SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM 10-KSB/A
(Number 2)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1999
Commission File No.: 0-1388
WATERS INSTRUMENTS, INC.
(d/b/a Waters Corporation)
(Name of Small Business Issuer as specified in its charter)
Minnesota 41-0832194
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2411 Seventh Street NW, Rochester, Minnesota 56001
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (507) 288-7777
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $.10 par value per share
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
Issuer's revenues for its most recent fiscal year: $17,585,000.
The aggregate market value of the Common Stock held by nonaffiliates of the
Registrant as of August 31, 1999 was approximately $5,441,843.
There were 1,472,279 shares of Common Stock, $.10 par value, outstanding as of
August 31, 1999.
-------------------------
Transitional Small Business Disclosure Format (check one). Yes [ ] No [ X ]
<PAGE>
This Amendment No. 2 to the Issuer's Form 10-KSB for the fiscal year
ended June 30, 1999, is being filed in order to file Items 9, 10, 11 and 12
under Part III, which the Company originally intended to incorporate by
reference to a proxy statement. The proxy statement will not be filed within 120
days of June 30, 1999.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The names and ages of executive officers and directors of the Company, their
positions and offices presently held, and the periods of service as such are as
follows:
<TABLE>
<CAPTION>
Year in which first
Position with the Company and became an Officer
Name Age Principal Occupation or Director
<S> <C> <C> <C>
Jerry W. Grabowski 47 President, Chief Executive Officer, 1993
and Director of the Company
Gregory J. Anshus 42 Chief Financial Officer and Treasurer of the 1996
Company
William R. Franta 57 Director. Business Development & Technology 1997
Consultant in Minneapolis, Minnesota.
John A. Grimstad 49 Secretary and General Counsel of the Company. 1996
Vice President of Fredrikson & Byron, P. A. in
Minneapolis, Minnesota
Charles G. Schiefelbein 60 Director. President of Capital Growth Services 1986
of Minneapolis, Minnesota.
</TABLE>
The following information is presented as to the business experience of each
executive officer and director during the past five or more years and his
directorships of other publicly held corporations:
Mr. Grabowski has been President, Chief Executive Officer and a member of the
Company's Board of Directors since August 1, 1993. He additionally served as
Chief Financial Officer, Treasurer and Secretary from December 1994 until
October 1996. From 1988 until joining the Company, Mr. Grabowski was employed as
General Manager of Onan Power/Electronics Division of the Cummins Engine
Company.
Mr. Anshus was elected Chief Financial Officer and Treasurer on October 22,
1996. Since joining the Company in October 1991, he served in various accounting
positions in the Company. From October 1994 until his election, Mr. Anshus
served as Controller of the Company. Until joining the Company, Mr. Anshus
served as Controller of B&F Companies.
Mr. Franta has been the Vice President of Marketing at Centron since August
1997. Between February 1997 and August 1997, he was a Business Development &
Technology Consultant in Minneapolis, Minnesota. From January 1987 to February
1997 he served as Senior Vice President of Network Systems Corporation. He is a
Director of HEI, Inc. in Victoria, Minnesota.
<PAGE>
Mr. Grimstad has been, since 1984, a Vice President and shareholder of
Fredrikson & Byron, P.A., the Company's counsel, and serves as a Director and
Secretary or Assistant Secretary of several closely-held manufacturing
companies. He has served as the Company's Secretary since 1996.
Mr. Schiefelbein, since September 1996 has been President of Capital Growth
Services, a consulting and investment company, based in Minneapolis, Minnesota.
From 1979 until August 1996, Mr. Schiefelbein was Chairman of Computer Petroleum
Corporation (CPC), a public company that provides electronic energy price and
news information. From 1979, when he founded CPC, to 1991, Mr. Schiefelbein
served as Chairman and Chief Executive Officer. He is also currently a director
of Research, Inc.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent (10%) of the
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the SEC). Officers, directors, and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely on its review of the copies of such forms
received by it, the Company believes that, during the period from July 1, 1998
through June 30, 1999, all filing requirements applicable to its officers,
directors, and greater than ten-percent beneficial owners were complied with.
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid or to be paid by the
Company, as well as certain other compensation paid or accrued, during fiscal
year 1999 to the named executive officer as of June 30, 1999:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
Annual Compensation Awards Payouts
Restricted All Other
Name & Principal Fiscal Bonus $ Stock # Options LTIP Compensation
Position Year Salary $ (1) Other $ Awards $ Granted Payouts $(2)
-------- ---- -------- --------- ------- -------- ------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jerry W. Grabowski 1999 161,268 33,686 - - 3,250 - 3,320
President & CEO 1998 158,524 35,278 - - 3,250 - 3,783
1997 143,780 61,000 - - - - 4,632
</TABLE>
(1) Represents incentive compensation payment.
(2) Represents insurance premiums and 401(k) match paid by the Company.
Option Grants During Fiscal Year 1999
There were 3,250 shares of the Company's common stock granted in options under
the Company's 1995 Stock Option Plan during fiscal year 1999 to the named
executive officer in the Summary Compensation Table. The Company has not granted
any stock appreciation rights.
<TABLE>
<CAPTION>
Number of
Securities Percent of Total Options
Underlying Options Granted to Employees in Exercise or Base Price
Name Granted (#) Fiscal Year ($/Share) Expiration Date
<S> <C> <C> <C> <C>
Jerry W. Grabowski 3,250 13.8% $5.75 2/5/2008
</TABLE>
<PAGE>
Option Exercises During Fiscal Year 1999 And Fiscal Year-End Option Values
The named executive officer in the Summary Compensation Table did not exercise
any options during fiscal year 1999.
<TABLE>
<CAPTION>
Shares # of Unexercised Options at Value of Unexercised Options at
Acquired Value June 30, 1999 June 30, 1999
Name on Exercise Realized Exercisable/Unexercisable Exercisable/Unexercisable (1)
<S> <C> <C> <C> <C>
Jerry W. Grabowski 0 $ 0 56,500 exercisable $124,875 exercisable
0 unexercisable $0 unexercisable
</TABLE>
(1) Value is calculated on the basis of the difference between the option
exercise price and the closing sale price for the Company's Common
Stock at June 30, 1999 of $4.625 as quoted on the NASDAQ National
Market System, multiplied by the number of shares of Common Stock
underlying the option.
Compensation of Directors
Each non-employee, non-officer Director receives an annual retainer fee of
$4,000, $350 for each attended quarterly meeting of the Board, $50 for each
breakfast or dinner meeting of the Board, $150 for each attended meeting of a
Committee on which he serves and a fee of $500 for each time he provides
additional services as a special consultant to the Company, plus, in each case,
reimbursement of travel expenses. Such Directors also receive a monthly stipend
of $50 to cover miscellaneous travel, telephone, and meal expenses associated
with Board responsibilities.
Employment Contracts and Termination of Employment Arrangements
The Company has entered into an employment agreement with Jerry W. Grabowski,
which provides for compensation in the event Mr. Grabowski's employment with the
Company is terminated under certain circumstances. Upon termination of
employment initiated by the Company's Board of Directors, Mr. Grabowski will
have the right to receive an amount equal to twelve-months' base salary and the
cost of all existing health/medical and other benefit plans enjoyed by Mr.
Grabowski on the effective date of termination (subject to the terms of the
plans) or substantially the same benefits if the terms of a plan exclude
non-employees. Mr. Grabowski will also be entitled to receive on August 31, in
the year immediately following the "Performance Period" (most recently ended
fiscal year) in which a termination occurred, the incentive compensation he
would have earned had his employment not been terminated, in an amount
proportionate to the number of months that he was employed by the Company prior
to such termination. In the event Mr. Grabowski's employment with the Company is
terminated within one year of a change in control, then upon such termination in
addition to the Company's obligation stated above, the Company will pay Mr.
Grabowski an additional amount equal to the base salary, then in effect, for one
year.
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table provides information concerning the only persons known to
the Company to be the beneficial owners of more than 5% of the Company's
outstanding Common Stock as of September 30, 1999 or as otherwise indicated:
<TABLE>
<CAPTION>
Number of Shares
Name and Address of Beneficial Owner Beneficially Owned Percent of Class
- ------------------------------------ ------------------ ----------------
<S> <C> <C>
Charles G. Schiefelbein
2920 Norwest Center, Minneapolis, MN 55402 204,753 (1) 13.8%
Woodland Investment Company
3007 Skyway Circle North, Irving, TX 75038 172,000 (2) 11.7%
Kohl Gift Trust
3007 Skyway Circle North, Irving, TX 75038 90,000 (3) 6.1%
</TABLE>
(1) Includes 70,000 shares of stock held in the name of Peace Shalom
Foundation, of which Mr. Schiefelbein is a Director and Vice President,
as well as 3,350 shares which may be purchased pursuant to options held
by Mr. Schiefelbein which are or will become exercisable within 60 days
of September 30, 1999.
(2) According to the most current Schedule 13D filed by Woodland Investment
Company and information provided by it, the power to vote and dispose
(or to direct the vote or disposition) of such shares is shared with
Atlee M. Kohl and Nicole F. Kohl, each of whom are thereby deemed to be
beneficial owners of such shares.
(3) According to the most current Schedule 13D filed by Kohl Gift Trust,
the power to vote and dispose (or to direct the vote or disposition) of
such shares is shared with Atlee M. Kohl who is deemed to be a
beneficial owner of such shares.
Management Shareholdings
The following table sets forth the beneficial ownership of the Company's Common
Stock by (i) each director of the Company, (ii) the named executive officer in
the Summary Compensation Table, and (iii) all directors and executive officers
as a group, as of September 30, 1999. Except as otherwise indicated, the persons
named in the table have sole voting and investment power with respect to all
shares of Common Stock owned by them.
<TABLE>
<CAPTION>
Number of Shares Percent
Name of Director or Number of Persons in Group Beneficially Owned(1) of Class (1)
- ---------------------------------------------- --------------------- ------------
<S> <C> <C>
Charles G. Schiefelbein 204,753 (2) 13.8%
Jerry W. Grabowski 69,750 (3) 4.6%
John A. Grimstad 21,850 (4) 1.5%
William R. Franta 10,150 (5) 0.7%
Officers and Directors as a Group (6 persons) 324,503 (6) 20.6%
</TABLE>
<PAGE>
(1) Under rules of the Securities and Exchange Commission, an individual is
also deemed to beneficially own shares which are not outstanding but
which the individual has the right to acquire as of September 30, 1999
or within 60 days of such date. Such shares not outstanding but so
deemed beneficially owned are treated as outstanding when determining
the percent of the class owned by the particular individual and when
determining the percent owned by the group.
(2) Includes 70,000 shares of stock held in the name of Peace Shalom
Foundation, of which Mr. Schiefelbein is a Director and Vice President,
as well as 10,050 shares which may be purchased pursuant to options
held by Mr. Schiefelbein which are or will become exercisable within 60
days of September 30, 1999.
(3) Includes 56,500 shares which may be purchased pursuant to options held
by Mr. Grabowski which are or will become exercisable within 60 days of
September 30, 1999.
(4) Includes 10,050 shares which may be purchased pursuant to options held
by Mr. Grimstad which are or will become exercisable within 60 days of
September 30, 1999.
(5) Includes 10,050 shares which may be purchased pursuant to options held
by Mr. Franta which are or will become exercisable within 60 days of
September 30, 1999.
(6) Includes 104,650 shares which may be purchased pursuant to options held
by Officers and Directors which are or will become exercisable within
60 days of September 30, 1999.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
To management's knowledge, no director, officer, or ten percent Shareholder or
any affiliates of such persons had in fiscal years 1998 or 1999 or currently has
any material interest, direct or indirect, in any transaction in which the
Company was involved.
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized, in Rochester, Minnesota, on
October 28, 1999.
WATERS INSTRUMENTS, INC.
/s/ Jerry W. Grabowski
By Jerry W. Grabowski
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment has been signed by the following persons on behalf of the Company in
the capacities and on the dates indicated.
Signature Title Date
/s/ Jerry W. Grabowski
- ------------------------ President, Chief Executive Officer,
Jerry W. Grabowski (Principal Executive Officer) and
Director October 28, 1999
/s/ Gregory J. Anshus
- ------------------------ Chief Financial Officer (Principal
Gregory J. Anshus Financial Officer) October 28, 1999
*
- ------------------------
William R. Franta Director October 28, 1999
*
- ------------------------
John A. Grimstad Director and Secretary October 28, 1999
*
- ------------------------ Director October 28, 1999
Charles G. Schiefelbein
* Signed on behalf of the director by Jerry
Grabowski as attorney in fact
