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 (No Fee Required)
For this fiscal year ended the Last Day of February, 2000
Commission File Number 0-8955
THE CHERRY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-2977756
(State of other jurisdiction of incorporation (I. R. S. Employer
or organization) Identification Number)
3600 Sunset Avenue, Waukegan, IL 60087
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (847) 662-9200
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
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 the past 90 days. ( X ) Yes ( ) No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation 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 the form 10-K. ( X )
The aggregate market value of the registrant's Common Stock on April 28, 2000
held by nonaffiliates was approximately $81 million, based on a calculation that
45% of the shares are owned by nonaffiliates and are valued at the closing price
as reported on the Nasdaq National Market tier of The Nasdaq Stock Market on
April 28, 2000.
Number of shares of Common Stock outstanding as of April 28, 2000 was
10,079,983.
1
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS OF THE COMPANY
The following information concerning the directors has been furnished by
the nominees:
<TABLE>
<CAPTION>
Principal Occupation First
Year
During Last Five Years Elected
Name Age And Other Directorships Director
---- --- ----------------------- --------
<S> <C> <C> <C>
Peter B. Cherry 52 Chairman of the Board and President 1977
Thomas L. Martin 78 President Emeritus of Illinois Institute of 1979
Technology.
Robert B. 72 Consultant, formerly partner, law firm of 1982
McDermott McDermott, Will & Emery; Mr. McDermott is
also a director of Maynard Oil Company.
Peter A. 57 Director, since 1993, Executive Vice 1993
Guglielmi President, since 1990, Chief Financial
Officer, 1990-1999, and Treasurer, 1988-
1999, Tellabs Inc. (voice and data
communications equipment manufacturer),
President, Tellabs International, Inc.
1993-1997. Mr. Guglielmi is also a
director of Internet Communications Corp.
and Uniphase Corporation.
Charles W. Denny 64 Chairman, since 1997, Chief Executive Officer
and President, 1992-1998, Schneider 1993
Electric-North American Division (formerly
Groupe Schneider-North America), President
and Chief Operating Officer, 1992-1997,
Square D Company (electrical distribution
and industrial control products
manufacturer). Mr. Denny is also a director
of Woodhead Industries, Inc.
W. Ed Tyler 47 Director, President and Chief Executive 1995
Officer since April 1998, Moore Corporation
Limited (print and digital communication
products and services), formerly Executive
Vice President, 1995-1998, and Sector
President, Information Management Sector
since 1996, Sector President, Networked
Services Sector, 1994-1996, R. R. Donnelley
& Sons Co. (printing and printing related
services). Mr. Tyler is also a director of
Vista Information Solutions, Inc. and First
Industrial Realty Trust, Inc.
Henry J. West 57 Group Vice President, since 1992, The Marmon 1995
Group (international association of
manufacturing and service businesses).
<FN>
Information concerning the executive officers is set forth after Item 4 in Part
I hereof under the caption "Executive Officers of the Registrant."
</TABLE>
2
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that certain
of the Company's directors, officers and stockholders file with the Securities
and Exchange Commission and Nasdaq an initial statement of beneficial ownership
and certain statements of changes in beneficial ownership of Common Stock of the
Company. Based solely on its review of such forms received be the Company and
written representation from the directors and officers that no other reports
were required, the Company is unaware of any instances of noncompliance, or late
compliance, with such filings during the fiscal year ended February 29, 2000.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the executive officers
named below.
<TABLE>
Summary Compensation Table (1)
<CAPTION>
Long-Term
Annual Compensation Compensation
--------------------------- ------------
Number of
Shares
Underlying All other
Name and Principal Salary Bonus Stock Options Compensation
Position Year ($) ($) (#) (2) ($)
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter B. Cherry 2000 $439,335 $-- 40,000 5,600
Chairman of the Board 1999 432,735 151,725 20,000 5,600
And President 1998 413,778 44,449 12,000 7,713
Alfred S. Budnick (3) 2000 290,000 58,377 6,800 2,832
Vice President of the 1999 275,000 17,531 17,000 3,259
Company
And President of a 1998 265,000 136,044 8,500 6,426
Subsidiary
Klaus D. Lauterbach 2000 299,868 93,067 6,000 --
Vice President of the 1999 317,853 120,327 6,000 --
Company
And General Manager of a 1998 293,082 82,189 6,000 --
Subsidiary
Dan A. King 2000 225,311 -- 8,000 5,600
VP of Finance & 1999 214,126 42,840 5,000 5,600
Administration,
Treasurer and 1998 205,451 44,090 5,000 7,713
Secretary
Robert G. Terwall 2000 200,082 -- 8,000 5,600
Vice President of the 1999 183,789 9,180 5,000 5,600
Company
And General Manager of a 1998 182,188 15,481 5,000 7,448
Division
<FN>
(1) Table excludes perquisites, as amounts received do not exceed the lesser of
$50,000 or 10% of any of the named officer's salary and bonus.
(2) Represents Company contributions under 401(k) and profit sharing plans.
(3) Mr. Budnick resigned as an officer and director on April 12, 2000.
</TABLE>
3
<PAGE>
The table below sets forth certain information with respect to stock options
granted under the Company's 1995 Stock Incentive Plan during fiscal 2000 to the
executive officers named in the Summary Compensation Table.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential
Realizable Value
at Assumed
Individual Grants (1) Annual Rates of
Stock Price
Appreciation
for Option Term (2)
-------------------------------------------------------- --------------------
Number of
Shares % of Total
Underlying Options/SARs
Options/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
(#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Peter B. 40,000 17.2% $13.875 3/01/2009 $349,095 $884,670
Cherry
Alfred S. 6,800 2.9% 13.875 7/03/2000 2,122 4,285
Budnick
Klaus D. 6,000 2.6% 13.875 3/01/2009 52,364 132,701
Lauterbach
Dan A. King 8,000 3.4% 13.875 3/01/2009 69,819 176,934
Robert G. 8,000 3.4% 13.875 3/01/2009 69,819 176,934
Terwall
<FN>
(1) All options reported are for Common Stock granted on March 1, 1999, and
become exercisable in cumulative annual installments of 1/3 of the shares
covered thereby on each of the first, second and third anniversaries of the
grant date. Mr. Budnick resigned as an officer and director on April 12,
2000. As a result, only 2,266 shares of the 6,800 grant are exercisable and
expire on July 3, 2000 if unexercised.
(2) The amounts set forth represent the value that would be received by the
Named Executive Officer upon exercise of the option on the date before the
expiration date of the option based upon assumed annual growth rates in the
market value of the Company's common stock of 5% and 10%, rates prescribed
by applicable Securities and Exchange Commission rules. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Company's common stock and other factors such as the general condition
of the stock markets and the timing of the exercise of the options. The
potential realizable values for Mr. Budnick is based on only the 2,266
shares exercisable to July 3, 2000 as disclosed in Note (1) above, rather
than the full grant. In addition Mr. Budnick's realizable value is based on
an accelerated expiration date of July 3, 2000 rather than the normal ten
year term to expiration.
</TABLE>
4
<PAGE>
The following table sets forth certain information with respect to options
exercised by the executive officers named in the Summary Compensation Table.
<TABLE>
Aggregate Option Exercises in Last Fiscal Year
and Fiscal Year End Option Values
<CAPTION>
Shares Number of Shares Value of Unexercised In-
Acquired Underlying Unexercised the-Money Options at
on Value Options at Fiscal Year End Fiscal Year End ($)
Exercise Realized($) (#) Exercisable Exercisable/
Name (#) (1) Unexercisable Unexercisable (1) (2)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter B. 0 -- 38,666/57,334 $393,662/$516,838
Cherry
Alfred S. 0 -- 28,333/20,967 $285,457/$0
Budnick
Klaus 0 -- 18,000/12,000 $187,500/$105,000
D.Lauterbach
Dan A. King 0 -- 14,999/13,001 $156,242/$116,383
Robert G. 0 -- 13,499/13,001 $143,867/$116,383
Terwall
<FN>
(1) Value is calculated based on the difference between the option exercise
price and the closing market price of the Common Stock on the date of
exercise or end of fiscal year multiplied by the applicable number of
shares.
(2) Mr. Budnick resigned as an officer and director on April 12, 2000. As a
result, unexercisable options expire on July 3, 2000 with no value.
</TABLE>
Employment Contracts and Change of Control Agreements:
Pursuant to an agreement dated January 17, 2000 between Cherry Semiconductor
Corporation (CSC) and Mr. Budnick, CSC agreed to pay Mr. Budnick three times his
annual salary if he were terminated without cause or he terminated employment
after an adverse change in the terms and conditions of his employment. CSC also
entered into an agreement with Mr. Budnick dated January 17, 2000 under which it
agreed to pay Mr. Budnick a retention bonus equal to one year's annual salary if
he remained employed by CSC during the period in which Cherry explored the
possible sale of CSC.
Cherry entered into an agreement with Mr. Budnick dated January 17, 2000,
pursuant to which Mr. Budnick would be paid a success bonus equal to 1.32% of
the purchase price paid by any purchaser of CSC upon consummation of the
purchase. Cherry also entered into an agreement dated January 17, 2000 with Mr.
Budnick to provide Mr. Budnick reimbursement on a grossed-up basis of any
Federal excise taxes imposed on Mr. Budnick as a result of any payments to him
in connection with a sale of CSC.
5
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK OWNERSHIP INFORMATION
The table below sets forth certain information as of June 10, 2000, with
respect to each person known by the Company to be the beneficial owner of more
than five percent of the outstanding shares of Common Stock and the beneficial
ownership of each director, each executive officer shown in the Summary
Compensation Table and all executive officers and directors as a group. Except
as set forth below, the address for such person or group is the Company's
Waukegan office.
<TABLE>
Common Stock
-----------------------
Number of
Shares
Beneficially
Name Owned Percent
---------------------------------------------------------
<S> <C> <C>
Peter B. Cherry 5,533,380(a)(b)(c)(d) 54.1%
Heartland Advisors 949,800 9.3%
Franklin Advisors,Inc. 643,800 6.3%
Robert B. McDermott 61,658(d) *
Klaus D. Lauterbach 43,878(d) *
Dan A. King 41,267(d) *
Robert G. Terwall 28,668(d) *
Thomas L. Martin, Jr. 8,858(d) *
Charles W. Denny 5,458(d) *
Peter A. Guglielmi 9,458(d) *
W. Ed Tyler 4,617(d) *
Henry J. West 5,117(d) *
All executive
officers and 5,750,181(d) 55.7%
directors as group
(11 persons)
<FN>
*Less than 1%
(a)The table includes 741,454 shares of Common Stock held by trusts for the
benefit of Catherine C. Rousey, of which Peter B. Cherry is the sole trustee
in one trust with 284,000 shares and Peter B. Cherry and Virginia B. Cherry
(his mother) are trustees in the other trust with 457,454 shares. As
trustees they have the power to vote the Common Stock and to make
dispositions. The table also includes 931,114 shares in a Virginia Cherry
Trust, and 927,784 shares in a Walter Cherry Trust. Peter B. Cherry is sole
trustee for the Virginia and Walter Cherry Trusts
(b)Includes 9,182 shares held in a charitable foundation by Mr. Cherry and his
wife, 45,000 shares held in a trust for the children of Walter L. Cherry and
1,044 shares in the Walter L. Cherry estate. Peter B. Cherry and Virginia
Cherry are the co-executors of the estate.
(c) The table includes 95,822 shares of Common Stock held by Mr. Cherry's wife
as trustee for their children.
(d) The total number of shares of Common Stock of the Company for officers and
directors includes shares held under options exercisable within 60 days as
follows: Peter B. Cherry, 62,666; Dan A. King, 20,999; Klaus D. Lauterbach,
24,000; Robert G. Terwall, 19,499; Robert B. McDermott, 4,458; Thomas L.
Martin, Jr., 4,458; Charles W. Denny, 4,458; Peter A. Guglielmi, 4,458; W. Ed
Tyler, 4,617; and Henry J. West, 4,617, and all executive officers and
directors as a group, 161,229.
</TABLE>
6
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On June 5, 2000, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with CABO Acquisition Corp., a corporation owned by Peter
Cherry and certain of his affiliates ("CABO"), pursuant to which CABO would
acquire all of the outstanding common stock of the Company not now owned by
Peter Cherry and certain of his affiliates for $26.40 per share. The Board of
Directors of the Company approved the Merger Agreement after a Special
Committee, comprised of all of the directors except for Peter B. Cherry,
determined that the transaction was fair to shareholders other than Peter Cherry
and his affiliates. Pursuant to the Merger Agreement, on June 15, 2000, CABO
commenced a cash tender offer to purchase any and all shares of Cherry
Corporation common stock not owned by Peter Cherry and his affiliates at a price
of $26.40 net to the seller in cash, subject to certain conditions, including a
condition that the number of shares tendered when combined with those already
owned by Peter Cherry and certain of his affiliates equals more than 67% of the
shares of common stock issued and outstanding (the "Minimum Condition"). The
tender offer is scheduled to expire on July 13, 2000, unless extended.
Following the completion of the tender offer, if the Minimum Condition is met
and CABO purchases shares tendered in the tender offer, CABO will be merged with
and into the Company and all outstanding Cherry Corporation common stock (other
than shares owned by Peter Cherry and certain of his affiliates which will be
contributed to CABO) will be converted into the right to receive $26.40 per
share, except for shares held by shareholders exercising their appraisal rights
in accordance with Delaware law.
7
<PAGE>
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.
THE CHERRY CORPORATION
Date June 28, 2000 By /s/ Dan A. King
---------------------------- ----------------------------
Dan A. King
Vice President of Finance and
Administration, Treasurer and
Secretary
8
