<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
X Annual report pursuant to Section 13 or 15(d) of the Securities
---- Exchange Act of 1934 (Fee Required) For the fiscal year ended
December 31, 1998.
Transition report pursuant to Section 13 or 15(d) of the Securities
---- Exchange Act of 1934 (Fee Required) For the transition period from
to
------------ -----------.
COMMISSION FILE NUMBER 0-12728
MEDAR, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2191935
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number
38700 GRAND RIVER AVENUE,
FARMINGTON HILLS, MICHIGAN 48335
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 471-2660
Securities registered pursuant to Section 12(b) of the Act::
NONE
Securities registered pursuant to Section 12(g) of the Act::
COMMON STOCK, NO PAR VALUE, STATED VALUE $.20 PER SHARE
(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 and (2) has been subject to the filing requirements for
at least the past 90 days. YES NO X
--- ---
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 the 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]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of February 28, 1999:
COMMON STOCK, NO PAR VALUE, STATED VALUE $.20 PER SHARE - $10,733,530
The number of shares outstanding on each of the issuer's classes of common
stock, as of February 28, 1998:
COMMON STOCK, NO PAR VALUE, STATED VALUE $.20 PER SHARE - 9,024,901
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DOCUMENTS INCORPORATED BY REFERENCE: NONE
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Part III
Item 10. Directors and Executive Officers of the Registrant
Directors
The following table sets forth information concerning the Directors of the
Company.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE COMPANY SERVED AS
NAME AND PRINCIPAL OCCUPATION AGE DIRECTOR SINCE
---- --------------------------------- --- --------------
<S> <C> <C> <C>
Max A. Coon.......................... Secretary and Vice Chairman of the Board of 64 1978
Medar, Inc.; President and Chairman of the
Board of Maxco, Inc.
Richard R. Current................... Executive Vice President and Chief 54 1996
Financial Officer of Medar, Inc.
Charles J. Drake..................... Chairman of the Board and Chief Executive 58 1978
Officer of Medar, Inc.
Stephan Sharf........................ President of SICA Corp, a Michigan based 78 1986
automotive industry consulting firm
Vincent Shunsky...................... Treasurer of Medar, Inc.; Director, 50 1978
Treasurer and Vice President of Finance of
Maxco, Inc.
William B. Wallace................... Senior Managing Director of Equity 54 1990
Partners, Ltd., a Troy, Michigan based
private investment banking firm
</TABLE>
All of the foregoing directors have been engaged in the principal
occupation specified for the previous five years with the exception of the
following:
Richard R. Current joined the Company in May 1995 as its Vice President of
Finance. In March 1996, Mr. Current was named a Director of the Company. Prior
to joining Medar, Mr. Current was managing partner of Ernst & Young's Lansing,
Michigan practice from 1985 to 1992 and was the Chief Financial Officer of The
Shane Group, Inc., a Hillsdale, Michigan holding company with ownership of a
number of manufacturing and distribution subsidiaries, from 1992 to 1995. In
September 1997, a corporation of which Mr. Current had previously served as an
officer and director filed a petition for liquidation under Chapter 7 of the
Bankruptcy Code. Although he was nominally an officer and director, Mr.
Current's involvement was primarily as an investor, he did not receive any
compensation from the company and was not involved in day-to-day operations. Due
to these, among other factors, the Company does not believe this action is
material to an evaluation of Mr. Current's abilities as a director and officer
of the Company.
Charles J. Drake resigned his position as President of the Company in
February 1998. He continues to serve as the Chairman and Chief Executive Officer
of the Company as he has since 1978.
Messrs. Coon, Drake and Shunsky are also directors of Maxco, Inc., the
stock of which is traded on the Nasdaq National Market.
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EXECUTIVE OFFICERS
The following table sets forth information concerning the Executive
Officers of the Company.
<TABLE>
<CAPTION>
PRESENT POSITION WITH THE SERVED AS
NAME COMPANY AND PRINCIPAL OCCUPATION AGE OFFICER SINCE
---- -------------------------------- --- -------------
<S> <C> <C> <C>
Charles J. Drake..................... Chairman of the Board And Chief Executive 58 1978
Officer of Medar, Inc.
Mark R. Doede........................ President and Chief Operating Officer of 41 1989
Medar, Inc.
Richard R. Current................... Executive Vice President of Finance and 54 1995
Director of Medar, Inc.
Michael J. Charchol.................. Former Vice President, Vision Products of 57 1996
Medar, Inc.
Lyle D. Harbin....................... Vice President of Marketing, Welding 65 1985
Products of Medar, Inc.
Arthur D. Harmala.................... Vice President of Marketing, Vision 55 1995
Products of Medar, Inc.
Max A. Coon.......................... Secretary and Vice Chairman of the Board 64 1978
of Medar, Inc.; President and Chairman of
the Board of Maxco, Inc.
Vincent Shunsky...................... Treasurer and Director of Medar, Inc.; 50 1978
Treasurer, Vice President of Finance and
Director of Maxco, Inc.
</TABLE>
All of the foregoing officers of the Company have been engaged in the
principal occupations specified above for the previous five years except as
stated above and as follows:
Michael J. Charchol was appointed as Vice President, Vision Products of
Medar, Inc. in March 1998. Prior to that time he had served for seven years as
Vice President of the Company's Integral Vision -- AID subsidiary. Mr. Charchol
retired from his position with the Company effective November 13, 1998.
Mark R. Doede was appointed as President and Chief Operating Officer of the
Company in February 1998. Prior to that time, Mr. Doede served as Vice President
and Chief Operating Officer of the Welding Products Division of the Company
since 1996 and served the Company in various other capacities since 1980.
Arthur D. Harmala was appointed as Vice President of Marketing, Vision
Products in March 1995. He has been Vice President, Sales and Marketing for the
Company's wholly-owned subsidiary, Integral Vision -- AID, Inc., since 1989 and
was previously employed by the Company since 1985 as director of marketing for
Medar's line of vision products. Mr. Harmala previously worked in sales
management
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positions at Allen-Bradley Company, Inc., a manufacturer of programmable
controllers, and at Perceptron, Inc., a manufacturer of non-contact gauging
products.
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 or beneficial owners of over 10% of any class
of the Company's equity securities to file certain reports regarding their
ownership of the Company's securities or any changes in such ownership. During
the year ended December 31, 1998, all of such reports were filed as required.
Item 11. EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of Max A. Coon and Vincent Shunsky. Messrs. Coon and Shunsky, although
officers of the Company, are also officers and directors of Maxco, Inc., are
paid by Maxco, Inc. and receive no compensation from the Company. Mr. Charles J.
Drake, the Company's Chief Executive Officer, is a director of Maxco, Inc.
OVERVIEW AND PHILOSOPHY
The Committee is responsible for developing and making recommendations to
the Board with respect to the Company's executive compensation policies. In
addition, the Compensation Committee, pursuant to authority delegated by the
Board, determines on an annual basis the compensation to be paid to the Chief
Executive Officer and each of the other executive officers of the Company.
The objectives of the Company's executive compensation program are to:
- Support the achievement of desired Company performance.
- Provide compensation that will attract and retain superior talent and
reward performance.
- Align the executive officers' interests with the success of the Company
through the granting of stock options.
The executive compensation program provides an overall level of
compensation opportunity that is competitive with companies of comparable size
and complexity. The Compensation Committee will use its discretion to set
executive compensation where in its judgment external, internal or an
individual's circumstances warrant it.
EXECUTIVE OFFICER COMPENSATION PROGRAM
The Company's executive officer compensation program is comprised of base
salary, long-term incentive compensation in the form of stock options, and
various benefits, including medical and deferred compensation plans, generally
available to employees of the Company.
BASE SALARY
Base salary levels for the Company's executive officers are competitively
set relative to other comparable companies. In determining salaries the
Committee also takes into account individual experience and performance.
STOCK OPTION PROGRAM
The stock option program is the Company's long-term incentive plan for
executive officers and key employees. The objectives of the program are to align
executive and Shareholder long-term interests by creating a strong and direct
link between executive pay and Shareholder return, and to enable executives to
develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock.
In May 1995 a stock option plan allowing the issuance of options on up to
500,000 shares of the Company's Common Stock was approved by the Shareholders.
This stock option plan provides for the grant of both options intended to
qualify as "incentive stock options" within the meaning of Section 422A of the
Internal Revenue Code, as amended, and nonstatutory stock options which do not
qualify for such treatment. The stock option plan authorized a committee of
directors to award executive and key employee
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stock options, as well as options to directors and nonemployees who are in a
position to materially benefit the Company. Stock options were granted at an
option price equal to the fair market value of the Company's Common Stock on the
date of grant, have ten year terms and may contain exercise restrictions
established by the committee. Awards are made at a level calculated to be
competitive with companies of comparable size and complexity. Shares authorized
for issuance under this plan are exhausted, although in the event options
granted under this plan lapse, those shares would again become available.
A new stock option plan authorizing options on 500,000 shares of Common
Stock of the Company on substantially the same terms is proposed to be approved.
See "Proposal 5: Approval of Stock Option Plan."
DEFERRED COMPENSATION
Effective July 1, 1986, the Company adopted a 401(k) Employee Savings Plan.
The 401(k) is a "cash or deferred" plan under which employees may elect to
contribute a certain portion of their compensation which they would otherwise be
eligible to receive in cash. The Company has agreed to make a matching
contribution of 20% of the employees' contributions of up to 6% of their
compensation. In addition, the Company may make a profit sharing contribution at
the discretion of the Board. All full time employees of the Company or its U.S.
subsidiaries who have completed six months of service are eligible to
participate in the plan. Participants are immediately 100% vested in all
contributions. The plan does not contain an established termination date and it
is not anticipated that it will be terminated at any time in the foreseeable
future.
BENEFITS
The Company provides medical benefits to the executive officers that are
generally available to Company employees. In addition, executive officers may be
provided with other benefits, such as life insurance and automobiles. The amount
of perquisites, as determined in accordance with the rules of the Securities and
Exchange Commission relating to executive compensation, did not exceed 10% of
salary for any executive officer for fiscal 1998.
CHIEF EXECUTIVE OFFICER
Charles J. Drake has served as the Company's Chief Executive Officer since
1978. His base salary for the 1998 year was $160,000.
Significant factors in establishing Mr. Drake's compensation were his
strategic and overall management direction of the Company and his position and
long service to the Company.
The Committee believes Mr. Drake's compensation is comparable to that of
chief executive officers of similar companies.
THE COMPENSATION COMMITTEE
Max A. Coon
Vincent Shunsky
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SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and to the other executive officers whose compensation
for the 1998 year exceeded $100,000:
<TABLE>
<CAPTION>
ANNUAL LONG TERM
COMPENSATION COMPENSATION
----------------- --------------------
ALL OTHER
NAME AND SALARY BONUS OPTIONS COMP(1)
PRINCIPAL POSITION YEAR ($) ($) (#) ($)
------------------ ---- ------ ----- ------- ---------
<S> <C> <C> <C> <C> <C>
Charles J. Drake................................ 1998 160,000 0 0 7,308(2)
Chairman of the Board 1997 160,000 0 100,000 7,911(2)
and Chief Executive Officer 1996 295,000 0 0 5,255(2)
Mark R. Doede................................... 1998 115,962 0 0 520
President and 1997 105,000 0 15,000 519
Chief Operating Officer 1996 105,000 0 3,000 520
Richard R. Current.............................. 1998 115,000 0 0 1,380
Executive Vice President 1997 115,000 0 10,000 769
and Chief Financial Officer 1996 115,000 0 20,000 1,096
Arthur D. Harmala............................... 1998 93,077 0 0 1,117
Vice President of Marketing, 1997 90,000 0 15,000 887
Vision Products 1996 92,380 20,000 8,000 890
Lyle D. Harbin.................................. 1998 100,000 64,127(3) 0 1,701
Vice President of Sales, 1997 101,021 0 10,000 1,212
Welding Products 1996 80,962 0 3,000 972
</TABLE>
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(1) Unless otherwise indicated, compensation in this category represents the
Company's 20% match of employee deferrals of currently earned income into
the 401(k) Employee Savings Plan.
(2) Includes premiums of $6,520, $5,893 and $5,255 paid by the Company on
executive term life insurance in 1998, 1997 and 1996, respectively.
(3) Represents sales commissions earned by Mr. Harbin.
OPTIONS
The following table summarizes the value of the options held by the
executive officers named in the Summary Compensation Table above as of December
31, 1998. No options were granted to or exercised by the named individuals
during the year ended December 31, 1998. All of the options held by the named
individuals are presently exercisable.
YEAR END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
NAME FY-END FY-END
---- ----------- ------------
<S> <C> <C>
Charles J. Drake............................................ 250,000 $0
Mark R. Doede............................................... 26,000 $0
Richard R. Current.......................................... 45,000 $0
Arthur D. Harmala........................................... 34,000 $0
Lyle D. Harbin.............................................. 13,000 $0
</TABLE>
DIRECTOR COMPENSATION
Directors who are not officers of the Company receive $200 for each meeting
attended. In addition, Messrs. Sharf and Wallace each have consulting agreements
with the Company pursuant to which they have agreed to provide consulting
services to the Company for so long as they hold office as directors. The
Company paid both Mr. Sharf and Mr. Wallace $9,600 for such consulting services
during the fiscal year.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the cumulative total Shareholder return on the
Common Stock of the Company for the last five years with the cumulative total
return on the CRSP Total Return Index for the Nasdaq Stock Market (US Companies)
(1) and the Dow Jones Industrial Technology Index (2) over the same period,
assuming the investment of $100 in the Company's Common Stock, the Nasdaq Index
and the Industrial Technology Index on December 31, 1993, and reinvestment of
all dividends.
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
DOW JONES INDUSTRIAL
MEDAR, INC. CRSP TOTAL RETURN INDEX TECHNOLOGY INDEX
----------- ----------------------- --------------------
<S> <C> <C> <C>
12/31/94 122 98 106
12/31/95 70 138 147
12/31/96 50 170 142
12/31/97 48 209 150
12/31/98 10 293 138
</TABLE>
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(1) The CRSP Total Return Index for the Nasdaq Stock Market (US Companies) is
composed of all domestic common shares traded on the Nasdaq National Market
and the Nasdaq Small-Cap Market.
(2) The Dow Jones Industrial Technology Index is composed of companies whose
technology and high-tech products are primarily directed toward industrial
production and/or quality control.
<PAGE> 8
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 1999 regarding
the beneficial ownership of the Company's Common Stock by (i) the Principal
Shareholder (Maxco, Inc.), (ii) the only other beneficial owners of more than 5%
of the Company's outstanding stock that are known to the Company, (iii) each of
the Company's Directors, (iv) each of the Company's Executive Officers listed in
the Summary Compensation Table, above, and (v) all Officers and Directors of the
Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP
-----------------
SOLE VOTING AND SHARED VOTING AND
INVESTMENT POWER INVESTMENT POWER PERCENT
---------------- ----------------- -------
<S> <C> <C> <C>
Maxco, Inc........................................... 2,280,605(1) 24.86%
1118 Centennial Way
Lansing, MI 48917
State Street Bank and Trust Company, as Trustee of
the Textron Master Trust............................. 1,000,000(2) 9.97%
One Enterprise Drive
North Quincy, MA 02171
Charles J. Drake..................................... 341,500(3) 3.68%
Max A. Coon.......................................... 88,000(4) 19,150 1.19%
Richard R. Current................................... 46,000(5) 5,000 *
Mark R. Doede........................................ 50,136(6) *
Lyle D. Harbin....................................... 19,180(7) *
Arthur D. Harmala.................................... 34,000(8) 100 *
Stephan Sharf........................................ 6,000 *
Vincent Shunsky...................................... 21,183(4) 2,000 *
William B. Wallace................................... 26,000(9) 3,000 *
All Directors and Officers as a Group (10 persons)... 625,999(10) 35,250 7.01%
</TABLE>
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* Beneficial ownership does not exceed 1%.
(1) Includes Warrants for the purchase of 150,000 shares of Medar Stock.
(2) Represents Warrants for the purchase of Common Stock. Information obtained
from Schedule 13G dated February 12, 1998, filed with the Securities and
Exchange Commission by State Street Bank and Trust Company and sent to the
Company pursuant to Section 13(d) of the Securities Exchange Act of 1934.
(3) Includes options to purchase 250,000 shares.
(4) Does not include shares held by Maxco, Inc., of which Mr. Coon is the
President, Chairman of the Board and the owner of 23.6% of its Common
Stock, or 4,500 shares held by the Maxco, Inc. Employee Profit Sharing
Plan, of which Messrs. Coon and Shunsky are trustees.
(5) Includes options to purchase 45,000 shares.
(6) Includes options to purchase 26,000 shares.
(7) Includes options to purchase 13,000 shares.
(8) Includes options to purchase 34,000 shares.
(9) Includes options to purchase 7,000 shares.
(10) Includes options to purchase 375,000 shares.
Item 13. Certain Relationships and Related Transactions
Charles J. Drake, the Chairman and CEO of the Company, was indebted to the
Company during 1998, with the largest aggregate amount of such indebtedness
being $345,715. This debt was incurred by Mr. Drake in order to exercise options
to purchase 150,000 shares of the Company's Common Stock and to satisfy certain
personal obligations and is evidenced by promissory notes bearing interest at
9%. At March 31, 1999, the amount of this indebtedness was $347,715.
Mark R. Doede, the President and COO of the Company, was indebted to the
Company during 1998 with the largest aggregate amount of such indebtedness being
$244,470. This debt was incurred by Mr. Doede in order to satisfy certain
personal obligations and is evidenced by a promissory note bearing interest at
9%. At March 31, 1999, the amount of this indebtedness was $222,293.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: May 6, 1999 MEDAR, INC.
By: /S/RICHARD R. CURRENT
-----------------------------------------------------
Richard R. Current, Executive Vice President of
Finance (Principal Financial and Accounting Officer)
