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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
FORM 10-K/A NO. 1
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________
Commission File 0-16029
PRONET INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1832168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6340 LBJ Freeway
Dallas, Texas 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 972-687-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $.01 PAR VALUE
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
----- -----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant as of February 28, 1997, was approximately $58,642,972. As of
February 28, 1997, there were 12,567,274 outstanding shares of the registrant's
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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The following Items 10, 11, 12 and 13 of Part III from the ProNet Inc.
(the "Company") 1996 Form 10-K filed with the Securities and Exchange
Commission (the "SEC") on March 28, 1997, are hereby amended and restated in
their entirety as follows:
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The current directors and executive officers of the Company are as
follows:
NAME AGE POSITION
- ---- --- --------
Jackie R. Kimzey 44 Chief Executive Officer and Chairman of the
Board of Directors
David J. Vucina 43 President, Chief Operating Officer and Director
Thomas V. Bruns 64 Director
Harvey B. Cash 58 Director
Edward E. Jungerman 54 Director
Jan E. Gaulding 42 Senior Vice President, Treasurer and Chief
Financial Officer
Joseph Y. Lacik Jr. 42 Vice President and Chief Information Officer
Timothy J. Moore 40 Vice President - New Business Development
Jeffery A. Owens 43 Senior Vice President and Chief Technology Officer
Mark A. Solls 40 Vice President, Secretary and General Counsel
Jackie R. Kimzey is a founder of the Company and has been a director of the
Company since 1983. Mr. Kimzey has been Chairman of the Board of the Company
since March 1990 and Chief Executive Officer of the Company since May 1983. Mr.
Kimzey served as President of the Company from May 1983 until May 1991.
David J. Vucina joined the Company in August 1988 and has been a director
of the Company since 1994. Mr. Vucina served as Executive Vice President of the
Company and President and Chief Operating Officer of ProNet Medical
Communications, the Company's medical communications division until May 1991, at
which time he was elected President and Chief Operating Officer of the Company.
Thomas V. Bruns has been a director of the Company since May 1991. Mr.
Bruns has been Chairman of the Board of Zaun Equipment Company, a power
equipment distributor company, since 1986.
Harvey B. Cash has been a director of the Company since 1982. Mr. Cash
was Chairman of the Board of the Company from 1982 until March 1990. Mr. Cash
is currently general partner of InterWest Partners, a venture capital fund.
Mr. Cash is Chairman of the Board of Cyrix Corporation, a publicly held
microprocessor company, and currently also serves on the Boards of Directors
of the following public companies: i2 Technologies, Inc., a provider of
supply chain management software; Aurora Electronics, Inc., a distributor of
recycled integrated circuit boards and computer components; Benchmarq
Microelectronics, Inc., a developer of chips and chipsets for portable
electronic devices; Ciena Corporation, a provider of systems for long
distrance fiber optic telecommunications networks; AMX Corporation, a
manufacturer of remote control systems; and Heritage Media Corporation, an
owner and operator of radio and television stations.
Edward E. Jungerman has been a director of the Company since May 1992.
Mr. Jungerman has been President of Impulse Telecommunications Corporation
("Impulse"), a strategic telecommunications consulting firm, since 1986. He
has over 25 years experience in the telecommunications field, including
senior executive positions at Northern Telecom, Inc. and private, start-up
ventures in the specialized advanced telecommunications services field.
Jan E. Gaulding joined the Company in March 1984 and served as Vice
President - Finance, Treasurer and Chief Financial Officer until January 1994
at which time she was elected Senior Vice President, Treasurer and Chief
Financial Officer of the Company. Ms. Gaulding served as Secretary of the
Company from February 1986 until December 1994. As Chief Financial Officer,
Ms. Gaulding has primary responsibility for the Company's financial,
treasury, accounting and human resources functions.
Joseph Y. Lacik Jr. joined the Company in February 1997 as Vice President
and Chief Information Officer. Mr. Lacik is responsible for developing and
implementing strategic information system solutions for the Company. From 1996
until joining the Company, Mr. Lacik was a principal consultant with Keane Inc.,
a consulting firm. From 1994 to 1996, Mr. Lacik served as Vice President of
Information Technology for Cameron Ashley Building Products, Inc. From 1990 to
1994, Mr. Lacik served in various information technology positions with Sprint,
a telecommunications company.
<PAGE>
Timothy J. Moore joined the Company in April 1997 as Vice President - New
Business Development. Mr. Moore is responsible for the Company's business
development strategy and new product applications. From 1990 until joining the
Company, Mr. Moore served in various senior management positions at Uniden
America, a manufacturer of wireless communication products, where he focused on
wireless voice and data communication technology as well as the internet
industry.
Jeffery A. Owens joined the Company in May 1984 as Vice President -
Engineering and served in that capacity until January 1996, at which time he was
elected Senior Vice President and Chief Technology Officer. Mr. Owens is
responsible for the Company's strategic technology and engineering functions.
Mark A. Solls joined the Company in December 1994 as Vice President,
Secretary and General Counsel. From February 1993 until joining the Company,
Mr. Solls engaged in the private practice of law. From November 1990 until
February 1993, Mr. Solls served as Senior Vice President, Secretary and General
Counsel of Maxum Health Corp., a provider of medical diagnostic services.
Officers are appointed by the Board of Directors and serve until their
respective successors are appointed and qualified by the Board of Directors.
ITEM 11. EXECUTIVE COMPENSATION
DIRECTORS' COMPENSATION
The Company currently has a policy whereby each non-employee director
receives a $6,000 annual retainer and $1,500 for each Board of Directors meeting
attended. All directors of the Company are reimbursed for traveling costs and
other out-of-pocket expenses incurred in attending meetings of the Board of
Directors.
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
On May 22, 1991, the Company granted to Mr. Bruns, a newly elected
non-employee director, an option to purchase 7,500 shares of common stock,
$.01 par value per share ("Common Stock") at an exercise price equal to the
closing price of the Common Stock as quoted on the NASDAQ National Market
System on May 22, 1991. On July 2, 1991, the Company adopted a Non-Employee
Director Stock Option Plan which provides for a one-time grant of an option
to purchase 7,500 shares of Common Stock of the Company to each non-employee
director of the Company who at the time of adoption previously had not
received a stock option grant (Mr. Cash), and to any subsequent outside
director who is elected and begins serving on the Company's Board of
Directors on or before July 1, 2001 (Mr. Jungerman). Options granted under
this plan may be exercised after the director has completed six months of
service as a member of the Board after the date on which the director was
granted the option. The exercise price of each option granted under this
plan on the effective date of the plan (July 2, 1991) was the closing price
of the Company's Common Stock as quoted on the NASDAQ National Market System
on such effective date, and the exercise price of subsequently granted
options is the closing price of the Company's Common Stock as quoted on the
NASDAQ National Market System as of the date the grantee is elected to the
Company's Board of Directors.
1995 LONG-TERM INCENTIVE PLAN
On May 25, 1995, the Company adopted the 1995 Long-Term Incentive Plan
(the "1995 Plan").
On November 20, 1996, in response to changes to Rule 16b-3 under the
Securities Exchange Act of 1934, the Board of Directors amended the 1995 Plan
to provide greater flexibility in the grants of awards to non-employee
directors. The 1995 Plan provides for an automatic grant of a nonstatutory
option to purchase 2,500 shares of Common Stock to each non-employee director
who is a director of the Company as of both the day immediately preceding the
annual meeting of the Company's stockholders and the day immediately
following the annual meeting, effective on the date of the first meeting of
the Board of Directors following the annual meeting. The exercise price for
each share of stock subject to the option shall be the fair market value
(equal to the closing price of the Common Stock as quoted on the NASDAQ
National Market System) of a share of stock on the date of grant of such
option and such options will vest equally over a period of three years from
the date of the grant.
On November 20, 1996, the Company granted a nonstatutory option to
purchase 2,500 shares of Common Stock at an exercise price of $5.625 per
share to its three non-employee directors in accordance with the terms of the
1995 Plan. The option shall become vested and exercisable with respect to
833 shares of stock on each of the first two anniversaries of the date of
grant, and with respect to 834 shares of stock on the third anniversary of
the date of grant, so long as the non-employee director remains a director of
the Company after the date of grant through those dates. On December 16,
1996, the Company granted a nonstatutory option to purchase 10,000 shares of
Common Stock at an exercise price of $6.00 per share to its three
non-employee directors in accordance with the terms of the 1995 Plan. The
option shall become vested and exercisable with respect to 3,333 shares of
stock on each of the first two anniversaries of the date of grant, and with
respect to 3,334 shares of stock on the third anniversary of the date of
<PAGE>
grant, so long as the non-employee director remains a director of the Company
after the date of grant through those dates. The options shall terminate on
the earliest of (i) the date ten years from the date of grant, (ii)
immediately when the holder ceases to be a director, if the Board demands or
requests the holder's resignation from the Board, (iii) on the date 90 days
after the holder ceases to be a director for any reason other than the
reasons specified in the preceding clause (ii) or the following clause (iv),
or (iv) on the date one year after the holder ceases to be a director because
of death or permanent disability.
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding the
compensation of the Company's Chief Executive Officer and the Company's four
most highly compensated executive officers other than the Chief Executive
Officer (the "Named Executives"), as well as the total compensation earned by
each such individual for the last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
LONG-TERM
COMPENSATION
ANNUAL AWARDS- ALL OTHER
COMPENSATION OPTIONS (1) COMPENSATION
----------------------- ------------ ------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS (#) (2)
- --------------------------- ---- -------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Jackie R. Kimzey 1996 $235,000 -- 115,000 $17,694
Chief Executive Officer 1995 208,000 $97,955 -- 16,716
1994 191,435 92,736 70,000 15,708
David J. Vucina 1996 192,016 -- 111,000 18,901
President and Chief 1995 168,000 101,722 -- 12,737
Operating Officer 1994 149,511 108,675 70,000 8,290
Bo Bernard 1996 110,000 -- -- 5,791
Former Executive Vice President 1995 114,125 51,803 -- 5,222
1994 114,708 55,545 30,000 4,847
Jan E. Gaulding 1996 134,992 -- 61,000 4,404
Senior Vice President and 1995 105,000 35,320 -- 4,126
Chief Financial Officer 1994 94,704 30,590 50,000 3,607
Mark A. Solls 1996 133,000 -- 35,000 7,944
Vice President and General 1995 125,004 33,250 20,000 6,055
Counsel 1994 -- -- -- --
</TABLE>
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(1) Options to acquire shares of Common Stock.
(2) Amount represents premiums paid by the Company for compensatory
split-dollar life and disability insurance including the portion
attributable to term life insurance (less than $1,000 for each Named
Executive) that is taxable compensation to the Named Executive.
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes options to acquire shares of Common Stock
granted to the Named Executives during 1996.
<TABLE>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ------------------------
NAME GRANTED(#)(1) FISCAL YEAR ($/SHARE)(2) DATE 5% 10%
- ---- ------------- ------------ ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Jackie R. Kimzey 22,000 3.00% $6.00 01/17/06 $ 82,940 $210,320
45,000 6.00 6.00 07/30/06 169,650 430,200
48,000 7.00 6.00 12/16/06 180,960 458,880
David J. Vucina 22,000 3.00 6.00 01/17/06 82,940 210,320
45,000 6.00 6.00 07/30/06 169,650 430,200
44,000 6.00 6.00 12/16/06 165,880 420,640
Bo Bernard -- -- -- -- -- --
Jan E. Gaulding 14,000 2.00 6.00 01/17/06 52,780 133,840
23,000 3.00 6.00 07/30/06 86,710 219,880
24,000 3.00 6.00 12/16/06 90,480 229,440
Mark A. Solls 5,000 1.00 6.00 01/17/06 18,850 47,800
10,000 1.00 6.00 07/30/06 37,700 95,600
20,000 3.00 6.00 12/16/06 75,400 191,200
</TABLE>
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(1) All options were granted pursuant to the 1987 Incentive Stock Option Plan
and 1995 Long-Term Incentive Plan. The options have a term of ten years from
the date of the original grant and vest in 20% cumulative annual increments
over that period beginning with the first anniversary date of the grant;
however, the options which expire 12/16/06 vest 100% one year from the date
of the grant.
(2) The options with expiration dates of 1/17/06 and 7/30/06 represent
options which were repriced to an exercise price of $6.00 per share from
$20.88 per share and $7.56 per share, respectively.
(3) The potential realizable value portion of the table illustrates the values
that might be realized upon exercise of the options immediately prior to
the expiration of their term, assuming the specified compounded rates of
appreciation in Common Stock over the term of the options. The price of
Common Stock at the end of the ten year term of the options would be $9.77
assuming five percent annual appreciation and would be $15.56 assuming ten
percent annual appreciation. These amounts represent assumed rates of
appreciation only. Actual gains, if any, on stock option exercises depend
on the future performance of the Common Stock and overall market
conditions. There can be no assurances that the potential values set forth
in this table reflect the actual values that may be obtained by any of the
Named Executives.
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table summarizes options exercised during 1996 and presents
the value of unexercised options held by the Named Executives at fiscal
year-end:
<TABLE>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END (2)
SHARES ACQUIRED VALUE -------------------------------- -----------------------------
NAME ON EXERCISE (#) REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jackie R. Kimzey -- -- 68,000 177,000 -- --
David J. Vucina -- -- 70,500 173,000 -- --
Bo Bernard -- -- 68,500 24,000 16,300 --
Jan E. Gaulding -- -- 68,825 95,000 $ 8,680 --
Mark A. Solls -- -- 5,000 50,000 -- --
</TABLE>
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(1) Value is calculated based on the remainder of the closing market price of
Common Stock on the date of the exercise minus the exercise price
multiplied by the number of shares to which the exercise relates.
(2) The last sales price of Common Stock as reported on the NASDAQ National
Market on December 31, 1996, the last trading day of 1996, was $4.38. Value
is calculated on the basis of the remainder of $4.38 minus the exercise
price multiplied by the number of shares of Common Stock underlying the
option.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Compensation Committee was composed of Messrs. Bruns,
Cash, Jungerman and Mark Musur (Mr. Musur's Board term expired November 20,
1996). No member of the Compensation Committee is an officer of the Company.
Since March 1992, upon management's request, Impulse has provided consulting
services in the area of personal communications technologies and services to
the Company. Mr. Jungerman is the President of and owns a controlling
interest in Impulse. During the last fiscal year, the Company paid Impulse
approximately $415,000 for these consulting services.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 31, 1997,
regarding the amount and nature of the beneficial ownership of Common Stock
by (i) each person known to the Company to be the beneficial owner of more
than five percent of the outstanding shares of Common Stock, (ii) each of its
directors, (iii) each executive officer of the Company named in the Summary
Compensation Table below and (iv) all of the Company's directors and
executive officers as a group. Except as otherwise noted, the persons named
in the table have sole voting and investment power in the shares of Common
Stock shown as beneficially owned by such persons.
<PAGE>
<TABLE>
BENEFICIAL OWNERSHIP
AS OF
MARCH 31, 1997
--------------------------------
NUMBER OF PERCENT OF
SHARES OF OUTSTANDING
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ------------------------ ------------ ------------
<S> <C> <C>
PRINCIPAL STOCKHOLDERS:
Wellington Management Company, LLP(1)......................... 1,345,600 10.66%
DIRECTORS AND OFFICERS:
Bo Bernard (2)................................................ 63,399 *
Thomas V. Bruns (3)........................................... 10,166 *
Harvey B. Cash (3)............................................ 29,166 *
Jan E. Gaulding (4)........................................... 91,384 *
Edward E. Jungerman (3)....................................... 10,166 *
Jackie R. Kimzey (5).......................................... 181,593 1.43
Mark A. Solls (6)............................................. 11,501 *
David J. Vucina (7)........................................... 94,611 *
All directors and executive officers as a group (10 persons)(8)... 578,529 4.44
</TABLE>
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* REPRESENTS LESS THAN 1% OF THE SHARES OUTSTANDING
(1) Wellington Management Company, LLP ("WMC") is an investment adviser
registered with the Securities and Exchange Commission under the Investment
Advisors Act of 1940, as amended. As of March 31, 1997 WMC, in its
capacity as investment adviser, may be deemed to have beneficial ownership
of 1,345,600 shares of Common Stock that are owned by numerous investment
advisory clients, none of which is known to have such interest with respect
to more than five percent of the class except for Hartford Capital
Appreciation Fund, Inc. As of March 31, 1997, WMC had shared voting
power with respect to 1,126,000 shares and shared dispositive power with
respect to all 1,345,600 shares. The business address of WMC is 75 State
Street, Boston, Massachusetts 02109.
(2) Includes 714 shares beneficially owned by Mr. Bernard's child. Mr.
Bernard resigned his position of Executive Vice President effective
December 31, 1996.
(3) Includes 9,166 shares subject to currently exercisable options or options
exercisable within 60 days after March 31, 1997.
(4) Includes 74,625 shares subject to currently exercisable options or options
exercisable within 60 days after March 31, 1997.
(5) Includes 76,400 shares subject to currently exercisable options or options
excercisable within 60 days after March 31, 1997 and 61,000 shares
beneficially owned by Mr. Kimzey's children.
(6) Includes 11,000 shares subject to currently exercisable options or options
exercisable within 60 days after March 31, 1997.
(7) Includes 88,900 shares subject to currently exercisable options or options
exercisable within 60 days after March 31, 1997.
(8) Includes 325,225 shares subject to currently exercisable options or options
exercisable within 60 days after March 31, 1997, as well as 63,399
shares directly held by Mr. Bernard, former Executive Vice President.
<PAGE>
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and beneficial
owners of more than ten percent of the Common Stock, to file with the Securities
and Exchange Commission and the National Association of Securities Dealers, Inc.
reports of ownership and changes in ownership of the Common Stock. Copies of
such reports are required to be furnished to the Company. Based solely on its
review of the copies of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that during
fiscal year 1996, all filing requirements applicable to its officers, directors,
and ten percent beneficial owners were satisfied except that Mr. Jungerman
inadvertently filed a Form 4 late.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since March 1992, upon management's request, Impulse has provided
consulting services in the area of personal communications services to the
Company. Mr. Jungerman is the President of, and owns a controlling interest
in, Impulse. During the last fiscal year, the Company paid Impulse $415,000
for these consulting services, an amount which management believes is fair
and reasonable and as favorable to the Company as could have been obtained
from a wholly unrelated party.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
PRONET INC.
(Registrant)
Date: May 1, 1997 /s/ JAN E. GAULDING
------------------------------------
Jan E. Gaulding
SENIOR VICE PRESIDENT, TREASURER AND
CHIEF FINANCIAL OFFICER
