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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(FILED IN ACCORDANCE WITH RULE 12B-25)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NO.: 0-16182
VERNITRON CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 11-1962029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
645 MADISON AVENUE
NEW YORK, NEW YORK 10022
(Address of principal executive offices) (Zip Code)
(212) 593-7900
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, par value $.01 per share
$1.20 Cumulative Exchangeable Redeemable Preferred Stock,
par value $.01 per share
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
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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: Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section 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 [X].
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of the close of business on February 28, 1996: $6,103,000
Common Stock outstanding at February 28, 1996: 12,659,957 shares.
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VERNITRON CORPORATION
FORM 10-K/A NO. 1
Vernitron Corporation, a Delaware corporation (the "Registrant" or
"Company") hereby amends its Form 10-K, dated March 26, 1996 (the "Form 10-K"),
for the fiscal year ended December 31, 1995.
The Form 10-K is hereby amended to add Part III thereto as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age and principal occupation of each nominee, the nominee's
length of service as a director of the Company, the names of the other public
companies of which the nominee is a director and certain other biographical
information are set forth below.
STEPHEN W. BERSHAD, 54
Chairman of the Board and Chief Executive Officer of the Company since
December 1986. Prior to joining the Company, he was a Managing Director of
Lehman Brothers and its predecessors, investment banking firms, where he held a
series of senior management positions. Mr. Bershad is a director of EMCOR
Group, Inc.
ANTHONY J. FIORELLI, JR., 66
President, Strategic Management Consulting Services, Inc., a management
consulting firm, since December 1985. Prior to that time, Mr. Fiorelli was
President and Chief Executive Officer of General Defense Corporation, a
diversified engineering and manufacturing company. Mr. Fiorelli has been a
director of the Company since February 1988.
ELIOT M. FRIED, 63
Mr. Fried has been a Managing Director of Lehman Brothers and its
predecessors, investment banking firms, since 1991. Prior to that time he was
Senior Executive Vice President of Lehman Brothers. Currently, he is Co-
Chairman of Lehman Brother's Investment Committee. Mr. Fried is a director of
American Marketing Industries, Inc., Bridgeport Machines, Inc., Energy Ventures,
Inc., Lear Seating Corporation, Sun Distributors, L.P. and Walter Industries
Inc. Mr. Fried has served as a Director of the Company since 1994.
The Board of Directors met four times during 1995. The Audit Committee,
the Compensation Committee and the Stock Incentive Plan Committee are the
standing committees of the Board.
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The Audit Committee reviews internal and external audit procedures of
the Company. Mr. Fiorelli is a member of the Audit Committee. The Compensation
Committee oversees compensation policies of the Company. Its members are
Messrs. Bershad and Fiorelli. The Stock Incentive Plan Committee administers
the Vernitron Corporation Long-Term Stock Incentive Plan. Mr. Fiorelli is a
member of the Stock Incentive Plan Committee. The Audit Committee and the
Compensation Committee met once in 1995.
Each director attended all meetings of the Board and of the Committees
on which the director served.
The compensation of directors is fixed by the Board of Directors.
Directors who are not employees of the Company receive meeting fees of $2,500
for each Board meeting attended and $1,000 for each committee meeting attended
other than in connection with a Board meeting. Directors are reimbursed for
travel and other expenses incurred in the performance of their duties.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table shows the compensation paid to the Company's
executive officers for services in all capacities for the three years ended
December 31, 1995:
<TABLE>
<CAPTION> LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------ ALL OTHER
BONUS OTHER ANNUAL OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION (# OF SHARES)(2) ($)(3)
- --------------------------- ---- --------- ------ ------------ ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen W. Bershad.............. 1995 262,500 100,000 - - 9,633
Chairman of the Board and 1994 262,500 150,000 - 21,000 10,810
Chief Executive Officer 1993 262,500 - - - 3,385
Elliot N. Konopko (4)................. 1995 175,000 40,000 - - 7,271
Vice President, General 1994 175,000 55,000 - 15,000 6,318
Counsel and Secretary 1993 175,000 - - - 3,338
Raymond F. Kunzmann (5)........ 1995 135,000 45,000 - 20,000 5,517
Vice President-Finance 1994 120,000 28,000 - 2,721
and Controller
</TABLE>
_____________________
(1) Reflects payments under the Company's bonus plan, which is described in
the "Compensation Committee Report on Executive Compensation" below.
(2) Reflects awards under the Company's Long-Term Stock Incentive Plan,
which is described under "Stock Incentive Plan" below.
(3) Reflects matching contributions under the Company's 401(K) Plan,
described under 401(K) Plan on page 6 of this proxy statement, and payments
under the Company's executive health insurance plan. Vernitron's executive
health insurance plan, which covers only executive officers, provides for the
reimbursement of deductible and coinsurance amounts and certain medical expenses
not covered under Vernitron's basic medical plans.
(4) Mr. Konopko has been Vice President, General Counsel and Secretary of
the Company since March 1990.
(5) Raymond F. Kunzmann was elected Vice President-Finance and Controller on
June 2, 1994. Prior to that time, he was Group Controller at Mannesmann Capital
Corporation, a diversified manufacturing company, from January 1994 until May
31, 1994, and was Controller and held other positions at Lear Siegler, Inc., a
diversified manufacturing/service company, from January 1987 until December
1993.
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401(K) Plan
Vernitron currently maintains a 401(K) Salary Reduction Plan (the
"401(K) Plan") which is intended to qualify under Sections 401(a) and 401(K) of
the Internal Revenue Code. All employees who are not members of collective
bargaining groups and who are 21 years of age or older are eligible to
participate in the 401(K) Plan on the first calendar day of the month
immediately following the month in which they complete 1,000 hours of service.
All eligible executive officers have elected to participate in the 401(K) Plan.
Eligible employees electing to participate in the 401(K) Plan may
defer a portion of their compensation on a pre-tax basis, by contributing a
percentage thereof to the 401(K) Plan. The minimum contribution is not less
than 3% of annual gross pay. The maximum is prescribed by the Tax Reform Act of
1986. The limit for 1995 was $9,240 and will be $9,500 in 1996. The Company
made a matching contribution in Common Stock of the Company in respect of each
employee's 3% contribution in 1995. Eligible employees who elect to participate
in the 401(K) Plan and whose employment began prior to December 1, 1988 are 100%
vested in the Company's matching contribution when made. Eligible employees
whose employment began on and after December 1, 1988 are vested in the Company's
matching contribution according to the following schedule: less than 1 year of
service - 0%; 1 year of service - 20%; 2 years of service - 40%; 3 years of
service - 60%; 4 years of service - 80%; and 5 years of service - 100%.
Stock Incentive Plan
The Vernitron Corporation Long-Term Stock Incentive Plan (the "Incentive
Plan") was approved by the stockholders in 1991. The Incentive Plan is
administered by the Stock Incentive Plan Committee (the "Committee"). The
Committee selects participants from among those executives and other key
employees of the Company and its subsidiaries who are in a position to
contribute materially to the success of the Company and determines the amounts,
times, forms, terms and conditions of grants.
Grants may be in the form of options to purchase shares of Common Stock,
stock appreciation rights, restricted stock and performance units (collectively,
"stock incentives"). Grants may be made for up to 450,000 shares of Common
Stock of the Company in the aggregate. Stock appreciation rights may be granted
on a "free-standing" basis or in conjunction with all or a portion of the shares
covered by an option. Stock incentive awards are subject to such provisions as
the Committee determines and may be exercised at one time or in such
installments and at such prices over the balance of the exercise period as
determined by the Committee.
Each stock incentive is exercisable in whole or in part, prior to its
cancellation or termination, by written notice to the Company. If any option is
being exercised, such notice must be accompanied by payment in full of the
purchase price in cash or, if acceptable to the Committee, shares of Company
Common Stock or partly in cash and partly in such shares. Stock incentives are
not transferable except by will or by laws of descent and distribution.
In general, each stock incentive will terminate upon the earlier of (i)
the date fixed by the Committee when the stock incentive is granted or (ii)
unless determined otherwise by the Committee, termination of employment other
than for cause, to the extent the stock incentive was then exercisable, up to 90
days after the participant's termination of employment. In the event of death
or termination due to disability, the stock incentive may be exercised to the
extent then exercisable for up to one year thereafter. If a participant's
employment is terminated for cause, however, his or her ability to exercise any
stock incentive is terminated.
The Company may make loans to such participants as the Committee, in its
discretion, may determine in connection with the exercise of options in an
amount up to the exercise price of the option plus any applicable withholding
taxes. In no event may any such loan exceed the fair market value, at the date
of exercise, of the shares covered by the option exercised.
Under the Incentive Plan, the Committee may determine, in the event of a
change of control of the Company, that all stock incentives which have not
terminated and which are then held by any participant will
4
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become immediately exercisable. Any such determination by the Committee may be
set forth in an applicable option agreement or by resolution of the Committee.
Options outstanding under the Incentive Plan to acquire up to 117,000
shares were granted prior to 1994, including to Stephen W. Bershad (42,000
shares) and Elliot N. Konopko (30,000 shares). Options outstanding under the
Incentive Plan to acquire up to an additional 101,000 shares were granted in
1994 to certain new and current employees, including to Stephen W. Bershad
(21,000 shares), Elliot N. Konopko (15,000 shares) and Raymond F. Kunzmann
(20,000 shares). All options are exercisable to the extent of 40% thereof
within one year from the date of grant and an additional 30% each year
thereafter. All options are incentive stock options. All options terminate
seven years after the date of grant and are exercisable at $0.75 per share,
except that Mr. Bershad's options terminate five years after grant and are
exercisable at $0.83 per share.
Compensation Committee Report On Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation.
Under the supervision of the Compensation Committee of the Board of
Directors, the Company has developed and implemented compensation policies which
seek to enhance the profitability of the Company, and thus shareowner value, by
aligning closely the financial interests of the Company's senior managers with
those of its shareowners. In furtherance of these goals, the Company relies to
a large degree on annual bonus and longer-term stock incentive compensation to
attract and retain executive officers and other key employees and to motivate
them to perform to the full extent of their abilities. Both types of incentive
compensation are not guaranteed and are variable and closely tied to corporate,
business unit and individual performance in a manner designed to encourage a
sharp and continuing focus on building profitability and shareowner value. The
annual bonus and stock incentive compensation is more closely tied to the
Corporation's success in achieving significant financial and other performance-
oriented goals. The Committee considers the total compensation (earned or
potentially available) of each of the executive officers and the other senior
managers in establishing each element of compensation. Eligible persons must be
employed by the Company at the time bonus compensation is awarded.
In evaluating the performance and setting the incentive compensation of the
Chief Executive Officer, the Committee has taken note of management's success
in improving sales, operating income, bookings and backlog and in repositioning
the Company for growth in its served markets. In its review of other senior
management performance and compensation for 1995, the Committee has also taken
into account management's consistent commitment to the long-term success of the
Company through development of new or improved products and the implementation
of significant cost reductions, resulting in increased efficiencies and
continued debt reduction.
Based on its evaluation of these factors, the Committee believes that the
senior management of the Company is dedicated to achieving significant
improvements in long-term financial performance and that the compensation
policies the Committee has implemented and administered have contributed to
achieving this management focus.
During each fiscal year, the Committee considers the desirability of
recommending to the Long-Term Stock Incentive Committee granting senior
executives, including executive officers, awards under the Incentive Plan, which
provides the flexibility to grant longer-term incentives in a variety of forms,
including performance units, stock options, stock appreciation rights and
restricted stock. For 1995 the Committee determined not to recommend the grant
of additional awards under the Incentive Plan.
Members of the Compensation Committee
Stephen W. Bershad
Anthony J. Fiorelli, Jr.
5
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Compensation Committee Interlocks and Insider Participation
Mr. Bershad, a member of the Compensation Committee, is Chairman of the
Board and Chief Executive Officer of the Company.
Stock Price Performance Graph
The information in the foregoing report and the following graph shall not
be incorporated by reference (by any general statement incorporating this proxy
statement by reference or otherwise) into any prior or future filing under the
Exchange Act or the Securities Act of 1933, except to the extent the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
The following graph shows the value of a $100 investment in Common Stock
from August 30, 1991 through December 29, 1995, as of the dates indicated,
compared with the value of a similar investment in the NASDAQ Non-Financial
Stock Index and the S&P High Technology Composite Index at such times. The
NASDAQ Non-Financial Stock Index is an index comprising all non-financial common
shares traded on the NASDAQ National Market and the NASDAQ Small-Cap Market.
The S&P High Technology Composite Index is an index comprising common shares of
companies in the aerospace/defense, communications equipment, electronics and
office equipment and supplies industries. Both the NASDAQ Non-Financial Stock
Index and the S&P High Technology Composite Index are calculated on a total
return basis to include the reinvestment of dividends. The Common Stock was
first quoted on NASDAQ on August 14, 1991.
[GRAPHIC]
[BOX]
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<TABLE>
<CAPTION>
8/31/91 12/27/91 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/30/94 6/30/95 12/29/95
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vernitron Common $100 $ 88 $ 91 $ 91 $ 91 $ 38 $ 59 $ 35 $ 50 $ 54
Stock
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NASDAQ Non-
Financial Index $100 $114 $104 $124 $129 $143 $126 $137 $171 $189
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S & P High
Technology $100 $ 93 $100 $103 $115 $126 $124 $144 $196 $207
Composite Index
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</TABLE>
(1) On July 20, 1994 the Company issued an additional 7,352,942 shares of
Common Stock to existing stockholders at $0.34 per share pursuant to a rights
offering of Common Stock. Prior to the rights offering, there were 5,185,070
shares of Common Stock outstanding.
7
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Agreements With Directors and Officers
The Company has entered into indemnification agreements with its
directors and certain officers in order to induce them to continue to serve as
directors and officers of the Company, indemnifying them for any and all
liabilities incurred by them arising out of their service as directors or
officers, other than liabilities arising out of conduct which has been
determined in a final adjudication to constitute bad faith or a knowing
violation of law or receipt by such person of an improper personal benefit. The
rights to indemnification under such agreements are in addition to any rights to
indemnification contained in the Company's Certificate of Incorporation or By-
Laws, which provide for indemnification under certain circumstances. The
Company has agreed to pay Mr. Konopko up to six months' base compensation and
certain other benefits in the event of his termination by the Company other than
for cause.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned by the Company's directors individually, and by all directors
and officers as a group, as of March 31, 1995:
<TABLE>
<CAPTION>
SHARES EXERCISABLE TOTAL
OWNED STOCK SHARES
DIRECTLY OR OPTION BENEFICIALLY PERCENT
INDIRECTLY (1) SHARES (2) OWNED OF CLASS
-------------- ---------- -------- --------
<S> <C> <C> <C> <C>
Stephen W. Bershad . . . . . . . 5,685,157 50,400 5,735,558 45.1%
Anthony J. Fiorelli, Jr.(3). . . 69,245 -- 69,245 --
Eliot M. Fried (4) . . . . . . . -- -- -- --
Directors and Executive Officers
as a group (5 persons) . . . . . 5,754,402 86,400 5,840,802 45.8%
- ---------------------
</TABLE>
(1) Does not include 1,066,099 shares of Common Stock owned by the
Vernitron Corporation 401(K) Plan (the "401(K) Plan") as of March 31, 1996.
Elliot N. Konopko and Raymond F. Kunzmann, who are executive officers of the
Company, are the sole trustees of the 401(K) Plan and may be deemed to
beneficially own such shares, although each of them disclaims beneficial
ownership of such shares. Mr. Bershad owns 2,731,337 shares of Common Stock
directly and 2,953,820 shares of Common Stock indirectly through SWB Holding
Corporation, of which he is the sole shareholder and Chairman.
(2) Shares covered by stock options exercisable on March 31, 1996, or
within 60 days thereafter.
(3) Less than 1% of the total Common Stock outstanding.
(4) Eliot M. Fried is a Managing Director and a Co-Chairman of the
Investment Committee of Lehman, which may be deemed to beneficially own
2,318,705 shares of Common Stock. See "Principal Stockholders" below. Mr.
Fried disclaims beneficial ownership of such shares.
8
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Mr. Bershad also directly owns, as of March 31, 1996, 149,041 shares of
$1.20 Cumulative Exchangeable Redeemable Preferred Stock, $.01 par value per
share ("Preferred Stock"), of the Company, constituting approximately 20.2% of
the outstanding shares of Preferred Stock. No other director or officer owns
any shares of Preferred Stock.
PRINCIPAL STOCKHOLDERS
The Company knows of no person who, as of March 31, 1996, beneficially
owned more than five percent of the Common Stock outstanding, except for Mr.
Bershad and except as set forth below.
<TABLE>
<CAPTION>
AMOUNT AND
NAME AND ADDRESS NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------- -------------------- ----------
<S> <C> <C>
Lehman Electric Inc. 2,318,705 shares 18.3%
World Financial Center
200 Vesey Street
New York, NY 10285
Victor A. Morgenstern 909,000 shares 7.2%
2 North LaSalle Street
Chicago, IL 60602
Vernitron Corporation 401(K) Plan 1,066,099 shares 8.4%
Vernitron Corporation
645 Madison Avenue
New York, NY 10022
</TABLE>
Lehman Electric Inc., a Delaware corporation ("Lehman Electric"), is an
investment vehicle. Lehman Brothers Inc., a Delaware corporation ("Lehman
Brothers"), is a registered broker-dealer. Lehman Brothers Group Inc., a
Delaware corporation ("Group"), is a holding company and parent of Lehman
Electric. Lehman Brothers Holdings Inc., a Delaware corporation ("Holdings"),
through its domestic and foreign subsidiaries, is a full line securities firm.
It is the immediate parent of Lehman Brothers and Group. The foregoing entities
(other than Lehman Brothers) may be deemed to beneficially own the 2,318,705
shares of Common Stock directly owned by Lehman Electric. In the ordinary
course of its business on behalf of its customers, Lehman Brothers may purchase
and sell shares of Common Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None, other than as set forth in Item 11 above.
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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 authorized.
VERNITRON CORPORATION
Dated: May 2, 1996
By: /s/ Elliot N. Konopko
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Elliot N. Konopko
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