DYNATRONICS CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
November 21, 2000
TO THE SHAREHOLDERS OF DYNATRONICS CORPORATION:
Please take notice that the Annual Meeting of Shareholders of
Dynatronics Corporation, a Utah corporation (the "Company"), will be
held at 7030 Park Centre Drive, Salt Lake City, Utah, 84121, as provided
by the bylaws of the Company, as amended, on Tuesday, November 21, 2000,
at 4:00 p.m., Mountain Standard Time, for the following purposes:
1. To elect a Board of seven directors to hold office until the
next Annual Meeting of Shareholders or until their respective
successors have been elected or appointed;
2. To consider and act upon a proposal that the shareholders
ratify the appointment of KPMG LLP as the Company's independent
public accountants for the fiscal year ending June 30, 2001;
and
3. To transact such other business as may properly be brought
before the meeting or any adjournment thereof.
The foregoing items of business, including the nominees for
directors, are more fully described in the Proxy Statement that is
attached to and made a part of this Notice.
Only shareholders of record at the close of business on Monday,
October 2, 2000 will be entitled to vote at this meeting. A list of
shareholders entitled to vote will be available for inspection at the
office of the Company for ten days prior to the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Bob Cardon
___________________________________
Bob Cardon, Corporate Secretary
Salt Lake City, Utah
October 13, 2000
IMPORTANT
Whether or not you expect to attend the Annual Meeting in person,
to assure that your shares will be represented, please complete, date,
sign and return the enclosed proxy without delay in the enclosed
envelope. Your proxy will not be used if you are present at the meeting
and desire to vote your shares personally. Your proxy is revocable in
accordance with the procedures set forth in the Proxy Statement.
<PAGE>
PROXY STATEMENT
DYNATRONICS CORPORATION
7030 Park Centre Drive
Salt Lake City, Utah 84121
Solicitation of Proxies
This Proxy Statement is furnished pursuant to Regulation 14A under
the Securities Exchange Act of 1934 in connection with the solicitation
of proxies in the enclosed form for use in voting at the Annual Meeting
of Shareholders of Dynatronics Corporation, a Utah corporation,
("Dynatronics" or the "Company") to be held at 7030 Park Centre
Drive, Salt Lake City, Utah 84121 at 4:00 p.m. (local time) on November
21, 2000, and at any and all adjournments or postponements thereof.
This Proxy Statement, the Notice of Annual Meeting and the accompanying
form of proxy will be provided to shareholders of record as of October
2, 2000 and any adjournment or postponement thereof. This Proxy
Statement, the enclosed proxy card and the Annual Report to Shareholders
will be mailed on or about October 19, 2000 to shareholders entitled to
vote at the meeting.
The cost of disseminating this information will be paid by the
Company. In addition to the solicitation of proxies by use of the
mails, the directors, officers and employees of the Company, without
receiving additional compensation therefore, may solicit proxies
personally or by telephone or facsimile. Arrangements will be made with
brokerage firms and other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of the
shares of common stock held by such persons, and the Company will
reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection
therewith.
ANY SHAREHOLDER WHO EXECUTES A PROXY MAY REVOKE IT AT ANYTIME
BEFORE IT IS EXERCISED BY GIVING ANOTHER PROXY OR BY LETTER OR TELEGRAM
DIRECTED TO THE COMPANY.
THE SOLICITATION OF PROXIES TO WHICH THIS PROXY STATEMENT RELATES
IS BEING MADE ON BEHALF OF THE COMPANY BY ITS BOARD OF DIRECTORS.
VOTING
The matters to be considered and voted upon at the Annual Meeting
will be:
1. Election of seven directors to serve until the next Annual
Meeting of Shareholders or until their successors are
elected and qualified;
2. Ratification of the selection of KPMG LLP as the independent
public accountants of the Company; and
3. Transaction of such other business as may properly come
before the meeting.
It is important that proxies be returned promptly. Stockholders
are requested to vote, sign, date and return the proxy in the enclosed
self-addressed envelope. Shares of common stock will be voted in
accordance with the instructions indicated on properly executed proxies.
If no instructions are indicated, such shares will be voted "FOR" the
<PAGE>
election of each of the seven nominees for director, "FOR" the
ratification of the appointment of KPMG LLP as the Company's independent
public accountants for the fiscal year ending June 30, 2001, and, in the
discretion of the proxy holder, as to any other matters that may
properly come before the Annual Meeting.
The close of business on October 2, 2000 has been fixed as the
"Record Date" for determining shareholders entitled to notice of and
to vote at the meeting. At the close of business on the Record Date,
Dynatronics had issued and outstanding 8,785,038 shares of common stock,
no par value, all of which are entitled to vote and be voted at the
meeting. Each share is entitled to one vote and only shareholders of
record of the Company's common stock as of the close of business on the
Record Date are entitled to vote their shares at the Annual Meeting.
Shareholders will not be allowed to cumulate their shares. Holders of a
majority of the shares entitled to be cast at the Annual Meeting must be
represented at the Annual Meeting to constitute a quorum for purposes of
conducting any business. Abstentions and broker non-votes will be
counted as "represented" for the purpose of determining the presence
or absence of a quorum.
Each of the proposed actions to be considered requires the
affirmative approval of a majority of the votes cast at the Annual
Meeting where holders of a majority of the shares issued and outstanding
are present in person or by proxy. Under Utah law, once a quorum is
established, shareholder approval with respect to a particular proposal
is generally obtained when the votes cast in favor of the proposal
exceed the votes cast against the proposal. Therefore, abstentions and
broker non-votes will not have the effect of being considered as votes
against any matter considered at the Annual Meeting.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of October 2, 2000, certain
information that has been provided to the Company with respect to
beneficial ownership of shares of the Company's common stock, no par
value, for (i) all the persons known to be holders of more than 5% of
the Company's voting securities; (ii) each director, (iii) each
executive officer of the Company named in the Summary Compensation Table
of this Proxy Statement (the "Named Executive Officers"), and (iv) all
executive officers and directors of the Company as a group. The
percentages are based on 8,785,038 shares outstanding as of October 2,
2000 plus shares issuable upon exercise of options held by the persons
indicated. Unless noted otherwise, the Company believes each person
named below has sole voting and investment power with respect to the
shares indicated. Unless otherwise indicated, the address of the
shareholder is the Company's principal executive offices, 7030 Park
Centre Drive Salt Lake City, UT 84121.
Amount and
Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership(1) Class
---------------------------------------------------------------------
Kelvyn H. Cullimore, Jr. 828,743 (2) 9.3%
President, CEO, Director
7030 Park Centre Dr.
Salt Lake City, UT 84121
Kelvyn H. Cullimore 185,441 (3) 2.1%
Chairman of the Board
E. Keith Hansen, M.D. 286,650 (4) 3.3%
Director
Larry K. Beardall 199,963 (5) 2.2%
Exec. V.P., Director
<PAGE>
Amount and
Nature of
Beneficial Percent of
Name of Beneficial Owner Ownership(1) Class
---------------------------------------------------------------------
Howard L. Edwards 57,000 (6) *
Director
Joseph H. Barton 78,000 (7) *
Director
Val J. Christensen 15,000 (8) *
Director
John S. Ramey 49,500 (9) *
Sr. V.P. Operations
All executive officers and 1,670,297 (10) 18.3%
directors as a group (8 persons)
--------------------------------------
* Less than 1 percent of outstanding shares
(1) Beneficial ownership is determined in accordance with the rules of
the Securities and Exchange Commission. Included in the computation
of the number of shares beneficially owned by a person and the
percentage ownership of that person are shares of common stock
subject to options, warrants, or other convertible instruments held
by that person that are exercisable within 60 days of October 13,
2000. Such shares, however, are not deemed outstanding for purposes
of computing the ownership of any other person.
(2) Includes 622,623 shares owned directly, 51,120 shares owned by Mr.
Cullimore's wife and minor children, 30,000 shares owned by a family
corporation of which Mr. Cullimore is Vice President, and exercisable
options for the purchase of 125,000 shares.
(3) Includes 138,191 shares owned directly, 7,250 shares owned by Mr.
Cullimore's wife, 30,000 shares owned by a family corporation of
which Mr. Cullimore is President, and exercisable options for the
purchase of 10,000 shares.
(4) Includes 194,650 shares owned directly, 80,000 shares owned by a
pension plan as to which Dr. Hansen is a beneficiary and exercisable
options for the purchase of 12,000 shares
(5) Includes 64,263 shares owned directly, 15,700 shares owned by Mr.
Beardall's children and exercisable options for the purchase of
120,000 shares.
(6) Includes 36,000 shares owned directly and exercisable options for the
purchase of 21,000 shares.
(7) Includes 75,000 shares owned directly and exercisable options for the
purchase of 3,000 shares.
(8) Includes exercisable options for the purchase of 15,000 shares.
<PAGE>
(9) Includes 19,500 shares owned by a retirement plan as to which Mr.
Ramey is beneficiary and exercisable options for the purchase of
30,000 shares.
(10) The calculation of beneficially owned shares of all executive
officers and directors as a group eliminates the duplicate entries of
shares owned by a family corporation which are reflected in the
beneficial ownership of both Kelvyn H. Cullimore and Kelvyn H.
Cullimore, Jr.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting of Shareholders, seven (7) directors will be
elected. The nominees are Kelvyn H. Cullimore, Kelvyn H. Cullimore Jr.,
Larry K. Beardall, E. Keith Hansen, Joseph H. Barton, Howard L. Edwards,
and Val J. Christensen. The Board of Directors has no reason to believe
that any nominee named herein will be unable or unwilling to serve.
Each person identified as a nominee has consented to be named as such.
Assuming a quorum is present for the meeting, the seven nominees
receiving the highest number of affirmative votes of shares entitled to
be voted will be elected as directors of the Company for the ensuing
year. Shareholders are not allowed to cumulate votes in the election of
directors. Unless marked otherwise, proxies received will be voted FOR
the election of each nominee.
Directors of the Company hold office until the next annual meeting
of the Company's shareholders and until their successors have been
elected or appointed and duly qualified. Executive officers are elected
by the Board of Directors of the Company at the first meeting after each
Annual Meeting of Shareholders and hold office until their successors
are elected or appointed and duly qualified. Vacancies on the board
which are created by the retirement, resignation or removal of a
director may be filled by the vote of the remaining members of the
Board, with such new director serving the remainder of the term or until
his successor shall be elected and qualify.
Meeting and Committees
----------------------
There were six regular meetings of the Board of Directors held
during the fiscal year ended June 30, 2000. No director attended fewer
than 75% of the meetings during his term of service. The Board has no
formal Nominating Committee. The Board has a standing Compensation
Committee comprising the outside directors of the board, that reviews
and approves compensation matters for executive officers of the Company
and has oversight responsibility for all benefit plans of the Company.
Members of this Committee are: Dr. E. Keith Hansen, Joseph H. Barton,
Howard L. Edwards and Val J. Christensen. There were two meetings of
the Compensation Committee of the Board of Directors held during the
year ended June 30, 2000. The Board also has an Audit Committee
comprising the outside directors of the board. There were two meetings
of the Audit Committee held during fiscal year 2000. The functions of
the Audit Committee are (1) to review and approve the selection of, and
all services performed by, the Company's independent auditors, (2) to
review the Company's internal controls, and (3) to review and report to
the Board of Directors with respect to the scope of audit procedures,
accounting practices and internal accounting and financial controls of
the Company.
There are no material legal proceedings to which any director or
executive officer is a party adverse to the Company.
Recommendation of the Board
---------------------------
THE BOARD RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL BOARD NOMINEES
NAMED ABOVE.
<PAGE>
Remuneration of Directors
-------------------------
Directors who receive remuneration as officers of the Company are
paid $100 per meeting for attendance at regular and special director's
meetings. Outside directors are paid an annual director's fee of
$3,600. In addition, the Company pays all expenses incurred by
directors in connection with attendance at board meetings.
Each outside director also participates in an annual bonus
program. The full annual bonus per director is one percent of the
Company's pre-tax profits. A total of $13,432 was paid to the outside
directors under this plan for the fiscal year ended June 30, 2000.
The directors and executive officers of the Company at
October 13, 2000 were:
Director
or Officer Position
Name Age Since with Company
------------------------------------------------------------------------
Kelvyn H. Cullimore 65 1983 Chairman of the Board
Kelvyn H. Cullimore, Jr. 44 1983 President, CEO and
Director
Larry K. Beardall 44 1986 Executive Vice President of
Sales and Marketing and
Director
E. Keith Hansen, M.D. 55 1983 Director
Joseph H. Barton 72 1995 Director
Howard L. Edwards 69 1997 Director
Val J. Christensen 47 1999 Director
John S. Ramey 49 1992 Sr. Vice President
of Operations
Kelvyn H. Cullimore is the father of Kelvyn H. Cullimore, Jr. No
other family relationships exist among officers and directors of the
Company.
Certain information with respect to each nominee for director is
set forth below.
Kelvyn H. Cullimore has served as Chairman of the Board of the
Company since its incorporation in April 1983. From 1983 until 1992,
Mr. Cullimore served as President of the Company. Mr. Cullimore
received a B.S. in Marketing from Brigham Young University in 1957, and
following graduation, worked for a number of years as a partner in a
family-owned home furnishings business in Oklahoma City, Oklahoma. Mr.
Cullimore has participated in the organization and management of various
enterprises, becoming the president or general partner in several
business entities, including real estate, motion picture, and equipment
partnerships. From 1979 until 1992, Mr. Cullimore served as Chairman of
the Board of American Consolidated Industries (ACI), the former parent
company of Dynatronics. From 1986 until 1999, Mr. Cullimore served as
President of ITEC and from 1986 to 1997, he served as ITEC's Chairman,
President and CEO. Presently, Mr. Cullimore serves on the board of
directors of ITEC.
<PAGE>
Kelvyn H. Cullimore, Jr. was elected President and Chief Executive
Officer of the Company in December of 1992. He has been a Director
since the incorporation of the Company. He served as
Secretary/Treasurer of the Company from 1983 until 1992 and
Administrative Vice President from 1988 until 1992. Mr. Cullimore
graduated from Brigham Young University with a degree in Financial and
Estate Planning in 1980. Mr. Cullimore has served on the Board of
Directors of several businesses, including Dynatronics Marketing Company
and ACI. He currently serves on the Board of ITEC. In addition, he was
Secretary/Treasurer of ACI and Dynatronics Marketing Company. From 1983
until 1992 Mr. Cullimore served as Executive Vice President and Chief
Operating Officer of ACI.
Larry K. Beardall was elected Executive Vice President of the
Company in December of 1992. He has served as a Director and the Vice
President of Sales and Marketing for the Company since July of 1986.
Mr. Beardall joined Dynatronics in February of 1986 as Director of
Marketing. He graduated from Brigham Young University with a degree in
Finance in 1979. Prior to his employment with Dynatronics, Mr. Beardall
worked with GTE Corporation in Durham, North Carolina as the Manager of
Mergers and Acquisitions and then with Donzis Protective Equipment in
Houston, Texas as National Sales Manager. He also served on the Board
of Directors of Nielsen & Nielsen, Inc., the marketing arm for Donzis, a
supplier of protective sports equipment.
E. Keith Hansen, M.D. has been a Director of the Company since
1983. Dr. Hansen obtained a Bachelor of Arts degree from the University
of Utah in 1966 and an M.D. degree from Temple University in 1972. He
has been in private practice in Sandy, Utah since 1976. Dr. Hansen was
also a Director of ACI until 1992 and a Director of Mountain Resources
Corporation from 1980 to 1988. Currently, Dr. Hansen serves as a
Director of Accent Publishers, a privately held company, based in Salt
Lake City, Utah.
Joseph H. Barton was elected a Director in November 1995, and began
serving in January 1996. Mr. Barton received a Civil Engineering degree
from the University of California at Berkeley and has held various
executive positions including President of J.H. Barton Construction
Company, Senior Vice President of Beverly Enterprises, and President of
KB Industries, a building and land development company. Most recently,
Mr. Barton served as Senior Vice President of GranCare, Inc. from 1989
to 1994 and currently is a consultant for Covenant Care, a company which
owns and manages long-term care facilities throughout the United States.
Howard L. Edwards was elected a Director in January 1997. From
1968 to 1995 Mr. Edwards served in various capacities at Atlantic
Richfield Company (ARCO) and its predecessor, the Anaconda Company,
including corporate secretary, vice president, treasurer and general
attorney. In addition, Mr. Edwards was a partner in the law firm of
VanCott, Bagley, Cornwall and McCarthy, in Salt Lake City, Utah. He
graduated from the George Washington University School of Law in 1959
and received a bachelor's degree in Finance and Banking from Brigham
Young University in 1955.
Val J. Christensen was appointed to the Board in January 1999.
Since 1996, Mr. Christensen has served as Executive Vice President of
Franklin Covey Company, where he has also served as General Counsel
since 1990. He also served on Franklin's Board of Directors from 1991
to 1997. Prior to joining Franklin, Mr. Christensen was engaged in the
private practice of law with the international law firm of LeBoeuf,
Lamb, Leiby & MacRae, specializing in general business and business
litigation matters. Following graduation from law school in 1980, Mr.
Christensen served as a law clerk to the Honorable James K. Logan of the
United States Tenth Circuit Court of Appeals. He is an honors graduate
of the Brigham Young University School of Law and served as articles
editor of the BYU Law Review.
John S. Ramey joined the Company in December 1992 as Vice President
of Research and Development and currently serves as Senior Vice
President of Operations. Prior to joining the Company, Mr. Ramey worked
for 16 years with Phillips Semi-conductors--Signetics, an integrated
circuit manufacturing company as Manager of Product Engineering. From
1983 to 1989 Mr. Ramey also served as President of Enertronix, a small
<PAGE>
public corporation. Since 1989 Mr. Ramey has served as Vice President
of JRH Technology, a private engineering firm. Mr. Ramey earned his MBA
degree in 1991 from the University of Phoenix (in Salt Lake City, Utah)
and a BS degree in electronics in 1977 from Brigham Young University.
Certain Relationships and Related Transactions
----------------------------------------------
Except as described in this Proxy Statement under the captions,
"Employment Contracts" and "Salary Continuation Plan," during the
two years ended June 30, 2000 the Company was not a party to any
transaction in which any director, executive officer or shareholder
holding more than 5% of the Company's issued and outstanding common
stock had a direct or indirect material interest.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
--------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more
than 10% of a registered class of the Company's equity securities
("Reporting Persons") to file initial reports of ownership and report
changes in ownership with the Securities and Exchange Commission.
Reporting Persons are required by regulation of the Securities and
Exchange Commission to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on review of the copies of such forms furnished to
the Company during and with respect to the fiscal year ended June 30,
2000, the Company believes that during its 2000 fiscal year all Section
16(a) filings applicable to these Reporting Persons were filed timely
with the exception of a Form 5 by John S. Ramey for the purchase of
6,000 shares of the Company's common stock which was filed in October,
2000 and Form 5's for stock options granted to the four outside
directors of the board during fiscal year 2000 which were also filed in
October, 2000.
Executive Compensation
----------------------
The compensation of the Company's chief executive officer and all
executive officers whose total cash compensation during the fiscal year
ended June 30, 2000 exceeded $100,000 (collectively, the "Named
Executive Officers") is shown below.
Summary Compensation Table
The following table sets forth, for the three most recent fiscal
years of the Company, the compensation paid to the Named Executive
Officers.
[CAPTION]
<TABLE>
Long Term Compensation
------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------
Name Other Restricted
and Annual Stock LTIP All Other
Principal Compen- Award(s) Options/ Payouts Compen-
Position Year Salary($) Bonus($) sation(1) ($) SAR(#) ($) sation($)(2)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kelvyn H. Cullimore, Jr. 2000 $109,011 $17,417 $10,414 $-0- -0- $-0- $-0-
President/CEO 1999 $109,011 $44,434 $10,757 $-0- -0- $-0- $-0-
1998 $106,956 $37,773 $9,720 $-0- 100,000 $-0- $-0-
Kelvyn H. Cullimore 2000 $105,000 $28,633 $15,006 $-0- -0- $-0- $481,894
Chairman of the Board 1999 $56,108 $35,964 $6,828 $-0- -0- $-0- $-0-
1998 $44,554 $28,622 $3,428 $-0- -0- $-0- $-0-
Larry K. Beardall 2000 $99,483 $23,223 $9,944 $-0- -0- $-0- $-0-
Executive Vice President 1999 $99,483 $59,244 $10,402 $-0- -0- $-0- $-0-
1998 $97,429 $50,365 $9,414 $-0- 100,000 $-0- $-0-
John S. Ramey 2000 $84,300 $11,612 $7,872 $-0- -0- $-0- $-0-
Sr. Vice President 1999 $84,300 $29,623 $8,918 $-0- -0- $-0- $-0-
1998 $79,950 $22,898 $8,608 $-0- 15,000 $-0- $-0-
</TABLE>
(1) The Company provides automobiles for certain executive officers and
pays all vehicle operating expenses. The Company also provides life
insurance for its officers. The amount of this column includes the
approximate value of these benefits to the Named Officer.
(2) Includes amounts received in settlement of compensation payable under
a salary continuation plan, as discussed below in greater detail.
During the last completed year, the Company made no awards under
any long-term incentive plan and no stock appreciation rights were
granted.
Employment Contracts
--------------------
The Company has entered into written employment contracts with two
executive officers, Kelvyn H. Cullimore, Jr., President and Chief
Executive Officer, and Larry K. Beardall, Executive Vice President. The
initial terms of these contracts run through the end of the Company's
fiscal year in 2003. Both contracts may be renewed automatically,
subject to the right of either party to terminate the agreements upon 90
days notice made prior to the last day of the initial term or any
renewal term. The contract extensions would extend each contract for up
to an additional ten years (five renewal terms of two years each). The
compensation package under each contract includes an auto allowance, an
annual bonus based on pre-tax operating profit of the Company (at rates
established by the Compensation Committee), and stock options granted
under the Company's 1992 Stock Option Plan, as amended and restated.
Each officer also participates in the salary continuation plan and
receives other welfare and employee benefits that are standard in such
agreements, including, by way of example, health insurance and
disability coverage, paid vacation and Company-paid life insurance. The
contracts also contain a provision granting the executives certain
rights and protections in the event of a change in control of the
Company. Among other things, the change of control provision of the
contracts provide for severance payments to the executives if their
employment is discontinued as a result of the change of control of the
Company.
The employment agreements described above terminate upon the death
or disability of the executive or termination of the employment for
cause. The agreements also contain covenants of the executives that,
during the term of their employment and continuing for a specified
period after the termination of their employment for any reason, with or
without cause, they will not compete with the Company or make use of or
disclose confidential information of the Company.
Bonus Plan
----------
The Company maintains a discretionary incentive bonus plan
administered by the Compensation Committee. Pursuant to the plan, the
Compensation Committee granted incentive bonuses to certain officers and
employees of the Company during the year ended June 30, 2000. The total
amount of bonuses paid for the fiscal year was $136,650 of which $80,885
was paid to Named Executive Officers, and is included under the
"Bonus" heading in the Summary Compensation Table.
Salary Continuation Plan
------------------------
During fiscal year 1988, the Company's Board of Directors adopted
a Salary Continuation Agreement (Agreement) for certain Named Executive
Officers of the Company. The Agreement provides for a pre-retirement
benefit to the officer's designated beneficiary in the event he dies
before reaching age 65 and a retirement benefit upon reaching age 65.
The pre-retirement benefit provides for payment of 50% of the officer's
compensation at the time of death up to $75,000 annually for a period of
15 years or until the officer would have reached age 65, whichever is
<PAGE>
longer. The retirement benefit provides the officer $75,000 annually
for a period of 15 years. Presently, Kelvyn H. Cullimore, Jr. and Larry
K. Beardall are covered under this plan. Until April 2000, Kelvyn H.
Cullimore, the Company's Chairman of the Board was also covered under
this plan.
Funding for obligations arising in connection with the Agreement
is provided by life insurance policies on the participating officers, of
which the Company is the owner and beneficiary. The face amounts of the
policies have been determined so that sufficient cash values and death
benefits will be provided to meet the obligations as they occur. In
fiscal year 2000, the Company expensed $72,382 relating to salary
continuation obligations under the Agreement.
In April 2000, the Company entered into a settlement agreement
with Mr. Kelvyn H. Cullimore with respect to his Salary Continuation
Agreement as Chairman of the Board of Directors. Under the terms of the
settlement, the Company made a lump sum payment of $481,894 and
terminated his Salary Continuation Agreement. The payment was funded
from the surrender of a life insurance policy which was used as the
funding vehicle for his Salary Continuation Agreement. The surrender of
the life insurance policy resulted in income tax expense of
approximately $79,000 since the tax basis of the policy was lower than
the amount received by the Company. The settlement with Mr. Cullimore
eliminates approximately $500,000 in expenses over the next 15 years,
the majority of which would have been incurred in the next three years
and would have reduced net income of the Company in those future
periods.
401(k) Plan
-----------
The Company has adopted a 401(k) Plan (the "Plan"). Employees
who are age 20 and have completed at least six months of service with
the Company are eligible to participate in the Plan.
Eligible employees may make contributions to the Plan in the form
of salary deferrals up to 15% of total compensation, not to exceed
$10,000, the maximum allowable amount of salary deferrals for calendar
1999. The Company matches annual employee contributions at 25% of
employee contributions, up to a maximum of $500 per employee per year.
Participants under the Plan are 100% vested in their salary
deferral contributions and vest 20% per year after 2 years of
participation in Company matching contributions. Amounts deferred by
employees under the Plan are included under "Salary" in the Summary
Compensation Table. Amounts contributed by the Company for each Named
Officer are included in the "Other Compensation" column in the table
above.
Stock Options Outstanding
-------------------------
During fiscal year 2000, options to purchase 185,299 shares were
granted under the 1992 Stock Option Plan to employees and outside
directors of the Company. Options are to purchase common stock, no par
value, of the Company and are exercisable one year (minimum) from the
date of grant. The weighted average per share exercise price of these
options was $.95.
Aggregated Option Exercises In Last Fiscal Year
and Fiscal Year-End Option Values
The following table sets forth the information, including the
fiscal year-end value of unexercised stock options held by the Named
Executive Officers. No options were exercised by Named Executive
Officers during the year ended June 30, 2000.
[CAPTION]
<TABLE>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares June 30, 2000 June 30, 2000
Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized ($) Unexercisable Unexercisable (1)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Kelvyn H. Cullimore, Jr. -0- -0- 125,000/0 $1,525/0
President/CEO
Kelvyn H. Cullimore -0- -0- 10,000/0 $610/0
Larry K. Beardall -0- -0- 120,000/0 $1,220/0
John S. Ramey -0- -0- 30,000/0 $915/0
</TABLE>
(1) Value is based on the fair market value of the Company's common
stock on June 30, 2000. Values indicated reflect the difference between
the exercise price of the unexercised options and the market value of
shares of common stock on June 30, 2000. The closing bid price of the
common stock on June 30, 2000, the last trading date in the Company's
fiscal year, as reported by NASDAQ, was $.78 per share.
PROPOSAL 2 - RATIFICATION OF SELECTION OF AUDITORS
The firm of KPMG LLP served as independent public accountants for
the Company for the fiscal year ended June 30, 2000. The Audit
Committee of the Board has recommended, and the Board of Directors has
selected the firm to continue in this capacity for the current fiscal
year ending June 30, 2001, subject to ratification by the shareholders.
Accordingly, a resolution will be presented at the meeting to ratify the
selection of KPMG LLP by the Board of Directors as independent public
accountants to audit the accounts and records of the Company for the
fiscal year ending June 30, 2001, and to perform other appropriate
services. If the stockholders fail to ratify the selection, the Board of
Directors will reconsider its decision.
Recommendation of the Board
---------------------------
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL #2
RATIFYING THE SELECTION OF KPMG LLP AS AUDITORS FOR THE COMPANY FOR THE
FISCAL YEAR ENDING JUNE 30, 2001.
Representatives of KPMG LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they
desire and may be available to respond to appropriate questions. During
the two most recent fiscal years, there has been no resignation or
dismissal of the independent public accountants engaged by the Company.
OTHER MATTERS
The Board of Directors of the Company knows of no other matters to
be presented at the Annual Meeting. If, however, any further business
should properly come before the Annual Meeting, the persons named as
proxies in the accompanying form will vote on such business in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Regulations adopted by the Securities and Exchange Commission
require that shareholder proposals must be furnished to the Company a
reasonable time in advance of the meeting at which the action is
proposed to be taken. Shareholder proposals intended to be presented at
the 2001 Annual Meeting of the Company's Shareholders must be received
<PAGE>
by the Company at its corporate headquarters on or before July 31, 2001,
in order to be included in the Proxy Statement and Form of Proxy
relating to that meeting. Receipt of a shareholder proposal does not
necessarily guarantee that the proposal will be included in the proxy.
If a shareholder intends to propose any matter for a vote at the Annual
Meeting of Shareholders to be held in 2001, but fails to notify the
Company of such intention prior to the date indicated above, then a
proxy solicited by the Board of Directors may be voted on such matter in
the discretion of the proxy holder, without discussion of the matter in
the proxy statement soliciting such proxy and without such matter
appearing as a separate item on the proxy card.
ADDITIONAL INFORMATION
The Company will provide, without charge, to each shareholder to
whom this proxy statement is delivered, upon written or oral request, a
copy of the Company's annual report on Form 10-KSB for the year ended
June 30, 2000, including the financial statements and schedules thereto,
as filed with the Securities and Exchange Commission. Such document
shall be sent by first class mail or other equally prompt means.
Written or oral requests for such information should be directed to Mr.
Bob Cardon, Corporate Secretary, Dynatronics Corporation, 7030 Park
Centre Drive, Salt Lake City, UT 84121.
DYNATRONICS CORPORATION
By order of the Board of Directors
/s/ Bob Cardon
______________________________________
Bob Cardon, Corporate Secretary
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