<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
12500 NORTH WASHINGTON STREET
DENVER, COLORADO 80241-2400
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The annual meeting of shareholders of Auto-trol Technology Corporation (the
"Company") will be held on Tuesday, January 28, 1997, at the Company's
headquarters, 12500 North Washington Street, Denver, Colorado, at 10:00 a.m.
Mountain Standard Time. At the meeting, the shareholders will consider and act
upon the following matters:
1. The election of directors to serve until the next annual meeting or
until their successors are duly elected and qualified.
2. Such other business as may properly come before the meeting.
Only shareholders of record at the close of business on December 10, 1996, are
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors
Allyson S. Kissell
Secretary
Denver, Colorado
December 20, 1996
IT IS IMPORTANT THAT ALL SHAREHOLDERS BE REPRESENTED AT THE MEETING. WE URGE
YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE, WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING. THE PROXY SHOULD BE RETURNED IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE. IF YOU DO ATTEND THE MEETING, YOU MAY THEN
WITHDRAW YOUR PROXY. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE.
<PAGE>
AUTO-TROL TECHNOLOGY CORPORATION
12500 NORTH WASHINGTON STREET
DENVER, COLORADO 80241-2400
______________________________________________________________________
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 28, 1997
This Proxy Statement (the "Proxy Statement") is furnished to shareholders of
Auto-trol Technology Corporation (the "Company") in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting of Shareholders to be held on Tuesday, January 28, 1997, at the
Company's headquarters, 12500 North Washington Street, Denver, Colorado, at
10:00 a.m. Mountain Standard Time, and at any adjournment thereof. The
approximate mailing date of this Proxy Statement and the accompanying proxy is
December 20, 1996. ANY PROXY MAY BE REVOKED IN PERSON AT THE MEETING, EITHER BY
SUBMITTING A PROXY DATED LATER THAN THE PROXY TO BE REVOKED OR BY NOTIFYING THE
SECRETARY OF THE COMPANY IN WRITING AT ANY TIME PRIOR TO THE TIME IT IS VOTED.
In addition to the solicitation of proxies by mail, officers and other
representatives of the Company may solicit the return of proxies by telephone,
telegraph or personal contact. The Company will bear the expense of preparing,
printing, assembling and mailing this Proxy Statement and accompanying material
to its shareholders and will reimburse banks, brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in
forwarding proxy solicitation material to beneficial owners.
All references in this Proxy Statement to the Company's last fiscal year refer
to the period from October 1, 1995 to September 30, 1996.
SHAREHOLDER PROPOSALS
Subject to the rules of the Securities Exchange Act of 1934, any shareholder
who intends to submit a proposal for action at the annual meeting of
shareholders must be a record or beneficial owner of at least 1% or $1,000 in
market value of securities entitled to be voted at the meeting and must have
held such securities for at least one year. Further, the shareholder must
continue to own such securities through the date on which the meeting is held.
Currently, the 1997 annual meeting of shareholders is scheduled to be held on
January 27, 1998. To be considered for inclusion in the proxy material for the
next annual meeting, proposals must be received by the Secretary of the Company
at 12500 North Washington Street, Denver, Colorado 80241-2400 on or before
September 30, 1997.
1
<PAGE>
VOTING SECURITIES AND PRINCIPAL SHAREHOLDERS
The Company's outstanding voting stock consists of Common Stock. Only holders
of Common Stock of record at the close of business on December 10, 1996 (the
"Record Date"), will be entitled to notice of, and to vote at, the meeting. On
the Record Date there were 7,732,445 shares of Common Stock outstanding. Each
outstanding share of Common Stock is entitled to one vote on each matter to be
acted upon at the meeting.
A majority of the Company's outstanding voting Common Stock, represented in
person or by proxy, is necessary to constitute a quorum to take action at the
meeting. Cumulative voting is not permitted. If a quorum is present at the
meeting, the simple majority vote of shares voting is required for election of
the directors. Abstaining votes and broker non-votes will not be counted as
votes for or against a proposal, and will have no effect on the result of a
vote, although both will be counted towards the presence of a quorum.
The following table sets forth, as of November 30, 1996, information with
respect to beneficial ownership of the Company's Common Stock by each person
beneficially owning more than 5% of the outstanding shares of such Common Stock:
<TABLE>
<CAPTION>
SHARES PERCENT
BENEFICIALLY OF
TITLE OF CLASS NAME AND ADDRESS OWNED CLASS
==========================================================================
<S> <C> <C> <C>
Common Stock Hillman Trusts 1,843,922 (1) 24%
c/o Howard B. Hillman
Taconic Group
158 Main Street
New Canaan, CT 06840
- --------------------------------------------------------------------------
Common Stock Howard B. Hillman 7,546,174(1)(3) 98%
- --------------------------------------------------------------------------
Common Stock Venhill Limited Partnership 5,032,485(2) 65%
- ------------------------------------------------------------------------
</TABLE>
(1) The Hillman Trusts are comprised of thirteen separate trusts holding in
aggregate 1,843,922 shares. These shares are also included in the total for
Howard B. Hillman, President, CEO and a director of the Company. Under the
terms and conditions of the Trusts, Mr. Hillman has sole voting and
investment powers for one Trust which includes 1,000 shares; shared voting
and investment powers for eleven Trusts which include 936,255 shares; and
neither voting nor investment powers for one Trust which includes 906,667
shares. Additionally, Mr. Hillman is the beneficiary and trustee of one of
the Trusts; beneficiary of two of the Trusts; and the Trustee of ten of the
Trusts. The other Trustees and beneficiaries of the Hillman Trusts are
neither officers nor directors of the Company.
(2) Howard B. Hillman is a general partner of Venhill Limited Partnership.
(3) Includes 669,767 shares held directly by Howard B. Hillman, and 5,032,485
shares owned by Venhill Limited Partnership of which Mr. Hillman is a
general partner. Excludes an aggregate of 800 shares owned by Mr. Hillman's
adult children, as to which shares Mr. Hillman disclaims beneficial
ownership.
The following table sets forth, as of November 30, 1996, information with
respect to beneficial ownership of the Company's Common Stock by each director
of the Company, each of whom is a nominee for election as director, by each
named executive officer, and by the present directors and officers of the
Company as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT
OF OF
TITLE OF CLASS NAME BENEFICIAL OWNERSHIP CLASS
==============================================================================
<S> <C> <C> <C>
Common Stock Howard B. Hillman 7,546,174 /(1)/ 98%
------------------------------------------------------
Major General 400 /(2)/ *
William R. Usher,
USAF (Ret.)
------------------------------------------------------
J. Roderick 2,200 /(2)/ *
Heller, III
------------------------------------------------------
Kenneth M. Dedeluk 4,825 /(2)/ *
------------------------------------------------------
Dewayn Davis 3,330 /(2)/ *
------------------------------------------------------
Common Stock All current 7,560,814 /(2)(3)(4)/ 98%
directors and
officers as a
group (9 persons)
- ------------------------------------------------------------------------------
</TABLE>
* Less than 1 percent.
(1) Includes 770,333 shares of Common Stock of which Howard B. Hillman is both a
trustee and a beneficiary; 166,922 shares of Common Stock of which Mr.
Hillman is a trustee but not a beneficiary and as to which he disclaims
beneficial ownership; 906,667 shares of Common Stock of which Mr. Hillman is
a grantor and neither a trustee nor a beneficiary; 669,767 shares of Common
Stock owned directly by Mr. Hillman; 5,032,485 shares owned by Venhill
Limited
2
<PAGE>
Partnership of which Mr. Hillman is a general partner; and excludes
an aggregate of 800 shares held by Mr. Hillman's adult children, as to which
shares Mr. Hillman disclaims beneficial ownership.
(2) Includes stock options that will have vested by January 28, 1997.
(3) Includes 1,843,922 shares owned by the Hillman Trusts and 5,032,485 shares
owned by Venhill Limited Partnership.
(4) Includes 100 shares and 3,260 options held by Karen Niparko, Vice President;
45 shares and 400 options held by Allyson Kissell, Corporate Secretary; and
50 shares and 30 options held by Valerie Gautreaux, Assistant Corporate
Secretary.
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 of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission ("Commission") initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors, and greater than ten percent shareholders are
required by Commission regulation to furnish the Company with copies of all
Section 16(a) forms they file.
Mr. Davis, Ms. Niparko and Ms. Kissell were 14 days delinquent in filing
Forms 5 to report options granted during the fiscal year. To the Company's
knowledge, based solely on a review of the copies of reports furnished to the
Company, the Company believes that all filings applicable to its other executive
officers, directors, and 10 percent beneficial owners were complied with during
the last fiscal year.
PERFORMANCE GRAPH
The following graph compares the Company's, the peer group's and the
Standard & Poors' 500 yearly percentage change in cumulative total shareholder
return for the past five years, as measured by dividing the (i) the sum of (A)
the cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the registrant's share price at the
end and the beginning of the measurement period; by (ii) the share price at the
beginning of the measurement period. The peer group was selected from companies
which Auto-trol Technology Corporation considers to be its competitors, such as
Parametric Technology Corporation, Structural Dynamics Research Corporation,
Autodesk, Inc., Intergraph Corporation and ComputerVision Corporation. The graph
assumes that $100 was invested on October 1, 1991 and that all dividends were
reinvested.
[GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AUTO-TROL PEER GROUP S&P500
------------------------------------------------------
100 100 100
100 100 100
86 122 104
21 136 112
57 136 111
43 178 140
17 160 165
3
<PAGE>
PROPOSAL 1. ELECTION OF DIRECTORS
The Company's Bylaws provide that the Board of Directors shall consist of not
fewer than three persons. In accordance with the Bylaws, three directors are to
be elected to hold office until the next annual meeting of shareholders or until
their successors are duly elected and qualified. The proxies will be voted,
unless authority to do so is withheld, in favor of the nominees listed below,
all of whom comprise the current Board of Directors of the Company, each having
served in that capacity since the dates indicated. In the event any of the
nominees shall become unavailable, the persons named as proxies may vote for a
substitute nominee or vote for fewer than three directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.
NOMINEES FOR DIRECTORS
Set forth in the following table is certain information regarding each nominee
for election as director of the Company:
<TABLE>
<CAPTION>
BUSINESS EXPERIENCE FOR
POSITION WITH THE THE PAST FIVE YEARS;
NAME; AGE COMPANY; YEAR BECAME DIRECTOR AND
PRINCIPAL OCCUPATION OTHER DIRECTORSHIPS
================================================================================
<S> <C> <C>
Howard B. Hillman President of the Director of the Company
Age 62 Company, Chief Executive since 1973. President
Officer and Chairman of and Chief Executive
the Board of Directors. Officer of the Company
since 1985. Private
investor, trustee and
beneficiary of certain
Hillman Family Trusts.
Mr. Hillman is also a
director of Hambrecht &
Quist Group.
- --------------------------------------------------------------------------------
Major General William R. Director of the Company. Director of the Company
Usher, USAF (Ret.) Director of Business since 1988. Since
Age 63 Development, Management 1994, Director,
and Data Systems Business Development,
Department, Lockheed Lockheed Martin
Martin Corporation, the Corporation,
world's largest space specializing in complex
and electronics integrated information
corporation. management systems.
- --------------------------------------------------------------------------------
J. Roderick Heller, III Director of the Company; Director of the Company
Age 59 Chairman and Chief since 1984. Chairman
Executive Officer of NHP and Chief Executive
Incorporated. Officer of NHP
Incorporated.
- --------------------------------------------------------------------------------
</TABLE>
There are no arrangements or understandings between of the above-listed
directors, or any other persons, pursuant to which any of the directors have
been selected as such.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During the Company's last fiscal year, the Board of Directors met four times.
Messrs. Hillman, Heller, and Usher were present at all meetings. The Board of
Directors has an Audit Committee and a Compensation Committee, but does not have
a nominating committee.
The Audit Committee advises the Board of Directors with respect to (i) the
selection of independent certified public accountants, who annually audit the
books and records of the Company and its consolidated subsidiaries; (ii) the
scope of such audit; (iii) the adequacy of the financial statements prepared for
publication by management and the adequacy of the audits of such statements; and
(iv) the adequacy of the financial and accounting control procedures and the
financial management of the Company. The current members are Messrs. Hillman
and Heller. The Audit Committee did not meet separately from the Board of
Directors meetings during the twelve months ended September 30, 1996.
The Compensation Committee advises the Board of Directors with respect to
executive compensation, stock options and other forms of compensation. The
current members are Messrs. Usher and Heller. The Compensation Committee met
twice during the twelve months ended September 30, 1996.
4
<PAGE>
Each director who is not also an officer of the Company received $2,000 for
attending each of the scheduled meetings of the Board of Directors in fiscal
year 1996. Directors were reimbursed for travel expenses for attending the
Board Meetings.
OFFICERS
Set forth below is a description of the present executive officers and
officers of the Company except for Mr. Hillman, President, Chief Executive
Officer and Chairman of the Board, who is described above. All officers of the
Company hold office until their successors are appointed by the Board of
Directors. There are no arrangements or understandings between any of the
officers listed below, or any other persons, pursuant to which any of the
officers have been selected as such.
KENNETH M. DEDELUK - VICE PRESIDENT OF INTERNATIONAL OPERATIONS, AND PRESIDENT
OF AUTO-TROL TECHNOLOGY (CANADA) LTD.
Mr. Dedeluk, age 46, joined Auto-trol Technology (Canada) Ltd., a wholly owned
subsidiary of Auto-trol Technology Corporation, in 1976. In 1981, Mr. Dedeluk
became Vice President and General Manager of Canadian Operations. In 1989 he
was appointed President of Auto-trol Technology (Canada) Ltd., and in June of
1993 Mr. Dedeluk was appointed Vice President of International Operations of the
Company.
MARY LOUISE SCHWAB CPA - VICE PRESIDENT, TREASURER, AND CHIEF FINANCIAL OFFICER
Ms. Schwab, age 41, joined the Company in August 1995, as Controller. On
September 23, 1996, Ms. Schwab was appointed Vice President, Treasurer and Chief
Financial Officer. Prior to her employment with the Company, Ms. Schwab was
Division Controller for DOVatron International, Inc. of Boulder, Colorado from
January 1994 to February 1995. She was Corporate Controller for Somatogen, Inc.
of Boulder, Colorado from November 1991 to January 1994 and was Vice President
of Finance for Generation 5 Technology, Inc. of Westminster, Colorado from
January 1989 through October 1991.
KAREN L. NIPARKO - VICE PRESIDENT
Ms. Niparko, age 41, joined the Company in 1988, initially as Director of the
Human Resources Department, and more recently was appointed Director of
Operations of the Company. Ms. Niparko was appointed Vice President of the
Company effective May 16, 1994.
DEWAYN DAVIS - VICE PRESIDENT
Mr. Davis, age 40, joined the Company in 1984, initially as an Applications
Engineer. He entered the Company's sales force in 1987 and was shortly
thereafter promoted to Regional Sales Manager. In January, 1993 Mr. Davis was
promoted to Director of Western Area Field Operations, and was appointed Vice
President of the Company effective September 8, 1994.
ALLYSON S. KISSELL - SECRETARY
Ms. Kissell, age 48, joined the Company in 1984 and has held various positions
with the Legal Department during her employment with the Company, including her
appointment as Assistant Secretary in 1987. Ms. Kissell was appointed Secretary
of the Company effective September 16, 1992.
5
<PAGE>
VALERIE R. GAUTREAUX - ASSISTANT SECRETARY
Ms. Gautreaux, age 46, has worked in various capacities, including Contract
Administrator, in the Legal Department since joining the Company in 1987. She
was appointed Assistant Secretary of the Company on October 24, 1996.
EXECUTIVE COMPENSATION
REPORT FROM THE COMPANY'S COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors has reviewed Executive
Compensation and concluded that due to the Company's disappointing financial
results for the year, salaries for executive officers should not be based upon
Company performance. Salary determination is based on a combination of factors
including evaluation of compensation for executive positions within the
industry, as well as the individual's past performance, education and future
potential with the Company.
For its evaluation of compensation, the Committee did not rely on specific
data from specific companies within the systems integration industry, but
rather, on its broad understanding of competitive salaries for comparable
executive positions. Based on this approach, there is no direct relationship
between other companies and the broad industry "norms" used by the Committee in
their deliberations regarding Company executive compensation.
The objective of the Committee is to determine salaries that are sufficient to
attract, motivate and retain executives of outstanding ability and potential.
The Committee further attempts to establish a relationship between executive
compensation and the creation of shareholder value. These objectives are
achieved by providing a combination of cash compensation and stock option
grants. Options are granted to executives based on subjective performance
evaluation and not the attainment of specific performance goals.
All of the above factors and policies were considered in determining the
compensation of Mr. Hillman, President and Chief Executive Officer of the
Company. However, Mr. Hillman voluntarily lowered his salary to its present
level and has voluntarily not been awarded an increase this fiscal year. His
compensation was not based on the Company's performance.
<TABLE>
<CAPTION>
<S> <C>
/s/Major General William R. Usher, USAF (Ret.) Director
- ----------------------------------------------
Major General William R. Usher, USAF (Ret.)
/s/J. Roderick Heller, III Director
- ----------------------------------------------
J. Roderick Heller, III
</TABLE>
The following Summary Compensation Table sets forth the salary, bonus and
other compensation earned during the last three fiscal years by Howard B.
Hillman, the Company's Chief Executive Officer, and by the other two executive
officers of the Company whose aggregate compensation for that year exceeded
$100,000. No stock appreciation rights were granted to the named executive
officers for the years indicated.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ALL RESTRICTED
OTHER ANNUAL STOCK OPTIONS LTIP PAYOUTS
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD(S) GRANTED PAYOUTS
POSITION YEAR ($) ($)(1) ($) ($) (SHARES) ($)
==================================================================================================================================
Howard B. Hillman 1996 $100,000 $240 $ 0 N/A -- N/A
-------------------------------------------------------------------------------------------------------
President and Chief 1995 100,000 240 4,401(2) N/A -- N/A
-------------------------------------------------------------------------------------------------------
Executive Officer 1994 107,166 240 7,142(2) N/A -- N/A
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Kenneth M. Dedeluk/*/ 1996 128,561 220 3,084(3) N/A 15,000 N/A
-------------------------------------------------------------------------------------------------------
President, Auto-trol 1995 122,724 218 2,887(3) N/A 2,000 N/A
-------------------------------------------------------------------------------------------------------
Technology (Canada) Ltd. 1994 122,222 222 3,000(3) N/A -- N/A
- ----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Dewayn Davis 1996 116,991 110 -- N/A 28,000 N/A
-------------------------------------------------------------------------------------------------------
Vice President 1995 110,242 240 -- N/A 4,500 N/A
-------------------------------------------------------------------------------------------------------
1994 100,510 240 -- N/A -- N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Compensation was originally based on Canadian dollars for Mr. Dedeluk and
then converted to U.S. dollars.
(1) This column reflects compensation to named executive officers under the
Company's 401(k) Retirement Plan; except as to Mr. Dedeluk, where the amount
represents compensation in the form of contributions from Auto-trol
Technology (Canada) Ltd. through its Registered Retirement Savings Plan.
(2) This total for 1995 includes $3,762 for rent, $268 for telephone, and $371
for utilities. This total for 1994 includes $6,480 for rent, $235 for
telephone, and $427 for utilities.
(3) This total is for car allowance.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The two members of the Company's Compensation Committee, Mr. Usher and Mr.
Heller, have no interlocking relationships as defined by SEC rules and
regulations.
STOCK OPTIONS AND OTHER PLANS
The Company has an Incentive Stock Option Plan ("ISO Plan"), a Special
Purpose Stock Option Plan ("SPSO Plan") and an Employee Stock Purchase Plan
("ESP Plan"). The Board of Directors may from time to time alter, amend, suspend
or discontinue the ISO Plan, the SPSO Plan and the ESP Plan, except that the
Board may not take action which adversely affects the rights and obligations
with respect to stock options outstanding under the Plans. The Board may not,
without approval of the shareholders: (i) increase the maximum number of shares
of Common Stock that may be made subject to options under any of the Plans; (ii)
materially increase the benefits accruing to participants under any of the
Plans; or (iii) materially modify the requirements as to eligibility for
participation in any of the Plans.
As amended by the shareholders in January 1992, the ISO Plan and the SPSO
Plan options were pooled, combining the number of shares available for grant
under both plans. In January of 1996, the Plans were each amended to restate the
number of shares available for grant collectively under the Plans to 400,000,
reflecting the Company's one for ten reverse stock split. Any shares of Common
Stock which were subject to Stock Options, but for which such Stock Options have
expired, shall again be available for purposes of granting Stock Options under
the Plans. As of September 30, 1996, 182,540 options for shares of Common Stock
remained available for grant collectively under the ISO Plan and the SPSO Plan.
7
<PAGE>
INCENTIVE STOCK OPTION PLAN
Under the ISO Plan, Key Employees are granted options to purchase Common Stock
of the Company at a per share price equal to the fair market value of a share of
Common Stock on the date that the option is granted. Almost all of the
Company's approximately 325 employees could qualify as Key Employees. The
Compensation Committee determines the optionees, the number of shares covered by
the options, and the exercise price of options granted under the ISO Plan.
Compensation Committee members are not eligible to receive options under the ISO
Plan.
A copy of the ISO Plan is available upon shareholder request.
SPECIAL PURPOSE STOCK OPTION PLAN
The SPSO Plan was adopted in 1981, approved by the shareholders in 1982,
revised in 1994, and revised again in 1995. Under the SPSO Plan, options are
granted at the fair market value of the shares on the date of grant. The
Compensation Committee determines the optionees, the number of shares covered by
the options, and the exercise price of the options granted under the Plan. The
options granted and to be granted under the SPSO Plan are not "incentive" stock
options which meet the requirements of Section 422A of the Internal Revenue Code
of 1986, as amended. Compensation Committee members are eligible to receive
options under the SPSO Plan.
A copy of the SPSO Plan is available upon shareholder request.
OPTION REPORTING REQUIREMENTS
The following table discloses options to purchase Common Stock granted from
October 1, 1995, through September 30, 1996, under the ISO Plan and the SPSO
Plan to Messrs. Dedeluk and Davis, the only named executive officers referred to
in the Summary Compensation Table to be granted stock options during that
period.
OPTION GRANTS TABLE/*/
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR OPTION TERM
-------------------------------------
<S> <C> <C> <C> <C> <C>
OPTIONS EXERCISE EXPIRATION
NAME GRANTED($)(1) PRICE($)(1) DATE 5% ($)(1) 10% ($)(1)
============================================================================================================================
Kenneth M. Dedeluk 15,000 6.875 2/22/06 64,855 164,355
- ----------------------------------------------------------------------------------------------------------------------------
Dewayn Davis 28,000 6.875 2/22/06 121,062 306,795
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/*/ SEC regulations require disclosure of stock appreciation rights ("SARs")
issued; however, Auto-trol Technology Corporation has not granted any SARs.
(1) Actual gains on exercise, if any, are dependent upon the future performance
of the Company's Common Stock.
8
<PAGE>
Under either the ISO Plan or the SPSO Plan, options become exercisable in five
cumulative annual installments of 20% per year, and remain exercisable until the
option expires. A change of ownership of the Company may accelerate the vesting
schedule of the options. An unexercised option generally expires on the tenth
anniversary of the date on which it was granted, or thirty days after
termination of the employment, or six months after the death or disability, of
the optionee. The exercise price may be paid either in cash or by delivery of
shares of the Company's Common Stock, valued at the market price. The
Compensation Committee may, in its discretion, establish provisions for the
exercise of stock options different from those described in this paragraph. No
named executive officer exercised any stock options in fiscal year 1996.
The following table discloses the options held by the named executive officers
at the end of the last fiscal year.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUE TABLE
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-THE-
UNDERLYING UNEXERCISED MONEY OPTIONS AT FISCAL
OPTIONS AT FISCAL YEAR END YEAR END ($)
SHARES ACQUIRED VALUE ---------------------------------------------------------------------------
NAME ON EXERCISE REALIZED VESTED UNEXERCISABLE VESTED UNEXERCISABLE
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Howard B. Hillman -- -- -- -- $-- $--
- ------------------------------------------------------------------------------------------------------------------------------------
Kenneth Dedeluk -- -- 3,400 18,600 15,250 126,625
- ------------------------------------------------------------------------------------------------------------------------------------
Dewayn Davis -- -- 2,400 32,600 14,625 232,250
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan ("ESP Plan") became effective in
1980, and is administered by two members of the Board of Directors (the
"Committee"). Almost all full-time employees who have been with the Company for
at least six months and who work seventeen and one-half hours per week are
entitled to participate in the ESP Plan. The purchase period for the ESP Plan
begins on March 1 and ends October 31, for each calendar year. All employees
who wish to participate in the ESP Plan must re-enroll at the beginning of each
purchase period.
An employee may purchase stock equal to the lesser of 10% of his annual
salary, or the number of shares authorized by the Committee. The ESP Plan
allows employees to purchase Common Stock at the lesser of either full market
price, or at a 5% discount of the fair market price of the stock at the
beginning of the purchase period, or at a 5% discount of the fair market price
when the stock is purchased.
No shares of Common Stock were acquired under the ESP Plan from October 1,
1995, through September 30, 1996, by the named executive officers.
A copy of the Employee Stock Purchase Plan is available upon shareholder
request.
9
<PAGE>
RETIREMENT PLAN
The Company's Retirement Savings Plan (the "Retirement Plan") is a cash or
deferred profit-sharing plan designed to comply with the requirements of Section
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended. All
employees of the Company may participate in the Retirement Plan, provided that
they have six months of service with the Company. The Retirement Plan is
administered by a committee appointed by the Board of Directors.
Funds of the Plan are held, invested and administered by an independent
company. Plan funds may not be invested in Common Stock of the Company.
Under the Plan, employees may contribute an amount equal to 15% of their
compensation per pay period, subject to statutory limits, to a tax deferral
account. The percentage of compensation that may be contributed by the highly
compensated employees under the Internal Revenue Code depends on the average
percentage of compensation contributed by the non-highly compensated employees.
The Company will contribute, to the employee's account, an amount equal to the
employee's contribution, up to ten dollars per pay period. The value of an
employee's account is payable to the employee or the employee's beneficiary upon
the employee's retirement, voluntary or involuntary termination, death, or
disability. Prior to such time, withdrawals may only be made for financial
hardships as defined by the Internal Revenue Code and Regulations.
The Board of Directors may, in its discretion, terminate the Retirement Plan
at any time, in whole or in part. Upon such termination, the Plan provides for
the distribution of the assets of the fund for the benefit of its participants.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year 1996 the Company borrowed $2,000,000 from Howard B.
Hillman, President, CEO, and a director of the Company and $9,500,000 from the
Venhill Limited Partnership ("Venhill"), of which Mr. Hillman has voting and
investment powers. Debt-to-equity transactions totaling $12,500,000 were
approved by the Board of Directors in which: 2,142,857 shares of Common Stock
were issued for debt of $7,500,000 in March 1996 and 1,666,667 shares of Common
Stock were issued for debt of $5,000,000 in September 1996. The $3.50 price per
share for the March 1996 conversion and the $3.00 price per share for the
September 1996 conversion approximates the market bid price at date of
conversion. The Company's related party debt activity for year ending September
30, 1996 is as follows:
Note payable balance as of October 1, 1995 $ 2,900,000
Additional amount borrowed 11,500,000
Amount converted to Common Stock by Venhill (10,500,000)
Amount converted to Common Stock by Howard B. Hillman (2,000,000)
-------------
Note payable balance as of September 30, 1996 $ 1,900,000
==============
The notes outstanding to Venhill are payable October 1, 1997 and bear interest
at 10%. Interest payable relating to this debt was approximately $490,400 as of
September 30, 1996 of which $131,400 is due to Howard B. Hillman and $359,000 is
due to Venhill. During October and December 1996, the Company borrowed an
additional $2,000,000 from Venhill.
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OTHER MATTERS
The items discussed above are the only items of business, other than routine
procedural matters, which management intends to present or is informed that
others intend to present, for action as to which proxies received or presented
at the meeting are to be used. However, if other matters are properly presented
at the meeting, proxies named by the Board of Directors will vote the shares
represented by them in accordance with the recommendations of the Board of
Directors of the Company.
RELATIONSHIPS WITH INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company retained KPMG Peat Marwick as its independent certified public
accountants effective 1990, and they have been selected to continue in such
capacity for the current fiscal year.
Representatives of KPMG Peat Marwick are expected to attend the annual
meeting, will have an opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
FINANCIAL STATEMENTS
Consolidated financial statements for the Company are included in Auto-trol
Technology Corporation's Annual Report on Form 10-K, which has been filed with
the Securities and Exchange Commission. A copy of this Report may be obtained
without charge upon written request directed to Ms. Allyson S. Kissell,
Secretary, 12500 N. Washington Street, Denver, Colorado 80241-2400.
By Order of the Board of Directors
Allyson S. Kissell
Secretary
Denver, Colorado
December 20, 1996
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AUTO-TROL TECHNOLOGY CORPORATION
FOR MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 28, 1997
The undersigned hereby appoints Howard B. Hillman and Allyson S. Kissell and
each of them, each with full power to act alone and each with full power of
substitution, as proxies to vote all the shares of Common Stock of Auto-trol
Technology Corporation held of record by the undersigned on December 10, 1996,
which the undersigned is entitled to vote at its annual meeting of shareholders
to be held on January 28, 1997, and any adjournment thereof, upon the following
matters as set forth in the Notice of said meeting and Proxy Statement dated
December 20, 1996, copies of which have been received by the undersigned.
The Board of Directors recommends that all shareholders vote on the following:
1. Election of three (3) Directors:
Nominees: J. Roderick Heller, III, Howard B. Hillman,
Major General William R. Usher (Ret.)
[_] FOR [_] AGAINST
FOR, except vote withheld from the following nominee(s)__________________
2. Such other business as may properly come before the meeting.
(IMPORTANT-CONTINUED ON REVERSE SIDE)
