<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 S240.14a-11(c) or S240.14a-12
AMERICAN TECHNICAL CERAMICS CORP.
--------------------------------------------------
(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:
-------------------------------------------------------------------
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:
-------------------------------------------------------------------
5) Total fee paid:
( ) 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.: _____________________
3) Filing Party: _____________________________________________________
4) Date Filed: _____________________________________________________
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP.
17 STEPAR PLACE
HUNTINGTON STATION, NEW YORK 11746
-------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 20, 1998
-------------------------------------------------------
To the Stockholders of
AMERICAN TECHNICAL CERAMICS CORP.:
The Annual Meeting of Stockholders of American Technical Ceramics
Corp., a Delaware corporation (the "Company"), will be held at 2201 Corporate
Square Boulevard, Jacksonville, Florida 32216, on Friday, November 20, 1998, at
10:00 a.m., Eastern Standard Time, for the following purposes:
1. To elect five directors;
2. To ratify the appointment of KPMG Peat Marwick LLP as the
independent public accountants to audit the Company's
consolidated financial statements for the fiscal year ending
June 30, 1999; and
3. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on October 16,
1998, the record date fixed by the Board of Directors, are entitled to notice
of, and to vote at, the meeting. A complete list of stockholders of the Company
as of the record date will be open to examination by any stockholder for any
purpose germane to the meeting during ordinary business hours on or after
November 10, 1998 at the place of the meeting. The transfer books of the
Company will not be closed.
Your attention is directed to the accompanying Proxy Statement.
Stockholders unable to attend the meeting in person are urged to date, sign and
mail promptly the enclosed proxy card in the postpaid envelope to ensure that
your shares are represented at the meeting. If you attend the meeting, you may
vote in person if you wish to do so, even though you have sent in your proxy.
BY ORDER OF THE BOARD OF DIRECTORS
KATHLEEN M. KELLY
Secretary
Huntington Station, New York
October 20, 1998
<PAGE>
AMERICAN TECHNICAL CERAMICS CORP.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of American Technical Ceramics Corp., a
Delaware corporation (the "Company"), to be voted at the Annual Meeting of
Stockholders (the "Annual Meeting") and any adjournment or postponement
thereof. The Annual Meeting will be held at 10:00 a.m., Eastern Standard Time,
on Friday, November 20, 1998, at the Company's facility at 2201 Corporate
Square Boulevard, Jacksonville, Florida 32216. The principal executive offices
of the Company are located at 17 Stepar Place, Huntington Station, New York
11746. It is expected that this Proxy Statement and the accompanying proxy card
will first be mailed or delivered to stockholders entitled to notice of, and to
vote at, the Annual Meeting on or about October 23, 1998.
VOTING SECURITIES AND VOTING RIGHTS
Only holders of record of the Company's Common Stock, par value $.01 per
share (the "Common Stock"), at the close of business on October 16, 1998 will
be entitled to notice of, and to vote at, the Annual Meeting. As of October 16,
1998, there were 3,849,984 shares of Common Stock issued and outstanding. A
majority of the outstanding shares of Common Stock present in person or by
proxy shall constitute a quorum at the Annual Meeting. Each outstanding share
of Common Stock is entitled to one vote on all matters, which vote may be given
in person or by proxy duly authorized in writing. There are no cumulative
voting rights.
All proxies received pursuant to this solicitation will be voted, and,
where a choice is specified as to the proposals described in the foregoing
Notice of Annual Meeting of Stockholders, they will be voted in accordance with
that specification. If no specific instructions are given with respect to the
matters to be acted upon, the shares of Common Stock represented by a signed
proxy will be voted FOR all of the Board's nominees for director, FOR the
proposal to ratify the appointment of KPMG Peat Marwick LLP as the independent
public accountants to audit the Company's consolidated financial statements for
the fiscal year ending June 30, 1999 and in accordance with the proxy holders'
best judgment as to any other matters as may properly come before the Annual
Meeting. Stockholders who have executed proxies may revoke them at any time
before they are voted by submitting a later dated proxy or by written notice
delivered to the Secretary of the Company. Personal attendance at the meeting
without submitting a later dated proxy or a written notice of revocation to the
Secretary shall not serve to revoke any proxy.
The affirmative vote of the holders of a majority of the shares of Common
Stock present at the Annual Meeting, in person or by proxy, and entitled to
vote is necessary for the election of directors and the ratification of KPMG
Peat Marwick LLP as the Company's independent public accountants to audit the
Company's consolidated financial statements for the fiscal year ending June 30,
1999. Accordingly, an abstention is the equivalent of a vote against the
election of any nominee for election to the Board of Directors of the Company
or the proposal to ratify the appointment of KPMG Peat Marwick LLP. In the
event a broker that is a record holder of Common Stock of the Company does not
return a signed proxy, the shares of Common Stock represented by such proxy
will not be considered present at the Annual Meeting and, therefore, will not
be considered in determining the presence of a quorum. Broker non-votes will
have no effect on the outcome of the vote for the election of directors or the
ratification of KPMG Peat Marwick LLP as the Company's independent accountants.
As of October 16, 1998, 2,295,515 shares of Common Stock (approximately
59.6% of the issued and outstanding shares of Common Stock) were held of record
and beneficially by Victor Insetta, who is the President, Chief Executive
Officer and a director of the Company. His share holdings are sufficient to
assure election of the nominees for election as directors as forth herein, to
ratify the appointment of KPMG Peat Marwick LLP as the independent public
accountants to audit the Company's consolidated financial statements for the
fiscal year ending June 30, 1999 and to take action on any other matters as may
properly come before the Annual Meeting.
<PAGE>
The Company will bear the entire cost of the solicitation of proxies by
the Board of Directors. Proxies will be solicited by mail, and may be solicited
personally by telephone or facsimile transmission, by directors, officers and
regular employees of the Company, without additional remuneration.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 16, 1998, certain
information with respect to the ownership of the Company's Common Stock by (i)
all persons who are known by the Company to be the beneficial owners of more
than 5% of the outstanding shares of Common Stock, (ii) each of the directors
of the Company, (iii) each of the executive officers of the Company listed in
the table under the caption "Executive Compensation -- Summary Compensation
Table," and (iv) all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP (1) CLASS
- ------------------------------- ----------------------------- ----------------
<S> <C> <C>
VICTOR INSETTA 2,295,515(2) 59.6%
2201 Corporate Square Boulevard
Jacksonville, Florida
JOSEPH COLANDREA 153,300(3) 4.0%
911 South Ocean Boulevard
Boca Raton, Florida
STUART P. LITT 34,269(4) *
One Norden Lane
Huntington Station, New York
RICHARD MONSORNO 33,926(5) *
2201 Corporate Square Boulevard
Jacksonville, Florida
KATHLEEN M. KELLY 23,087(6) *
One Norden Lane
Huntington Station, New York
CHESTER E. SPENCE 12,500(7) *
269 Windsor Place
Brooklyn, New York
O. JULIAN GARRARD III 1,000 *
3871 Little Lane
Jacksonville, Florida
RUBIN BLUMKIN --
7720 Hearth Stone Avenue
Boynton Beach, Florida
All executive officers and directors 2,400,297(2) 62.3%
as a group (7 persons)
- ---------
* Less than one percent.
</TABLE>
2
<PAGE>
(1) All shares are beneficially owned, and the sole voting and investment
power over such shares is held, by the persons named, except to the
extent described in the following footnotes.
(2) Does not include (i) 153,300 shares owned by Mr. Colandrea which are
subject to a Restated Shareholders' Agreement, dated April 15, 1985,
among the Company and Messrs. Insetta, Colandrea and Joseph Mezey (the
"Restated Shareholders' Agreement"), and (ii) shares subject to Voting
and Transfer Agreements entered into in connection with options granted
under a stock option plan which has expired. Pursuant to the Restated
Shareholders' Agreement, Messrs. Insetta, Colandrea and Mezey have agreed
that, so long as they own shares of Common Stock, they will vote their
shares for the election of either three designees of Mr. Insetta (if Mr.
Insetta elects not to be a director) or of Mr. Insetta and two of his
designees, and for the election of Mr. Colandrea (if Mr. Colandrea elects
to be a director) to the Board of Directors of the Company. Mr. Colandrea
has waived his right to be designated as a director indefinitely until
written notice is served to the contrary at least 90 days prior to the
next scheduled annual meeting. No such notice has been given relative to
the Company's Annual Meeting to be held November 20, 1998. Mr. Mezey no
longer owns shares of Common Stock. The Restated Shareholders' Agreement
will terminate upon the death of Mr. Insetta or at such time as Mr.
Insetta does not own at least 10% of the outstanding shares of Common
Stock. The Restated Shareholders' Agreement also provides for certain
rights of first refusal and registration rights. The Voting and Transfer
Agreements referred to above contain provisions requiring the holders of
shares purchased upon the exercise of options granted under said plan to
vote such shares for the election as directors of the Company of certain
persons (currently Victor Insetta and Rubin Blumkin). The Company has not
regularly enforced these provisions.
(3) Does not include 2,275,061 shares owned by Mr. Insetta which are subject
to the Restated Shareholders' Agreement. See Note (2) above. By virtue of
such agreement, Mr. Colandrea may be deemed to beneficially own the
shares owned by Mr. Insetta.
(4) Includes 1,000 shares subject to options which are presently exercisable.
(5) Includes 1,000 shares subject to options which are presently exercisable.
(6) Includes 6,687 shares owned jointly with Mrs. Kelly's husband. Includes
1,000 shares subject to options which are presently exercisable.
(7) Includes 2,500 shares owned jointly with Mr. Spence's wife.
3
<PAGE>
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers, directors and persons who own
beneficially more than ten percent of the Company's Common Stock to file with
the Securities and Exchange Commission initial reports of beneficial ownership
and reports of changes in beneficial ownership of the Common Stock. Officers,
directors and persons owning more than ten percent of the Common Stock are
required to furnish the Company with copies of all such reports. To the
Company's knowledge, based solely on a review of copies of such reports
furnished to the Company, the Company believes that, during the fiscal year
ended June 30, 1998, the only deviations from the Section 16(a) filing
requirements applicable to its officers, directors and persons owning
beneficially more than ten percent of the Common Stock were that, (i) in March
1998, Mr. Insetta filed a Statement of Change in Beneficial Ownership on Form 4
one day late, and (ii) Andrew Perz, who joined the Company as Controller in
January 1998 and who does not beneficially own any shares of Common Stock,
neglected to file a Statement of Beneficial Ownership on Form 3. Mr. Perz has
since filed an Annual Statement of Beneficial Ownership on Form 5.
Messrs. Litt, Monsorno, Spence and Mrs. Kelly inadvertently failed to
timely file Statements of Change in Beneficial Ownership on Form 4 or an Annual
Statement of Beneficial Ownership on Form 5 with respect to options granted to
them during the fiscal year ended June 30, 1997. Each of them has since filed
an Annual Statement of Beneficial Ownership on Form 5 reflecting said grants.
Several other employees who are not officers of the Company but who had
previously filed Forms 3 and Forms 4 also inadvertently failed to file
Statements of Changes in Beneficial Ownership on Form 4 or Annual Statements of
Beneficial Ownership on Form 5 with respect to options granted to them during
such fiscal year. Each such employee has since filed an Annual Statement of
Beneficial Ownership on Form 5 (i) reflecting said grants, and (ii) reflecting
that he is not an officer, director or 10% stockholder of the Company or an
employee that performs a policy making function and that, therefore, he is not
subject to Section 16 of the Exchange Act.
4
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
Five directors are to be elected to serve until the next annual meeting
of stockholders or until their respective successors are elected and qualified.
Set forth in the table below is certain information, as of October 16, 1998,
with respect to the nominees of the Board of Directors of the Company for
election as directors and is based on the records of the Company and
information provided to it. All of the nominees are presently directors of the
Company. Absent instructions to the contrary, it is the intention of the
persons named in the enclosed proxy to vote for the election as directors of
the persons named in the table below. If any such nominee should become
unavailable for any reason, which the Board of Directors has no reason to
anticipate, the persons named in the enclosed proxy reserve the right to
substitute another person of their choice in his place.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
APPOINTED
BUSINESS EXPERIENCE AS A
NAME AGE DURING THE PAST FIVE YEARS DIRECTOR
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VICTOR INSETTA 58 President and Chief Executive Officer of the 1966
Company and Director.
RUBIN BLUMKIN (2) 76 Retired since May 1988. Prior thereto, Vice 1984
President - Marketing of the Company.
O. JULIAN GARRARD III (1)(2) 52 Partner of Garrard & Garrard, C.P.A., a certified 1988
public accounting firm specializing in taxation.
CHESTER E. SPENCE (1) 58 Consultant to the Company. Prior thereto, Vice 1985
President-Marketing and Sales of the Company from
August 1993 to April 1998.
STUART P. LITT (2) 56 Senior Vice President - Operations of the Company 1993
since September 1996. Prior thereto, associate of
OEM Capital, an investment banking firm specializing
in the electronics industry, since December 1992.
Consultant to electronics companies since September 1990.
</TABLE>
- ------------------
(1) Member of Compensation Committee
(2) Member of Audit Committee
There are no family relationships between or among any directors or
executive officers of the Company. See footnotes (2) and (3) to the table under
the caption "Security Ownership of Certain Beneficial Owners and Management"
for information concerning agreements among certain stockholders as to the
election of directors.
5
<PAGE>
BOARD MEETINGS; COMMITTEES OF THE BOARD OF DIRECTORS
During the fiscal year ended June 30, 1998, the Board of Directors held
six meetings. All Directors attended at least 75% of the meetings held during
the fiscal year ended June 30, 1998.
The Board of Directors has created a standing Audit Committee. The Audit
Committee, which held four formal meetings and communicated informally several
times during the fiscal year ended June 30, 1998, currently consists of Messrs.
Blumkin, Garrard and Litt. Among other things, the Audit Committee reviews the
scope and procedures of the audit activities of the independent accountants and
their reports on their examinations. It also reviews reports from the Company's
financial management and independent accountants on compliance with corporate
policies and the adequacy of the Company's internal accounting controls. Mr.
Blumkin replaced Mr. Spence as a member of the Audit Committee on December 6,
1997. Each of Messrs. Blumkin, Garrard, Litt and Spence attended all of the
meetings held by the Audit Committee during the fiscal year ended June 30, 1998
while he was a member.
The Board of Directors has also created a Compensation Committee which
currently consists of Messrs. Spence and Garrard. The Compensation Committee is
authorized, subject of the Certificate of Incorporation and By-Laws of the
Company and the Delaware General Corporation Law, to exercise all power and
authority of the Board of Directors with respect to the compensation of
employees of the Company. The Compensation Committee did not hold a meeting
during the fiscal year ended June 30, 1998.
Each of the non-employee directors of the Company receives a fee of
$1,000 plus expenses for each meeting, excluding teleconference meetings, of
the Board of Directors and, if a member of a Committee, each Committee meeting,
that he attends.
6
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth compensation paid over each of the last
three fiscal years to the President and Chief Executive Officer of the Company
and to each of the other executive officers of the Company whose cash
compensation exceeded $100,000 (collectively, the "Named Executive Officers"):
<TABLE>
<CAPTION>
FISCAL
NAME AND YEAR RESTRICTED ALL OTHER
PRINCIPAL ENDING STOCK COMPENSATION
POSITION JUNE 30 SALARY ($) BONUS ($)(1) AWARDS ($)
---------- ------- ---------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C>
VICTOR INSETTA 1998 $273,195 $190,480 (2) $190,478 (3) $ 4,938 (4)
President, Chief Executive 1997 248,535 281,185 -- 4,796 (4)
Officer and Director 1996 245,700 170,900 -- 4,607 (4)
RICHARD MONSORNO 1998 $169,643 $ 32,827 -- $ 6,740 (6)
Senior Vice President - 1997 154,122 26,713 -- 6,602 (6)
Technology 1996 147,379 17,760 $110,000 (5) 5,649 (6)
STUART LITT 1998 $161,689 $ 32,827 $196,688 (8) $ 4,507 (9)
Senior Vice President - 1997 115,385 (7) 24,108 131,063 (8) 42,057 (10)
Operations and Director
KATHLEEN M. KELLY 1998 $112,811 $ 32,827 -- $ 5,883 (11)
Vice President - 1997 103,231 26,713 -- 5,303 (11)
Administration and Secretary 1996 97,016 17,760 -- 4,963 (11)
</TABLE>
- --------------------
(1) Includes amounts paid in the applicable fiscal year in respect of such
fiscal year and amounts earned for such fiscal year and paid in a
subsequent fiscal year.
(2) Represents the cash portion of the bonus paid to Mr. Insetta in respect
of the fiscal year ended June 30, 1998 pursuant to his employment
agreement. See "Executive Compensation -- Employment Agreements."
(3) Represents the fair market value of the stock portion of the bonus paid
to Mr. Insetta in respect of the fiscal year ended June 30, 1998 pursuant
to his employment agreement consisting of 20,454 shares of Common Stock
(based upon the closing sale price of the Company's Common Stock on the
American Stock Exchange on June 30, 1998 of $9.3125 per share). See
"Executive Compensation -- Employment Agreements."
(4) Consist of contributions by the Company to the 401(k) Savings Plan on
behalf of Mr. Insetta. See "Executive Compensation -- 401(k) Savings
Plan."
(5) Represents the fair market value of a stock bonus of 10,000 shares of
Common Stock granted on November 17, 1995 (based upon the closing sale
price of the Company's Common Stock on the American Stock Exchange on
November 17, 1995 of $11.00 per share). The Company has a right of first
refusal to purchase the shares if at any time Mr. Monsorno elects to
transfer them. As of June 30, 1998, the value of the 10,000 shares of
Common Stock issued to Mr. Monsorno pursuant to this stock bonus
7
<PAGE>
was $93,125 (based upon the closing sale price of the Company's Common
Stock on the American Stock Exchange on such date of $9.3125 per share).
(6) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Monsorno of $4,808, $4,670 and $3,606 for fiscal
years 1998, 1997 and 1996, respectively, and income recorded for fiscal
years 1998, 1997 and 1996 of $1,932, $1,932 and $2,043, respectively, as
a result of the partial forgiveness of a loan made by the Company to Mr.
Monsorno for the purpose of paying income taxes on a 10,000 share stock
bonus made to him in April 1994. See "Executive Compensation -- 401(k)
Savings Plan."
(7) Mr. Litt commenced full time employment with the Company on September 16,
1996. Includes amount paid to him as a director prior to the commencement
of his employment. See "Executive Compensation -- Employment Agreements."
(8) Represents the fair market value of restricted stock awards aggregating
10,417 and 18,000 shares, respectively, of Common Stock granted to Mr.
Litt in fiscal years 1998 and 1997 in connection with his employment by
the Company based upon the closing sale prices of the Company's Common
Stock on the American Stock Exchange on the dates of grant (which prices
ranged from $9.3125 to $19.875 per share). As of June 30, 1998, the value
of the 28,417 shares of Common Stock issued to Mr. Litt was $264,633
(based upon the closing sale price of the Company's Common Stock on the
American Stock Exchange on such date of $9.3125 per share). See
"Executive Compensation -- Employment Agreements."
(9) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mr. Litt. See "Executive Compensation -- 401(k)
Savings Plan."
(10) Consists of relocation expenses paid by the Company on behalf of Mr.
Litt. See "Executive Compensation -- Employment Agreements."
(11) Consists of contributions by the Company to the Company's 401(k) Savings
Plan on behalf of Mrs. Kelly of $3,951, $3,371 and $2,920 for fiscal
years 1998, 1997 and 1996, respectively, and income recorded for fiscal
years 1998, 1997 and 1996 of $1,932, $1,932 and $2,043, respectively, as
a result of the partial forgiveness of a loan made by the Company to Mrs.
Kelly for the purpose of paying income taxes on a 10,000 share stock
bonus made to her in April 1994. See "Executive Compensation -- 401(k)
Savings Plan."
AGGREGATE OPTION EXERCISES DURING THE
FISCAL YEAR ENDED JUNE 30, 1998
AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information concerning the number
and value of shares underlying exercisable and unexercisable stock options as
of the fiscal year end June 30, 1998 held by the Named Executive Officers. None
of the Named Executive Officers exercised any options during the fiscal year
ended June 30, 1998.
<TABLE>
<CAPTION>
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END(1)
-------------------------------- --------------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard Monsorno 1,000 3,000 $1,063 $3,188
Kathleen M. Kelly 1,000 3,000 $1,063 $3,188
Stuart Litt 1,000 3,000 $1,063 $3,188
</TABLE>
(1) Based upon the closing sale price of the Common Stock on the American
Stock Exchange on June 30, 1998 of $9.3125 per share.
8
<PAGE>
EMPLOYMENT AGREEMENTS
Victor Insetta
The Company has entered into an employment agreement with Victor Insetta,
the Company's President and Chief Executive Officer. The term of the agreement
currently expires on March 1, 1999. Pursuant to its terms, the agreement was
automatically renewed for a one-year period beginning on March 1, 1998. In the
absence of written notice to the contrary by either party at least 120 days
prior to March 1 of subsequent years, the Agreement will continue to be
automatically renewed for one-year periods.
Pursuant to the agreement, Mr. Insetta was paid base compensation for the
fiscal year ended June 30, 1998 at the rate of $270,270 per annum. The
agreement provides for further increases in Mr. Insetta's base salary by the
Board of Directors from time to time in its sole discretion. The agreement also
provides that, as additional annual incentive compensation, Mr. Insetta is also
entitled to an amount equal to 5% of the Company's net income (before such
incentive compensation and before income taxes). In September 1998, the Company
amended the employment agreement, effective for the fiscal year ended June 30,
1998, to allow the Company, at its option, to pay the additional annual
compensation in stock, cash or a combination thereof, subject to certain
limitations. For the fiscal year ended June 30, 1998, the Company elected to
pay 50% of Mr. Insetta's additional annual compensation in cash and 50% in
shares of Common Stock. See "Executive Compensation -- Summary Compensation
Table."
The agreement provides, among other things, that if there is a change of
control of the Company or if Mr. Insetta's employment is terminated prior to
the scheduled expiration date other than for cause (as defined in the
agreement), death, disability, or voluntary termination apart from a change of
control, the Company is required to pay to Mr. Insetta, in a lump sum, an
amount equal to the greater of (i) all of the compensation due to Mr. Insetta
under the agreement through the end of the then existing term of the agreement,
or (ii) three times Mr. Insetta's average annual compensation under the
agreement during the five most recent taxable years prior to the taxable year
in which the termination took place as calculated in accordance with the
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"). In
addition, if Mr. Insetta voluntarily terminates his employment with the
Company, for a period equal to the lesser of the remaining term of the
agreement or one year, Mr. Insetta has agreed that he will not, directly or
indirectly, solicit those persons or entities who are customers of the Company
on the effective date of his termination of employment for the purpose of
purchasing multi-layer capacitors; provided, however, that the foregoing
restriction shall not apply if Mr. Insetta terminates his employment because of
a change of control of the Company. In addition, Mr. Insetta has agreed that,
for a period of one year following the termination of his employment (other
than termination by the Company without cause), he will not divulge to any
person any information which is actually held in confidence by the Company,
subject, however, to certain conditions, including the Company having
performed, and continuing to perform, its obligations under the agreement.
The Company presently maintains a term life insurance policy in the
aggregate amount of $4,000,000 on the life of Mr. Insetta. The Company is named
as the beneficiary of this policy.
Stuart Litt
The Company has also entered into an employment agreement with Stuart P.
Litt, who in September 1996 became Senior Vice President - Operations of the
Company. Mr. Litt has been a director of the Company since 1993. See "Election
of Directors." Pursuant to the agreement, Mr. Litt shall be employed for a
period of three years at an annual base salary of $150,000. Mr. Litt's annual
base salary was increased effective September 15, 1997 to $165,000. In
addition, Mr. Litt is entitled to quarterly cash bonuses equal to one-half of
one percent of the Company's net income (before such incentive compensation and
before income taxes). The agreement may only be terminated in the event that
Mr. Litt is disabled or for cause. In addition, the agreement provides that if
Mr. Litt's employment by the Company is terminated at any time after the first
three years of employment, Mr. Litt will be entitled to a severance payment of
$100,000.
9
<PAGE>
Pursuant to the agreement, the Board of Directors granted to Mr. Litt a
restricted stock award of 34,000 shares of Common Stock. Pursuant to this
award, Mr. Litt was to receive 24,000 shares in 24 monthly installments of
1,000 shares on the 15th of each month commencing October 15, 1996, provided he
is still actively employed by the Company on each such date, and an additional
10,000 shares on December 15, 1996, again provided he was still actively
employed by the Company on such date. Through June 30, 1997, Mr. Litt had
received 18,000 shares of Common Stock pursuant to this program. Subsequent to
May 15, 1997, the Company and Mr. Litt mutually agreed to terminate the monthly
1,000 share awards while they discussed alternative structures for future
awards.
In August 1997, the Board of Directors and Mr. Litt agreed to amend the
terms of Mr. Litt's restricted stock award program. On August 19, 1997, he was
awarded an additional 2,301 shares of Common Stock and the Company set aside
$11,700 for Mr. Litt to pay a portion of the income taxes payable by him in
respect of such award. On the 15th of each subsequent month commencing
September 15, 1997 through June 30, 1998, Mr. Litt received a number of shares
(rounded to the nearest whole share) as follows:
Number
Date of Issuance of Shares
---------------- ---------
August 19, 1997 2,301
September 15, 1997 771
October 15, 1997 789
November 17, 1997 768
December 15, 1997 782
January 15, 1998 795
February 16, 1998 764
March 16, 1998 836
April 15, 1998 843
May 15, 1998 867
June 15, 1998 901
------
Total 10,417
======
The fair market value of such stock on June 30, 1998 was $264,633 (based
upon the closing sale price of the Company's Common Stock on the American Stock
Exchange on such date of $9.3125).
During July, August and September, Mr. Litt received an additional 2,852
shares of Common Stock pursuant to this agreement. No additional shares are
issuable pursuant thereto.
401(k) SAVINGS PLAN
The Company has a 401(k) Savings Plan covering all employees. Pursuant to
this plan, eligible employees may elect to defer up to 15% of their eligible
gross earnings, but in no event more than $9,500 for the calendar year 1998. In
addition, contributions may be limited by certain other restrictions under the
Code. The Company contributes an amount based upon the employee's
contributions, up to 3% of such employee's gross earnings. Officers are
eligible to participate in this plan in the same manner as are all other
employees. For the fiscal year ended June 30, 1998, the Company's contributions
to this plan were $350,377, including contributions on behalf of Mr. Insetta,
Mr. Monsorno, Mr. Litt and Mrs. Kelly of $4,937, $4,807, $4,507 and $3,951,
respectively. See "Executive Compensation -- Summary Compensation Table."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended June 30, 1998, the Compensation Committee of
the Board of Directors consisted of Messrs. Garrard and Spence. During the
fiscal year ended June 30, 1998, decisions with respect to officers'
compensation were made by the entire Board. See "Executive Compensation --
Report on Executive Compensation." No officer who serves as a director of the
Company participated in matters involving the evaluation of his own performance
or the setting of his own compensation.
10
<PAGE>
REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has established a Compensation Committee which
currently consists of Messrs. Garrard and Spence. While the Compensation
Committee has the power and authority of the Board of Directors with respect to
the compensation of employees, the Committee has historically provided
information and assistance to the full Board of Directors of the Company which
has been the body responsible for making decisions with respect to employee
compensation issues. No officer of the Company who serves on the Board of
Directors or on the Compensation Committee participates in matters involving
the evaluation of his own performance or the setting of his own compensation.
The Company seeks to establish compensation plans and policies which are
designed to (i) attract and retain highly qualified employees at all levels,
(ii) provide rewards that are closely linked to the Company's performance, and
(iii) align the interests of the Company's employees with those of its
stockholders through stock ownership. The Company monitors the compensation
paid to various levels of employees on both a geographic and industry basis.
Moreover, the Company has established bonus compensation programs for virtually
all levels of employees pursuant to which they are rewarded based upon the
overall profitability of the Company. Finally, the Company has over the past
several years awarded stock bonuses to several executive officers and
supervisory employees in order to reward them for their efforts on behalf of
the Company and to provide them with a direct stake in the Company's future. In
April 1997, the Board adopted the 1997 Stock Option Plan in order to expand the
universe of individuals who are important to the Company's success who may be
eligible for stock-based compensation.
The base salary of Victor Insetta, the Company's President and Chief
Executive Officer, for fiscal year 1998 was based principally upon his rights
under the employment agreement described above. The agreement, which was
entered into in 1985 and has been amended several times, provides for a minimum
base salary of $225,000. This amount was increased to $234,000 effective
October 1, 1992, $246,000 effective March 1, 1994 and $270,270 effective May
12, 1997. These modest increases were consistent with cost of living increases
granted to virtually all employees of the Company. The Board also believed that
they were warranted in order to bring Mr. Insetta's base compensation in line
with salaries being paid to other chief executive officers of similar companies
and in recognition of the Company's performance.
Mr. Insetta's employment agreement also entitles him to annual incentive
compensation equal to 5% of the Company's net income (before such incentive
compensation and before income taxes) which for the fiscal year ended June 30,
1998 amounted to $380,958. The Board believes that it is appropriate for the
compensation of the Chief Executive Officer of the Company to be based, in
substantial part, on the Company's overall performance.
In September 1998, Mr. Insetta's employment agreement was further amended
to allow the Company to pay Mr. Insetta's annual incentive compensation in
cash, Common Stock or a combination thereof. The determination of the manner of
payment is made each year by the Board of Directors, in its sole discretion,
subject to certain limitations. For the fiscal year ended June 30, 1998, the
Board (with Mr. Insetta abstaining) elected to pay 50% of Mr. Insetta's annual
incentive compensation in cash and 50% in Common Stock. This will permit the
Company to conserve cash and will also more closely ally Mr. Insetta's overall
compensation to the performance of the Company's stock.
Rubin Blumkin
O. Julian Garrard III
Victor Insetta
Stuart P. Litt
October 20, 1998 Chester E. Spence
11
<PAGE>
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock from July 1, 1993 through June 30, 1998, with the cumulative total
return of the American Stock Exchange Total Return Index and a peer group of
companies selected by the Company. The peer group is composed of ten
publicly-held manufacturers of capacitors and other electronic components,
including the Company. Total cumulative return values were calculated based on
the assumption of $100 invested on July 1, 1993, assuming reinvestment of
dividends. The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR
THE PURPOSE OF EDGAR FILING.]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------------------------
6/93 6/94 6/95 6/96 6/97 6/98
-------- ------ ------ ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
American Technical Ceramics Corp. 100.00 115.91 459.09 293.18 531.82 338.64
Peer Group 100.00 124.05 189.19 153.17 199.75 133.47
Amex Market Value 100.00 97.66 115.19 132.83 147.06 172.57
</TABLE>
- -------------------
* $100 invested on 6/30/93 in stock or index - including reinvestment of
dividends. Fiscal year ending June 30.
(1) Vishay Intertechnology, Inc., AVX Corp., Aeroflex, Inc., Sawtek, Inc.,
Merrimac Industries, Inc., Vari-1 Company, Inc., California Micro Devices
Corp., Sage Labs, Inc. and Micronetics Wireless, Inc.
12
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATED PARTY LEASES
The Company presently leases certain real property from its principal
stockholder, Victor Insetta, and entities controlled by him. In the case of
each such lease, the Company has periodically obtained appraisal letters
indicating that the fixed rentals in effect did not exceed fair market rentals
in the area. The Company does not intend to lease any additional real property
from Mr. Insetta or entities controlled by him other than renewals of existing
leases and improvements and new construction that may be made to existing
leased properties.
FLORIDA FACILITY
The Company's Jacksonville, Florida facility (the "Florida Facility") is
leased by its wholly-owned subsidiary, American Technical Ceramics (Florida),
Inc. ("ATC-Florida"), from V.P.I. Properties Associates ("VPI"), a limited
partnership of which Mr. Insetta is the sole general partner and the limited
partnership interests are owned by members of his family. The lease, which was
amended and restated as of July 1, 1996 and amended again as of May 1, 1998 to
reflect the construction of a new building on the premises, is for a term
expiring in 2010.
To finance the development of the Florida Facility, VPI transferred the
Florida Facility to the Jacksonville Port Authority which issued tax exempt
bonds (the "Bonds") in the principal amount of $2,000,000 to Barnett Bank Trust
Company, N.A. ("Barnett"). The Florida Facility was then sold to VPI under an
Installment Sale and Security Agreement (the "Agreement") with legal title
being retained by Barnett, as trustee for the holders of the Bonds. Payment of
the Bonds is secured by a security interest in, and lien upon, the real
property comprising the Florida Facility and the machinery and equipment which
is located therein which were financed from the Bond proceeds.
Under the lease, ATC-Florida is responsible to pay to Barnett, for the
account of VPI, the principal of, premium, if any, and interest on the Bonds,
all expenses of the trustee under the Indenture relating thereto (the
"Indenture") and all other payments required to be made by VPI under the
Agreement or the Indenture. In addition, ATC-Florida is responsible to pay to
VPI, as supplemental rent, annually, the difference between the sum of $461,239
(adjusted upward (but not downward) annually based upon the increase, if any,
in the Consumer Price Index for all Urban Consumers for the last reported month
available on June 1 of each year during the lease compared to such index for
April 1998) and the amount payable to Barnett pursuant to the preceding
sentence. ATC-Florida is also obligated to pay all expenses arising in
connection with the Florida Facility, including all real estate taxes,
assessments, utilities and repairs.
The Company, through ATC-Florida, has the right at the end of the lease
term to purchase the Florida Facility at its fair market value and has a right
of first offer to purchase the Florida Facility if VPI elects to sell it in the
interim.
In the fiscal year ended June 30, 1998, the aggregate rental paid by
ATC-Florida under this lease was $409,335. In addition, the Company incurred
expenses of $78,231 for real estate taxes and $217,563 for utilities.
13
<PAGE>
NEW YORK PROPERTY
Since July 1976, the Company has leased from Mr. Insetta the land and
building at 15 Stepar Place, Huntington Station, New York (the "New York
Property"). The lease for the New York Property expired in February 1996. The
Company leased the New York Property on a month-to-month basis on the same
terms as the terms provided in the lease until January 1, 1997 when the lease
was renewed and extended for a five-year term. The lease was amended and
restated as of September 25, 1998. The base rent is based upon the annual
payments of principal and interest payable under the mortgage encumbering such
property. The base rent reflects an adjustment upward commencing January 1,
1990 and as of each succeeding calendar year based upon the increase in the
Consumer Price Index for All Urban Consumers (New York City) over the Consumer
Price Index for All Urban Consumers (New York City) for January 1989. Current
monthly installments are $39,960. The Company is also responsible for payment
of all real estate taxes and all utilities and repairs relating to the
property. During the fiscal year ended June 30, 1998, the total amount of rent
paid by the Company for this facility was $476,244. In addition, the Company
incurred expenses of $59,574 for real estate taxes, $273,289 for utilities and
$25,084 for leasehold improvements.
The Company has the option to purchase the New York Property at any
time during the lease at its fair market value and a right of first offer if
Mr. Insetta elects to sell it in the interim.
14
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
KPMG Peat Marwick LLP, the independent public accounts who have audited
the Company's financial statements for the past nine years, have been appointed
by the Board of Directors of the Company to audit the Company's consolidated
financial statements for the fiscal year ending June 30, 1999. The Board of
Directors recommends that the appointment of such auditors be ratified by the
stockholders. The Board of Directors believes that the selection of an
independent accountant to audit the financial statements of the Company
prepared by management is an appropriate matter for stockholder consideration.
If the stockholders do not ratify the selection of KPMG Peat Marwick LLP, the
Board of Directors will consider the selection of another firm of independent
certified public accountants to audit the Company's consolidated financial
statements for the fiscal year ending June 30, 1999. Representatives of KPMG
Peat Marwick LLP may be present at the Annual Meeting and, if present, will
have an opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE
RATIFICATION OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS TO
AUDIT THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR
ENDING JUNE 30, 1999 WHICH IS DESIGNATED AS PROPOSAL 2 ON THE ENCLOSED PROXY
CARD.
ANNUAL REPORT TO STOCKHOLDERS
The Company will provide to any stockholder, without charge, upon written
request to the Secretary of the Company, a copy of the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1998.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
The Company expects to hold its annual meeting of stockholders for the
fiscal year ending June 30, 1999 in November or December 1999. Stockholders who
intend to present proposals intended to be included in the Company's Proxy
Statement and form of proxy relating to such annual meeting must submit their
proposals in writing to the Secretary of the Company on or before June 30,
1999.
OTHER MATTERS
Management of the Company knows of no business other than that referred
to in the foregoing Notice of Annual Meeting and Proxy Statement that may come
before the Annual Meeting. However, if other matters properly come before the
Annual Meeting, it is the intention of the persons named in the enclosed proxy
to vote thereon in accordance with their judgement.
BY ORDER OF THE BOARD OF DIRECTORS
KATHLEEN M. KELLY
Secretary
October 20, 1998
15
<PAGE>
APPENDIX
AMERICAN TECHNICAL CERAMICS CORP.
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Victor Insetta and Kathleen M. Kelly,
and each of them, the attorneys and proxies of the undersigned, with power of
substitution, to represent and vote on behalf of the undersigned all the shares
of common stock of American Technical Ceramics Corp. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of American Technical
Ceramics Corp. to be held at 2201 Corporate Square Boulevard, Jacksonville,
Florida, 32216, on Friday, November 20, 1998 at 10:00 a.m., local time, and any
adjournment or adjournments thereof, hereby revoking all proxies heretofore
given with respect to such stock, upon the following proposals more fully
described in the notice of and proxy statement for the Annual Meeting (receipt
of which is hereby acknowledged). 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 PROPOSALS 1 AND 2.
Please mark boxes [ ] or [x] in blue or black ink.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1) AND (2).
1. ELECTION OF DIRECTORS:
FOR ALL NOMINEES LISTED BELOW [ ]
(EXCEPT AS MARKED TO THE CONTRARY BELOW)
WITHHOLD AUTHORITY [ ]
TO VOTE FOR ALL NOMINEES LISTED BELOW
Victor Insetta, Rubin Blumkin, O. Julian Garrard III, Chester E. Spence and
Stuart P. Litt.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON SPACE PROVIDED BELOW.)
- -------------------------------------------------------------------------------
CONTINUED, AND TO BE SIGNED AND DATED ON REVERSE SIDE.
2. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT PUBLIC ACCOUNTANTS OF THE CORPORATION
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE ANNUAL MEETING.
I WILL [ ] WILL NOT [ ] ATTEND THE ANNUAL MEETING.
Please sign exactly as your names appear below. When shares
are held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian,
please sign in 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.
DATED ,1998
-----------------------------------------
Signature (s)
-----------------------------------------
Signature (s)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
