<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year ended December 31, 1999.
[_] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from ________ to _________.
Commission File Number 0-23781
ATG INC.
(Exact name of registrant as specified in its charter)
California 94-2657762
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
47375 Fremont Boulevard
Fremont, California 94538
(Address of principal executive offices)
(510) 490-3008
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(g) of the Act: Common Stock, No
par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 at least the past 90 days:
Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K (Paragraph 229.405 of this Chapter) 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-K or any amendment to this Form 10-K.
[_]
On March 13, 2000, there were issued and outstanding 14,089,770 shares of Common
Stock. The aggregate market value of Common Stock held by non-affiliates of the
Registrant on that date was approximately $78,374,000 based on the closing sale
price of the Common Stock, as reported by the NASDAQ National Market.
Documents Incorporated By Reference
None.
1
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INTRODUCTION
ATG Inc. hereby amends its Form 10-K for the fiscal year ended December 31, 1999
by: adding to Part III, Item 10, Directors and Executive Officers of the
Registrant, the section entitled "Section 16(a) Beneficial Ownership Reporting
Compliance;" adding to Part III, Item 11, Executive Compensation; adding to Part
III, Item 12, Security Ownership of Certain Beneficial Owners and Management;
and adding to Part III, Item 13, Certain Relationships and Related Transactions.
PART III
Item 10. Directors and Executive Officers of the Registrant
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission
and the NASDAQ national market. Officers, directors and greater than ten
percent (10%) beneficial owners are required by the Securities and Exchange
Commission regulations to furnish the Company with copies of all Section 16(a)
forms they file. Specific due dates for these reports have been established
and the Company is required to disclose in this Annual Report on Form 10-K any
late filings during the most recent fiscal year. To the Company's knowledge,
based solely on its review of the copies of such reports required to be
furnished to the Company during the most recent fiscal year, all of these
reports were timely filed with the Securities and Exchange Commission and the
NASDAQ national market.
2
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Item 11. Executive Compensation
The following table discloses compensation received by the Company's Chief
Executive Officer and the four (4) remaining most highly paid executive officers
who received total compensation in excess of $100,000 for the previous years
ended December 31, 1999, 1998 and 1997.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation (4) Awards
----------------------- ------
Securities
Name and Principal Position Year Salary Bonus Underlying Options(#)
- --------------------------- ---- ------ ----- ---------------------
<S> <C> <C> <C> <C>
Doreen M. Chiu 1999 $245,154 $60,000 *
Chief Executive Officer 1998 156,000 * 50,000
1997 150,000 * 150,000
Frank Y. Chiu 1999 225,846 60,000 *
Executive Vice President 1998 130,000 * 50,000
1997 120,000 * 159,900
William M. Hewitt 1999 220,846 60,000 *
President - Waste Management 1998 157,038 * 40,000
Services (1) 1997 103,269 * 70,000
Steven J. Guerrettaz 1999 159,308 30,000 20,000
Chief Financial Officer (2) 1998 150,000 * 10,000
1997 1,731 * 60,000
Eric C. Su 1999 140,000 50,000 *
Vice President - Marketing & 1998 112,086 * 40,000
Planning (3) 1997 94,386 25,000 20,000
</TABLE>
- ------------------------
* None
(1) Joined the Company in April 1997.
(2) Joined the Company in December 1997 and left the Company in February 2000.
(3) Resigned as Corporate Officer in February 2000 and reassigned within the
Company to a non-officer position.
(4) Each of the named executive officers received perquisites and other
personal benefits, the aggregate amount of which did not exceed the lesser
of $50,000 or 10% of the annual base salary reported.
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Stock Option Grants and Exercises
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options granted during
the fiscal year ended December 31, 1999.
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants Potential Realizable
------------------------------------------------------------------- Value at Assumed
Number of % of Total Annual Rates of Stock
Securities Options Price Appreciation
Underlying Granted to Exercise for Option Term ($) (1)
Options Employees in Price Per Expiration -----------------------
Name Granted (#) Fiscal Year Share ($) Date(2) 5% 10%
- ---- --------------- ------------- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Doreen M. Chiu 0 n.a n.a. n.a. n.a. n.a.
Frank Y. Chiu 0 n.a n.a. n.a. n.a. n.a.
William M. Hewitt 0 n.a n.a. n.a. n.a. n.a.
Steven J. Guerrettaz 20,000 14.8% $7.00 7/15/09 $88,045 $223,124
Eric C. Su 0 n.a n.a. n.a. n.a. n.a.
</TABLE>
(1) Potential realizable value is based on the assumption that the Common Stock
appreciates at the annual rate shown (compounded annually) from the date of
grant until the expiration of the ten-year option term. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
(2) Options may terminate before their expiration date if the optionee's status
as an employee is terminated.
The following table shows, as to the individuals named in the Summary
Compensation Table above, information concerning stock options exercised during
the fiscal year ended December 31, 1999 and the value of unexercised options at
such date.
Aggregated Option Exercises in Last Fiscal Year
And Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options
December 31, 1999 (#) at December 31, 1999 ($)(1)
---------------------
Shares Acquired Value Exercisable/ Exercisable/
On Exercise (#) Realized ($) Unexercisable Unexercisable
--------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Doreen M. Chiu......... 41,000 $167,437 500/158,500 $ 1,656/491,906
Frank Y. Chiu.......... 54,000 275,825 53,500/168,400 224,919/524,700
William M. Hewitt...... -- -- 66,666/43,334 0/0
Steven J. Guerrettaz... -- -- 70,000/20,000 0/0
Eric C. Su............. 60,000 440,525 63,333/26,667 192,625/0
</TABLE>
________________________
(1) Based on the fair market value of the Common Stock at December 31, 1999 of
$4.3125 per share, less the exercise price paid for such shares.
4
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Employment Agreements
None of the individuals named in the Summary Compensation Table above is a
party to an employment agreement with the Company.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, that might incorporate future
filings, including this Annual Report on Form 10-K, in whole or in part, the
following report and the Performance Graph on page 9 shall not be incorporated
by reference into any such filings.
Compensation Philosophy
The Compensation Committee of the Board of Directors of the Company (the
"Committee") consists of the three (3) independent directors who are neither
employees nor officers of the Company. The Committee reviews the Company's
executive compensation program and policies, determines the compensation of the
Company's Chief Executive Officer ("CEO"), and reviews and approves the CEO's
recommendations for the compensation of the other senior executive officers of
the Company.
The Committee's philosophy regarding compensation of the Company's senior
management is to link rewards to financial and operational performance, to
encourage creation of shareholder value and to achieve the Company's strategic
goals and objectives. Through its executive compensation policies, the Committee
seeks to attract, retain and motivate highly qualified executives who will
contribute to the Company's success. Thus, the Committee believes the Company's
compensation arrangements must remain competitive with those offered by other
companies of similar size and scope of operations. To achieve these goals, the
executive compensation program consists of three primary components which, taken
together, constitute a flexible and balanced method of establishing total
compensation for senior management. These components are: (i) base salary which
reflects individual performance and contribution to the Company; (ii)
discretionary annual bonus awards payable in cash and tied to the Company's
achievement of financial targets; and (iii) long-term stock based incentive
awards designed to strengthen the mutuality of interests between the Company's
executive officers and its shareholders. Beginning in 1998, option grants to
executive officers are made under the Company's 1998 Stock Ownership Incentive
Plan by the Committee.
Cash Based Compensation
Salary. Consistent with the Company's philosophy, the Committee's approach
to base compensation is to offer competitive salaries in comparison with market
practices. Salary decisions are based on an annual review with the CEO,
considering the decision-making responsibilities of each position and the
experience, work performance, and team-building skills of position incumbents,
subject to existing employment agreements, if any. The cash salary of each of
the Company's executive officers is determined by the individual's performance
and past and potential contributions to the Company, as well as the overall
financial performance and resources of the Company.
Bonuses. The Committee has in the past and may in the future authorize the
payment of discretionary bonus compensation based upon an assessment of an
individual's exceptional contributions to the Company. Bonuses are based upon
the overall achievement in increasing the Company's revenue and its level of
profitability.
5
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As a general matter, the Committee endorses the philosophy that executive
compensation should reflect company performance. The Company, to date, has not
yet adopted any compensation plans which are tied directly to Company
performance by formula.
Equity Based Compensation
The executive officers have, from time to time, received grants of options
to acquire Common Stock. The purpose of the option grants is to provide such
individuals with additional incentives to maximize shareholder value. The
Committee also utilizes vesting periods to encourage key employees to continue
in the employ of the Company. The size of the option grant to each executive
officer is set at a level which is intended to create a meaningful opportunity
for stock ownership based on the individual's current position with the Company
and may also be based in part upon Company performance factors such as earnings
per share and revenue growth. However, the extent to which these latter factors
are taken into consideration will vary from individual to individual at the
Committee's sole discretion.
Chief Executive Officer Compensation
The process of determining the compensation for the CEO and the factors
taken into consideration in such determination are generally the same as the
process and factors used in determining the compensation of all of the executive
officers of the Company. The Committee considers both the Company's overall
performance and the CEO's individual performance. Bonuses for the CEO are based
upon the overall achievements in increasing the Company's revenue and its level
of profitability. Ms. Chiu's salary was determined based on analysis of salaries
paid by peer companies and on Ms. Chiu's knowledge, experience and individual
performance.
The foregoing report has been furnished by the Compensation Committee of
the Board of Directors of the Company.
Andrew C. Kadak, Chairman
Earl E. Gjelde
George Doubleday, II
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The following persons served on the Compensation Committee of the Company's
Board of Directors during fiscal year 1999: Andrew C. Kadak, Earl E. Gjelde, and
George Doubleday, II. None of these persons is a current or former officer or
employee of the Company. There are no "interlocks, " as defined by the
Securities and Exchange Commission, with respect to any member of the
Compensation Committee.
6
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Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the beneficial ownership of the Common Stock
of the Company as of April 24, 2000, by each person known by the Company to
own beneficially more than five percent of the Company's outstanding Common
Stock, by each director, by each executive officer named in the Summary
Compensation Table below and by all current directors and executive officers as
a group. All shares are subject to the named person's sole voting and investment
power, except where otherwise indicated. The address of each beneficial owner
identified is in care of the Company, 47375 Fremont Boulevard, Fremont,
California 94538.
<TABLE>
<CAPTION>
Number Percent of
Name of Shares (1) Shares Outstanding
- ---- ------------- ------------------
<S> <C> <C>
Doreen M. Chiu (2) 2,719,926 19.3%
George Doubleday, II (3) 507,243 3.6%
Eric C. Su (4) 121,333 *
William M. Hewitt (5) 83,954 *
Steven J. Guerrettaz (6) 71,484 *
Earl E. Gjelde (7) 15,000 *
Andrew C. Kadak (7) 15,000 *
All directors and executive officers as
a group (9 persons) (8) 3,598,940 25.5%
</TABLE>
- --------------------
* The number of shares owned is less than 1%
(1) Beneficial ownership includes shares of Common Stock subject to options
held by the named person that are currently exercisable or will become
exercisable within 60 days.
(2) Includes all shares beneficially owned by Frank Y. Chiu as community
property and options to purchase 20,000 shares of Common Stock.
(3) Includes options to purchase 15,000 shares of Common Stock
(4) Includes options to purchase 63,333 shares of Common Stock.
(5) Includes options to purchase 83,333 shares of Common Stock
(6) Includes options to purchase 70,000 shares of Common Stock
(7) Represents options to purchase 15,000 shares of Common Stock
(8) Includes 370,666 shares of Common Stock that may be issued upon the
exercise of options outstanding and beneficially owned by the directors and
executive officers as a group.
7
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Item 13. Certain Relationships and Related Transactions
The following is a summary of certain transactions to which the Company was
or is a party and in which certain executive officers, directors or shareholders
of the Company had or have a direct or indirect material interest.
From 1992 to 1997, Doreen M. Chiu, the Company's Chairman of the Board and
Chief Executive Officer, extended a series of loans to the Company, each of
which was repayable in full upon demand (collectively, the "Loan"). The Loan,
which was unsecured, bore interest at an annual rate of 10%, payable
concurrently with principal. The outstanding principal balance of the Loan,
including accrued interest, at December 31, 1997 was $1,280,180. This Loan was
repaid in full in 1998.
Doreen M. Chiu and Frank Y. Chiu, the Executive Vice-President and a
director of the Company, have each guaranteed the obligations of the Company
under (i) two Promissory Notes in the principal amounts of $2,069,604 and
$1,996,075 held by Safeco Credit Company, Inc.; (ii) an Equipment Lease between
the Company and Great Western Leasing that provides for an aggregate rental
amount of $32,522; and (iii) a Commercial Lease Agreement between the Company
and U.S. Bancorp with an aggregate rental amount of $103,341.
In connection with the issuance of certain bonds, undertakings and other
instruments of guarantee in favor of the Company, Doreen M. Chiu and Frank Y.
Chiu have each executed (i) a blanket Indemnity Agreement in favor of ACSTAR
Insurance Company ("ACSTAR"), indemnifying ACSTAR against any losses that ACSTAR
may incur in connection with the issuance of any such bonds, undertakings or
other instruments of guarantee, and (ii) a blanket Continuing Agreement of
Indemnity-Contractor's Form for the benefit of Reliance Insurance Company,
United Pacific Insurance, Reliance National Indemnity Company and Reliance
Surety Company, indemnifying such entities against any losses that such entities
may incur in connection with the issuance of any such bonds, undertakings or
other instruments of guarantee. As of December 31, 1999, the potential aggregate
liability of Mr. and Mrs. Chiu under the blanket indemnities was approximately
$35,500.
In 1998, the Company entered into a contract to provide certain
engineering, remediation and construction services to Mission Ranch Center, a
California limited partnership ("Mission Ranch"). Doreen M. Chiu and Frank Y.
Chiu are general partners and own a 50% partnership interest in Mission Ranch.
The Company reported revenues of $1,403,000 and costs of $1,354,000 related to
services provided under this contract in 1999. The Company reported revenues of
$785,000 and costs of $432,000 related to services provided under this contract
in 1998. The total project contract value is approximately $4,695,000 and is
expected to be completed in fiscal 2000.
8
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PERFORMANCE GRAPH
The following graph demonstrates a comparison of cumulative total
shareholder returns, calculated on a dividend reinvestment basis and based upon
an initial investment of $100 in the Company's Common Stock as compared with the
Russell 2000 Index and the Nasdaq Stock Market (U.S.) Index. No dividends have
been declared or paid on the Company's Common Stock during such period. The
stock price performance shown on the graph below is not necessarily indicative
of future price performance. The Common Stock began trading on the Nasdaq
National Market on May 7, 1998. The graph reflects the Company's stock price
performance from the initial public offering through the end of fiscal 1999.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Cumulative Total Return
---------------------------------------------------------------------------
5/7/98 6/98 9/98 12/98 3/99 6/99 9/99 12/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ATG INC. 100 90 71 87 76 78 59 51
RUSSELL 2000 100 97 79 87 78 91 84 85
NASDAQ STOCK MARKET (U.S.) 100 103 93 121 135 148 152 224
</TABLE>
9
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ATG INC.
By: /s/ Doreen M. Chiu
----------------------------
Doreen M. Chiu
Chairman of the Board
President and CEO
Date: May 1, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ Doreen M. Chiu
- ---------------------------------------- Chairman, President and Chief May 1, 2000
Doreen M. Chiu Executive Officer
/s/ Frank Y. Chiu
- ---------------------------------------- Executive Vice-President May 1, 2000
Frank Y. Chiu Director
/s/ William M. Hewitt
- ---------------------------------------- President-Waste Mgmt. Services May 1, 2000
William M. Hewitt Director
/s/Danyal F. Mutman
- ---------------------------------------- Chief Financial Officer May 1, 2000
Danyal F. Mutman
/s/ George Doubleday II
- ---------------------------------------- Director May 1, 2000
George Doubleday II
/s/ Earl E. Gjelde
- ---------------------------------------- Director May 1, 2000
Earl E. Gjelde
/s/ Andrew C. Kadak
- ---------------------------------------- Director May 1, 2000
Andrew C. Kadak
</TABLE>
10
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
ATG Inc. on Form S-8 (file No. 333-72349 and File No. 333-89115) of our reports
dated March 28, 2000, on our audits of the consolidated financial statements and
financial statement schedule of ATG Inc. as of December 31, 1999 and 1998 and
for the years ended December 31, 1999, 1998 and 1997 which reports are included
in this Annual Report on Form 10-K/A.
/s/ PricewaterhouseCoopers LLP
San Jose, California
May 1, 2000
