SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 1996
Commission file number 0-11571
AEQUITRON MEDICAL, INC.
(Exact name of registrant as specified in its charter)
14800 Twenty-eighth Avenue North
Minneapolis, Minnesota 55447
(Address of principal executive offices)
Incorporated under the laws of IRS Identification Number
the State of Minnesota 41-1359703
(612) 557-9200
(Registrant's telephone number including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value 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 such filing requirements for
the past 90 days. Yes [ x ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ x ]
The issuer's revenues for 1996, its most recent fiscal year, were $38,447,800.
The aggregate market value of the Company's common stock held by nonaffiliates
of the Company on July 23, 1996 computed at The Nasdaq National Market closing
price of $7.50 was $35,785,665.
The Company has one class of equity securities outstanding: common stock, $.01
par value per share. On July 19, 1996, there were 4,940,842 shares outstanding.
<PAGE>
This Amendment No. 1 to the Form 10-K for the year ended April 30, 1996 is
being filed to amend Part III as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Information relating to the executive officers of the Company is set
forth at the end of Part I of the Form 10-K for the year ended April 30, 1996
previously filed. The names, ages and positions with the Company of the current
directors, along with information regarding their business experience for the
past five years, is set forth below. The Company's Articles of Incorporation
provide that the Board of Directors be divided into three classes, with each
class being as equal in number as possible and serving staggered three-year
terms, or until their successors are elected and qualified.
Position with Director
Name Age the Company Since
James B. Hickey, Jr. 43 President, Chief Executive 1993
Officer and Director
Ervin F. Kamm, Jr. 56 Director 1991
Lawrence A. Lehmkuhl 59 Director 1986
David B. Morse 53 Director 1983
Gerald E. Rhodes 54 Director 1984
Business Experience
James B. Hickey, Jr. has been the President and Chief Executive Officer of
the Company since June 1993. From October 1989 to June 1993, Mr. Hickey served
as President of Baxter Healthcare, Inc's Respiratory/Anesthesia Systems
Division, and, prior to October 1989, he was President of Baxter's Hospitex
Division for three years.
Mr. Kamm has been the President and Chief Executive Officer of Digi
International, a data communications company, since December 1994. From January
1988 to November 1994, Mr. Kamm was President of Norstan, Inc., a
telecommunications company. Mr. Kamm was President of Plato/Wicat Systems Co., a
developer of educational software, from August 1984 to December 1987. In
addition, Mr. Kamm currently serves as a director of Digi International and
Secure Computing Corporation.
Mr. Lehmkuhl is currently a director of Fisher Imaging Corp. and Kera
Vision, Inc. From February 1985 until April 1993, Mr. Lehmkuhl served as the
President, Chief Executive Officer and Director of St. Jude Medical, and from
April 1993 to February 1995, he was the Chairman of the Board of St. Jude
Medical. From 1966 to February 1985, Mr. Lehmkuhl was employed by American
Hospital Supply Corporation in various capacities, most recently as President of
the American Converters Division.
Mr. Morse has been a partner with the law firm of Best & Flanagan in
Minneapolis, Minnesota since 1990. Mr. Morse has practiced law in private
practice since 1971. Since July 1989, Mr. Morse has served as the Company's
Chairman of the Board.
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Mr. Rhodes has been the President of Ring Specialty Company, a jewelry
manufacturer located in Boulder, Colorado, since January 1981. Mr. Rhodes has
also served as the Secretary of the Company since July 1989.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that, during the period from May 1, 1995 through April 30,
1996, all filing requirements applicable to its officers, directors and greater
than ten-percent beneficial owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth all cash compensation paid or to be paid
by the Company, as well as certain other compensation paid or accrued, during
fiscal years 1994, 1995 and 1996 to the Chief Executive Officer and the four
highest paid executive officers whose total salary and bonus exceeded $100,000
based on salary and bonus earned during fiscal year 1996.
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------------------
Awards Payouts
-------------------------------------------------
Restricted Securities LTIP All Other
Name and Principal Fiscal Stock Underlying Payouts Compen-
Position Year Annual Compensation Awards ($) Options ($) sation ($)
- ---------------------- ----- ---------- ---------- ----- ----------
------------------------------------------
Salary ($) Bonus ($) Other ($)
---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James B. Hickey, Jr. 1996 $209,231 $57,538 $ -- $ -- 150,000 $ -- $17,000(1)
President and Chief 1995 187,615 100,356 -- -- 25,000 -- 18,428
Executive Officer 1994 150,385 275,000 23,996
Jeffrey A. Blair 1996 139,423 38,341 -- -- 45,000 -- 3,859(2)
Sr. Vice President 1995 127,523 47,821 -- -- 16,000 -- 3,388
Sales & Marketing 1994 76,154 9,375 20,000 -- 100,000 -- 30,728
William M. Milne 1996 115,322 31,159 -- -- 45,000 -- 3,670(2)
Chief Financial 1995 108,436 40,663 -- -- 10,000 -- 3,493
Officer 1994 102,887 -- -- -- 10,000 -- 9,980
Robert A. Samec 1996 100,786 26,677 -- -- 45,000 -- 3,238(2)
Vice President 1995 94,282 35,356 -- -- 12,000 -- 1,568
Regulatory Affairs 1994 88,800 -- -- -- 10,000 -- --
Edson R. Weeks, III 1996 97,769 26,887 -- -- 45,000 -- 3,991(2)
Vice President 1995 86,961 32,611 -- -- 12,000 -- 3,017
Operations 1994 79,700 -- -- -- 10,000 -- 2,949
</TABLE>
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(1) Represents forgiveness of a portion ($12,500) of a debt owed by Mr. Hickey
to the Company as a result of the Company's payment of the closing expenses
on his home, plus $4,500 paid by the Company pursuant to a Company match
under the 401(K) Plan.
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(2) Represents the amount paid by the Company pursuant to a Company match under
the 401(k) Plan.
Option Grants During 1996 Fiscal Year
The following table provides information regarding stock options
granted during fiscal 1996 to the named executive officers in the Summary
Compensation Table. The Company has not granted any stock appreciation rights.
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Potential Realizable
Value at Assumed
Number of % of Total Annual Rates of
Securities Options Stock Price
Underlying Granted to Exercise or Appreciation for
Options Employees in Base Price Expiration Option Term(1)
Name Granted Fiscal Year ($/Sh) Date 5% ($) 10% ($)
- ------------------------- --------------- ------------------ --------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
James B. Hickey, Jr 125,000(2) 25.10% $ 5.50 06/19/05 $251,545 $637,467
25,000(3) 5.02% $7.125 08/21/05 $ 91,588 $232,104
Jeffrey A. Blair 25,000(2) 5.02% $ 5.50 06/19/05 $ 86,472 $219,139
20,000(3) 4.02% $7.125 08/21/05 $ 89,616 $227,107
William M. Milne 25,000(2) 5.02% $ 5.50 06/19/05 $ 86,472 $219,139
20,000(3) 4.02% $7.125 08/21/05 $ 89,616 $227,107
Robert C. Samec 25,000(2) 5.02% $ 5.50 06/19/05 $ 86,472 $219,139
20,000(3) 4.02% $7.125 08/21/05 $ 89,616 $227,107
Edson R. Weeks, III 25,000(2) 5.02% $ 5.50 06/19/05 $ 86,472 $219,139
20,000(3) 4.02% $7.125 08/21/05 $ 89,616 $227,107
</TABLE>
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(1) The potential realizable value portion of the foregoing table illustrates
value that might be realized upon exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates of
appreciation on the Company's Common Stock over the term of the options.
These numbers do not take into account provisions of certain options
providing for termination of the option following termination of
employment, nontransferability or vesting over periods.
(2) Option becomes exercisable with respect to 20% of the shares covered
thereby on July 1 of each of 1998, 1999, 2000, 2001 and 2002. The exercise
price was equal to 100% of the fair market value on June 19, 1995, the date
of grant.
(3) Option becomes exercisable with respect to 20% of the shares covered
thereby on August 21 of each of 1996, 1997, 1998, 1999 and 2000. The
exercise price was equal to 100% of the fair market value of the Common
Stock on August 21, 1995, the date of grant.
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Aggregated Option Exercises During 1996 Fiscal Year and Fiscal Year-End Option
Values
The following table provides information related to options exercised by
the named executive officers during fiscal 1996 and the number and value of
options held at fiscal year-end. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities In-the-Money Options at
Shares Underlying Unexercised April 30, 1996
Acquired on Value Options at April 30, 1996 Exercisable/
Name Exercise Realized(1) Exercisable/Unexercisable Unexercisable(2)
- ---- ----------- ----------- ------------------------- -----------------------
<S> <C> <C> <C> <C>
James B. Hickey, Jr. -- -- 190,000 exercisable $873,750 exercisable
260,000 unexercisable $660,624 unexercisable
Jeffrey A. Blair 15,000 $45,938 58,200 exercisable $255,662 exercisable
87,800 unexercisable $213,900 unexercisable
William M. Milne 12,000 $40,500 23,625 exercisable $100,093 exercisable
60,875 unexercisable $100,406 unexercisable
Robert A. Samec -- -- 23,025 exercisable $97,668 exercisable
62,475 unexercisable $106,206 unexercisable
Edson R. Weeks, III 10,000 $33,750 23,025 exercisable $97,668 exercisable
62,475 unexercisable $106,206 unexercisable
</TABLE>
(1) Value is calculated based on the amount, if any, by which the closing
price for the Common Stock as quoted on the Nasdaq National Market on
the date of exercise exceeds the option exercise price, multiplied by
the number of shares to which the exercise relates.
(2) Value is calculated on the basis of the difference between the option
exercise price and the closing sale price for the Company's Common
Stock at April 30, 1996 as quoted on the Nasdaq National Market,
multiplied by the number of shares of Common Stock underlying the
option.
Employment Contracts and Termination of Employment Arrangements
The Company has entered into an employment agreement with James B.
Hickey, Jr., which, in addition to the compensation shown in the Summary
Compensation Table, provides for compensation in the event Mr. Hickey's
employment with the Company is terminated under certain circumstances. Upon
termination of employment initiated by the Company's Board of Directors other
than for cause, Mr. Hickey will receive salary and medical insurance for twelve
(12) months. Upon termination for cause, payment of severance shall be at the
discretion of the Board.
The Company also entered into an employment agreement with Jeffrey A.
Blair. In addition to the compensation shown in the Summary Compensation Table,
Mr. Blair has the right to six months of severance pay if the Board terminates
his employment without cause.
As described in the Compensation and Stock Option Committee Report, the
Company entered into Change In Control Employment Agreements with each of James
B. Hickey, Jr., William M. Milne, Jeffrey A. Blair, Robert C. Samec, Edson R.
Weeks, III, Patricia A. Hamm and Earl H. Slee. Each such Agreement provides
that, following a change of control of the Company, if the executive officer is
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subsequently terminated without cause or voluntarily resigns within 12 months of
such change of control, he or she will receive a lump sum amount equal to two
times his or her current base compensation plus two times his or her target
bonus under the Company's Management Incentive Plan. In addition, all options
will become fully vested upon such termination or resignation and will be
exercisable for three months.
Compensation of Directors
Since 1987, the Company has paid each non-employee director an annual
fee of $12,000, payable in twelve monthly installments. In addition, since April
1995, such directors also receive $1,000 for each Board meeting attended in
person or $500 for attending a meeting by telephone conference. Nonemployee
directors also receive an automatic annual grant of a non-qualified stock option
pursuant to the 1988 Stock Option Plan on the date of the Company's annual
meeting each year. Each option granted enables that director to purchase 10,000
shares of the Company's Common Stock at an option exercise price equal to the
fair market value of such shares on the date the option is granted. Each option
granted to a director is exercisable beginning one year after the date of grant,
and will generally expire at the earlier of (i) twelve months after the optionee
ceases to be a director and (ii) five years after the date of grant.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Principal Shareholders
To the best of the Company's knowledge, the only beneficial owners of
more than five percent (5%) of the Company's outstanding shares of Common Stock
as of August 9, 1996 are listed below.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
Heartland Advisors, Inc. 746,150(1) 15.1%
790 North Milwaukee Street
Milwaukee, WI 53202
Dimensional Fund Advisors Inc. 254,100(2) 5.1%
1299 Ocean Avenue
Santa Monica, CA 90401
First Bank System, Inc. 696,800(3) 14.1%
c/o First Trust National Association
180 East Fifth Street
St. Paul, MN 55101
- ----------------------
(1) All shares are held for the beneficial ownership of various accounts
for which Heartland Advisors, Inc. acts as fiduciary; Heartland
Advisors, Inc. has sole voting power over 709,450 shares, no voting
power over 36,700 shares and sole investment power over all of the
shares. The Company has relied on information contained in a Schedule
13G dated February 9, 1996 from Heartland Advisors, Inc.
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(2) Includes 55,700 shares owned by DFA Investment Dimensions Group Inc.
and 17,600 shares owned by The DFA Investment Trust Company; the
officers of both companies are also officers of Dimensional Fund
Advisors Inc. and in such capacity have shared voting and dispositive
power over such shares. The Company has relied on information contained
in a Schedule 13G dated January 30, 1995 from Dimensional Fund
Advisors, Inc. and other information available to the Company.
(3) All shares are held for the beneficial ownership of various accounts
for which First Bank acts as fiduciary; First Bank has sole voting
power over all of the shares, sole investment power over 663,300 shares
and no investment power over 33,500 shares. The Company has relied on
information in a Schedule 13G dated February 9, 1996 and subsequent
information furnished by First Bank.
Management Shareholdings
The following table provides information as of August 9, 1996
concerning the beneficial ownership of the Company's Common Stock by (i) each
director of the Company, (ii) each of the executive officers named in the
Summary Compensation Table, and (iii) all directors and executive officers as a
group. Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to all shares of Common Stock owned by
them.
Name of Director, Named Executive Number of Shares Percent of
Officer or Identity of Group Beneficially Owned (1) Class (1)
James B. Hickey, Jr. 249,808 (2) 4.8%
Ervin F. Kamm, Jr. 35,000 (3) 0.7%
Lawrence A. Lehmkuhl 78,000 (4) 1.6%
David B. Morse 46,300 (5) 0.9%
Gerald E. Rhodes 70,000 (6) 1.4%
Jeffrey A. Blair 83,289 (7) 1.7%
William M. Milne 41,195 (8) 0.8%
Robert A. Samec 28,100 (9) 0.6%
Edson R. Weeks, III 50,052 (10) 1.0%
All Directors and Executive 697,744 (11) 12.8%
Officers as a Group (11 persons)
- -------------------
(1) Under the rules of the SEC, shares not actually outstanding are deemed
to be beneficially owned by an individual if such individual has the
right to acquire the shares within 60 days. Pursuant to such SEC rules,
shares deemed beneficially owned by virtue of an individual's right to
acquire them are also treated as outstanding when calculating the
percent of the class owned by such individual and when determining the
percent owned by any group in which the individual is included.
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(2) Includes 230,000 shares which may be purchased by Mr. Hickey upon
exercise of currently exercisable options.
(3) Includes 35,000 shares which may be purchased by Mr. Kamm upon exercise
of currently exercisable options.
(4) Includes 35,000 shares which may be purchased by Mr. Lehmkuhl upon
exercise of currently exercisable options.
(5) Includes 30,000 shares which may be purchased by Mr. Morse upon
exercise of currently exercisable options, 8,000 shares held in a trust
for Mr. Morse's benefit and 500 shares held by Mr. Morse's spouse for
which he disclaims having voting or investment power.
(6) Includes 35,000 shares which may be purchased by Mr. Rhodes upon
exercise of currently exercisable options.
(7) Includes 75,400 shares which may be purchased by Mr. Blair upon
exercise of currently exercisable options.
(8) Includes 24,500 shares which may be purchased by Mr. Milne upon
exercise of currently exercisable options.
(9) Includes 24,300 shares which may be purchased by Mr. Samec upon
exercise of currently exercisable options.
(10) Includes 24,300 shares which may be purchased by Mr. Weeks upon
exercise of currently exercisable options.
(11) Includes 524,500 shares which may be purchased by the directors and
executive officers of the Company upon exercise of currently
exercisable options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
David B. Morse, Chairman and a director of the Company, also serves as
general counsel to the Company. Mr. Morse has been a partner with the law firm
of Best & Flanagan in Minneapolis, Minnesota since 1990. During the fiscal year
ended April 30, 1996, Best & Flanagan billed the Company $400,500 for legal
services performed for the Company.
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SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Company has caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: August 27, 1996
AEQUITRON MEDICAL, INC. "Company"
/s/ James B. Hickey, Jr.
James B. Hickey, Jr., President
and Chief Executive Officer
/s/ William M. Milne
William M. Milne, Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this amendment to Form 10-K for year ended April 30, 1996 has been signed below
by the following persons on behalf of the Company and in the capacities and on
the dates indicated.
Signature and Title Date
/s/ James B. Hickey, Jr. August 27, 1996
James B. Hickey, Jr., President,
Chief Executive Officer and
Director (Principal Executive Officer)
/s/ William M. Milne August 27, 1996
William M. Milne, Chief Financial Officer
(Principal Financial Officer)
* August 27, 1996
Lawrence A. Lehmkuhl, Director
* August 27, 1996
David B. Morse, Director
* August 27, 1996
Gerald E. Rhodes, Director
* August 27, 1996
Ervin F. Kamm, Jr., Director
* /s/ James B. Hickey, Jr. August 27, 1996
James B. Hickey, Jr., Attorney-in-Fact
pursuant to Power of Attorney
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