SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 1999
OR
[ ] 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 1-8101
___________
Exact Name of Registrant as
Specified in Its Charter: SMTEK INTERNATIONAL, INC.
______________________________
DELAWARE 33-0213512
_____________________________ _____________
State or Other Jurisdiction of I.R.S. Employer
Incorporation or Organization No. Identification
Address of Principal Executive Offices: 2151 Anchor Court
Thousand Oaks, CA 91320
_________________________
Registrant's Telephone Number: (805) 376-2595
_________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
_________________________ ________________________________________
Common Stock, $.01 Par Value Pacific Exchange
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
$.01 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 the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K 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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing price as reported by Nasdaq on October 7,
1999 was $5,076,000. The registrant had 2,267,455 shares of Common Stock
outstanding as of October 7, 1999.
<PAGE>
Part I (Item 3) and Part III (Items 10, 11, 12 and 13) are hereby added
to the registrant's Form 10-K filed on October 15, 1999.
PART I
Item 3. LEGAL PROCEEDINGS
On October 20, 1999, an action was filed in the Superior Court of the
State of California in the County of Ventura styled as Reiss vs. SMTEK
International, Inc. (the "Company"). The action purports to arise out of
the merger of the Company with Jolt Technology, Inc. Also named as a
plaintiff is Charlene Gondek, a shareholder of the Company. The complaint
asserts claims against the Company and certain of its present and former
officers and directors for breach of contract, common law fraud, and
violation of the California Corporate Securities Act. The Company denies
the allegations of the complaint, and intends a vigorous defense.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
PRINCIPAL OCCUPATION AND YEAR FIRST
BUSINESS EXPERIENCE INCLUDING ELECTED A
NAME SERVICE ON OTHER BOARDS AGE DIRECTOR
Class I Director to Continue in Office Until the 1999 Annual Meeting:
James P. Burgess Vice President, Trilogy Marketing 68 1998
Inc.
Class II Directors to Continue in Office Until the 2000 Annual Meeting:
Gregory L. Horton Chief Executive Officer, 43 1996
President and Chairman of
the Board of Directors,
SMTEK International, Inc.
Bruce E. Kanter Management consultant 56 1998
Class III Director to Continue in Office Until the 2001 Annual Meeting:
Oscar B. Marx, III President and CEO, 60 1998
TMW Enterprises Inc.
Mr. Burgess has served as Vice President of Trilogy Marketing, Inc., a
manufacturers representative for electronics products companies, since
1996. From 1995 to 1996, Mr. Burgess served as Vice President of Alcoa
Fujikura Limited, a supplier of electrical products to the automotive
industry. Mr. Burgess served as Vice President of Electro-Wire Products,
Inc., an electrical distribution company, from 1985 to 1995, prior to the
acquisition of that company by Alcoa Fujikura Limited.
Mr. Horton became the Company's President and Chief Executive Officer
in January 1996, following the Company's acquisition of SMTEK, Inc. He was
appointed a director in February 1996, and was appointed Chairman of the
Board in July 1996. Since 1986, he has also served as the President and
Chief Executive Officer of SMTEK, Inc., a subsidiary of the Company.
Mr. Kanter has provided management consulting services to various
companies since 1994. From 1991 to 1994, Mr. Kanter served as Executive
Vice President, Chief Financial Officer and director of Westwood One,
Inc., the parent company of several national radio networks and the
largest producer and distributor of radio programming. Mr. Kanter is a
director of Discus Dental, a privately held marketer and manufacturer of
dental products.
Mr. Marx has served as President and CEO of TMW Enterprises Inc., a
private equity investment company, since 1995, and as Chairman of Pullman
Industries, a privately held metal-forming company, since 1996. Mr. Marx
served as President and CEO of Electro-Wire Products, Inc., an electrical
distribution company, from 1994 to 1995, and as Vice President - Automotive
Components Group of Ford Motor Company from 1989 to 1994. Mr. Marx is a
director of Parametric Technology Corporation and Amerigon Inc. (Nasdaq
traded companies), Tesma International (an automotive parts company listed
on the Toronto Stock Exchange) and Ecoair Company (a privately held
technology development company).
None of the Company's executive officers or directors are related by
blood or marriage. There are no arrangements or understandings between the
listed individuals and any other person pursuant to which those individuals
were selected as an officer or director.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, the directors and
executive officers of the Company and persons who own more than 10% of
the Company's Common Stock ("statutory insiders") are required to file
reports of their ownership of the Company's Common Stock on Form 3 and
any subsequent changes in that ownership on Form 4 or Form 5 with the
Securities and Exchange Commission.
To the Company's knowledge, based solely upon its review of the
copies of such reports required to be furnished to the Company during or
with respect to the fiscal year ended July 2, 1999, the Company believes
that all Section 16(a) filing requirements applicable to its statutory
insiders during or for such fiscal year were satisfied, except: (1)
George R. Weatherford, who was appointed Corporate Vice President of
Operations in August 1998, did not file his Form 3 until after the due
date for such form; (2) Charlene Gondek, who served as a director until
August 6, 1999, did not file her Form 5 until after the due date for
such form; and (3) Thomas M. Wheeler, who owns more than 10% of the
Company's stock and who served as a director until September 29, 1998,
did not file a Form 4 to report the acquisition of 562,500 shares of the
Company's common stock on May 21, 1999. This acquisition by Mr. Wheeler
was reported on a Schedule 13-D/A filed by him on June 1, 1999, and on
his Form 5 filed on August 13, 1999.
Item 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLE
The following table sets forth the cash compensation paid or
accrued by the Company, as well as certain other compensation, for its
fiscal years ended June 30, 1999, 1998 and 1997 to each of the Company's
executive officers whose compensation exceeded $100,000 for the fiscal
year ended June 30, 1999:
Long-Term
Name and Annual Compensation Compensation
Principal -------------------------- Awards:
Positions Age Year Salary Bonus Other Options(#)
-------------- --- ---- ------ ------- ----- -------
Gregory L. Horton 43 1999 $150,000 $ 85,000 (1) 25,000(3)
Chairman, President 1998 150,000 126,000 (1) -0-
and CEO 1997 150,000 97,000 (1) 20,500
Richard K. Vitelle 46 1999 $125,000 $ 10,000 (1) 19,250(3)
VP Finance & Admin., 1998 125,000 10,000 (1) -0-
CFO and Secretary 1997 123,000 37,000 (1) 19,250
George R. Weatherford 59 1999 $ 93,000(2) $17,000 (1) 14,864(4)
Corp. VP Operations
(1) Total perquisites and other personal benefits did not exceed
the lesser of $50,000 or 10% of the executive's salary and bonus.
(2) Mr. Weatherford was appointed Corporate Vice President of
Operations of the Company in August 1998. His reported
compensation represents Mr. Weatherford's salary from the time
of his appointment to fiscal year-end.
(3) Consists of options repriced in fiscal 1999 which had
originally been issued in years prior to fiscal 1999.
(4) Includes 4,864 options repriced in fiscal 1999 which had
originally been issued in years prior to fiscal 1999.
Mr. Horton's biographical information appears under Item 10 above.
Mr. Vitelle has served as the Company's Vice President of Finance
and Administration, Chief Financial Officer and Secretary since January
1996. From 1993 until 1996 he served as Chief Financial Officer of
InVitro International, Inc., a publicly held company engaged in
developing and marketing in vitro diagnostic testing systems.
Since August 1998, Mr. Weatherford has served as the Company's
Corporate Vice President of Operations. From March 1997 until August
1998, he served as Managing Director of Irlandus Circuits Ltd., the
Company's printed circuit board fabrication subsidiary located in
Northern Ireland. Prior to 1997, Mr. Weatherford had over 20 years
experience in general management positions with various companies within
the U.S. printed circuit board industry.
OPTION GRANTS IN FISCAL YEAR ENDED JUNE 30, 1999
The following table sets forth information concerning options granted to
each of the named executive officers during fiscal 1999 (including the
repricing of previously granted options):
Potential Realizable
% of Total Value at Assumed
Options Exer- Annual Rates of Stock
Granted to cise Price Appreciation
Employees or Base Expir- for Option Term
Options in Fiscal Price ation --------------
Name Granted Year ($/Sh.) Date 5% 10%
-------- ------- ---- ---- ---- ---- -----
Gregory Horton 25,000 19.1% $10.00 11/20/08 $157,000 $398,000
Richard Vitelle 19,250 14.7% $10.00 11/20/08 $121,000 $307,000
George Weatherford 14,864 11.4% $10.00 11/20/08 $ 93,000 $237,000
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END
OPTION VALUES
The following table sets forth information concerning options held
by each of the named executive officers as of June 30, 1999:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year-End Fiscal Year-End
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable(1) Unexercisable(2)
------ -------- -------- ------------- -------------
Gregory Horton -0- $ -0- 18,333 / 6,667 $ -0- /$ -0-
Richard Vitelle -0- $ -0- 13,666 / 5,584 $ -0- /$ -0-
George Weatherford -0- $ -0- 4,864 /10,000 $ -0- /$ -0-
(1) All options listed in the table are exercisable at option prices
equal to fair market value on the date of grant.
(2) The value of unexercised in-the-money options is based upon the
fair market value for the common stock on June 30, 1999 of
$6.50 less the applicable option conversion price.
TEN-YEAR OPTION/SAR REPRICINGS
<TABLE>
<CAPTION>
NUMBER OF EXERCISE LENGTH OF
SECURITIES MARKET PRICE PRICE AT ORIGINAL
UNDERLYING OF STOCK AT TIME OF OPTION TERM
OPTIONS TIME OF REPRICING NEW REMAINING
REPRICED OR REPRICING OR OR EXERCISE AT DATE OF
AMENDED AMENDMENT AMENDMENT PRICE REPRICING OR
NAME DATE (#) ($) ($) ($) AMENDMENT
---- -------- ----------- ------------ --------- -------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen M. Andres....... 11/06/89 124 97.50 119.60 97.50 1 yr. 0 mos.
11/06/89 208 97.50 150.50 97.50 2 yrs. 0 mos.
11/06/89 83 97.50 186.72 97.50 3 yrs. 0 mos.
11/06/89 200 97.50 225.00 97.50 4 yrs. 0 mos.
11/06/89 500 97.50 190.00 97.50 5 yrs. 0 mos.
11/06/89 250 97.50 145.00 97.50 6 yrs. 2 mos.
11/06/89 300 97.50 140.00 97.50 8 yrs. 0 mos.
Gregory L. Horton....... 11/20/98 4,500 10.00 32.50 10.00 7 yrs. 5 mos.
11/20/98 15,500 10.00 25.00 10.00 7 yrs. 10 mos.
11/20/98 5,000 10.00 20.00 10.00 8 yrs. 4 mos.
10/03/96 15,500 25.00 35.00 25.00 9 yrs. 9 mos.
Richard K. Vitelle...... 11/20/98 19,250 10.00 25.00 10.00 7 yrs. 9 mos.
09/12/96 4,250 25.00 32.50 25.00 9 yrs. 8 mos.
09/12/96 5,000 25.00 35.00 25.00 9 yrs. 9 mos.
11/06/89 250 97.50 140.00 97.50 8 yrs. 0 mos.
11/06/89 125 97.50 153.75 97.50 8 yrs. 11 mos.
Alan R. Steel............11/06/89 2,000 97.50 145.00 97.50 9 yrs. 8 mos.
George R. Weatherford... 11/20/98 2,500 10.00 25.00 10.00 8 yrs. 3 mos.
11/20/98 2,364 10.00 15.00 10.00 9 yrs. 0 mos.
</TABLE>
EMPLOYMENT AGREEMENTS AND EXECUTIVE SEVERANCE ARRANGEMENTS
Mr. Horton's employment agreement provides for a base salary of
$150,000, subject to annual reviews of the Compensation Committee.
Effective July 1, 1999, Mr. Horton's base salary was increased to
$200,000. Mr. Horton's employment is "at will." Should he voluntarily
resign or be terminated for cause, Mr. Horton will not be entitled to
severance pay. He is entitled to severance equal to 20 months' base
salary if he is terminated without cause. As further described in the
accompanying Report of the Compensation Committee, Mr. Horton was awarded
a cash bonus of $85,000 for fiscal year 1999. See "Compensation of Chief
Executive Officer."
Mr. Vitelle's employment agreement provides for a base annual salary
of $125,000. Mr. Vitelle's employment is "at will". If his employment
is terminated by the Company for cause, then he is not entitled to
severance pay. However, he is entitled to 12 months' base salary and
benefits as severance if he is terminated by the Company without cause,
or if he is terminated as the result of a change in control of the
Company. In addition, if the principal place of Mr. Vitelle's employment
is relocated to any site beyond the 35-mile radius of the Company's
present headquarters, then he may resign at any time within the following
12 months, whereupon he will be entitled to 12 months' severance payments
and benefits.
Mr. Weatherford's employment agreement provides for a base salary
of $105,000 per year. Effective August 23, 1999, Mr. Weatherford's base
salary was increased to $125,000. For fiscal 1999, Mr. Weatherford's
agreement provided for a bonus equal to 1% of the pretax income of each
operating unit. Mr. Weatherford is entitled to six months' salary
continuation as severance in the event his employment is terminated in
conjunction with a change in control of the Company or the termination
of the Chief Executive Officer.
DIRECTOR COMPENSATION
Directors do not receive cash compensation for their services on
the Company's Board of Directors except for reimbursement of travel
expenses.
Pursuant to the 1998 Non-Employee Directors Stock Plan (the
"Directors Plan"), annually on July 1 each non-employee director is
automatically granted, without further action by the Board, a stock
option to purchase 1,500 shares of the Company's Common Stock. The
exercise price per share of all options granted under the Directors Plan
is equal to 100% of the fair market value of the Common Stock at the
time of grant. Under the terms of the Directors Plan, each option
granted is fully exercisable upon the grant date. Each option grant has
a ten-year term. On July 1, 1999 options covering a total of 6,000
shares were granted to non-employee directors at an option price of
$6.50 per share.
The Directors Plan also provides for compensation payable in the
form of shares of Common Stock with a fair market value of $1,000 for
attendance in person for each Board of Directors meeting or $500 for
attendance by conference telephone call for each Board of Directors
meeting, and $500 for attendance in person or by conference telephone
call for each meeting of the committees of the Board of Directors if
such committee meetings are not held in conjunction with meetings of the
Board of Directors.
No stock certificates may be delivered to a director until six
months from the date of grant of an option or from the date of issuance
of the shares.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors (the "Committee")
administers the Company's executive compensation programs and reviews and
approves salaries and bonuses of the executive officers named in the
Executive Compensation Table. The Company's executive compensation programs
are designed to:
- provide competitive levels of base and incentive compensation in
order to
attract, retain and motivate high quality employees;
- tie individual total compensation to individual performance and
the success of the Company; and
- align the interests of the Company's executive officers with
those of its stockholders.
Base Salary. Base salary is targeted to be moderate yet competitive
in relation to salaries commanded by those in similar positions in
comparable companies. The Committee reviews management's recommendations
for executives' salaries and examines survey data for executives with
similar responsibilities in comparable companies to the extent practicable,
and to the extent such data is available. Individual salary determinations
are based on experience, achievement of goals and objectives, sustained
performance and comparison to peer level positions outside the Company.
Incentive Compensation Program. Incentive compensation for the
Company's executive officers is designed to reward such individuals for
their contributions to corporate and individual objectives. In addition,
the Company's operating units maintain profit sharing plans under which
operating unit managers and other key employees receive incentive cash
compensation based on the performance and pre-tax profits of those
operations. The Company's executive officers named above do not
participate in these operating unit profit sharing plans.
Stock Options. The Board of Directors administers the Company's 1993
and 1996 Stock Incentive Plans, which are designed to align the interests
of management and other key employees with those of the Company's
stockholders. The number of stock options granted is related to the
recipient's base compensation, level of responsibility and accomplishments.
All options have been granted with an option exercise price equal to the
fair market value of the Company's common stock on the date of grant.
Repricing of Stock Options. In November 1998, in an effort to retain
the services of key employees of the Company, the Board of Directors
lowered the exercise price of all 112,894 outstanding employee options,
held by 296 employees, to $10.00, the fair market value on the date of
repricing. The original options carried exercise prices ranging from
$15.00 to $32.00; as a result, the Committee believed that the options were
not providing the intended incentivation for the Company's key employees.
The repriced options included 25,000, 19,250 and 4,864 options held by
Messrs. Horton, Vitelle and Weatherford, respectively, the Company's
executive officers.
Compensation of Chief Executive Officer. Gregory L. Horton was
appointed President and Chief Executive Officer of the Company in 1996. Mr.
Horton's employment agreement provides for a base salary of $150,000,
subject to annual review by the Committee, and for a bonus of up to 200% of
his base salary for achievement of corporate goals and objectives. In
evaluating Mr. Horton's compensation for fiscal 1999, the Committee took
into consideration competitive executive salaries in companies of similar
size and complexity. On this basis, the Committee determined that Mr.
Horton's base salary was low relative to competitive salaries. The
Committee also noted that the Company has made progress in fiscal 1999
toward achieving long-term strategies, although such progress is not
necessarily evident from the financial results for fiscal 1999. Principally
on the basis of these factors, the Committee awarded Mr. Horton a cash bonus
of $85,000 for fiscal 1999, and increased Mr. Horton's base salary from
$150,000 to $200,000 effective July 1, 1999.
Submitted by the Compensation Committee:
Bruce E. Kanter and Oscar B. Marx III
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Kanter and Marx were appointed to the Compensation Committee
in November 1998. Neither of these individuals were officers or
employees of the Company during fiscal 1999 or at any prior time. There
are no interlocks between the Company and other entities involving the
Company's executive officers and directors who serve as executive
officers or directors of other entities.
STOCK PERFORMANCE GRAPH
The following performance table compares the cumulative total
return for the period from June 30, 1994 through June 30, 1999 from an
investment of $100 in (i) the Company's Common Stock, (ii) the Dow Jones
Industrials as a group, and (iii) the Dow Jones Computer Index group of
companies (the Company's peer group). For each group an initial
investment of $100 is assumed on June 30, 1994. The total return
calculation assumes reinvestment of all dividends for the indices. The
Company did not pay dividends on its Common Stock during the time frame
set forth below.
The data points depicted on the graph are as follows:
Dow Jones Dow Jones SMTEK
Date Computer Index Industrial Ave. International
-------- ------ ------ ------
06/30/94 100.00 100.00 100.00
06/30/95 172.47 125.69 144.44
06/30/96 194.61 155.99 177.78
06/30/97 301.59 212.08 100.00
06/30/98 431.93 246.96 66.67
06/30/99 777.84 302.65 28.89
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of October 28, 1999, except as
otherwise indicated, the number of shares and percentage of outstanding
Common Stock known by the Company to be beneficially owned by (i) each
person who is known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock, (ii) each of the Company's
directors, (iii) each Named Executive Officer and (iv) all executive
officers and directors of the Company as a group. Unless otherwise
noted, shares are held with sole voting and investment power. Holdings
include, where applicable, shares held by spouses and minor children,
including shares held in trust.
SHARES OF COMMON STOCK
------------------------------
NAME AND ADDRESS OF NO. PERCENT OF
BENEFICIAL OWNER * SHARES CLASS
------------------- --------- ----------
Thomas M.Wheeler......... 881,813 38.9%
801 W. Big Beaver Road
Suite 201
Troy, MI 48084
Gregory L. Horton.......... 66,249 (1) 2.9%
James B. Burgess........... 4,223 (2) **
Bruce E. Kanter............ 4,847 (3) **
Oscar B. Marx III.......... 2,416 (2) **
Richard K. Vitelle......... 16,356 (4) **
George R. Weatherford...... 10,042 (5) **
Directors and Executive
Officers as a Group (6
persons).................. 104,133 (6) 4.6%
- --------
* Unless otherwise noted, the address for the beneficial owner is
c/o SMTEK International, Inc., 2151 Anchor Ct., Thousand Oaks, CA 91320.
** Represents less than 1% of the outstanding shares.
(1) Includes 19,999 shares underlying options exercisable within 60 days.
(2) Includes 2,416 shares underlying exercisable options.
(3) Includes 2,540 shares underlying exercisable options.
(4) Includes 15,061 shares underlying options either currently exercisable
or exercisable within 60 days.
(5) Includes 7,364 shares underlying options either currently exercisable
or exercisable within 60 days.
(6) Includes 49,796 shares underlying options exercisable within 60 days.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 21, 1999, following approval of the Company's stockholders,
the Company sold 562,500 shares of Common Stock to Thomas M. Wheeler,
the Company's largest stockholder, for an aggregate price of $4,500,000.
This transaction increased Mr. Wheeler's ownership interest in the
Company's Common Stock from 18.7% to 38.9%. Also on May 21, 1999, the
Company paid off a $2,000,000 note payable to Mr. Wheeler and accrued
interest thereon of $302,000.
SIGNATURE
Pursuant to the requirements 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.
November 1, 1999 /s/ Richard K. Vitelle
- --------------------------- -----------------------
Date Richard K. Vitelle
Vice President - Finance
(Principal Financial Officer)
