SCHEDULE 14A INFORMATION
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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
Colonial Data Technologies Corp.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement
if other than Registrant)
Payment of Filing Fee (Check the Appropriate Box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i), 14a-6(j)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] 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.*
4. Proposed maximum aggregate value of transaction:
[ ] 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 number on 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:
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
COLONIAL DATA TECHNOLOGIES CORP.
80 Pickett District Road
New Milford, Connecticut 06776
(860) 210-3000
PROXY STATEMENT
For Annual Meeting of Stockholders, April 18, 1996
The enclosed proxy is solicited by the Board of Directors (the "Board"
or "Board of Directors") of Colonial Data Technologies Corp., a Delaware
corporation (the "Company"), 80 Pickett District Road, New Milford, Connecticut
06776, to be voted at the Annual Meeting of Stockholders to be held on April 18,
1996, at 10:00 a.m. local time at The Ethan Allen Inn, Exit 4, Route I-84,
Danbury, Connecticut, or any adjournments thereof (the "Annual Meeting"). At
the Annual Meeting, the presence in person or by proxy of the holders of a
majority of the total number of shares of outstanding common stock will be
necessary to constitute a quorum.
The Board of Directors does not know of any business to be brought
before the Annual Meeting, other than as indicated in the notice, but it is
intended that, as to any other such business, votes may be cast pursuant to the
proxies in accordance with the judgment of the persons acting thereunder.
Any stockholder who executes and delivers a proxy may revoke it at any
time prior to its use upon (i) receipt by the Secretary of the Company of
written notice of such revocation; (ii) receipt by the Secretary of the Company
of a duly executed proxy bearing a later date; or (iii) appearance by the
stockholder at the meeting and his request for the return of his proxy.
Only stockholders of record at the close of business on February 29,
1996 are entitled to notice of and to vote at the Annual Meeting. As of
February 29, 1996 there were 15,427,484 shares of common stock outstanding, each
of which is entitled to one vote. This proxy statement and the attached form of
proxy are first being sent or given to stockholders on or about March 14, 1996.
OWNERSHIP OF COMMON STOCK BY DIRECTORS,
EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company, based on information filed with
the Securities and Exchange Commission (the "SEC") and the Company's stock
records, the following table sets forth the beneficial ownership of the Common
Stock par value $.01 per share of the Company ("Common Stock") as of February
29, 1996, by (i) beneficial owners of more than five percent of the Company's
Common Stock, (ii) each director and nominee, (iii) each named executive
officer, and (iv) all directors and executive officers of the Company as a
group.
Shares of Common
Stock Beneficially Owned (1)
________________________
Beneficial Owner Number of Shares Percentage
________________ ________________ __________
Putnam Investments, Inc. 861,900 (2) 5.6%
One Post Office Square
Boston, MA 02109
Robert J. Schock 829,295 (3) 5.4%
80 Pickett District Road
New Milford, CT 06776
Constantine S. Macricostas 65,590 (4) *
Frederick P. Masotta, Jr. 658,284 4.3%
Walter M. Fiederowicz 150,916 (5) 1.0%
Timothy R. Welles 0 0%
William L. Nutter 128,100 (6) *
Daniel V. Cusack 235,340 (7) 1.5%
Joseph W. Cline 16,666 (8) *
Directors and executive 2,090,191 (9) 13.5%
officers as a group (9
persons)
* Less than one percent.
(1) Except as otherwise indicated, the named person has the sole voting and
investment power with respect to the shares of the Company's Common Stock
set forth opposite each person's name, subject to the information contained
in the footnotes to the table.
(2) As reported in Schedule 13G filed with the SEC, certain Putnam investment
managers (together with their clients, parent corporations, Putnam
Investments, Inc. and Marsh & McLennen Companies, Inc.) are considered the
beneficial owners of 861,900 or 5.6% of shares outstanding, of the
Company s Common Stock, which shares were acquired for investment purposes
by such investment managers for certain of its advisory clients.
(3) Includes 255,295 shares held by his wife as to which Mr. Schock may be
deemed to share voting and investment power. Mr. Schock disclaims
beneficial ownership of such shares held by his wife.
(4) Does not include 604,755 shares held by Photronics, Inc., of which Mr.
Macricostas is chairman of the board of directors, chief executive officer
and a shareholder. Mr. Macricostas disclaims beneficial ownership of such
shares.
(5) Includes 150,916 shares held by his wife as to which Mr. Fiederowicz may be
deemed to share voting and investment power. Mr. Fiederowicz disclaims
beneficial ownership of such shares held by his wife.
(6) Includes 20,000 shares for which Mr. Nutter holds options exercisable
within 60 days and 1,500 shares held by his children as to which he may be
deemed to share voting and investment power. Mr. Nutter disclaims
beneficial ownership of shares held by his children.
(7) Includes 31,500 shares held by his wife as to which Mr. Cusack may be
deemed to share voting and investment power. Mr. Cusack disclaims
beneficial ownership over such shares held by his wife.
(8) Includes 16,666 shares for which Mr. Cline holds options exercisable within
60 days.
(9) Includes 42,666 shares for which executive officers hold options
exercisable within 60 days.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Deloitte & Touche LLP has been selected by the
Board of Directors, upon the recommendation of the Audit Committee of the Board,
as independent accountants of the Company and its subsidiary for the 1996 fiscal
year. Representatives of Deloitte & Touche LLP are expected to be present at
the Annual Meeting, with the opportunity to make a statement if they desire to
do so, and to answer stockholders' questions.
ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
ELECTION AS DIRECTORS OF THE NOMINEES LISTED BELOW.
Number of and Nominees for Directors
The by-laws of the Company provide that a Board of Directors of such
number, not less than three nor more than nine, as fixed by the Board of
Directors, shall be elected by the stockholders. The current size of the Board
is set at five (5) directors. It is the intention of the persons named as
proxies to vote the proxies, unless authority to vote is specifically withheld,
to elect as directors the nominees listed below to serve as such until the next
annual meeting of stockholders and until their respective successors are chosen
and qualified.
A board of five directors is to be elected at the Annual Meeting.
Directors will be elected by a plurality of votes cast. Only votes cast for a
nominee will be counted, except that the accompanying proxy will be voted for
the five nominees in the absence of instructions to the contrary. Abstentions,
broker non-votes, and instructions on the accompanying proxy card to withhold
authority to vote for one or more of the nominees will not be included in vote
totals and will have no effect on the outcome of the vote. The names of, and
certain information with respect to, the nominees for election as directors, to
serve until the 1997 Annual Meeting of Stockholders and until their successors
are elected and qualified, are set forth below and were furnished to the Company
by the nominees. All of the nominees are currently serving as directors.
If, for any reason, any of the nominees shall become unavailable for
election, the individuals named in the enclosed proxy may exercise their
discretion to vote for any substitutes chosen by the Board of Directors, unless
the Board of Directors should decide to reduce the number of directors to be
elected at the Annual Meeting. The Company has no reason to believe that any
nominee will be unable to serve as a director.
The following table sets forth the information as to the nominees for
election as directors of the Company. There are no family relationships between
any directors or executive officers of the Company.
Name Age Position with the Company
____ ___ _________________________
Robert J. Schock (2)(3) 54 Chairman of the Board,
President, Chief Executive
Officer, Director
Timothy R. Welles 36 Executive Vice President,
Chief Operating Officer,
Director
Walter M. Fiederowicz (3) 49 Director
Frederick P. Masotta, Jr. (1)(2) 64 Director
Constantine S. Macricostas (1) 59 Director
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
(3) Member of the Executive Committee
Robert J. Schock has served as Chairman of the Board of Directors
since March 7, 1996, as President, Chief Executive Officer and a director of the
Company since September 1989 and as President and a director of the Company's
principal subsidiary since 1981. From 1977 to 1980, Mr. Schock was director of
national operations for ICOT Corporation (a telecommunications equipment
manufacturer). From 1966 to 1977, Mr. Schock held a variety of positions with
Xerox Corporation, including product manager, regional sales operations manager
and regional manager for Microsystems.
Mr. Welles was elected Executive Vice President and Chief Operating
Officer and a director of the Company on March 7, 1996. Prior to joining the
Company, Mr. Welles was Senior Vice President of First Albany Corporation, an
investment banking firm, from January 1994 to March 1996 with responsibilities
related primarily to corporate finance activities. Prior to joining First
Albany, Mr. Welles held various positions, most recently as Managing Director,
at Advest, Inc., an investment banking firm, from August 1989 to January 1994.
Prior to joining Advest, Inc., Mr. Welles practiced securities and corporate law
at Cahill Gordon & Reindel in its New York office.
Walter M. Fiederowicz has been a director of the Company since
September 1989 and a director of the Company's principal subsidiary since 1985
and served as Chairman of the Board of Directors from August 1994 until March
1996. From 1979 to December 1988, Mr. Fiederowicz was a partner of the law firm
of Cummings & Lockwood and served as counsel to that firm from December 1988
until September 1990. From January 1991 until July 1994, he held various
positions, including executive vice president and chairman, and served as a
director of Conning Corporation, the parent company of an investment firm. He
is also a director of Photronics, Inc., a photomask manufacturer. Mr.
Fiederowicz was chairman and director of Covenant Mutual Insurance Company, a
property and casualty insurance company ("Covenant") from 1989 until March 1993,
and was president and chief executive officer of Covenant from 1989 until
December 1992. Covenant was placed in rehabilitation by the Insurance
Commissioner of the State of Connecticut in 1993 and subsequently liquidated as
a result of losses in connection with insurance claims relating to Hurricane
Andrew.
Frederick P. Masotta, Jr. has been a director of the Company since
September 1989 and a director of the Company's principal subsidiary since 1981.
For the last five years he has been president of Craftsmen, Inc., a privately-
held construction company.
Constantine S. Macricostas has been a director of the Company since
September 1989 and a director of the Company's principal subsidiary since 1987.
Since 1974, Mr. Macricostas has served in several positions including as
chairman and chief executive officer of Photronics, Inc., a photomask
manufacturer. He also serves as a director of Nutmeg Federal Savings and Loan
Association and Orbit Semiconductor Inc., a semiconductor manufacturer.
MEETINGS AND COMMITTEES OF THE BOARD
During the fiscal year ended December 31, 1995 the Board of Directors
met eleven times. During 1995, each director attended at least 75% of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by all committees on which he served.
The Board of Directors has no standing nominating committee.
Audit Committee
The Audit Committee is responsible for recommending the auditors for
the Company and consults with and reviews the services provided by the Company's
independent auditors. The Audit Committee consists of Frederick P. Masotta, Jr.
and Constantine S. Macricostas. The Audit Committee met once during 1995.
Compensation Committee
The Compensation Committee reviews and recommends to the Board the
compensation and benefits of all officers of the Company. The Compensation
Committee also administers the Company's 1983 Stock Option Plan and 1994 Long-
Term Incentive Plan. The Compensation Committee consists of Robert J. Schock
and Frederick P. Masotta, Jr. The Compensation Committee met three times during
1995.
Executive Committee
The Executive Committee is authorized to exercise the powers of the
Board of Directors during intervals between Board meetings subject to
limitations imposed by law or established by the Board and the Company's by-
laws. The Executive Committee's approval of any extraordinary transactions is
subject to Board ratification. The Executive Committee consists of Robert J.
Schock and Walter M. Fiederowicz. The Executive Committee did not meet during
1995.
EXECUTIVE COMPENSATION
The following tables set forth information with respect to the Chief
Executive Officer and all other executive officers whose total salary and bonus
for the fiscal year ended December 31, 1995 exceeded $100,000:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Securities All Other
Name and Year Salary Bonus Underlying Compensation(2)
Principal Options/SARs
Position
Robert J. Schock 1995 $150,000 $98,075 --- $9,942
President, Chief 1994 150,000 18,400 --- 7,947
Executive Officer 1993 142,500 18,600 7,947
Walter M. 1995 150,000 93,500 --- 1,706
Fiederowicz 1994 75,000 6,400 --- ---
Chairman of the 1993 --- --- --- ---
Board
Daniel V. Cusack 1995 120,000 56,025 --- 4,763
Senior Vice 1994 93,777 13,800 --- 3,300
President 1993 73,800 12,800 --- 3,300
Joseph W. Cline 1995 105,000 26,000 25,000 1,900
Vice President 1994 --- --- --- ---
Sales and 1993 --- --- --- ---
Marketing
William L. Nutter 1995 100,000 17,000 --- 1,446
Vice President - 1994 86,480 19,300 20,000 ---
Research, 1993 86,480 4,300 --- ---
Development and
Engineering
(1) Mr. Fiederowicz was elected Chairman of the Board effective August 1994.
The salary and bonus amounts for 1994 reflect five months of service as
Chairman in that year.
(2) For 1995, includes: the dollar value of life insurance premiums paid by
the Company for the benefit of Mr. Schock ($7,947) and Mr. Cusack ($3,300)
and the amount of Company matching contributions made on behalf of the
named individuals under the Company s 401(k) Plan as follows: Mr. Schock
($1,995), Mr. Fiederowicz ($1,706), Mr. Cusack ($1,463), Mr. Cline
($1,900), and Mr. Nutter ($1,446).
OPTION/SAR GRANTS IN LAST FISCAL YEAR
% of Total Potential
Options/ Realizable Value
SARs at Assumed Annual
Number of Granted to Rates of Stock
Securities Employees Exercise Price Appreciation
Underlying in or Base Expira- for Option Term (2)
Options/SARs Fiscal Price tion
Name Granted (#) Year ($/Sh) Date 5%($) 10%($)
Robert J.
Schock --- --- --- --- --- ---
Walter M.
Fiederowicz --- --- --- --- --- ---
Daniel V.
Cusack --- --- --- --- --- ---
Joseph W. January
Cline 25,000(1) 20% $13.00 5, 2005 $204,391 $517,966
William L.
Nutter --- --- --- --- --- ---
(1) Options are exercisable as follows: one-third (1/3) after six months, one-
third (1/3) after two years and one-third (1/3) after three years.
(2) The actual value, if any, an employee may realize will depend on the excess
of the stock price over the exercise price on the date the stock option is
exercised. The dollar amounts under these columns are the result of
calculations at the 5% and 10% rates set by the rules of the SEC and
therefore are not intended to forecast future appreciation, if any, of the
Company's stock price.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Value of
Unexercised
Number of in-the-Money
Shares Unexercised Options at
Acquired Options at Fiscal Year End
on Value Fiscal Year End (1)
Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
Robert J. Schock --- --- --- ---
Walter M.
Fiederowicz --- --- --- ---
Daniel V. Cusack --- --- --- ---
Joseph W. Cline --- --- 8,333/16,667 $62,498/$125,003
$335,000/
William L. Nutter --- --- 20,000/10,000 $160,000
(1) In accordance with SEC rules, this valuation represents the difference
between $20 1/2, the closing price of the Company's common stock on
December 31, 1995, as reported by the American Stock Exchange, and the
exercise price of these options. Whether any actual profits will be
realized will depend upon whether the shares acquired are sold and the
amount received upon any such sale.
Directors' Compensation
During 1995, the directors received compensation at a rate of $800 for
each Board meeting attended. During 1995, the Company made no other payments to
directors with respect to participation on Board committees or with respect to
special assignments.
401(k) Plan
Effective in January 1995, the Board adopted a 401(k) Plan for the
Company's employees in which executive officers are permitted to participate
subject to any legal limitations on the amounts that may be contributed.
Subject to such limitations, the Company makes a matching contribution in cash
equal to 25% of the employee's contribution up to a maximum of 6% of salary.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
during fiscal 1995 were Robert J. Schock, President and Chief Executive Officer
of the Company, and Frederick P. Masotta, Jr.
During 1995, Mr. Fiederowicz served as a member of the compensation
committee of Photronics, Inc., whose chairman and chief executive officer is
Constantine S. Macricostas, a director of the Company.
Mr. Schock, Mr. Macricostas and Mr. Masotta are limited partners of
Cee Associates Limited Partnership, a limited partnership which leases a plant
and office facility to the Company's principal subsidiary. The limited partners
have a 99% interest in the partnership. The Company's principal subsidiary paid
aggregate rent to the partnership for the fiscal year ended December 31, 1995 in
the amount of $139,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's philosophy is that executive compensation
must be competitive with other comparable employers doing business in the
telecommunications industry and within geographic proximity of its facilities in
order to ensure that qualified employees can be attracted and retained.
Similarly, the Committee believes that the Company's compensation practices
should provide incentives and rewards for achieving or exceeding the Company's
goals and objectives and for creating a return to its stockholders.
The Committee uses several components to achieve these goals,
including: base salary, bonuses and stock option grants. The Company also
adopted a 401(k) Plan in 1995 for all employees, including executive officers.
The Committee evaluates and establishes base salary levels in light of
individual performance and responsibilities, economic conditions, comparisons
with other similarly situated companies, in order to encourage continuous
service to the Company. The salary of Robert J. Schock, Chief Executive
Officer, was determined based upon this analysis. For other executive officers,
the Company's Chief Executive Officer recommends salary levels to the Committee,
and the Committee normally implements these recommendations. Bonuses, if any,
are dependent upon the Company's achievement of its financial and other goals
during the relevant period. The Company's net income and earnings per share for
1995 increased to record levels and the Company made significant progress toward
diversifying its revenue base and product and service offerings. Based on these
achievements, the Committee authorized the payment of bonuses to certain
executive officers for 1995. Mr. Schock's bonus for 1995 was based upon his
successful leadership in managing the Company toward the accomplishment of the
financial and other results achieved in 1995.
During 1995, the Compensation Committee granted a total of 43,000
stock options to two executive officers who joined the Company in 1995. No
other stock options were granted to executive officers of the Company. The
Committee reached the conclusion that the grants described above were the only
grants required to maintain a sufficient level of incentive compensation for the
Company's executive officers.
Robert J. Schock
Frederick P. Masotta, Jr.
FIVE YEAR STOCKHOLDER RETURN COMPARISON
The following graph compares the cumulative total shareholder return
on the Company's Common Stock with the cumulative total shareholder return of
the Standard & Poor's 500 stock index and the Investors' Business Daily
"Telecommunications Equip" Index, for a five year period ended December 31,
1995. The comparison assumes the investment of $100 on January 1, 1991 in each
index and that dividends were reinvested when paid.
[PERFORMANCE GRAPH]
*Assumes $100 invested on January 1, 1991 in the Company's common stock,
Investor's Business Daily "Telecommunications-Equipment" Index and Standard &
Poor's Total Return Index.
Source: The following information was derived from the American Stock Exchange,
Investor's Business Daily, and the Standard & Poor's Total Return Index.
01/01/91 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
Colonial Data $100.00 $100.00 $140.00 $680.00 $2,420.00 $3,280.00
Technologies
Corp.
Telecommuni- 100.00 147.72 192.16 324.25 378.35 671.87
cations
Equipment
Index
Standard & 100.00 130.47 138.09 148.17 149.49 187.07
Poor's Total
Return Index
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company maintains its principal administrative, development and
support facility at a building located in New Milford, Connecticut which
consists of approximately 63,000 square feet. The Company leases this facility
under a lease dated as of September 1, 1994 that expires in August 2004. The
rent is $2.20 per square foot per year plus taxes, operating expenses and
insurance. The Company's lease includes an option to purchase the building at
fair market value as defined in the lease at any time from July 1, 1999 until
the expiration of the lease.
The facility is owned by Cee Associates Limited Partnership, a
partnership in which Robert J. Schock, Chief Executive Officer of the Company,
and Constantine S. Macricostas and Frederick P. Masotta, Jr., directors of the
Company, are limited partners and the Company is the sole general partner. The
limited partners have a 99% interest in the partnership. Rent paid by the
Company to the partnership for the year ended December 31, 1995, was $139,000.
The Company believes that the lease terms have been and are no less favorable
than those available from a disinterested third party.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows
of no matters which will be presented for consideration at the Annual Meeting
other than the proposals set forth in this Proxy Statement. If any other
matters properly come before the Annual Meeting, it is intended that the persons
named in the proxy will act in respect thereof in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Any stockholder who intends to present a proposal at the 1997 Annual
Meeting of Stockholders is advised that, in order for such proposal to be
considered for inclusion in the Board of Directors' proxy material for such
meeting, the proposal must be received by the Company no later than November 8,
1996 and must meet certain eligibility requirements of the Securities and
Exchange Commission. Such proposals may be mailed to Colonial Data Technologies
Corp., the attention of the Secretary, 80 Pickett District Road, New Milford,
Connecticut 06776.
SOLICITATION OF PROXIES AND COST THEREOF
The solicitation of the proxies is made by the Company. The cost of
solicitation of the proxies will be borne by the Company. In addition to
solicitation of the proxies by use of the mails, directors, officers and other
employees of the Company, without extra remuneration, may solicit proxies
personally or by telephone, telegraph, or other means of communication. The
Company will reimburse brokerage firms, nominees, custodians and fiduciaries for
their out-of-pocket expenses for forwarding proxy materials to beneficial owners
and seeking instruction with respect thereto.
STOCKHOLDERS MAY OBTAIN A COPY OF THE COMPANY'S FORM 10-K AS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION WITHOUT CHARGE (EXCEPT FOR
EXHIBITS), BY WRITING TO SECRETARY, COLONIAL DATA TECHNOLOGIES CORP., 80 PICKETT
DISTRICT ROAD, NEW MILFORD, CONNECTICUT 06776.
By Order of the Board of Directors
/s/ John N. Giamalis
John N. Giamalis
Secretary
March 14, 1996
