<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
SCHEDULE 14A INFORMATION
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(c)(2))
/X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
UTILX CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X / No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Per unit price
or other
underlying
Title of each Aggregate value of
class of number of transaction Proposed
securities to securities computed maximum
which to which pursuant to aggregate value
transaction transaction Exchange of Total Fee
applies: applies: Act Rule 0-11: transaction: Paid:
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------
</TABLE>
/ / 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.
Amount Previously Paid:________________ Filing Party:______________________
Form, Schedule or
Registration Statement No.:____________ Date Filed:________________________
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<PAGE>
UTILX-Registered Trademark- CORPORATION
22820 RUSSELL ROAD
P. O. BOX 97009
KENT, WASHINGTON 98064-9709
June 26, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
of the UTILX Corporation at 3:00 p.m., Pacific Daylight Time, on Friday,
July 31, 1998, at the Hawthorn Suites Hotel, Centercourt Room, 6329 South 212th,
Kent, Washington 98032.
The Notice of Meeting and Proxy Statement on the following pages describe
the matters to be presented at the meeting.
Whether or not you plan to attend the meeting, we hope you will have your
stock represented by signing, dating and returning the enclosed Proxy Card in
the enclosed envelope AS SOON AS POSSIBLE. Your stock will be voted in
accordance with the instructions you have given in your Proxy.
Sincerely,
William M. Weisfield
CHAIRMAN OF THE BOARD
- --------------------------------------------------------------------------------
IMPORTANT
A Proxy Statement and Proxy Card are submitted herewith. All stockholders
are urged to complete and mail the enclosed Proxy Card promptly. The enclosed
envelope for return of proxy requires no postage. Any stockholder attending the
meeting may personally vote on all matters that are considered, in which event
the signed Proxy Card is revoked.
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR STOCK BE VOTED.
<PAGE>
UTILX-Registered Trademark- CORPORATION
22820 RUSSELL ROAD
P. O. BOX 97009
KENT, WASHINGTON 98064-9709
----------------
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
JULY 31, 1998
-----------------
To the Stockholders:
The 1998 Annual Meeting of Stockholders of the UTILX Corporation will be
held at 3:00 p.m., Pacific Daylight Time, on Friday, July 31, 1998, at the
Hawthorn Suites Hotel, Centercourt Room, 6329 South 212th, Kent, Washington
98032, for the following purposes:
I. To elect three (3) directors to hold office until their successors are
elected and qualified (pages 2 - 3 of enclosed Proxy Statement);
II. To transact such other business as may properly come before the
meeting.
The nominees for directors are set forth in the enclosed Proxy Statement.
June 2, 1998 has been fixed as the record date for the 1998 Annual Meeting.
Only stockholders of record at the close of business on that date will be
entitled to notice of and to vote at the meeting.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT EVEN IF
YOU EXPECT TO BE PRESENT AT THE MEETING, YOU ARE REQUESTED TO MARK, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID
ENVELOPE PROVIDED TO ASSURE YOUR REPRESENTATION. STOCKHOLDERS ATTENDING THE
MEETING MAY VOTE IN PERSON EVEN IF THEY HAVE PREVIOUSLY SENT IN A PROXY CARD.
By Order of the Board of Directors
Thomas L. Markl
SENIOR VICE PRESIDENT AND SECRETARY
Kent, Washington
June 26, 1998
THE 1998 ANNUAL REPORT OF THE UTILX CORPORATION
ACCOMPANIES THIS PROXY STATEMENT.
<PAGE>
UTILX-Registered Trademark- CORPORATION
----------------
PROXY STATEMENT
----------------
GENERAL
The enclosed Proxy is solicited by the Board of Directors (the "Board of
Directors" or the "Board") of UTILX Corporation ("UTILX" or the "Company") for
use at the 1998 Annual Meeting of Stockholders to be held at 3:00 p.m., Pacific
Daylight Time, on Friday, July 31, 1998, at the Hawthorn Suites Hotel,
Centercourt Room, 6329 South 212th, Kent, Washington 98032, and at any
adjournment or adjournments thereof. Only stockholders of record of common
stock of UTILX Corporation, par value $0.01 per share (the "Common Stock"), at
the close of business on June 2, 1998, will be entitled to vote at the 1998
Annual Meeting of Stockholders. On that date, the Company had outstanding
7,407,760 shares of Common Stock.
The address of the Company's principal executive offices is 22820 Russell
Road, Kent, Washington 98032 and the mailing address is P.O. Box 97009, Kent,
Washington 98064-9709. This Proxy Statement and the accompanying Proxy Card are
being mailed to the stockholders of the Company on or about June 26, 1998.
VOTING
Each share of Common Stock outstanding on the record date of June 2, 1998,
is entitled to one vote at the 1998 Annual Meeting of Stockholders. Under
Delaware law and the Company's Certificate of Incorporation, if a quorum is
present at the meeting the nominees for election as directors must be elected by
a plurality vote. In the election of directors, shares that are not voted for
the election of directors will not count in determining the total number of
votes for each nominee.
Stockholders do not have the right to cumulate their votes in the election
of directors. The three nominees who receive the greatest number of votes cast
for the election of directors by shares entitled to vote and present in person
or by proxy at the Annual Meeting of Stockholders will be elected directors. In
an uncontested plurality election such as this, abstentions will have no effect,
since approval by a specified percentage of shares present or outstanding is not
required. Because brokers have discretion to vote shares of common stock held
on behalf of beneficial owners if no instructions are received about how to vote
such shares, there will be no "broker non-votes" in the election of directors.
SHARES FOR WHICH PROXIES ARE PROPERLY EXECUTED AND RETURNED WILL BE VOTED
AT THE MEETING IN ACCORDANCE WITH THE DIRECTIONS NOTED THEREON, AND IN THE
ABSENCE OF DIRECTIONS TO THE CONTRARY, SUCH SHARES WILL BE VOTED (i) "FOR" THE
ELECTION OF THE NOMINEES FOR THE BOARD OF DIRECTORS NAMED IN THE FOLLOWING
PAGES, PROVIDED THAT IF SUCH NOMINEES SHOULD BECOME UNAVAILABLE FOR ELECTION FOR
ANY REASON, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF A SUBSTITUTE NOMINEE
AS THE BOARD OF DIRECTORS MAY PROPOSE.
REVOCATION
Any stockholder giving a Proxy may revoke it at any time before it is voted
by delivering to the Secretary of the Company either a written notice of
revocation or a duly executed Proxy bearing a later date than the original
proxy, or by attending the meeting and electing to vote in person.
1
<PAGE>
I. PROPOSAL TO ELECT DIRECTORS
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of seven directors who,
in accordance with the Company's By-laws, are divided into three classes. The
provision is designed to ensure that approximately one-third of the Board is
eligible for reelection in any given year. At the 1998 Annual Meeting of
Stockholders, three directors will be elected to serve for a term of three
years, expiring in 2001. The remaining four directors are divided into two
classes of two directors each, respectively, whose terms expire in 1999 and
2000, respectively. The directors elected will continue in office until a
successor has been elected or until resignation or removal in the manner
provided by the By-laws of the Company. The names of the nominees and
continuing members of the Board of Directors are listed on pages 2 through 3.
Shares represented by a properly executed Proxy in the form of the accompanying
Proxy Card will be voted for such nominees. However, discretionary authority is
reserved to vote such shares in the best judgment of the persons named in the
Proxy in the event that any person other than the nominees listed below is to be
voted upon at the meeting due to the unavailability of the nominees so listed.
All persons named below are directors of the Company at the present time.
No family relationships exist between any nominees, directors or executive
officers of the Company.
BOARD RECOMMENDED NOMINEES
The names of the nominees for the Board of Directors, together with certain
information regarding them, are as follows:
CRAIG E. DAVIES (age 55) has been a director of the Company and President
and Chief Executive Officer since April 1994. Mr. Davies' term as a director
expires in 1998. From May 1993 to April 1994, he was employed by Sithe
Energies, a developer, owner and operator of independent electric power
generating facilities, most recently as Vice President and Chief Operating
Officer. From August 1985 to May 1993, he was President and Chief Executive
Officer of North American Energy Services Company, a utility services company,
and from April 1987 to November 1992, he served as Chairman of the Board.
JOHN D. DURBIN (age 63) has been a director of the Company since April
1997. Mr. Durbin's term as a director expires in 1998. Mr. Durbin has been a
Principal of Olympic Capital Partners, an investment banking firm, since 1996
and is a general Partner of John Durbin & Associates, a 25 year old firm which
owns and manages commercial and agricultural real estate. Previously, he was
Chairman, President and Chief Executive Officer of Bellevue-based Hostar
International, a hotel equipment manufacturer, which he co-founded in 1988. In
addition, he is a board member of several Northwest companies, including Puget
Sound Energy, Inc. and ConnexT, Inc., and is a member of the Advisory Board of
Barclay Dean Interiors, Inc. and Glant Pacific Companies. Mr. Durbin's
community service includes being a member of the Board of Trustees of Seattle
University and a board member of Children's Hospital Foundation, Junior
Achievement of Greater Seattle and the Medic One Foundation. He is a past
Chairman of United Way of King County and past President of the Seattle Rotary
Club.
WALTER M. HIGGINS (age 53) has been a director of the Company since January
1998. Mr. Higgins' term as a director expires in 1998. Mr. Higgins was named
President and Chief Executive Officer of AGL Resources, Inc., an Atlanta-based
energy holding company in January 1998. He joined Sierra Pacific Resources, a
utility holding company in late 1993, and was named Chairman of the Board,
President and Chief Executive Officer in January 1994. He also served as
President and Chief Executive Officer of Sierra Pacific Power Co., a subsidiary
of Sierra Pacific Resources. Prior to joining Sierra Pacific Resources, he was
President and Chief Operating Officer of Louisville Gas and Electric Co., the
principal subsidiary of LG&E Energy, a Louisville, Kentucky-based utility
holding company. Mr. Higgins joined Louisville Gas & Electric Co. in 1991 after
nearly 14 years with Portland General Electric Co. in Portland, Oregon. In
addition, he is a board member of AGL Resources, Inc. and AEGIS, Ltd., an
insurance company, and serves on the board of trustees of several business and
community organizations.
2
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE ABOVE
NOMINEES FOR THE BOARD OF DIRECTORS.
CONTINUING MEMBERS OF THE BOARD OF DIRECTORS
The names of the continuing members of the Board of Directors, together
with certain information regarding them, are as follows:
STANLEY J. BRIGHT (age 58) has been a director of the Company since January
1995. Mr. Bright's term as a director expires in 1999. Mr. Bright has been
Chairman, President and Chief Executive Officer of MidAmerican Energy Company, a
utility company, since June 1997. He previously served as President and Chief
Executive Officer since July 1996 and as President, Office of the Chief
Executive Officer since the July 1, 1995 formation of MidAmerican Energy in the
merger of Iowa-Illinois Gas and Electric Company and Midwest Resources, Inc. He
had been Chairman, President and Chief Executive Officer of Iowa-Illinois Gas
and Electric Company, a utility company, since May 1991. Mr. Bright served as
President and Chief Operating Officer of Iowa-Illinois Gas and Electric Company
from April 1990 to April 1991 and Vice President-Finance and Chief Financial
Officer from September 1986 to March 1990. Mr. Bright is also a director of
Utech Venture Capital Corporation, Genesis Health System, Des Moines Development
Corporation, Norwest Bank Iowa, N.A., St. Ambrose University in Davenport, Iowa,
the Iowa College Foundation and the Iowa Business Council, and is a member of
the Board of Visitors of the College of Business Administration of the
University of Iowa. In addition, he is a director of the Edison Electric
Institute, the Illinois Energy Association, the Iowa Utility Association and the
North Central Electric Association.
JOHN W. ELLIS (age 69) has been a director of the Company since August
1988. Mr. Ellis' term as a director expires in 2000. He is also Chief Executive
Officer of the Baseball Club of Seattle. Since 1969, he has been a director of
Puget Sound Energy, Inc. (formerly Puget Sound Power & Light Company), a
diversified gas and electric utility, where he was President from 1976 to 1987,
and Chief Executive Officer from 1976 until his retirement in 1993. Mr. Ellis
is also a director of Washington Mutual Savings Bank, a banking company, SAFECO
Corporation, an insurance company, and AEGIS, Ltd., an insurance company, and
serves as Chairman of the Board of Trustees of Seattle University. He is past
Chairman of the Edison Electric Institute and the Electric Power Research
Institute.
ROBERT E. RUNICE (age 68) has been a director of the Company since November
1988. Mr. Runice's term as a director expires in 2000. Mr. Runice is a private
investor and business consultant. From 1983 until his retirement in 1991,
Mr. Runice had been Vice President of U S WEST Inc., a diversified
telecommunications company, and President of its Commercial Development
Division. Mr. Runice is also a director of The Bombay Company, Inc., a
specialty retail company, and Tandy Brands Accessories, Inc., a manufacturer of
men's, women's and boys' accessories.
WILLIAM M. WEISFIELD (age 56) has been a director of the Company since
January 1995, and Chairman of the Board since January 1996. Mr. Weisfield's
term as a director expires in 1999. Mr. Weisfield has been Senior Vice
President of Benaroya Capital Company, a privately held investment company
specializing in development of Pacific Northwest real estate and other
investments, since January 1, 1994. Mr. Weisfield previously served as Chief
Operating Officer for Robbins Company, an underground tunnel boring
manufacturing company from November 1992 to December 1993. Mr. Weisfield also
acts as a director of Lindal Cedar Homes, Inc., Lifespan Biosciences, Inc. and
the Downtown Seattle Association, and is president-elect of the Downtown Seattle
Rotary Club and serves as a Regent of Seattle University.
3
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has established standing committees, including an
Audit Committee, a Compensation Committee and a Nominating and Organization
Committee. All committees are responsible to the full Board of Directors and
their activities are therefore subject to approval of the Board of Directors.
As provided in the Company's By-laws, each committee is appointed annually by
the Board of Directors and consists of not less than three directors, at least a
majority of whom must be independent and not members of management. The
functions performed by these Committees are summarized as follows:
AUDIT COMMITTEE. The Audit Committee reviews and makes recommendations
regarding the selection of outside auditors, the scope and results of the annual
audit, internal controls, procedures and the adequacy of staff for the safeguard
of the Company's assets, related-party transactions, potential conflicts of
interest and compliance with corporate policies including the Company's Code of
Ethical Conduct. The members of the Audit Committee are John D. Durbin
(Chairman), Robert E. Runice and William M. Weisfield. The Audit Committee met
six times during fiscal year 1998.
COMPENSATION COMMITTEE. The Compensation Committee reviews and makes
recommendations regarding compensation, including salaries and other incentives,
of directors, officers and other executives of the Company. Those members of
the Compensation Committee who are "nonemployee directors" within the meaning of
the rules adopted under Section 16 of the Securities Exchange Act of 1934, as
amended, and "outside directors" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, also act as plan administrator of the
Company's stock option plans. The members of the Compensation Committee are
Robert E. Runice (Chairman), John W. Ellis, John D. Durbin and Walter M.
Higgins. The Compensation Committee met four times during fiscal year 1998.
NOMINATING AND ORGANIZATION COMMITTEE. The Nominating and Organization
Committee reviews and makes recommendations regarding the size and composition
of the Board of Directors, nominees for directors, election of officers and the
organization of the Company. The Nominating and Organization Committee also
considers nominees for directors recommended by any stockholder of the Company.
Any stockholder desiring to do so must mail a written recommendation and any
comments to the Chairman of the Nominating and Organization Committee addressed
in care of the Secretary of the Company at the Company's corporate offices at
P.O. Box 97009, Kent, Washington 98064-9709. The members of the Nominating and
Organization Committee are John W. Ellis (Chairman), Stanley J. Bright and
Robert E. Runice. The Nominating and Organization Committee met three times
during fiscal year 1998.
FISCAL YEAR 1998 DIRECTOR MEETING ATTENDANCE
During fiscal year 1998, there were seven meetings of the Board of
Directors. Each director attended at least 80% of the total number of the
meetings of the Board of Directors and the Committees of the Board of Directors
on which each such director served.
DIRECTOR COMPENSATION
Directors who are employees of the Company do not receive any fees for
their services as directors. Directors of the Company who are not employees are
paid a quarterly retainer of $1,500 and committee chairpersons are paid an
additional quarterly retainer of $500. Nonemployee directors are also paid $500
for each Board of Directors meeting and $400 for each committee meeting attended
in person and one-half of those amounts for participation in telephonically
conducted meetings, plus reimbursement of expenses incurred in attending such
meetings. The Chairman, also a nonemployee director, receives a yearly retainer
of $35,000 for his services as Chairman. For extraordinary services beyond
those incidental to service on the Board and its committees,
4
<PAGE>
nonemployee directors receive fees for work on matters specially requested by
the Board at a rate of $125 per hour with a daily minimum of $500 and a daily
maximum of $1,000.
The Company has also adopted the 1987 Restated Stock Option Plan for
Nonemployee Directors (the "1987 Director Plan"), which provides for the grant
of options to acquire up to an aggregate 300,000 shares of Common Stock to
nonemployee directors. Pursuant to the 1987 Director Plan, each nonemployee
director receives an option to purchase 10,000 shares of Common Stock upon
initial appointment to the Board, which options vest 40% one year after the date
of grant and 20% each year thereafter. Each nonemployee director then
automatically receives annually an option to purchase 5,000 shares of Common
Stock, concurrently with each year's Annual Meeting of Stockholders. Such
options vest upon the date of grant. All grants under the 1987 Director Plan
are made at an exercise price equal to the fair market value of the Common Stock
on the date of grant. The purpose of the 1987 Director Plan is to help the
Company attract and retain qualified nonemployee directors.
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS, OFFICERS AND DIRECTORS
The following table sets forth as of June 2, 1998 (unless otherwise noted
below) information regarding the beneficial ownership of the Common Stock by
each stockholder who, to the Company's knowledge, owned more than 5% of the
outstanding Common Stock, by each of the directors, nominees and by each of the
executive officers named in the Summary Compensation Table, and by all directors
and executive officers, as a group. Each of the named persons and members of
the group has sole voting and investment power with respect to the shares shown,
except as stated below.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP OF COMMON STOCK
------------------------------------------------------------------------
Options and Other
Outstanding Shares Rights Exercisable
of Common Stock Within 60 Days Percent of
Name and Address* of Beneficial Owner Beneficially Owned of June 2, 1998 Total Class(1)
- ----------------------------------------- ------------------- ------------------- --------- ----------
<S> <C> <C> <C> <C>
Dawson-Samberg Capital Management Inc.(2) 535,000 0 535,000 7.22%
354 Pequot Avenue
Southport, CT 06490
Dimensional Fund Advisors Inc.(3) 517,500 0 517,500 6.99%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
UVCC Fund I 435,293 0 435,293 5.88%
Suite 1040
6110 Executive Boulevard
Rockville, MD 20852
Craig E. Davies 136,800 74,467(4) 211,267 2.82%
Stanley J. Bright 435,293 18,000(6) 453,293(5) 6.10%
MidAmerican Energy Company
P.O. Box 657
Des Moines, IA 50303-0657
John D. Durbin 0 14,000(6) 14,000 **
John W. Ellis 0 60,000(6) 60,000 **
Walter M. Higgins 0 5,000(6) 5,000 **
Robert E. Runice 4,000 45,000(6) 49,000 **
William M. Weisfield 5,000 28,000(6) 33,000 **
Thomas L. Markl 38,289 47,287(7) 86,576 1.15%
Larry D. Pihl 6,000 34,633(8) 40,633 **
All directors and executive
officers, as a group (13 persons) 631,798 417,653 1,049,451 13.41%
</TABLE>
5
<PAGE>
NOTES TO BENEFICIAL OWNERSHIP TABLE:
- Addresses are listed of owners of more than 5% of the outstanding
Common Stock.
-- Less than 1% of the outstanding Common Stock.
(1) In calculating the percentage ownership of any stockholder holding
options or other rights exercisable within 60 days of June 2, 1998, it
is assumed that such options or rights were exercised.
(2) Dawson-Samberg Capital Management, Inc. ("Dawson-Samberg") has
beneficial ownership of these shares through an investment management
agreement which grants to Dawson-Samberg the power to vote and dispose
of the shares.
(3) Dimensional Fund Advisors Inc. ("Dimensional"), a registered
investment advisor, is deemed to have beneficial ownership of 517,500
shares of the Company's common stock as of March 31, 1998, all of
which shares are held in portfolios of DFA Investment Dimensions Group
Inc., a registered open-end investment company, or in series of the
DFA Investment Trust Company, a Delaware business trust, or the DFA
Group Trust and DFA Participation Group Trust, investment vehicles for
qualified employee benefit plans, all of which Dimensional serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares.
(4) Consists of options to purchase 20,000 shares of Common Stock
granted under the Company's 1984 Restated Stock Option Plan (the "1984
Plan") and options to purchase 54,467 shares of Common Stock granted
under the Company's 1994 Option and Restricted Stock Plan (the "1994
Plan").
(5) Includes 435,293 shares owned by UVCC Fund I which may be deemed
beneficially owned by Mr. Bright. Utech Venture Capital Corporation
has a majority interest in the UTILX Common Stock held in UVCC Fund I.
Mr. Bright serves as a board member of Utech Venture Capital
Corporation. Mr. Bright disclaims beneficial ownership of such
shares.
(6) Consists of options to purchase shares of Common Stock granted under
the 1987 Director Plan and includes options to purchase 5,000 shares
of Common Stock that will automatically be granted on July 31, 1998.
See "Director Compensation."
(7) Consists of options to purchase 8,000 shares of Common Stock granted
under the 1984 Plan and options purchase 39,287 shares of Common Stock
granted under the 1994 Plan.
(8) Consists of options to purchase shares of Common Stock granted under
the 1994 Plan.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who beneficially own more than
10% of a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "Commission"). Officers, directors and greater than 10% stockholders are
required by Commission regulation to furnish the Company with copies of all
Section16(a) forms that they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no forms were
required for those persons, the Company believes that during the 1996, 1997 and
1998 fiscal years all filing requirements applicable to its officers, directors
and greater than 10% beneficial owners were complied with, other than one late
filing relating to the tax withholding of Mr. Scott Reynolds, an officer, and
one late filing relating to a cashless exercise transaction by Mr. Stanley
Bright, a director.
6
<PAGE>
II. OTHER MATTERS
The Company knows of no other matters that are likely to be brought before
the meeting. If, however, other matters not now known or determined come before
the meeting, the persons named in the enclosed Proxy Card or their substitutes
will vote such Proxy in accordance with their judgment in such matters.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid to the Company's Chief
Executive Officer and the other most highly compensated executive officers whose
salary and bonuses exceeded $100,000 (the "named executive officers") for
services rendered in fiscal year 1998 and the two prior fiscal years:
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
------------------------ ---------------------
Name and Securities Underlying ALL OTHER
Principal Position Year(1) Salary ($) Bonus ($) Options Awarded (#) Compensation ($)
- ------------------------ -------- --------- --------- --------------------- ----------------
<S> <C> <C> <C> <C> <C>
Craig E. Davies 1998 $235,000 $ 0 50,000 $ 5,959(2)
President/Chief 1997 $205,398 $37,900 57,000 $ 6,988(2)
Executive Officer 1996 $200,000 $ 0 25,000 $ 3,557(2)
Thomas L. Markl(3) 1998 $138,467 $ 0 35,000 $ 4,450(4)
Senior Vice President 1997 $116,553 $15,000 50,000 $ 3,720(4)
Corporate Secretary 1996 $110,000 $ 0 12,700 $ 3,127(4)
Larry D. Pihl(5) 1998 $114,235 $ 0 25,000 $ 3,510(6)
Vice President/CFO 1997 $ 99,814 $ 7,400 40,000 $ 3,036(6)
Controller/Treasurer 1996 $ 87,877 $ 0 10,500 $ 1,630(6)
</TABLE>
- ------------------------
(1) The Company's fiscal year ended March 31 of the year identified.
(2) Consists of $4,910 for Company matching contributions to qualified
benefit plans ("Company matching contributions") and $1,049 for taxable
life insurance benefits ("insurance benefits") for 1998; $6,124 and $864,
respectively, for 1997 and $2,693 and $864 respectively for 1996.
(3) Mr. Markl became an executive officer of the Company on June 1, 1994.
(4) Consists of $4,154 for Company matching contributions and $296 for
insurance benefits for 1998; $3,497 and $223, respectively, for 1997 and
$2,920 and $207, respectively, for 1996.
(5) Mr. Pihl became an executive officer of the Company on July 1, 1994.
(6) Consists of $3,427 for Company matching contributions and $83 for
insurance benefits for 1998, $2,975 and $61, respectively, for 1997 and
$1,592 and $38, respectively, for 1996.
7
<PAGE>
The following tables set forth information concerning option grants and
exercises during the Company's 1998 fiscal year to or by the named executive
officers and the value of the options held by such officers as of March 31,
1998:
<TABLE>
<CAPTION>
OPTION GRANTS IN FISCAL YEAR 1998
INDIVIDUAL GRANTS Potential Realizable
----------------------------------------------------------- Value at Assumed
% of Total Annual Rates of
Number of Options Stock Price
Securities Granted to Appreciation
Underlying Employees for Option Term(2)
Options in Fiscal Exercise Price Expiration --------------------
Name Granted Year 1998 Per Share(1) Date(1) 5% 10%
---- ---------- ---------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Craig E. Davies 50,000 18.7% $4.625 7/24/07 $145,432 $368,553
Thomas L. Markl 35,000 13.1% $4.625 7/24/07 $101,802 $257,987
Larry D. Pihl 25,000 9.4% $4.625 7/24/07 $ 72,716 $184,276
</TABLE>
- ------------------------
(1) The exercise price for the options is the fair market value of the Common
Stock on the date of grant. Exercise of an option requires payment in cash
of the exercise price. The options have a term of 10 years and become
exercisable in three equal annual installments beginning one year after
the date of grant, subject to acceleration upon the occurrence of certain
transactions, including certain mergers and other business combinations
involving the Company. The Compensation Committee also has the authority
to accelerate exercisability before the originally designated exercise
date(s). THe exercise price may be paid by the delivery of already owned
shares or a full-recourse promissory note, and tax withholding obligations
relating to exercise may be paid by the delivery of already owned shares or
by offsetting the underlying shares, subject to certain conditions.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% assumed appreciation rates set by the Securities and
Exchange commission and therefore are not intended to forecast possible
future appreciation, if any, in the price of the Common Stock.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND 1998 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised in-the-Money Options at
Name Options at March 31, 1998(1) March 31, 1998(2)
- ---- ------------------------------- ----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Craig E. Davies 36,400 120,600 $57,950 $216,175
Thomas L. Markl 21,080 86,620 $43,565 $169,723
Larry D. Pihl 15,200 65,300 $35,325 $134,238
</TABLE>
- ------------------------
(1) Consists of options granted under the 1984 Plan and the 1994 Plan.
(2) Based on a closing price of $5.50 per share on March 31, 1998.
8
<PAGE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
EMPLOYMENT AGREEMENTS. The Company has entered into term employment
agreements with Craig E. Davies, Thomas L. Markl and Larry D. Pihl. All of the
agreements establish starting annual base salary and eligibility to participate
in Company bonus and stock plans. The agreements obligate the Company to
continue employment and compensation of each such executive officer for one year
from the effective date of the agreement and for successive one-year periods
thereafter unless terminated upon 60 days' notice prior to the anniversary date
of the agreement. In addition, if the Company terminates the executive
officer's employment during the term of the agreement for reasons other than
"cause" or if the executive officer terminates employment for "good reason" or
within 180 days of a "change of control" of the Company (as the foregoing terms
are defined in the agreements), the Company will be obligated to make certain
termination payments to the affected executive officer, including one year's
severance pay and continuation of medical benefits for one year, or until
full-time employment of the executive officer, which ever comes first.
The employment agreement with Mr. Davies, effective April 1, 1994,
established an initial annual base salary of $200,000. The agreement required
the Company to grant to Mr. Davies at the commencement of his employment options
to purchase 25,000 shares of Common Stock under the 1984 Plan and 15,000 shares
of restricted Common Stock under the 1994 Plan.
The employment agreement with Mr. Markl, effective June 1, 1994,
established an initial annual base salary of $105,000. The agreement required
the Company to grant to Mr. Markl at the commencement of his employment options
to purchase 10,000 shares of Common Stock and 6,000 shares of restricted Common
Stock under the 1994 Plan.
The employment agreement with Mr. Pihl, effective July 1, 1994, established
an initial annual base salary of $72,000. The agreement required the Company to
grant to Mr. Pihl at the commencement of his employment options to purchase
5,000 shares of Common Stock under the 1994 Plan and 3,000 shares of restricted
Common Stock under the 1994 Plan.
AMENDED AND RESTATED 1994 OPTION AND RESTRICTED STOCK PLAN (the 1994
Plan). The 1994 Plan provides that upon a Change of Control each outstanding
option will automatically become exercisable in full for the total remaining
number of shares covered by the option. A "Change of Control" is defined in
the 1994 Plan as: (i) a change in the Board of Directors such that a
majority of the seats on the Board are occupied by individuals who were
neither nominated by a majority of the Incumbent Directors of the Company
then in office nor appointed by directors so nominated; (II) the acquisition
by any person (other than the0 Company or a Company employee benefit plan)
of, in the case of transactions not approved by a majority of the Incumbent
Directors, 20% or more of the combined general voting power of the Common
Stock and any other voting securities of the Company and, in the case of
other transactions, 33% or more of such combined voting power; or (III) the
approval by the stockholders of the Company of a business combination, other
than a business combination in which all or substantially all the
stockholders of the Company receive or hold 60% or more of the stock of the
corporation resulting from the Business Combination in substantially the same
proportions as their ownership before the Business Combination, no holder has
more than 33% of the combined voting power of the capital stock of the
resulting corporation and at least a majority of the board of directors of
the resulting corporation are Incumbent Directors or were approved by a
majority of the Incumbent Directors.
1984 STOCK OPTION PLANS. The 1984 Restated Stock Option Plan and the 1984
Restated Nonqualified Stock Option Plan provide that upon the occurrence of
certain transactions, including certain mergers and other business combinations
involving the Company, outstanding options will be fully exercisable. Such
options, if not exercised, will then terminate upon consummation of such
transactions. In the alternative, at the discretion of the Company and the
corporation(s) participating in such transactions, such options may be assumed
by the acquiring or surviving corporation.
9
<PAGE>
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the "Committee") is
composed entirely of directors who are not employees of the Company. Current
members of the Committee are Robert E. Runice, Chairman, John W. Ellis, John D.
Durbin and Walter M. Higgins. None of the members of the Committee participate
in the compensation programs described in this report.
PHILOSOPHY, PROCEDURES AND GENERAL POLICIES. In determining executive
compensation, the Committee and the Board are guided by the following
objectives:
- Attracting, retaining and motivating highly qualified and committed
executives.
- Using the competitive employment marketplace as a guide to assessing
and establishing compensation levels.
- Determining total compensation to a meaningful degree by returns to
the Company's stockholders.
- Exercising appropriate discretion and judgment in making individual
compensation determinations based on the performance and particular
employment position of the affected executive, the current economic
and business circumstances of the Company, and the prevailing
conditions in the relevant employment marketplace.
- Encouraging executives to obtain and hold an equity stake in the
Company.
The responsibility of the Committee is to review and make recommendations
regarding executive compensation to the Board of Directors. The Board of
Directors exercises final authority with respect to approval of executive
compensation, except with regard to grants under the Company's stock plans for
which the Committee has final authority. The Committee and the Board also
specifically approve the compensation of individual executives, including any
merit or promotional adjustments, and individually review the performance of
those executives on at least an annual basis. Base salary increases are based
upon the results of such performance reviews and, for executives other than the
President and Chief Executive Officer, such increases are also based upon the
recommendation of the President and Chief Executive Officer. During fiscal year
1998, the Committee used the services of an independent executive compensation
consultant to assist the Committee in evaluating the Company's executive
compensation programs and practices and to recommend changes for future years.
EXECUTIVE COMPENSATION PLAN. Under the Company's fiscal year 1998
Executive Compensation Plan, executive compensation consisted of the following
components:
- annual base salary
- annual incentive bonus
- long-term compensation in the form of stock option grants and
restricted stock
In establishing this plan, comparative executive compensation information
was collected by the Company using both publicly available sources as well as
compensation surveys produced by independent, outside compensation firms. That
information included, but was not specifically limited to, the group of
companies comprising the peer issuers index in the Stock Performance Graph. See
footnote 2 to "Stock Performance Graph" below.
ANNUAL COMPENSATION -- BASE SALARIES. The Company seeks to establish base
salaries of executives at median levels in those employment markets within which
the Company competes in order to recruit and retain qualified executive
employees. The Company reviews base salaries of each executive periodically,
generally on an annual basis, to ensure that the Company remains competitive.
Such annual reviews, conducted in conjunction with annual merit reviews, are to
provide the basis for assessments of base salary and adjustments.
10
<PAGE>
The Committee considers recommendations from the President and Chief
Executive Officer when making adjustments to executive salaries. The Committee
also considers the initial base salaries set forth in the employment agreements
of certain executives and such variables as relative responsibility, expertise,
past years' compensation and performance, and comparative market data, including
median salary data for similar positions within the industry. In light of the
Company's overall performance, general salary increases have not yet been
granted to the executive group in 1998, with the exception of one salary
increase to reflect an adjustment to market level. This salary increase was
approved by the Committee and the Board.
ANNUAL COMPENSATION -- ANNUAL INCENTIVE BONUSES. The Committee has an
established program of annual cash incentives to executives in the form of
performance awards. This program is intended to encourage achievement of
certain goals developed and specified at the beginning of the fiscal year. A
performance award target is established for each participating executive, based
on median competitive levels in those employment markets within which the
Company competes. Performance awards are to be distributed out of a performance
award fund whose size is determined by the success of the management group as a
whole in achieving the annual financial goals of the Company. If Company goals
are met, the performance award fund is divided among all participating
executives based on their respective performance award targets. Although
performance award targets are specified at the beginning of the fiscal year, the
relative share of the performance award fund received by a specific executive
may be increased or decreased at the time of distribution of performance awards,
based upon an assessment by the Board and Committee of the individual's
performance.
In April 1997, the Board and the Committee established performance award
targets for executives for fiscal year 1998 ranging from 20% to 50% of earned
base salary and established Company performance goals relating to achieving
profitability of specific profit centers and the entire Company. These goals
were not reached during fiscal year 1998 and therefore no performance awards
were paid to executive officers.
LONG-TERM COMPENSATION -- STOCK PLANS. Long-term incentives are designed
to link management reward with the long-term interest of the Company's
stockholders. Currently, the Company grants stock options and restricted stock
as long-term incentives.
In fiscal 1998, the Committee and the Board granted a total of 267,500
stock options, based on fiscal 1997 performance, to executive officers and
senior managers. These options were scheduled to vest five years after the
grant date, and eligible for accelerated vesting over a three year period upon
achieving certain stock price appreciation targets. In light of the Company's
overall performance, further stock option awards have not yet been granted to
the existing executive officers and senior managers.
In fiscal 1998, the Committee and the Board approved an Exempt Employee
Stock Option Plan, designed to make every salaried employee of the Company
eligible for annual nonqualified stock option awards upon achievement of
individual performance objectives. Over 150 of the Company's employees are
eligible for this incentive plan. The objective of this plan is to incent a
broader group of Company employees to pursue objectives aligned with the
interests of outside shareholders.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. In April 1994, Craig Davies was
elected President and CEO. Mr. Davies currently receives an annual base salary
of $235,000 and a performance-based target bonus of up to 50% of annual base
salary. Under certain conditions, a performance-based bonus award can be
increased beyond the target amount by the Committee. Pursuant to his employment
agreement, the Company granted Mr. Davies at the commencement of his employment
15,000 shares of restricted Common Stock under the 1994 Plan and options to
purchase 25,000 shares of Common Stock under the 1984 Plan. In fiscal year
1998, Mr. Davies was granted the option to purchase an additional 50,000 shares
of Common Stock under the 1994 Plan.
The compensation package for Mr. Davies was determined with the assistance
of a compensation consultant and was based upon a number of factors, including
market data indicating median salaries and annual bonuses for similar positions
in the employment market within which the Company competes. In determining
compensation, the Committee considered Mr. Davies' expertise and relevant
operational experience as well as his demonstrated achievement in prior
positions.
11
<PAGE>
CAP ON COMPANY DEDUCTIONS FOR CERTAIN COMPENSATION. Under Section 162(m)
of the Code, certain compensation payments in excess of $1 million are subject
to a cap on deductibility for the Company. The limitation on deductibility
applies with respect to that portion of a compensation payment for a taxable
year in excess of $1 million to either the Company's chief executive officer
or any one of the other four highest paid executives. Certain performance-
based compensation is not subject to the cap on deductibility. Options can
qualify for this performance-based exception, but only if they are granted at
fair market value, the total number of shares that can be granted to an
executive for any period is stated, and stockholder and Board approval is
obtained. Restricted stock does not satisfy the definition of performance-
based compensation unless the lapse of the Restricted Period is based on the
attainment of specified performance goals approved by the issuer's
stockholders. Restricted stock grants under the 1994 Plan will not satisfy
the performance-based criteria. The option portion of the 1994 Plan is
intended to comply with the performance-based criteria.
COMPENSATION COMMITTEE MEMBERS. The foregoing report has been provided by
the Compensation Committee of the Board of Directors.
Robert E. Runice (Chairman)
John W. Ellis
John D. Durbin
Walter M. Higgins
STOCK PERFORMANCE GRAPH
The graph below compares for each of the last five fiscal years ending
March 31, 1998 the cumulative total return of the Company, The Nasdaq Stock
Market index and the SIC 1600 - 1699 index. The cumulative total return of
Common Stock assumes $100 invested on March 31, 1993 in UTILX Common Stock and
for the comparator indices that all dividends are fully reinvested. The Company
has paid no dividend during the period indicated.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
UTILX CORPORATION, NASDAQ INDEX,(1) AND SIC 1600 - 1699 INDEX(2)
<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
UTILX 100.0 136.4 69.7 48.5 106.1 133.3
NASDAQ 100.0 107.9 120.1 163.0 181.2 275.0
SIC 1600 - 1699 100.0 97.4 96.1 122.6 219.8 379.6
</TABLE>
- ------------------------
(1) Broad market index consisting of all United States companies traded on
The Nasdaq Stock Market during the period indicated.
12
<PAGE>
(2) Peer issuers index consisting of all United States companies traded on
The Nasdaq Stock Market during the period indicated, including the Company,
whose Standard Industrial Classification ("SIC") code is within Major Group
16, "Heavy Construction other than Building Construction-Contractors." The
Company's SIC code is 1623, "Water, Sewer, Pipeline and Communications and
Power Line Construction." The following companies (and their ticker
symbols) comprise the group of peer issuers: Guy F. Atkinson Company of
California (ATKN); Burnup & Sim, Inc. (BSIM); Cerbco, Inc. (CERB); Devcon
International Corporation (DEVC); Enviroq Corporation (EROQ); Euroweb
International Corporation (EWEB); Global Industries, Limited (GLBL);
Granite Construction, Inc. (GCCO); Harding Associates, Inc. (HRDG);
Hungarian Teleconstruction Corporation (HTEL); Insituform East, Inc.
(INEI); Insituform Mid America, Inc. (INSMA); Insituform Technologies, Inc.
(INSUA); International Fibercom, Inc. (IFCI); Mastec, Inc. (MASX); Meadow
Valley Corporation (MVCO); Naylor Industries, Inc. (NALR); Noxso
Corporation (NOXO); and UTILX Corporation (UTLX).
EXPENSES OF SOLICITATION
Proxies may be solicited by officers, directors and regular supervisory and
executive employees of the Company, none of whom will receive any additional
compensation for their services. Proxies may be solicited personally or by
mail, telephone, telex, telegraph or messenger. The Company will also pay
persons holding shares of the Common Stock in their names or in the names of the
nominees, but not owning such shares beneficially, such as brokerage houses,
banks and other fiduciaries, for the expense of forwarding soliciting materials
to their principals. All of the costs of the solicitation of Proxies will be
paid by the Company.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Coopers & Lybrand L.L.P., certified
public accountants, to act as independent auditor of the Company for the fiscal
year ending March 31, 1999. Coopers & Lybrand L.L.P. has been auditor of the
Company since 1986.
A representative of Coopers & Lybrand L.L.P. is expected to be present at
the Annual Meeting of Stockholders, with the opportunity to make a statement, if
the representative so desires, and is expected to be available to respond to
appropriate questions from stockholders.
PROPOSALS OF STOCKHOLDERS
The Company intends to hold its 1999 Annual Meeting of Stockholders on
approximately July 30, 1999. In order for proposals of stockholders to be
considered for inclusion in the Proxy Statement and Proxy for the 1999 Annual
Meeting of Stockholders, such proposals must be received by the Secretary of the
Company no later than March 2, 1999.
1998 ANNUAL REPORT
A copy of the Company's 1998 Annual Report for the year ended March 31,
1998, as filed with the Securities and Exchange Commission is being mailed with
this Proxy Statement to each stockholder of record as of June 2, 1998. Any
stockholder not receiving this report will be provided such report without
charge by submitting a written request therefor addressed to Secretary, UTILX
Corporation, P.O. Box 97009, Kent, Washington 98064-9709, (253) 395-0200
(telephone), (253) 395-1040 (facsimile).
By Order of the Board of Directors
Thomas L. Markl
SENIOR VICE PRESIDENT AND SECRETARY
13
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS OF
UTILX CORPORATION
1998 ANNUAL MEETING OF STOCKHOLDERS - JULY 31, 1998
The undersigned hereby appoints William M. Weisfield, Craig E. Davies and
Thomas L. Markl, and each or any of them, with power of substitution, proxies
for the undersigned and authorizes them to represent and vote, as designated on
the reverse side, all of the shares of Common Stock, $0.01 par value, of UTILX
Corporation which the undersigned may be entitled to vote at the 1998 Annual
Meeting of Stockholders to be held at the Hawthorn Suites Hotel, Centercourt
Room, 6329 South 212th Street, Kent, Washington 98032 on Friday, July 31, 1998,
at 3:00 p.m., Pacific Daylight Time, and at any other adjournment of such
meeting, hereby revoking any proxies heretofore given, for the following
purposes and with discretionary authority as to any other matters that may
properly come before the meeting, all in accordance with and as described in the
Notice and accompanying Proxy Statement.
If no direction is given, this proxy will be voted FOR proposal 1.
-----------
IMPORTANT -- TO BE SIGNED AND DATED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
/ X / Please
mark your
votes as in
this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL 1. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.
FOR WITHHELD
1. Election of all NOMINEES: Craig E. Davies,
nominees / / / / John D. Durbin and
Walter M. Higgins for
three (3) year terms
expiring in 2001.
INSTRUCTIONS: To withhold authority to
vote for any individual nominee, write that
nominee's name in the space provided below.
_________________________________________________
Signature(s)_____________________________________ Date ___________________
Note: Please sign exactly as name appears hereon. Joint owners should each
sign and date. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such.
