<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FISCHER IMAGING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO OF FISCHER IMAGING CORPORATION APPEARS HERE]
12300 North Grant Street
Thornton, Colorado 80241
(303) 452-6800
-------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 2, 1999
------------------------------------------
The Annual Meeting of Stockholders of Fischer Imaging Corporation (the
"Company") will be held at the Holiday Inn, 10 East 120th Avenue, Northglenn,
Colorado 80233, on Wednesday, June 2, 1999, at 9:00 a.m., for the following
purposes:
(1) To elect two Class II directors to the Board of Directors.
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Only stockholders holding shares of Common Stock of record at the close of
business on May 6, 1999, will be entitled to notice of, or to vote at, the
Annual Meeting or any adjournment or postponement thereof.
STOCKHOLDERS, WHETHER OR NOT THEY EXPECT TO BE PRESENT AT THE ANNUAL
MEETING, ARE REQUESTED TO SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT
PROMPTLY IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE. ANY PERSON GIVING A PROXY
HAS THE POWER TO REVOKE IT AT ANY TIME, AND STOCKHOLDERS WHO ARE PRESENT AT THE
ANNUAL MEETING MAY WITHDRAW THEIR PROXIES AND VOTE IN PERSON. PLEASE NOTE,
HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK, OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
By Order of the Board of Directors,
/s/ William C. Fee
William C. Fee,
May 10, 1999 Secretary
<PAGE>
FISCHER IMAGING CORPORATION
12300 North Grant Street
Thornton, Colorado 80241
-------------------------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 2, 1999
This Proxy Statement is furnished in connection with the solicitation of
proxies for use at the Annual Meeting of Stockholders of Fischer Imaging
Corporation (the "Company") to be held on Wednesday, June 2, 1999, or at any
adjournment or postponement thereof, at the time and place and for the purposes
set forth in the accompanying Notice of Annual Meeting of Stockholders. This
Proxy Statement and the enclosed proxy, together with the Company's Annual
Report for the year ended December 31, 1998, are being mailed to the Company's
stockholders on or about May 10, 1999.
The accompanying proxy is solicited on behalf of the Board of Directors of
the Company. It may be revoked at any time before it is exercised by giving
written notice of its revocation to the Secretary of the Company, by filing a
later-dated proxy with the Secretary, or by attending the Annual Meeting and
voting in person. All shares of the Company's Common Stock, $.01 par value
("Common Stock"), represented by properly executed and unrevoked proxies, will
be voted if said proxies are received prior to or at the meeting.
Only holders of shares of the Company's Common Stock of record at the close
of business on May 6, 1999 will be entitled to vote at the Annual Meeting. At
the record date, there were outstanding 7,028,855 shares of Common Stock, which
constitute all of the voting securities of the Company. Each share of Common
Stock is entitled to one vote upon each matter presented at the Annual Meeting.
Abstentions will be counted as present for purposes of determining whether a
quorum is present and will have the same effect as a negative vote.
The affirmative vote of a plurality of the shares voting at the Annual
Meeting, assuming a quorum is present, is necessary for the election of the
directors. Brokerage firms who hold shares in "street name" for customers have
the authority to vote those shares with respect to the election of directors if
such firms have not received voting instructions from a beneficial owner.
Stockholders do not have the right to cumulate votes in the election of
directors. See Proposal No. 1 "Election of Directors."
The Company will bear the costs of soliciting proxies. The Company will
supply banks, brokers, dealers and other custodians, nominees and fiduciaries
with proxy materials to enable them to forward such materials to each beneficial
owner of shares which they hold of record. Such persons will be reimbursed for
their reasonable out-of-pocket expenses. In addition to solicitations by mail,
some of the Company's directors, officers and regular employees, without extra
compensation, may supplement this solicitation by telephone, facsimile, letter
or personal interview.
Fischer Imaging Corporation was incorporated in Minnesota in 1973 and was
reincorporated in Delaware in July 1991. As used in this Proxy Statement, the
term "Company" refers to Fischer Imaging Corporation, a Delaware corporation.
The principal executive offices of the Company are located at 12300 North
Grant Street, Thornton, Colorado 80241. The Company's telephone number is (303)
452-6800.
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ELECTION OF DIRECTORS
(Proposal No. 1)
At the meeting, two Class II directors are to be elected to hold office for
a term of three years, or until their successors have been duly elected and
qualified. Proxies submitted pursuant to this solicitation will be voted,
unless specified otherwise, for the election of David G. Bragg, M. D., and
Thomas J. Cable. Information with respect to each nominee is set forth in the
section entitled "Board of Directors." Dr. Bragg and Mr. Cable are both current
directors of the Company. In the event either of the nominees, who have
expressed an intention to serve if elected, fail to stand for election, the
persons named in the enclosed form of proxy may vote for a substitute nominee in
their discretion. The proxy cannot be voted for more than two nominees.
Election of the directors will require the affirmative vote of a plurality
of the shares of Common Stock voted at the Annual Meeting, assuming a quorum is
present. Brokerage firms who hold shares in "street name" for customers have
the authority to vote those shares with respect to the election of directors if
such firms have not received voting instructions from a beneficial owner.
Stockholders do not have a right to cumulate votes in the election of directors.
If a stockholder abstains from voting on any matter, the Company intends to
count such stockholder as present for purposes of determining whether a quorum
is present at the Annual Meeting for the transaction of business. Additionally,
the Company intends to count broker "nonvotes" as present for determining the
presence or absence of a quorum for the transaction of business. A nonvote
occurs when a nominee holding shares for a beneficial owner votes on one
proposal, but does not vote on another proposal because the nominee does not
have discretionary voting power and has not received instructions from the
beneficial owner. Abstentions and nonvotes will not be counted as votes cast
for or against items submitted for a vote of stockholders. Abstentions and
broker nonvotes, therefore, have the same effect as votes against a proposal.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE TWO PERSONS NOMINATED AS DIRECTORS.
BOARD OF DIRECTORS
Nominees and Members of the Board of Directors
The Board of Directors consists of three classes of directors, each class
serving for a three-year term ending in successive years. The authorized number
of directors is currently six. The Class II directors, whose terms will expire
at the 1999 Annual Meeting, are David G. Bragg, M. D., and Thomas J. Cable. The
Class III directors, whose terms will expire at the 2000 Annual Meeting, are
Morgan W. Nields and Kinney L. Johnson. The Class I directors, whose terms will
expire at the 2001 Annual Meeting, are Kathryn A. Paul and R. John Fletcher.
The following table lists the proposed members of the Board of Directors
and their ages, positions with the Company, terms of office and the years they
were first elected as directors:
2
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<TABLE>
<CAPTION>
Position with the Director
Name Age Company Since
--------- --- ---------- ----------
<S> <C> <C> <C>
Class II Nominees For a Three Year Term Expiring in 2002:
David G. Bragg, M. D. 65 Director 1985
Thomas J. Cable 59 Director 1984
Class III Directors Whose Terms Expire in 2000:
Morgan W. Nields 53 Chairman of the Board 1973
and Chief Executive Officer
Kinney L. Johnson 55 Director 1973
Class I Directors Whose Terms Expire in 2001:
Kathryn A. Paul 52 Director 1998
R. John Fletcher 53 Director 1998
</TABLE>
Directors
David G. Bragg, M.D. has been a director of the Company since 1985. Dr.
Bragg is Professor Emeritus and former Chairman of the Department of Radiology,
University of Utah School of Medicine, with which he has been affiliated since
1970. He is also currently Special Assistant to the Director, Diagnostic Imaging
Program of the National Cancer Institute, a member of the American Board of
Radiology, and a director of the American Investment Bank, N.A. Dr. Bragg is a
member of the Audit Committee of the Board of Directors.
Thomas J. Cable has been a director of the Company since 1984. Mr. Cable
founded and has been general partner of Cable & Howse Ventures, Inc., a venture
capital firm, since 1977. He is also a director of EndoSonics Corporation,
Ostex International Corporation and Mycogen Corporation. Mr. Cable is a member
of the Compensation Committee of the Board of Directors.
Morgan W. Nields has served as Chief Executive Officer and Chairman of the
Board since the Company's incorporation in 1973 and served as President from
August 1990 until December 1992. Mr. Nields is a Director and member of the
Board of Governors of the National Electrical Manufacturers Association (NEMA).
He is also a director of Breast Health Care Management, Inc. He holds a BA
degree from Williams College and an MBA from the Amos Tuck School of Business
Administration at Dartmouth College.
Kinney L. Johnson has been a director of the Company since 1973 and was
actively involved with the management of the Company from 1973 through February
1985. Mr. Johnson serves as a principal at Sequel Venture Partners, a venture
capital firm located in Boulder, Colorado, a position he has held since 1997,
and was a principal at Capital Health Venture Partners from 1985 to 1997. Mr.
Johnson is a member of the Audit Committee of the Board of Directors.
Kathryn A. Paul has been a director since March 1998. Ms. Paul began her
career with Kaiser Permanente in 1970, and has held a variety of management
positions since that time, including serving as Senior Vice President and
Regional Manager, Kaiser Permanente Ohio Region from 1986 to 1994, President of
the Colorado and Kansas City regions from 1994 to 1996, President of Kaiser
Permanente's Rocky Mountain Division from 1996 to March 1999 and, since March
1999, President Group Operations West, with responsibility for Kaiser Permanente
operations in Colorado, Hawaii,
3
<PAGE>
Seattle, Portland, and Kansas City. Ms. Paul is also Chairperson of the Board of
Directors of the Federal Reserve Board of Denver, and serves on the boards of a
variety of civic and charitable organizations. She is a member of the
Compensation Committee of the Board of Directors.
R. John Fletcher has been a director since June 1998. Mr. Fletcher serves
as Chief Executive Officer of Boston-based Fletcher Spaght, Inc., a strategic
consulting firm which specializes in health care and high technology companies,
a position he has held since 1983. From 1977 to 1983, he was with The Boston
Consulting Group, Inc. and from 1975 to 1977, served on the faculty of The
Wharton School in Philadelphia. Mr. Fletcher is also a director of Nitinol
Medical Technologies, and AutoImmune.
Board Meetings and Committees
The Board of Directors held 6 meetings in 1998. Each director attended at
least 75% of the meetings of the Board of Directors and committees of which he
was a member during 1998.
The Board of Directors has an Audit Committee, which is presently composed
of Mr. Johnson and Dr. Bragg. The Audit Committee met once in 1998 to consider
various accounting and auditing matters related to the Company, to review the
Company's financial statements, to review the services rendered by the Company's
independent public accountants and to recommend the selection of independent
public accountants for the Company.
The Board of Directors also has a Compensation Committee, which is
presently composed of Messrs. Cable and Fletcher and Ms. Paul. The Compensation
Committee met 2 times in 1998 to review and recommend compensation for the
Company's senior officers. The Compensation Committee also administers the
Company's 1991 Stock Option Plan and Employee Stock Purchase Plan.
In October 1998, the Board formed a Regulatory Oversight Committee to
monitor the Company's regulatory compliance and quality control activities. The
Regulatory Oversight Committee presently consists of Ms. Paul and Mr. Johnson.
The Board of Directors does not have a nominating committee.
Compensation of Directors
All nonemployee directors of the Company are reimbursed for expenses
incurred for attendance at meetings of the Board of Directors and each receives
an annual director's fee of $10,000.
Pursuant to the Director Plan, which was adopted in 1993 and amended in
1998, and is administered by the Board of Directors, a director who is not an
employee of the Company automatically receives a grant of options to purchase
5,000 shares of Common Stock upon his or her election to the Board of Directors,
plus an additional grant of options to purchase 5,000 shares on each February
26th thereafter (if the person remains a director on such date). Members of the
Board of Directors serving on the Compensation and Audit Committees receive
additional options to purchase 1,000 shares of Common Stock upon election to
these committees and each February 26th thereafter. The options automatically
granted under the Director Plan have an exercise price equal to the fair market
value of the Common Stock on the date of grant, are immediately exercisable and
expire ten years from their date of grant. If a person ceases to be a director
for any reason other than death or disability, the options remain exercisable
for a period equal to the director's length of service, but not
4
<PAGE>
less than one year and not greater than five years. If the event of death or
disability, the options remain exercisable for a period of twelve months, but in
no event beyond ten years from the date of grant. A total of 300,000 shares of
Common Stock has been reserved for issuance under the Director Plan. As of
December 31, 1998, options to purchase 89,000 shares of Common Stock were
outstanding under the Director Plan at an average price of $4.20 per share.
EXECUTIVE OFFICERS
The current executive officers of the Company, who serve at the pleasure of
the Board of Directors, are as follows:
<TABLE>
<CAPTION>
Name Age Position with Company
---- --- ---------------------
<S> <C> <C>
Morgan W. Nields 53 Chairman of the Board and
Chief Executive Officer
Anthony G. DeCarolis 52 Vice President, Sales, Marketing, and Service
William C. Fee 49 Vice President, Finance/ Corporate Secretary
Mike Tesic, Ph. D. 61 Vice President, Engineering
</TABLE>
Biographical information regarding Mr. Nields is set forth above under the
heading "Directors."
Anthony G. DeCarolis joined the Company in May 1995 as Vice President of
Sales and became Vice President, Sales and Marketing shortly thereafter. Mr.
DeCarolis assumed responsibility for Service operations in September 1996. Prior
to joining the Company, Mr. DeCarolis served in national sales management
positions for Toshiba America Medical Systems from 1989 to March 1995 and in
management positions at General Electric Company from 1985 to 1989. He has been
involved in diagnostic medical imaging since 1981. Mr. DeCarolis holds a BS
degree from the University of Pittsburgh.
William C. Fee joined the Company in August 1995 as its Controller, and was
appointed Vice President, Chief Accounting Officer in June 1997. He was
appointed Corporate Secretary in August 1998 and Vice President, Finance in
March 1999. Prior to joining the Company, Mr. Fee was Controller for Neodata
Services, Inc., a direct marketing and fulfillment company, from December 1993
to July 1995. From 1988 to 1993, Mr. Fee served as Vice President of Finance for
a privately-held defense contractor and Controller of a start-up biotechnology
company. From 1978 to 1988, Mr. Fee held a variety of financial management
positions with AlliedSignal Inc. Mr. Fee began his career with Ernst & Young,
where he was a member of the audit staff from 1971 to 1978. Mr. Fee holds a BA
degree in Accounting and an MBA from Michigan State University.
Dr. Tesic joined the Company in November 1993 as Vice President,
Engineering. Prior to joining the Company, Dr. Tesic served as Vice President of
Engineering and Strategic Development of Lunar Corporation, a medical capital
equipment manufacturer, from January 1992 to November 1993. Dr. Tesic was also
previously Manager of Research and Development for Varian Corporation's Magnetic
Resonance Spectroscopy business from July 1986 to January 1992 and, prior to
that, held several management positions with Picker International. Dr. Tesic
holds a Ph.D. degree in physics from Case Western Reserve University.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of April 16, 1999,
with respect to the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the Company's Common Stock; (ii) each director and director nominee of the
Company; (iii) the Company's Chief Executive Officer and those executive
officers of the Company other than the Chief Executive Officer whose salary and
bonus exceeded $100,000 as of the end of the Company's fiscal year; and (iv) all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Shares Beneficially Owned(1)
----------------------------
Name and Address of Beneficial Owner Number Percentage
- ------------------------------------ ------ ----------
<S> <C> <C>
GE Medical Systems, a division of
General Electric Company 506,667 (2) 6.7%
P. O. Box 414
Milwaukee, Wisconsin 53201
Dimensional Fund Advisors Inc. 440,100 (3) 6.3
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Arnold H. Snider 400,000 (4) 5.7
Deerfield Capital L.P. and Deerfield Partners, L. P. (4) (5)
450 Lexington Avenue, Suite 1930
New York, NY 10017
Directors and officers:
Morgan W. Nields 1,151,341 (5) 16.1
12300 North Grant St.
Denver, CO 80241
Kinney L. Johnson 259,500 (6) 3.7
David G. Bragg, M.D. 22,000 (7) *
Thomas J. Cable 31,064 (8) *
R. John Fletcher 12,000 (9) *
Kathryn A. Paul 10,000 (10) *
Anthony G. DeCarolis 73,542 (11) 1.0
William C. Fee 59,123 (12) *
Mike Tesic 66,958 (13) *
All directors and executive officers
as a group (10 persons) 1,685,528 (14) 22.7%
* Less than 1%
</TABLE>
(1) This table is based upon information supplied by officers and directors and
Schedules 13G filed by principal stockholders with the Securities and
Exchange Commission (the "SEC") in February 1999. Unless otherwise noted,
each person identified possesses sole voting and investment power with
respect to the shares listed. A beneficial owner is any person who,
directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power or investment power
over the shares. Number of shares includes all shares underlying options
that will be exercisable prior to June 16, 1999.
(2) Represents 1,333,333 shares of Series D Convertible Preferred Stock
("Preferred Stock") that are immediately convertible into 1,333,333 shares
of Common Stock at the option of their holder. Until converted, the
Preferred Stock is non-voting, except as required by law.
(3) Based upon the Schedule 13G filed with the SEC on February 11, 1999,
Dimensional Fund Advisors Inc. ("DFAI") has sole voting and investment
power over 440,100 shares. The reported shares are owned by advisory
clients of DFAI; DFAI disclaims beneficial ownership of all reported
shares.
6
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(4) Based upon the joint Schedule 13G filed with the SEC on February 3, 1999,
Arnold H. Snider has shared voting and investment power over 400,000
shares, Deerfield Capital, L.P. and Deerfield Partners, L.P. have shared
voting and investment power over 326,000 shares and Deerfield Management
Company and Deerfield International Limited have shared voting and
investment power over 74,000 shares.
(5) Includes 170,523 and 118,943 shares held by The Robert L. Nields Trust and
the Florence Wesson Nields Irrevocable Trust, respectively. Mr. Nields is
a co-trustee and a beneficiary of both trusts and exercises shared voting
and investment power as to such shares. Mr. Nields disclaims beneficial
ownership of the shares held by both trusts except to the extent of his
proportionate interest as beneficiary of the trusts. The amount shown also
includes 143,698 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(6) Includes 25,000 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(7) Represents 22,000 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(8) Includes 28,000 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(9) Represents 12,000 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(10) Represents 10,000 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(11) Includes 66,542 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(12) Includes 36,646 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(13) Represents 66,958 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
(14) Includes 410,844 shares that may be purchased pursuant to options
exercisable prior to June 16, 1999.
EXECUTIVE COMPENSATION
The following table sets forth the compensation to the Company's Chief
Executive Officer and the Company's executive officers whose salary and bonus
exceeded $100,000 for services rendered during the fiscal years ended December
31, 1998, 1997, and 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Awards
------------------
Annual Compensation # of Securities
---------------------------------- Underlying All Other
Name and Principal Position Year Salary(1) (1) Bonus Options (2) Compensation (3)
- --------------------------- ----------- -------------- -------------- ------------------ ---------------------
<S> <C> <C> <C> <C> <C>
Morgan W. Nields 1998 $239,970 $ 0 25,000 $ 75,750
Chairman of the Board 1997 234,018 0 25,000 75,750
Chief Executive Officer 1996 214,709 0 125,000 75,750
Anthony G. DeCarolis 1998 152,266 35,000 20,000 0
Vice President, Sales and 1997 141,362 70,000 20,000 0
Marketing 1996 133,699 45,504 76,000 0
Willliam C. Fee 1998 114,380 24,000 20,000 0
Vice President, Finance/ 1997 102,705 20,000 30,000 0
and Secretary 1996 93,273 0 14,000 0
Mike Tesic, Ph.D. 1998 164,845 16,875 20,000 21,577
Vice President, Engineering 1997 158,894 40,000 20,000 21,577
1996 152,622 0 76,000 21,577
</TABLE>
(1) The amount includes payouts, if any, for excess accrued vacation.
(2) Included in the 1996 option awards are options repriced during the year
(100,000 as to Mr. Nields, 56,000 as to each of Messrs. DeCarolis and Tesic
and 4,000 as to Mr. Fee). The 1998, 1997, and the remainder of the 1996
option awards represent new options granted during the respective years.
(3) These amounts principally represent the premiums paid under "split-dollar"
life insurance on behalf of certain officers under which the Company will
be reimbursed for premiums paid upon the officer's death. The executive
receives no ownership in the portion of cash surrender value representing
premiums paid under the policies until retirement, and then only if minimum
service requirements have been met.
7
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OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information with respect to
individual grants of stock options to the Company's Named Executive Officers
during the fiscal year ended December 31, 1998:
<TABLE>
<CAPTION>
Potential Realizable
Percent of Value at Assumed
Number of Total Annual Rates of
Securities Options Exercise Stock Price Appreciation
Underlying Granted to or Base for Option Term (2)
Options Employees Price Expiration ------------------------
Name Granted(#)(1) in 1998 ($ / Share) Date At 5%($) At 10%($)
- ---- ------------- ------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Morgan W. Nields 25,000 15.4% $4.000 6/12/08 $62,889 $159,374
Anthony G. DeCarolis 20,000 12.3% 4.000 6/12/08 50,312 127,499
William C. Fee 20,000 12.3% 4.000 6/12/08 50,312 127,499
Mike Tesic 20,000 12.3% 4.000 6/12/08 50,312 127,499
</TABLE>
* Not applicable (1).
(1) Options granted to executive officers in 1998 vest in equal monthly
increments over a four year period, except that the initial 25% vests in
its entirety only after one year. No options were granted to Ms. Wolin
during 1998, as she left the Company prior to the date options were granted
for 1998.
(2) Potential realizable values are reported net of the option exercise price,
but before taxes associated with the exercise of the option. These amounts
are based on the total of all option grants to the executive for the year
and upon the assumed rates of appreciation over the 10 year option term.
Actual gains, if any, on stock option exercises are dependent on the future
performance of the Common Stock, as well as the option holder's continued
employment through the vesting period. The amounts reflected in this table
may not necessarily be achieved.
AGGREGATED STOCK OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END STOCK OPTION VALUES
The table below sets forth information concerning exercises of stock
options during 1998 and the value of stock options held at the end of the fiscal
year ended December 31, 1998 by the Company's Named Executive Officers:
<TABLE>
<CAPTION>
# of Securities
Underlying Value of Unexercised
# of Shares Value Realized Unexercised Options In-the-Money Options
Acquired (market price at December 31, 1998 at December 31, 1998 (1)
on at exercise, less -------------------------- --------------------------
Name Exercise exercise price) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Morgan W. Nields 0 $ 0 127,917 132,083 $ 0 $ 0
Anthony G. DeCarolis 0 0 51,834 84,166 0 0
William C. Fee 0 0 27,167 41,833 0 0
Mike Tesic 0 0 54,334 81,666 0 0
</TABLE>
(1) Based on the closing stock price at December 31, 1998 of $2.125 per share,
as reported on the Nasdaq Stock Market, less exercise price.
RETENTION BONUS PLAN
In December 1995, the Board of Directors adopted a Retention Bonus Plan
(the "Retention Plan"). Under the Retention Plan, all employee options to
purchase shares of Common Stock will vest immediately and the Company make
payments to executive officers and other key employees of the Company (the
"Participants") in the event of a change of control of the Company. A "change
of control" under the Retention Plan is defined to occur upon the acquisition of
35% or more of the Company's
8
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outstanding Common Stock by a single person or group, the occurrence of
specified changes in the composition of the Board of Directors within specified
time periods, a consolidation or merger in which the Company is not the
surviving corporation, the sale or other transfer of 50% or more of the assets
or earnings power of the Company, the adoption of a plan of liquidation or
dissolution of the Company, or certain other similar events. Payments made to a
Participant under the Retention Plan will not exceed an amount equal to his or
her annual base salary in effect immediately prior to the change of control. The
Participants, who presently include the executive officers of the Company, are
selected by the Board of Directors, which may select additional Participants in
the future.
COMPENSATION COMMITTEE REPORT
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee is composed of three nonemployee Directors.
The Committee's executive compensation policies are designed to provide
competitive levels of compensation that integrate compensation with the
Company's performance, recognize individual initiative and achievements, and
assist the Company in attracting and retaining qualified executives.
Since its inception, the Company has maintained the philosophy that
compensation of its executive officers and others should be directly and
materially linked to the Company's operating performance. To achieve this
linkage, executive compensation is partially weighted towards incentive
compensation bonuses paid on the basis of the Company's operating performance.
After its review of the Company's programs, the Committee believes that the
total compensation program for executives of the Company during 1998 was
adequate.
1998 Executive Officer Compensation
In 1998, the compensation packages paid to the executives consisted of base
salary, incentive compensation (in the form of cash bonuses), and long-term
incentive compensation (in the form of stock options).
Base Salary
The Compensation Committee reviews the base salary levels for the Company's
executive officers annually based on the Chief Executive Officer's
recommendations. Base salaries are set to be competitive with the salaries paid
by other publicly-traded medical capital equipment manufacturers with similar
revenues (as determined by a review of publicly available information). These
manufacturers include some of the companies that comprise the Company's Peer
Index on page 12. Base salaries are also set based on each particular
executive's experience, expertise, responsibilities, potential for advancement,
and other factors. The Compensation Committee has not found it practicable, nor
has it attempted, to assign relative weights to the specific factors used in
determining base salary levels, and the specific factors used may vary among
individual officers. As is typical for most companies, payment of base salary
is not conditioned upon the achievement of any specific, pre-determined
performance targets.
Incentive Compensation
The incentive compensation program provides the potential for the executive
officers and other key employees to earn cash incentive bonuses based on the
Company's performance for the year, as well as on the basis of individual
initiatives and achievements. The incentive bonus pool for 1998 was
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based on the Company's achievement of certain earnings targets and values
assigned to individual objectives established at the beginning of 1998. These
targets were set by the Compensation Committee, based on the recommendations of
the Chief Executive Officer. Executive officers and other key employees
generally share in the bonus pool in proportion to their base salary.
The Compensation Committee may also approve, in its sole discretion, bonus
payments to executive officers that are not directly linked to previously
established performance objectives. Additionally, the Compensation Committee
has authorized the Chief Executive Officer, where appropriate to an executive's
specific employment responsibilities, establish bonus opportunities based upon
individual performance objectives. No such bonuses were paid in 1998.
Long-Term Incentive Compensation
The Company provides long-term incentive compensation through its 1991
Stock Option Plan (the "1991 Plan"), which provides for grants of stock options
to executive officers and other key employees. The Compensation Committee uses
stock options as a significant element of the executive officers' compensation
packages. Because the executive officers receive no benefit from the stock
options unless the Company's stock price appreciates, the options are intended
to provide incentives for the executive officers to enhance long-term Company
performance, as reflected in stock price appreciation, thereby increasing
stockholder value.
The Compensation Committee approved the stock options granted to the
executive officers in 1998 based on the objectives described above. The options
granted in 1998 vest 25% on the date which is one year from date of grant, with
the remainder vesting in equal monthly installments over the following 36
months. The size and nature of the option grants made to the executive officers
in 1998 were determined based on a subjective evaluation of the appropriate
level of incentive necessary to retain on a long-term basis the services of
executives with the experience, expertise, and responsibilities of the executive
group.
Compensation of Chief Executive Officer
1n 1998, the Compensation Committee structured the compensation package of
Morgan Nields, the Company's Chief Executive Officer, in the same manner and
based upon similar objectives as the Company's other executive officers. Mr.
Nields received no cash incentive bonus for 1998. The Compensation Committee
believes that Mr. Nields' total compensation package for 1998 appropriately
reflects his importance and contributions to the Company.
Section 162 (m)
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits the
federal income tax deductions of publicly traded companies to the extent that
total compensation (including base salary, annual bonus, restricted stock
awards, stock option exercises, and non-qualified benefits) for certain
executive officers exceeds $1 million in any one year. The Compensation
Committee intends to design the Company's compensation program so that the
compensation paid to its employees will be completely deductible by the Company.
Thomas J. Cable R. John Fletcher Kathryn A. Paul
Compensation Committee Compensation Committee Compensation Committee
Member Member Member
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FIVE YEAR STOCK PRICE PERFORMANCE GRAPH
The Stock Price Performance Graph set forth below compares the cumulative total
stockholder return on the Company's Common Stock for the five year period from
December 31, 1993 to December 31, 1998, with the cumulative total return on the
Nasdaq National Market Index and a Peer Group Index over the same period.
(Assumes the investment of $100 in the Company's Common Stock and the respective
indexes on December 31, 1993, with all dividends reinvested).
[FIVE YEAR STOCK PRICE PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
12/93 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95 3/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98
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<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fischer Imaging 100 121 86 93 100 95 105 163 186 270 223 105 109 95 112 105 92 73 61 40 40
Nasdaq 100 96 91 99 98 107 122 137 138 145 157 162 170 161 190 222 208 244 251 227 294
Peer Group 100 89 78 93 95 83 102 122 128 162 196 166 172 155 171 180 151 165 152 140 137
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</TABLE>
* Companies in Peer Group are: (1) Acuson Corp, (2) ADAC Laboratories, (3)
Advanced Technology Labs, Inc., (4) Biomagnetic Technologies, Inc., (5)
Elscint Limited, (6) EndoSonics Corporation, (7) Fonar Corp., (8) Hologic,
Inc., (9) Imatron, Inc., and (10) Lunar Corp.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Thornton headquarters and manufacturing facility is leased
from a partnership whose general partners are Morgan W. Nields, Chief Executive
Officer and Chairman of the Company, and Kinney L. Johnson, a member of the
Company's Board of Directors, under a lease effective August 1, 1992, which
expires July 31, 2012. The lease requires the Company to pay all taxes,
insurance, operating and maintenance expenses for the facility, and provides for
an annual base rent which is subject to adjustment at the beginning of the 8th,
13th and 18th lease year based on the then current market rent for similar
premises, provided the base rent may not be increased at any one time by more
than 7%. The Company made total lease payments of $744,000 in 1998.
The foregoing lease was approved by a majority of the Company's
disinterested directors at the time it was entered into by the Company. The
Company believes that this lease was entered into for bona fide business
purposes and was on terms no less favorable to the Company than could have been
obtained from unaffiliated third parties.
As of December 31, 1998, GE Medical Systems ("GEMS"), a division of General
Electric Company, owned 1,333,333 shares of Series D Convertible Preferred
Stock, then representing an approximately 16% equity ownership interest in the
Company. By an agreement effective March 24, 1999, GEMS surrendered 826,666 of
Series D Convertible Preferred Stock in exchange for a non-exclusive right to
manufacture the Tilt-C system, which the Company has manufactured for GEMS since
1994. This represents a renegotiation of the Company's previous arrangement
with GEMS whereby GEMS would receive the Tilt C rights under certain
circumstances in exchange for 100% of its Series D Preferred Stock. In addition
to other terms, the agreement amends certain terms of the Company's Series D
Preferred Stock in the event of a change of control transaction. First, if a
change of control transaction occurs or the Company comes to an agreement to
effect a change of control transaction prior to March 24, 2000, then GEMS will
be entitled to $7.50 per share less the average closing price of a share of the
Company's common stock for the twenty trading days preceding March 24, 1999, on
each of the 826,666 shares surrendered pursuant to the agreement. Second, as to
the remaining 506,667 outstanding shares of Series D Preferred Stock, change of
control rights will expire on March 24, 2002. For these purposes, a change of
control transaction generally includes any transaction involving a transfer of
more than 50% of the combined voting power of the Company's capital stock or a
sale by the Company of all or substantially all of its assets to any one or more
of Picker International, Inc., Siemens Medical Systems, Toshiba America Medical
Systems, Inc., or Philips Medical Systems, or any affiliate thereof. In 1998,
the Company's sales to GEMS under an Original Equipment Manufacturer contract
accounted for $3.4 million, or 5.9%, of the Company's total revenues.
During 1998, the Company invested $100,000 in Breast Health Management,
Inc. ("BHM"), a corporation formed in 1998 to develop and market office and
records management products and services for physicians offices conducting
breast healthcare procedures. The Company currently holds all of the non-voting
capital stock and two-thirds of the entire equity interest of BHM. In 1998 Mr.
Nields also invested a total of $50,000 in BHM. Mr. Nields is a director of
BHM, and holds all of the voting capital stock and one-third of the entire
equity interest of BHM.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's officers and directors and persons who are beneficial owners
of more than 10% of the Company's Common Stock ("10% beneficial owners") are
required to file reports of their holdings and transactions in the Company's
Common Stock with the SEC and the Nasdaq Stock Market and to furnish the Company
with copies of such reports.
Based solely upon its review of the reports it has received and upon
written representations it has obtained from these persons, the Company believes
that the Company's officers, directors and 10% beneficial owners have complied
with all such filing requirements with respect to 1998 except as set forth in
this paragraph. During 1998, a late Form 4 was filed on behalf of Mr. Johnson
and late Form 3's were filed on behalf of Ms. Paul and Mr. Fletcher at the time
of their election as members of the Company's Board of Directors.
INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which has been the independent public accountants for
the Company and its subsidiaries since 1973, has been selected by the Company's
Board of Directors, upon recommendation of its Audit Committee, as independent
public accountants for the Company and its subsidiaries for the fiscal year
ending December 31, 1999. Representatives of Arthur Andersen LLP are expected
to be present at the Annual Meeting and will be provided an opportunity to make
comments with respect to the Company's financial statements and to respond to
appropriate inquiries from stockholders.
SUBMISSION OF STOCKHOLDER PROPOSALS
FOR THE 2000 ANNUAL MEETING
Stockholder proposals submitted for presentation at the 2000 Annual Meeting
of Stockholders of the Company must be received by the Company no later than
January 7, 2000 to be eligible for inclusion in the Company's proxy statement
and proxy for that meeting. As provided by the Bylaws of the Company, for a
shareholder proposal to be eligible to be voted upon at the 2000 Annual Meeting
of Stockholders of the Company, notice of a shareholder proposal, prepared in
compliance with the applicable provision of the Company's Bylaws, must be
received by the Company not later than the close of business on the tenth day
following the Company's mailing of notice for that meeting.
DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the Annual Meeting any
matters other than those disclosed in the Notice of Annual Meeting of
Stockholders, and it does not know of any business which persons other than
management intend to present at the meeting. Should any other matters requiring
a vote of the stockholders arise, the proxies in the enclosed form confer upon
the person or persons entitled to vote the shares represented by such proxies
discretionary authority to vote the same in respect of any such other matter in
accordance with their best judgment.
Any stockholder who executes and returns the proxy may revoke the same at any
time before it is exercised by filing with the Secretary of the Company written
notice of such revocation or a duly executed
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proxy bearing a later date, or by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting will not in and of itself constitute
revocation of a proxy.
UPON WRITTEN REQUEST BY ANY STOCKHOLDER TO WILLIAM C. FEE, VICE PRESIDENT,
FINANCE, FISCHER IMAGING CORPORATION, 12300 NORTH GRANT STREET, THORNTON,
COLORADO 80241, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1998 WILL BE PROVIDED WITHOUT CHARGE.
By Order of the Board of Directors,
/s/ WILLIAM C. FEE
WILLIAM C. FEE,
Secretary
Thornton, Colorado
May 10, 1999
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PROXY SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
FISCHER IMAGING CORPORATION
The undersigned hereby appoints Morgan W. Nields and William C. Fee, and
either of them, with power of substitution, as proxies of the undersigned, and
hereby authorizes them to represent and to vote, as designated below, all the
shares of Common Stock of Fischer Imaging Corporation held of record by the
undersigned on May 6, 1999, at the Annual Meeting of Stockholders to be held
on June 2, 1999 or any adjournment or postponement thereof.
1. ELECTION OF DIRECTORS
[_] FOR all nominees listed below(except as marked to the contrary below,
see instructions)
[_] WITHHOLD AUTHORITY to vote for all nominees listed
Nominees: David G. Bragg, M.D.; Thomas J. Cable
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write that nominee's name in the space below:
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<PAGE>
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment or
postponement thereof, upon matters incident to the conduct of the meeting and
upon the election of substituted nominees for directors designated by the
Board of Directors if the persons named in Proposal 1 above are unable to
serve as directors.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy
will be voted FOR Proposal 1.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
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Signature
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Signature if held jointly
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Date
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
