Academy of Medical Films since 1991; Vice Chairman, Director, and Founder of drkoop.com, Inc. from January 1997 to September 2000; Executive Producer American Medical Association's International Health and Medical Film Competition (1991-1997).
--------------- * Represents less than 1% of the outstanding shares. (1) Includes 33,944 shares subject to options held by Mr. Pocapalia which are exercisable on or before April 6, 2001. (2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as to which he may be said to share the voting and investment power. Also includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said to have sole voting and investment power. (3) Includes 10,000 shares held of record by the J.B.D. Partnership of which Mr. Pocapalia owns 69%. MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES During fiscal 2000, all directors attended 100% of the Board of Directors meetings held. The Board of Directors of KIT held 4 meetings during the fiscal year ended October 31, 2000. KIT's Board of Directors has an Audit Committee and a Compensation Committee. The members of the Audit Committee are Frank S. Chan, Jr. (Chairman), Fred W. Chel and John W. H. Hinrichs. None of the members of the Audit Committee serves as an executive officer of KIT. During the 2000 fiscal year, the Audit Committee held three meetings. The members of the Compensation Committee are John F. Zaccaro (Chairman), Frank S. Chan, Jr. and John W. H. Hinrichs. None of the members of the Compensation Committee serves as an executive officer of KIT. Compensation Committee issues were reviewed and discussed following the regularly scheduled board meetings during fiscal year 2000. The functions of the Audit Committee include revising and making recommendations to the Board of Directors with respect to the engagement or re-engagement of an independent accounting firm to 6 9 audit KIT's financial statements for the then current fiscal year, and the terms of the engagement; the policies and procedures of KIT and the management of KIT with respect to maintaining KIT's books and records and furnishing the information necessary to the independent auditors; the procedures to encourage access to the Audit Committee and facilitate the timely reporting to the Audit Committee during the year by duly authorized representatives of the independent auditors; the implementation by the management of KIT of the recommendations made by the independent auditors; the adequacy and implementation of KIT's internal audit controls and the adequacy and competency of the related personnel, and such other matters relating to KIT's financial affairs and accounts as the Audit Committee may in its own discretion deem necessary. See "Report of the Audit Committee." The functions of the Compensation Committee include assisting the Board of Directors in evaluating and overseeing the compensation of senior management and certain key employees of KIT, including the administration and interpretation of KIT's Incentive Bonus Plan, KIT's 1994 Stock Option Plan and any other compensation programs KIT may adopt. See "Report of the Compensation Committee." DIRECTORS' FEES All directors of KIT are reimbursed for their out of pocket expenses incurred in connection with attending Board meetings. In addition, each director received an annual fee of $6,000, payable in equal quarterly installments, for his services as a director. Each member of the Audit Committee of the Board of Directors received $1,500 per Committee meeting attended. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16 of the Securities Exchange Act of 1934, as amended, requires KIT's officers (as defined under Section 16), directors and persons who beneficially own greater than 10% of a registered class of KIT's equity securities to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Based solely on a review of the forms it has received, KIT believes that during fiscal 2000 all Section 16 filing requirements applicable to its officers, directors and 10% beneficial owners were complied with by such persons. 7 10 EXECUTIVE COMPENSATION AND OTHER INFORMATION SUMMARY OF EXECUTIVE COMPENSATION The following table sets forth the executive compensation paid during the fiscal years ended October 31, 2000, 1999 and 1998 to the Chief Executive Officer and all other officers of KIT who earned more than $100,000 in combined salary and bonus in the fiscal year ended October 31, 2000: SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION(2) ANNUAL COMPENSATION(L) --------------- ---------------------- OPTIONS ALL OTHER NAME YEAR SALARY BONUS GRANTED COMPENSATION ---- ---- --------- --------- --------------- ------------ Dan Pocapalia...................... 2000 $200,000 $ 0 0 $6,000(4) Chairman and 1999 200,000 34,000 0 6,000(4) Chief Executive Officer 1998 15,000(3) 200,000 0 6,000(4) Harold D. Breach................... 2000 $130,000 $ 0 0 $1,404(5) President and General Manager 1999 64,275 94,552 40,000 0
--------------- (1) Except as noted below, no other annual compensation is required to be listed pursuant to the rules and regulations of the Securities and Exchange Commission. (2) KIT has not issued stock appreciation rights or restricted stock awards. KIT has no "long-term incentive plan" as that term is defined in the rules and regulations of the Securities and Exchange Commission. (3) Mr. Pocapalia voluntarily reduced his salary until KIT's results for the year could be determined. (4) Directors' Fees. (See "Directors' Fees" section in this Proxy Statement.) (5) Group-term life insurance premiums. 8 11 SUMMARY OF OPTIONS EXERCISED The following table provides information with respect to the exercise of stock options during the most recently completed fiscal year by the Chief Executive Officer and all other officers of KIT who earned more than $100,000 in combined salary and bonus in the fiscal year ended October 31, 2000 and the year-end value of unexercised options held by such individuals. OPTION EXERCISES AND YEAR-END VALUE TABLE AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUE
NUMBER OF SECURITIES VALUE OF UNDERLYING UNEXERCISED UNEXERCISED IN-THE-MONEY OPTIONS AT OPTIONS AT FISCAL YEAR-END(L) FISCAL YEAR-END(2) SHARES ------------------ ------------------ ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/ NAME ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE ---- ----------- -------- ------------------ ------------------ (#) ($) (#) ($) Dan Pocapalia................... 0 0 33,944(3)/0 $0/$0 Harold D. Breach................ 0 0 10,000/30,000 0/0
--------------- (1) Granted pursuant to KIT's 1994 Stock Option Plan. The options become exercisable subject to a four-year vesting schedule with 25% of the total grant becoming exercisable one year after the effective date of the grant (the "Award Date") and an additional 25% of the options becoming exercisable on each successive anniversary of the Award Date. No shares may be purchased by exercise of the option until the expiration of six months after the Award Date. Except as otherwise noted, all options listed below are Incentive Stock Options (as such term is defined in the 1994 Stock Option Plan). (2) Market value of the securities underlying the options at exercise date or year-end, as the case may be, minus the exercise or base price of "in-the-money" options. (3) These are Non-Qualified Stock Options as such term is defined in the 1994 Stock Option Plan. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION KIT's Compensation Committee consists of Messrs. John F. Zaccaro (Chairman), Frank S. Chan, Jr. and John W. H. Hinrichs. No member of the Compensation Committee serves as either an officer or employee of KIT. 9 12 REPORT OF THE COMPENSATION COMMITTEE The Compensation Committee of the Board of Directors oversees KIT's compensation program for its officers. This task includes reviewing the salary levels of officers, administering KIT's Incentive Bonus Plan and 1994 Stock Option Plan, considering management succession and performing other related matters. KIT has a compensation program which rewards each of its officers in line with KIT's operational goals and financial performance, including increases in shareholder value, together with each officer's individual effectiveness in bringing about those goals and performance. The goal of KIT's officer compensation program is to attract, retain and reward executives who are capable of leading KIT in achieving its business objectives. As a result, a portion of the total compensation package for each KIT officer has traditionally consisted of variable, performance based bonuses, which can be increased or decreased to reflect changes in corporate and individual performance. KIT's annual compensation package for officers currently consists of three components: (a) base salary (b) annual cash incentive or bonus based on KIT's Incentive Bonus Plan, and (c) long-term incentive or non-cash awards, primarily stock options, granted under KIT's 1994 Stock Option Plan (the "1994 Plan"). Base salary for each of KIT's officers is reviewed by the Compensation Committee, including the base salary of Dan Pocapalia, KIT's Chairman of the Board, and Chief Executive Officer. In reviewing Mr. Pocapalia's base salary, the Compensation Committee evaluates Mr. Pocapalia's total compensation in light of information regarding the compensation practices at various companies within KIT's industry peer group. KIT's industry peer group is comprised of Fleetwood Enterprises, Inc., Skyline Corporation, Coachmen Industries, Inc., Thor Industries, Inc., Champion Enterprises, Inc., Winnebago Industries, Inc., Rexhall Industries Inc., and KIT. The Compensation Committee considers various indicators of qualitative and quantitative success on both a corporate and an individual level. While the Compensation Committee considers corporate performance measures such as net income, earnings per share, contribution toward cost containment, revenue generation and sales expansion, the Compensation Committee does not apply any specific quantitative formula in reviewing compensation decisions. Decisions regarding the base salaries of Mr. Pocapalia and other executive officers are based upon a subjective evaluation of the performance of each officer and a subjective evaluation of KIT's performance as a whole. A review of KIT's industry peer group (as identified above) indicates that Mr. Pocapalia's compensation remained at or below that of other chief executive officers within KIT's industry based on his duties and responsibilities. Annual base salaries for other officers of KIT are based on the recommendations of Mr. Pocapalia after reviewing each officer's effectiveness and overall performance in his or her respective areas of responsibility. These salary recommendations are then reviewed annually by the Compensation Committee. KIT's executive management regularly provides members of KIT's Board of Directors with summaries of the financial performance of several of KIT's competitors. An analysis of this information reveals that a significant majority of KIT's competitors are in the midst of a substantive downturn in their business. Historically, during such industry-wide downturns, larger companies solicit the employment of key management from its competition. While the Compensation Committee has no information that this solicitation process will influence KIT's management group, it believes that KIT currently is 10 13 satisfied with and requires the services of all those comprising its senior management and, as such, has made no recommendations for salary reductions. A portion of the annual compensation of each officer relates to, and is contingent upon, the performance of KIT under KIT's Incentive Bonus Plan. All officers participate in KIT's Incentive Bonus Plan. Under the Incentive Bonus Plan, bonuses may be paid to officers pursuant to individual agreements relating to target profitability goals in each participant's area of responsibility. These profitability goals are a function of KIT's earnings per share during the fiscal year, and, in some cases, the operating income for certain participants' areas of responsibility. Time periods for which performance is measured include fiscal years and, in some cases, fiscal quarters. Payments are typically made within 75 days after the time period for which the performance is measured. The individual agreements setting forth these profitability goals are reviewed annually by the Compensation Committee. KIT also provides incentive compensation awards to certain members of its management under KIT's 1994 Plan. The 1994 Plan provides KIT with the ability to reward key employees periodically with options to purchase shares of KIT's Common Stock. These long-term incentives are designed to couple the interests of key employees with those of the shareholders of KIT. Stock option grants provide an incentive that focuses the individual's attention on managing KIT from the perspective of an owner, with an equity stake in the business. The value of stock options is tied to the future performance of KIT's Common Stock and provides value to the recipient only when the price of KIT's Common Stock increases above the option grant price. Stock options reward management for long-term strategic planning through the resulting enhancement of share price. The Compensation Committee plans to review the Company's 1994 stock option plan during fiscal year 2001. KIT believes that a compensation structure which includes the periodic granting of long-term incentives such as stock options will help to attract and retain senior managers with long-term management perspectives. The Compensation Committee has considered the anticipated tax treatment to KIT regarding the compensation and benefits paid to the Chief Executive Officer and all other officers of KIT who earned more than $1,000,000 in combined salary and bonus during the 2000 fiscal year in light of Section 162(m) of the Internal Revenue Code of 1986, as amended. The basic philosophy of the Compensation Committee is to strive to provide such executive officers with a compensation package which will preserve the deductibility of such payments for KIT. However, certain types of compensation payments and their deductibility depend upon the timing of an executive officer's vesting or exercise of previously granted rights. Moreover, interpretations of and changes in the tax laws and other factors beyond the Compensation Committee's control may affect the deductibility of certain compensation payments. The Compensation Committee will consider various alternatives to preserve the deductibility of compensation payments and benefits to the extent reasonably practicable and to the extent consistent with its other compensation objectives. The Compensation Committee John F. Zaccaro, (Chairman) Frank S. Chan, Jr. John W. H. Hinrichs KIT's Audit Committee consists of Frank S. Chan, Jr. (Chairman), Fred W. Chel and John W.H. Hinrichs. None of the members of the Audit Committee serves as an executive officer of KIT. During the 2000 fiscal year, the Audit Committee held 3 meetings. Each of the members of the Audit 11 14 Committee is independent as defined under the listing standards of the American Stock Exchange. The Audit Committee operates under a written charter adopted by the Board of Directors that is included in this proxy statement as Appendix A. REPORT OF THE AUDIT COMMITTEE The Audit Committee has reviewed and discussed with management the audited financial statements for the fiscal year ended October 31, 2000. In addition, the Audit Committee has discussed with the Company's independent accountants, PricewaterhouseCoopers LLP, the matters required by Codification of Statements on Auditing Standards No. 61, which includes, among other items, matters related to the conduct of the audit of the company's financial statements. The Audit Committee also has received the written disclosures and the letter from PricewaterhouseCoopers LLP required by Independence Standards Board Standard No. 1, and has discussed with PricewaterhouseCoopers LLP its independence from the Company. The Audit Committee has discussed with management of the Company and with the Company's independent accountants such other matters and received such assurances from them as the Audit Committee deemed appropriate. Based on the foregoing review and discussions and relying thereon, the Audit Committee has recommended to the Company's Board of Directors the inclusion of the audited financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2000. Audit Committee Frank S. Chan, Jr. Fred W. Chel John W. H. Hinrichs AUDIT FEES Audit fees to PricewaterhouseCoopers LLP for the fiscal year ended October 31, 2000 and the reviews of Form 10-Q are $84,660 of which an aggregate amount of $12,660 has been billed through October 31, 2000. ALL OTHER FEES Other fees to PricewaterhouseCoopers LLP for the fiscal year ended October 31, 2000 were $8,030 for the research of tax related issues and $10,880 audit fees for the Company's 401(k) plan. The Audit Committee has considered whether the provision of services, other than audit services, is compatible with maintaining the independence of KIT's principal accountant. 12 15 PERFORMANCE GRAPH The following paragraph shows a five year comparison of cumulative total shareholder return* for KIT, the S&P 500 Composite Index and a Peer Group** Index. [PERFORMANCE GRAPH]
-------------------------------------------------------------------------------- Oct 95 Oct 96 Oct 97 Oct 98 Oct 99 Oct 00 -------------------------------------------------------------------------------- KIT MANUFACTURING 100 95.83 76.04 40.1 34.38 40.63 S&P 500 INDEX 100 124.09 163.94 200 251.33 266.65 PEER GROUP 100 166.52 153.69 174.58 129.82 83.54 --------------------------------------------------------------------------------
--------------- * Total shareholder return assumes reinvestment of dividends. ** The Peer Group includes Fleetwood Enterprises, Inc., Skyline Corporation, Coachmen Industries, Inc., Thor Industries, Inc., Champion Enterprises, Inc., Winnebago Industries, Inc., Rexhall Industries, Inc, and KIT. Each company within the Peer Group was selected based on its similar product lines and marketing areas. IT SHOULD BE NOTED THAT THIS GRAPH REPRESENTS HISTORICAL STOCK PRICE PERFORMANCE AND IS NOT NECESSARILY INDICATIVE OF ANY FUTURE STOCK PRICE PERFORMANCE. THE FOREGOING REPORT OF THE BOARD OF DIRECTORS REGARDING COMPENSATION AND THE PERFORMANCE GRAPH THAT APPEARS IMMEDIATELY AFTER SUCH REPORT SHALL NOT BE DEEMED TO BE SOLICITING MATERIAL OR TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, OR INCORPORATED BY REFERENCE IN ANY DOCUMENT SO FILED. 13 16 EXECUTIVE OFFICERS The following table provides information as of February 5, 2001, regarding the executive officers of KIT, who serve at the pleasure of the Board of Directors. Except as otherwise indicated, beneficial ownership includes both voting power and investment power.
PRINCIPAL BUSINESS EXPERIENCE AMOUNT AND PERCENT OF CLASS DURING THE PAST 5 YEARS AND NATURE OF BENEFICIALLY NAME OF INDIVIDUAL AGE POSITIONS WITH KIT BENEFICIAL OWNERSHIP OWNED ------------------ --- ----------------------------- -------------------- ---------------- Dan Pocapalia........... 84 Director of KIT since 1947; 539,928(l)(2)(3) 50.9% Chairman of the Board and Chief Executive Officer of KIT since 1971; President of KIT from 1956 to 1978 and from November 1983 to June 1999. Bruce K. Skinner........ 53 Vice President and Treasurer 345 * of KIT since September 1997; Corporate Controller of KIT from 1985 to June 1997. Harold D. Breach........ 65 President and General Manager 11,000(4) 1.1% of KIT since June 1999; General Manager of KIT manufactured housing plant from December 1995 to June 1999. Assistant to Executive Vice President from October 1995 to December 1995. 1994 to 1995 Division Manager, Magnolia Homes, Vicksburg, MS. 1990 to 1993 Division Manager Skyline Homes, Woodland, CA. Matthew S. Pulizzi...... 57 Vice President -- Customer 5,000(5) * Relations of KIT since March 1982; Vice President Insurance and Legal Affairs of KIT from 1980 to March 1982; Director of Insurance and Legal Affairs of KIT from 1977 to 1980; Assistant to the President of KIT from 1976 to 1977. Marlyce A. Faldetta..... 65 Corporate Secretary of KIT 3,101(6) * since 1975.
--------------- * Represents less than 1% of the outstanding shares. (1) Includes 33,944 shares subject to options held by Mr. Pocapalia which are exercisable on or before April 6, 2001. (2) Includes 1,000 shares held by certain members of Mr. Pocapalia's family as to which he may be said to share the voting and investment power. Also includes 400 shares held by Mr. Pocapalia as the trustee of trusts for the benefit of Mr. Pocapalia's children, as to which Mr. Pocapalia may be said to have sole voting and investment power. 14 17 (3) Includes 10,000 shares held of record by J.B.D. Partnership of which Mr. Pocapalia owns 69%. (4) Includes 10,000 shares subject to options held by Mr. Breach which are exercisable on or before April 6, 2001. (5) Includes 5,000 shares subject to options held by Mr. Pulizzi which are exercisable on or before April 6, 2001. (6) Includes 3,000 shares subject to options held by Ms. Faldetta which are exercisable on or before April 6, 2001. APPOINTMENT OF INDEPENDENT ACCOUNTANTS The firm of PricewaterhouseCoopers LLP will serve KIT as independent accountants for the fiscal year ending October 31, 2001. The appointment of this firm was approved by the Audit Committee of the Board of Directors. Prior to its merger with PriceWaterhouse, L.L.P., the firm of Coopers & Lybrand L.L.P. had served as independent accountants for KIT since 1972. Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement and to respond to appropriate questions. ANNUAL REPORT KIT's Annual Report to Shareholders, containing audited financial statements for the fiscal years ended October 31, 2000 and 1999 accompanies or has preceded the mailing of this Proxy Statement. UPON YOUR WRITTEN REQUEST, KIT WILL SEND YOU, WITHOUT CHARGE, A COPY OF THE ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000, INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, WHICH KIT IS FILING WITH THE SECURITIES AND EXCHANGE COMMISSION. THE WRITTEN REQUEST MUST BE DIRECTED TO THE ATTENTION OF THE CORPORATE SECRETARY OF KIT, AT THE ADDRESS OF KIT SET FORTH ON THE FIRST PAGE OF THIS PROXY STATEMENT. PROPOSALS OF SHAREHOLDERS Shareholder proposals intended to be considered at KIT's 2002 Annual Meeting of Shareholders must be received by the Secretary of KIT at its principal executive offices no later than October 30, 2001 in order to be considered for inclusion in KIT's Proxy Statement and form of proxy relating to that meeting. If a shareholder notifies KIT of such shareholder's intent to present a proposal for consideration at KIT's 2002 Annual Meeting of Shareholders after January 11, 2002, KIT, acting through the persons named as proxies in the proxy materials for such meeting, may exercise discretionary voting authority with respect to such proposal without including information regarding such proposal in its proxy materials. OTHER MATTERS At the time of the preparation of this Proxy Statement, the Board of Directors knows of no other matters which will be acted upon at the Annual Meeting. If any other matters are properly presented for action at the Annual Meeting or at any adjournment thereof, it is intended that the proxies will be voted with respect thereto in accordance with the best judgment and in the discretion of the proxy holders. 15 18 ADDITIONAL INFORMATION KIT files annual, quarterly and special reports, proxy statements and other information with the Commission. You may read and copy any reports, statements and other information KIT files at the Commission's public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further information on the public reference rooms. KIT's Commission filings are also available to the public from commercial document retrieval services and at the web site maintained by the Commission at http://www.sec.gov. By Order of the Board of Directors, KIT MANUFACTURING COMPANY /s/ MARLYCE A. FALDETTA MARLYCE A. FALDETTA Corporate Secretary Long Beach, California February 27, 2001 16 19 APPENDIX A KIT MANUFACTURING COMPANY AUDIT COMMITTEE CHARTER The Audit Committee (the Committee) shall provide assistance to the corporate directors in fulfilling their responsibility to the shareholders, potential shareholders, and investment community relating to corporate accounting, reporting practices of the Company, and the quality and integrity of the Company's financial reports. The Committee shall consist of at least three outside directors. Each member of the Committee shall be appointed by the company's Board of Directors; and each member shall meet the independence and experience requirements of the American Stock Exchange and one member will have the accounting or related financial management experience required by such exchange. GENERAL RESPONSIBILITIES 1. Appoint one member of the Committee as its Chairperson. 2. Report Committee actions to the full Board of Directors and make appropriate recommendations. 3. In its discretion, conduct or authorize investigations into matters within its scope of responsibility and, if the Committee deems appropriate, retain independent counsel, accountants or other specialists to assist in the conduct of any such investigations. 4. Meet at least two times each year, or more frequently as circumstances require. The Chairperson of the Committee may call a Committee meeting whenever deemed necessary. The Committee may ask members of management, the company's independent accountants or others to attend meetings and may request any information it deems relevant from management or the company's independent accountants. 5. Meet with the company's controller, treasurer and independent accountants to discuss any matters the Committee believes should be discussed privately. 6. Review with the Company's counsel, any legal matter that could have a significant impact on the Company's financial statements. 7. Review and reassess the adequacy of the Committee's Charter and submit the Charter for review and approval by the Board of Directors on an annual basis. RESPONSIBILITIES REGARDING THE ENGAGEMENT OF THE INDEPENDENT ACCOUNTANTS 1. Review and recommend to the Board of Directors the independent accountants to be selected to audit the Company's annual financial statements. The Committee will also review and approve dismissal of the independent accountants 2. Review and approve requests for any significant management consulting engagements to be performed by the independent accountants selected to do the annual audit. 3. Ensure the independent accountants deliver to the Committee annually a formal written statement delineating all relationships between the independent accountants and the Company, addressing at A-1 20 least the matters set forth in Independent Standards Board Standard No. 1; discuss with the independent accountants any relationship or services disclosed in such statement that may impact the objectivity and independence of the Company's independent accountants; and recommend that the Board of Directors take appropriate action in response to this statement to oversee the independent accountants' independence. RESPONSIBILITIES FOR REVIEWING INTERNAL AUDITS, THE ANNUAL EXTERNAL AUDIT AND THE REVIEW OF FINANCIAL STATEMENTS 1. Request periodically the independent accountants to confirm that they are accountable to the Board of Directors and the Committee. 2. Review the scope, nature and rigor of internal and external audits with the Company's management and independent accountants. 3. After completion of the annual audit examination, review and discuss with the Company's management and independent accountants: a. The Company's annual financial statements and footnotes. b. The independent accountants' audit of and report on the financial statements. c. The qualitative judgments about the appropriateness and acceptability of accounting principles, financial disclosures and underlying estimates. d. Any significant difficulties or disputes with management encountered during the course of the audit. e. Any other matters about the audit procedures or findings that Generally Accepted Accounting Standards (GARS) require the independent accountants to discuss with the Committee. 4. Recommend to the Board of Directors that the Company's audited financial statements be included in the Company's Form 10-K. 5. Review with the Company's management and independent accountants the financial statements to be included in the company's Form 10-Q prior to its filing. The Chairperson of the Committee may represent the entire Committee for purposes of this review. 6. Discuss with the company's management and independent accountants the quality and adequacy of the Company's internal accounting controls. 7. Report Committee's activities to the full board and issue annually (commencing in 2001 a report to be included in the Company's proxy statement for submission to the shareholders). A-2 21 PROXY KIT MANUFACTURING COMPANY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned appoints Dan Pocapalia and Marlyce A. Faldetta, and each of them, proxies with full power of substitution, to vote all shares of Common Stock of KIT Manufacturing Company ("KIT") held of record by the undersigned as of February 5, 2001, the record date with respect to this solicitation, at KIT's Annual Meeting of Shareholders to be held at the Long Beach Airport Marriott, 4700 Airport Plaza Drive, Long Beach, California 90815, on Tuesday, March 13, 2001 at 9:00 a.m., local time, or at any adjournment thereof, upon the following matters: (CONTINUED AND TO BE SIGNED ON REVERSE SIDE) ------------------------------------------------------------------------------- FOLD AND DETACH HERE 22 FOR WITHHOLD Please mark each nominee listed AUTHORITY your votes as below (except as to vote for each indicated in [X] noted to the contrary) nominee listed below this example. 1. ELECTION OF DIRECTORS [ ] [ ]
Nominees: Dan Pocapalia, Fred W. Chel, Frank S. Chan, Jr., John W. H. Hinrichs and John F. Zaccaro (Instructions: To withhold authority to vote for any individual nominee, write that nominee's name in the space provided below.) _______________________________________________________________________________ 2. OTHER MATTERS in their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL (1) ABOVE. IF ANY NOMINEE DECLINES OR IS UNABLE TO SERVE AS A DIRECTOR, THEN THE PERSONS NAMED AS PROXIES SHALL HAVE FULL DISCRETION TO VOTE FOR ANY OTHER PERSON DESIGNATED BY THE BOARD OF DIRECTORS. Signature(s) of shareholder(s)______________________________ Dated _____, 2001 (Your signature should conform to your name as printed hereon. Co-owners should all sign.) ------------------------------------------------------------------------------ FOLD AND DETACH HERE