THERMWOOD
P. O. Box 436
Old Buffaloville Road
Dale, Indiana 47523
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, December 9, 1999 at 9:00 A.M. (Central Time)
To the Stockholders:
The Annual Meeting of Stockholders of Thermwood Corporation
will be held at the Corporation's offices on Thursday, December
9, 1999 at 9:00 A.M., Central Time, for the following purposes:
1.To elect five (5) directors for the ensuing one-year term;
2.To act upon the ratification of the selection by the Board
of Directors of KPMG LLP as independent auditors;
3.To transact any other business which properly may be brought
before the meeting.
All stockholders are cordially invited to attend, although only
stockholders of record at the close of business on November 12,
1999 will be entitled to vote at the meeting.
By order of the Board of Directors,
Linda S. Susnjara
Secretary
Dale, Indiana
November 16, 1999
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return the
accompanying
form of proxy, so that if you are unable to attend the meeting
your shares may nevertheless be voted.
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of
Thermwood Corporation (the "Corporation" or "Thermwood") for
use at the Annual Meeting of Stockholders (the "Annual
Meeting") on December 9, 1999.
The Corporation's principal executive office is located at Old
Buffaloville Road, Dale, Indiana 47523. The approximate date
on which this Proxy Statement is first being sent to
stockholders is November 16, 1999.
You may revoke this proxy at any time prior to its use by
delivering a written notice to the Secretary of the
Corporation, by executing a later-dated proxy or by attending
the meeting and voting in person. Proxies in the form
enclosed, unless previously revoked, will be voted at the
meeting in accordance with the specifications made by you
thereon, or, in the absence of such specifications, for the
election of directors nominated herein and to ratify the
selection of KPMG LLP as independent auditors for the fiscal
year ending July 31, 2000.
Holders of record of Shares of Common Stock, without par value
per share ("Common Stock") of the Corporation at the close of
business on November 11, 1999, will be entitled to vote at the
Annual Meeting. Each share of Common Stock will be entitled to
one vote. The Common Stock will be voted together as one
class. On November 11, 1999, there were 985,045 outstanding
shares of Common Stock of the Corporation. There are no other
voting securities outstanding.
ELECTION OF DIRECTORS
At the annual meeting, five directors are to be elected to
serve for a term of one year and until their successors shall
have been elected and qualified. It is intended that proxies
will be voted for the nominees set forth herein. Although it
is expected that all candidates will be able to serve, if one
or more is unable to do so, the proxy holders will vote the
proxies for the remaining nominees and for substitute nominees
chosen by the Board of Directors unless it reduces the number
of directors to be elected.
The table below presents information as of November 5, 1999 on
the nominees for election as directors of the Corporation for a
one-year term expiring in 2000:
<TABLE>
Principal Occupation Director Other
Name Business Experience Age Since Directorships
<S> <C> <C> <C> <C>
Kenneth J. President and 52 1969 Automation Associates, Inc
Susnjara Chairman
(1) of Board since 1971
Linda S. President of 50 1986 Automation Associates, Inc
Susnjara Automation
(l) Associates, Inc.
since 1985
Peter N. Lalos Engaged in the 65 1989
private practice of
law since 1961 and
senior partner,
Lalos & Keegan
Edgar Mulzer Chairman of the 81 1974 Lincolnland Bank
Board of Lincolnland
Bank (Retired)
Lee Ray Olinger Chairman of the 72 1989 First Bank of Huntingburg
Board of First Bank
of Huntingburg
</TABLE>
(1) Linda S. Susnjara and Kenneth J. Susnjara are husband and
wife.
Information on the executive officers of the Company is
contained in the following table:
<TABLE>
Name Principal Occupation Executive
Business Experience Age Officer Prior Position
Since (s)
<S> <C> <C> <C> <C>
Michael P. Vice President of 45 1980 Project Engineer,
Hardesty Engineering since 1988 Project Manager,
Vice President of
Machining Products
since 1975
Rebecca F. Treasurer since 1993 49 1993 Controller; Accounting
Fuller Manager since 1981
David J. Vice President of 42 1988 Sales Manager; Technical
Hildenbrand Sales since 1988 Manager since 1977
Donald L. Vice-President of 42 1997 Production Manager
Ubelhor Manufacturing since 1993
Richard Kasten Vice President of 47 1993 Applications Manager
Technical Services since 1990
since 1993
</TABLE>
OPERATION OF BOARD OF DIRECTORS AND COMMITTEES
During 1999 the Board of Directors held 4 meetings and each
incumbent director attended at least 75% of the aggregate of
all Board of Directors' meetings and all meetings of committees
of the Board of Directors that he or she served on.
All directors hold office until the next Annual Meeting of
shareholders of Thermwood or until their successors shall have
been elected and qualified. Directors receive compensation in
the amount of $1,000 plus $100 for each $100,000 in profit for
the previous quarter for attending each directors' meeting, and
are reimbursed for all related expenses.
The Audit Committee, consisting of Lee Ray Olinger, Edgar
Mulzer and Peter N. Lalos, met once during 1999. This
committee's function is to review the scope of the
Corporation's audit and generally to supervise the financial
affairs of Thermwood.
The Nominating Committee, consisting of Mr. Olinger, Mr. Mulzer
and Mr. Lalos, met once in 1999. The Nominating Committee
reviews officer performance and corporate needs and proposes to
the Board of Directors certain directions and changes in
titles, positions and responsibilities. The Nominating
Committee does not formally consider nominations by
shareholders.
The Stock Option Committee, consisting of Mr. Olinger, Mr.
Mulzer and Mr. Lalos, met once in 1999. This committee makes
awards to Thermwood employees of stock options under its
incentive stock option plan and non-qualified stock option
plan.
The Compensation Committee, consisting of Mr. Olinger, Mr.
Mulzer and Mr. Lalos met once during 1999. The Compensation
Committee reviews salaries and other compensation paid to the
Corporation's officers and makes recommendations to the Board
of Directors regarding such items.
It is expected that Mr. Olinger, Mr. Mulzer and Mr. Lalos will
be reappointed to the foregoing committees.
EXECUTIVE COMPENSATION
The following table sets forth the annual remuneration paid
during the fiscal years ended July 31, 1999, 1998 and 1997 to
the Chief Executive Officer and to each of the executive
officers of the Company whose total fiscal 1999 remuneration
exceeded $100,000 and to all officers as a group.
<TABLE>
Summary Compensation Table
Annual compensation
Other
Name and principal position Year Salary Bonus annual
compensation
(1)
<S> <C> <C> <C> <C>
Kenneth J. Susnjara, 1999 $108,000 $130,814 $3,500
Chairman of the Board, 1998 108,000 146,664 6,400
President and director 1997 63,000 83,242 3,700
Michael Hardesty, 1999 48,000 91,574 ---
Vice-president Engineering 1998 48,000 100,565 ---
1997 48,000 102,165 ---
David Hildenbrand 1999 45,000 70,518 ---
Vice-president Sales 1998 45,000 122,239 ---
1997 45,000 116,779 ---
Rebecca Fuller, Treasurer 1999 40,000 78,491 ---
1998 40,000 86,199 ---
1997 40,000 87,570 ---
All other officers as a
group:
1999 80,000 74,957 ---
(2) persons
1998 80,000 78,893 ---
(2) persons
1997 40,000 29,172 ---
(1) persons
</TABLE>
(1) Other annual compensation represents directors' fees paid
to Mr. Susnjara.
Stock options for an additional 4,000 shares were issued to an
officer under the Qualified Stock Option Plan in fiscal year
1998 at prices in excess of then current market prices. At
July 31, 1999, the exercise prices of some of the unexercised
options were less than the market price of our Common Stock.
On September 6, 1994, registration statements on Form S-8 were
filed with the Securities and Exchange Commission under the
Securities Act of 1933 in connection with the registration of
shares of our Common Stock under our Employee Incentive Stock
Option Plan and Non-Qualified Stock Option Plan.
In 1985 the Board of Directors appointed Mr. Susnjara to the
position of President and Chief Executive Officer. In this
position, he is to receive a bonus based on our pre-tax profits
as set forth below. See "-Profit Sharing Plan" below.
Profit Sharing Plan.
In 1985, we instituted a management profit sharing plan. This
plan was continued in an amended form for fiscal year 1999.
Covered under the plan are the Chairman, the President, Vice
President of Engineering, Vice President of Sales, Vice
President of Technical Services, Vice President of
Manufacturing, the Treasurer and various departmental managers.
Under the plan, the Chairman is entitled to 5% of corporate
operating income. The Vice President of Sales and Vice
President of Technical Services each are entitled to 5% of the
divisional operating income. The Vice President of
Manufacturing and the Treasurer are each entitled to receive 2%
and 3%, respectively, of the Corporate operating income. Any
divisional losses are to be subtracted from these amounts so
that the total bonus paid does not exceed 25% of operating
income.
Department managers are entitled to various bonuses based upon
productivity of their departments. Payments due under the plan
accrue for each six-month period and are thereafter paid in six
monthly installments. Vesting of rights under the plan
requires eligible participants to be continually employed
through the payment dates. Divisional losses of a fiscal year
must be recouped in the succeeding year, or years, in order to
be eligible for profit sharing earnings in the succeeding
year(s).
Incentive Stock Option Plan.
Under our Employee Incentive Stock Option Qualified Plan (the
"Qualified Plan"), options to purchase a maximum of 80,000
shares of our Common Stock may be granted to officers and other
key employees. Options granted under the Qualified Plan are
intended to qualify as incentive stock options as defined in
Section 422A of the Internal Revenue Code.
The Qualified Plan is administered by the Board of Directors
and a Committee currently consisting of three members of the
Board which determines which persons are to receive options,
the number of shares that may be purchased under each option
and the exercise prices. In the event an optionee voluntarily
terminates his employment with us, he has the right to exercise
his accrued options within 5 days prior to such termination.
However, we may redeem any accrued options held by each
optionee by paying him the difference between the option price
and the then fair market value. If an optionee's employment is
involuntarily terminated, other than because of death, he also
has the right to exercise his accrued options within 30 days of
termination. Upon death, his estate or heirs have one year to
exercise his accrued options. The maximum term of any option
is ten years and the option price per share may not be less
than the fair market value of our shares on the date the option
is granted. However, options granted to persons owning more
than 10% of our voting shares may not have a term in excess of
five years and the option price per share may not be less than
110% of fair market value at the date the option is granted.
The aggregate fair market value of the shares of Common Stock
(determined at the time the options are granted) with respect
to which incentive stock options are exercisable for the first
time by such optionee during any calendar year (under all such
plans) shall not exceed $100,000. Options must be granted
within ten years from the effective date of this Qualified
Plan.
Options granted under the Qualified Plan are not transferable
other than by will or the laws of descent and distribution.
Options granted under the Qualified Plan are protected by anti-
dilution provisions increasing the number of shares issuable
thereunder and reducing the exercise price of such options,
under certain conditions. The life term of the Qualified Plan
extends to December 3, 2000, or on such earlier date as the
Board of Directors may determine. Any option outstanding at
the termination date will remain outstanding at the termination
date until it expires or is exercised in full, whichever occurs
first.
Between December 1991 and August 1997, we granted ten-year
options to acquire 50,600 shares of our Common Stock at
exercise prices ranging from $5.00 to $10.66 under the
Qualified Plan to 20 of our employees. All of these options
are exercisable as of the date hereof.
Non-qualified Stock Option Plan.
Under our Non-qualified Stock Option Plan, options to purchase
a maximum of 70,000 shares of our Common Stock may be granted
to officers, directors, and other key employees.
The Non-qualified Stock Option Plan is administered by the
Board of Directors and a committee of three members of the
Board which determines which persons are to receive such
options, the number of shares that may be purchased under the
options, the exercise prices, the time and manner of exercise
and other related matters.
In the event an optionee voluntarily terminates his employment
or tenure with our consent or his employment or tenure is
terminated by us without cause, he generally has the right to
exercise his accrued options within 30 days after such
termination unless the Committee elects other time periods. In
all other cases of termination of the optionee's employment or
tenure other than death, said options shall cease immediately.
Upon death, his estate or heirs have one year to exercise his
accrued options.
The Committee may grant an optionee the right to surrender all
or a portion of his accrued options to us and receive from it
the difference between the option price and the then fair
market value. Options become exercisable in 25% installments
each year beginning in the second year through the fifth year.
Options are generally not transferable and are conditioned upon
the optionee remaining in our employ for at least one year from
the date of their grant. Under the NSO Plan, no option may be
granted after January 1, 2005 and the exercise price of such
options may not be less than the then fair market value. It is
within the Committee's discretion to grant anti-dilution
provisions to each optionee. Under present federal income tax
law, an employee, officer or director who is granted an option
will not have any income upon the grant of an option and we
will not be entitled to any deduction at that time. When an
optionee exercises his option, ordinary income will be realized
by him, measured by the excess of the fair market value of the
shares over the price paid for the shares. We will be entitled
to a deduction equal to the amount of income realized by the
holder of the option. If the optionee surrenders all or part
of his option for a cash or Common Stock payment, he will
realize ordinary income in the amount of cash or fair market
value of stock received. We will be entitled to a deduction
equal to the amount of income realized by the optionee.
As of July 31, 1999 options to acquire 40,000 shares of our
Common Stock at an average exercisable price of $8.91 per share
have been granted under the Non-qualified Stock Option Plan to
four of our directors and officers. Currently all of these
options are exercisable.
Other options.
There are options to purchase an additional 120,000 shares held
by our President. These options extend through October 18,
2005 and permit the purchase of 60,000 shares at $15.00 per
share and 60,000 shares at $30.00 per share.
Section 401(k) Plan
We adopted a tax-qualified cash savings plan (the "401(k)
Plan") that became effective in October 1989. This Plan covers
all employees who have completed 12 months of continuous
service prior to a plan entry date. Pursuant to the 401(k)
Plan, eligible employees may make salary deferral (before tax)
contributions of up to 15% of their total compensation per plan
year up to a specified maximum contribution as determined by
the Internal Revenue Service. We also make a matching
contribution of 25% of employees' contributions up to 5% of
their annual salaries and an additional match of 10% of their
contributions between 6% and 8% of employees' salaries.
The 401(k) Plan also includes provisions which authorize us to
make discretionary contributions. Such contributions, if made,
are allocated among all eligible employees as determined under
the 401(k) Plan. The trustee under the 401(k) Plan is Merrill
Lynch of Evansville, Indiana. It invests the assets of each
participant's account in funds at the direction of such
participant.
OWNERSHIP OF EQUITY SECURITIES OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth certain information regarding
our Common Stock ownership, including shares issuable upon
conversion of outstanding debentures and upon exercise of
options owned as of July 31, 1999 by
(a) each person known by us to own beneficially more than 5% of
our outstanding Common Stock,
(b) each director, and
(c) all officers and directors as a group:
<TABLE>
Shares Owned
Including
Those
Percentage Underlying Percentage
Shares of Total Exercisable of Total
Names and Owned at Outstanding Options and Outstanding
Addresses of July 31, Shares Convertible Shares
Beneficial Owners 1999 Owned Securities Owned
<S> <C> <C> <C> <C>
Kenneth J. Susnjara
(1) and Linda Susnjara 261,420(2) 26.54 411,420 34.29
Edgar Mulzer
401 10th Street
Tell City, IN 47586 208,052(3) 21.12 218,052 18.18
Peter N. Lalos
14312 Darnstown Road
Gaithersburg, MD 20878 8,000 0.81 22,000 1.83
Lee Ray Olinger
c/o First Bank of
Huntingburg
4th and Main Street
Huntingburg, IN 47542 --- --- --- ---
All Officers and
Directors as a Group 481,002 48.83 676,002 56.35
(9 persons)
</TABLE>
(1) The address of these shareholders is care of Thermwood,
Old Buffaloville Road, P.O. Box 436, Dale, Indiana 47523.
(2) These shares are owned jointly by Mr. and Mrs. Susnjara who
are husband and wife. Accordingly, each may be deemed to be a
beneficial owner of the securities owned by the other.
(3) Mr. Mulzer has given us an option to purchase all of these
shares during the two-year period commencing on January 1,
2002. Please read the information under the heading "Certain
Relationships and Related Transactions" for an illustration of
how exercise of that option would affect ownership and control
of Thermwood.
Certain Relationships and Related Transactions:
On February 4, 1999, Edgar Mulzer, a director and major
shareholder who is not active in our management, gave us an
option to purchase his shares at a price of $15.00 per share.
We can exercise this option at any time after January 1, 2002
and before January 1, 2004. We paid Mr. Mulzer $5,000 for this
option. We have secured this option to further our plans to
assure that control of Thermwood remains with Kenneth and Linda
Susnjara.
Mr. and Mrs. Susnjara are the owners of Automation Associates
Incorporated, a dealer of our machine products. The agreement
between us and Automation Associates contains the same terms
and conditions as with our other dealers. We sold no products
to Automation Associates during fiscal year 1999, but paid
Automation Associates $669,125 in commissions during the year
for assisting in effecting sales of approximately $4,500,000.
This amount represents approximately 25% of our gross sales for
fiscal year 1999. Automation Associates also leases space from
us at what we believe is a fair market rate. Rental payments
were $2,400 during fiscal years 1999 and 1998.
Lalos & Keegan, a law firm in which Mr. Lalos is the senior
partner, accrued fees of $183,000, $95,000, and $77,000, for
the fiscal years 1999, 1998, and 1997, respectively. All
outstanding balances have been paid subsequently.
We believe that the terms of the transactions between us and
our affiliated parties as described in this section are as fair
as those which we would have obtained if these transactions had
been effected with independent third parties. Each transaction
was approved by a majority of the disinterested directors. In
the future, all such transactions will continue to be approved
by a majority of the disinterested directors.
We have not purchased any shares of our Common Stock since
August 1, 1996. Edgar Mulzer purchased on the open market 340
shares at $7.81 per share and 2,000 shares at $7.20 per share
in December 1996. Mr. and Mrs. Susnjara purchased on the open
market 400 shares at $7.625 per share on May 1, 1998, 400
shares at $7.625 on May 4, 1998, and 600 shares at $7.625 per
share on May 5, 1998. In addition, Mr. and Mrs. Susnjara
converted debentures into 10,000 shares of Common Stock on
September 2, 1998. Peter Lalos purchased 620 shares at $7.80
and 40 shares at $8.80 per share in May 1997 and 200 shares at
$12.35 per share and 140 shares at $12.40 per share in November
1997. These are the only transactions in our shares effected
by such individuals since August 1, 1996.
To our knowledge, neither we nor any of our affiliates,
directors or executive officers has purchased or sold any
Common Stock in the last sixty days.
Fairness of Transactions with Affiliated Parties:
Management believes that the terms of the transactions between
us and our affiliated parties as described in this section are
as fair as those which we would have obtained if these
transactions had been effected with independent third parties.
Each transaction was approved by a majority of the
disinterested directors. In the future, all such transactions
will continue to be approved by a majority of the disinterested
directors.
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Based upon the recommendation of its Audit Committee, the Board
of Directors has selected the firm of KPMG LLP as the
independent auditors of the Corporation for the fiscal year
ending July 31, 2000. KPMG LLP has acted for the Corporation
in such capacity since August 1993. The Board proposes that
the stockholders ratify such selection at the Annual Meeting.
If the stockholders do not ratify the selection of KPMG LLP by
the affirmative vote of a majority of the votes cast at the
Annual Meeting on this proposal, the selection of independent
auditors will be reconsidered by the Board of Directors.
Representatives of KPMG LLP are expected to be present at the
Annual Meeting and will be afforded the opportunity to make a
statement if they so desire and to respond to appropriate
questions.
Compliance with Section 16 (a) of the Securities Exchange Act
of 1934
To our knowledge, based solely on a review of such materials as
are required by the Securities and Exchange Commission, no
officer, director or beneficial holder of more than ten percent
of our issued and outstanding shares of Common Stock failed to
timely file with the Securities and Exchange Commission any
form or report required to be so filed pursuant to Section 16
(a) of the Securities Exchange Act of 1934 during the fiscal
year ended July 31, 1999.
OTHER MATTERS
The Board of Directors knows of no other matters to come before
the meeting. Should any unanticipated business properly come
before the meeting, the persons named in the enclosed form of
proxy will vote in accordance with their best judgment.
The cost of preparing and mailing this Proxy Statement and the
accompanying proxy and the cost of solicitation of proxies on
behalf of the Board of Directors will be borne by us.
Solicitation will be made by mail. Such costs are estimated to
be less than $10,000. Some personal solicitation may be made
by directors, officers and employees without special
compensation, other than reimbursement for expenses.
Proposals which stockholders wish to include in our proxy
materials relating to the 2000 Annual Meeting of Stockholders
must be received by us no later than September 15, 2000.
It is important that proxies be returned promptly.
Stockholders are urged to sign and date the enclosed proxy and
return it promptly in the accompanying envelope.
By order of the Board of Directors,
Linda S. Susnjara
Secretary
Dale, Indiana
November 16, 1999
