<PAGE>
UNITED STATES
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 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
UTILX CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
UTILX/(R)/ CORPORATION
22820 Russell Road
P. O. Box 97009
Kent, Washington 98064-9709
June 25, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
of UTILX Corporation at 10:30 a.m., Pacific Daylight Time, on Friday, July 30,
1999, at the corporate headquarters located at 22820 Russell Road, 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,
/s/ William M. Weisfield
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/(R)/ CORPORATION
22820 Russell Road
P. O. Box 97009
Kent, Washington 98064-9709
____________________________
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
July 30, 1999
____________________________
To the Stockholders:
The 1999 Annual Meeting of Stockholders of UTILX Corporation will be held
at 10:30 a.m., Pacific Daylight Time, on Friday, July 30, 1999, at the corporate
headquarters, 22820 Russell Road, Kent, Washington 98032, for the following
purposes:
I. To elect two (2) directors to hold office until their successors are
elected and qualified (page 2 of enclosed Proxy Statement); and
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, 1999 has been fixed as the record date for the 1999 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, IN ORDER TO ASSURE YOUR REPRESENTATION
YOU ARE REQUESTED TO MARK, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS
PROMPTLY AS POSSIBLE IN THE POSTAGE-PAID ENVELOPE PROVIDED. 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
/s/ Anne G. Cameron
Anne G. Cameron
Corporate Secretary
Kent, Washington
June 25, 1999
The 1999 Annual Report of UTILX Corporation
accompanies this Proxy Statement.
<PAGE>
UTILX/(R)/ 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 1999 Annual Meeting of Stockholders to be held at 10:30 a.m., Pacific
Daylight Time, on Friday, July 30, 1999, at the corporate headquarters, 22820
Russell Road, 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,
1999, will be entitled to vote at the 1999 Annual Meeting of Stockholders. On
June 2, 1999, the Company had 7,431,560 outstanding 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 25, 1999.
Voting
Each share of Common Stock outstanding on the record date of June 2, 1999,
is entitled to one vote at the 1999 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 two 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 "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 six directors who, in
accordance with the Company's By-laws, are divided into three classes. The
provision is designed to ensure that one-third of the Board is eligible for
reelection in any given year. At the 1999 Annual Meeting of Stockholders, two
directors will be elected to serve for a term of three years, expiring in 2002.
The remaining four directors are divided into two classes of two directors each,
respectively, whose terms expire in 2000 and 2001, 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 below. 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:
Stanley J. Bright (age 59) has been a director of the Company since January
1995. Mr. Bright's term as a director expires in 1999. Mr. Bright is Vice
Chairman of the Board and a member of the Executive Committee of MidAmerican
Energy Holdings Company, a utility company, which was formed on March 12, 1999
in the merger of the prior MidAmerican Energy Holdings Company (MidAmerican
Energy) and CalEnergy Company, Inc. Prior to the merger, Mr. Bright served as
Chairman, President and Chief Executive Officer of MidAmerican Energy from June
1, 1997, as President and Chief Executive Officer from July 1, 1996, and as
President, Office of the Chief Executive Officer from July 1, 1995 when
MidAmerican Energy was formed 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 as Vice
President-Finance and Chief Financial Officer from September 1986 to March 1990.
Mr. Bright is also a director of Access Air, Inc., Utech Venture Capital
Corporation, Genesis Health System, St. Ambrose University in Davenport, Iowa,
and the Iowa College Foundation and is a member of the Board of Visitors of the
College of Business Administration of the University of Iowa.
William M. Weisfield (age 57) has been a director of the Company since
January 1995, Chairman of the Board since January 1996 and the Company's
President and Chief Executive Officer since November 1998. Mr. Weisfield's term
as a director expires in 1999. Mr. Weisfield was 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., the Downtown Seattle Association,
and is the President of the Seattle Rotary Club.
The Board of Directors recommends a vote "FOR" the election of the above
nominees for the Board of Directors.
2
<PAGE>
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:
John D. Durbin (age 64) has been a director of the Company since April 1997.
Mr. Durbin's term as a director expires in 2001. 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.
John W. Ellis (age 70) 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.
Walter M. Higgins (age 54) has been a director of the Company since January
1998. Mr. Higgins' term as a director expires in 2001. 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.
Robert E. Runice (age 69) 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.
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 1999.
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 three times during fiscal year 1999.
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 1999.
Fiscal Year 1999 Director Meeting Attendance
During fiscal year 1999, there were ten 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. Until November 1, 1998 when he became a Company employee, Mr.
Weisfield received a pro rata yearly retainer of $35,000 for his services as
Chairman. For extraordinary services beyond those incidental to service on the
Board and its committees, 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.
4
<PAGE>
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, Executive Officers and Directors
The following table sets forth as of June 2, 1999 (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.
5
<PAGE>
<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, 1999 Total Class/1/
- ---------------------------------------------- ------------------- ------------------ ----------------- ----------------
<S> <C> <C> <C> <C>
Trigran Investments, L.P./2/ 601,300 0 601,300 8.09%
155 Pfingsten Road, Suite 360
Deerfield, IL 60015
Dimensional Fund Advisors Inc./3/ 520,500 0 520,500 7.00%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
UVCC Fund I 435,293 0 435,293 5.86%
3 Bethesda Metro Center
Bethesda, MD 20814
Stanley J. Bright 437,293 25,000/4/ 462,293/5/ 6.20%
MidAmerican Holdings Company
106 East 2nd Street
Davenport, IA 50801
John D. Durbin 8,000 21,000/4/ 29,000 **
John W. Ellis 5,000 55,000/4/ 60,000 **
Walter M. Higgins 3,000 14,000/4/ 17,000 **
Robert E. Runice 4,000 50,000/4/ 54,000 **
William M. Weisfield 9,000 30,000 39,000 **
James E. Bartholomew 4,574 44,000/6/ 48,574 **
Craig E. Davies/7/ 160,000 0 160,000 2.15%
Thomas L. Markl/8/ 38,289 0 38,289 **
All directors and executive
officers, as a group (14 persons): 682,347 310,268 992,615 12.82%
</TABLE>
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, 1999, it
is assumed that such options or rights were exercised.
/2/ The voting and dispositive power of 30,000 of these shares is shared
with Castle Creek Partners LLP.
/3/ Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 520,500 shares of
the Company's common stock as of December 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
6
<PAGE>
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 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 30, 1999. See
"Director Compensation."
/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 Company's 1984 Restated Stock Option Plan (the "1984 Plan") and the
Amended and Restated 1994 Option and Restricted Stock Plan (the "1994
Plan").
/7/ Mr. Davies served as the Company's President, Chief Executive Officer
and board member until his resignation effective October 30, 1998.
/8/ Mr. Markl served as the Company's Senior Vice President and Secretary
until his resignation effective November 13, 1998.
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(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 1999 fiscal
year all filing requirements applicable to its officers, directors and greater
than 10% beneficial owners were complied with, other than one late filing
relating to purchase of stock on behalf of Mr. Stanley Bright, a director, and
one late filing relating to the granting of a stock option on behalf of Mr.
William M. Weisfield, a director and officer.
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 $100,000 (the "named executive officers") for
services rendered in fiscal year 1999 and the two prior fiscal years:
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
---------------------------- ---------------------
Name and Securities Underlying All Other
Principal Position Year/1/ Salary ($) Bonus ($) Options Awarded (#) Compensation ($)
- ------------------------------------ -------- -------------- ------------ --------------------- -----------------------
<S> <C> <C> <C> <C> <C>
Craig E. Davies/2/ 1999 $239,035/3/ $ 0 0 $ 6,921/4/
President/Chief 1998 $235,000 $ 0 50,000 $ 5,959/4/
Executive Officer 1997 $205,398 $37,900 57,000 $ 6,988/4/
William M. Weisfield/5/ 1999 $142,754 $ 0 205,000 $ 346/6/
President/Chief
Executive Officer
Thomas L. Markl/7/ 1999 $113,183 $ 0 0 $27,231/8/
Senior Vice President/ 1998 $138,467 $ 0 35,000 $ 4,450/8/
Corporate Secretary 1997 $116,553 $15,000 50,000 $ 3,720/8/
James E. Bartholomew/9/ 1999 $102,091 $ 0 0 $ 4,702/10/
Senior Vice President/
Eastern Region
</TABLE>
/1/ The Company's fiscal year ended March 31 of the year identified.
/2/ Mr. Davies served as the Company's President, Chief Executive Officer
and board member until his resignation effective October 30, 1998.
/3/ Includes severance payments pursuant to the terms of Mr. Davies'
employment agreement.
/4/ Consists of $5,000 for Company matching contributions to qualified
benefit plan ("Company matching contributions") and $1,921 for taxable
life insurance benefits ("insurance benefits") for 1999; $4,910 and
$1,049 respectively for 1998 and $6,124 and $864, respectively for
1997.
/5/ Mr. Weisfield served as a board member for the Company during the
entire 1999 fiscal year, and as an executive officer since November 1,
1998 following Mr. Davies' resignation.
/6/ Consists of $346 for insurance benefits.
/7/ Mr. Markl served as an executive officer of the Company until his
resignation effective November 13, 1998.
/8/ Consists of $24,333 in payment of deferred compensation, $2,423 for
Company matching contributions and $475 for insurance benefits for
1999; $4,154 for Company matching contributions and $296 for insurance
benefits for 1998 and $3,497 and $223, respectively for 1997.
/9/ Mr. Bartholomew became an executive officer of the Company on March 1,
1994. Because his annual compensation received during 1998 and 1997 did
not exceed $100,000, it is not included in the above table.
/10/Consists of $4,594 for Company matching contributions and $108 for
insurance benefits.
8
<PAGE>
The following tables set forth information concerning option grants and
exercises during the Company's 1999 fiscal year to or by the named executive
officers and the value of the options held by such officers as of March 31,
1999:
OPTION GRANTS IN FISCAL YEAR 1999
<TABLE>
<CAPTION>
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 1999 per Share/1/ Date/1/ 5% 10%
- ----------------------- ---------------- ----------------- ---------------- ---------------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Craig E. Davies 0 N/A N/A N/A $ 0 $ 0
William M. Weisfield 200,000/3/ 39.5% $2.000 11/1/08 $251,558 $637,497
5,000/4/ 0.9% $4.375 8/7/08 $ 13,790 $ 34,967
Thomas L. Markl 0 N/A N/A N/A $ 0 $ 0
James E. Bartholomew 0 N/A N/A N/A $ 0 $ 0
</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 under the Company's 1987 Director Plan
have a term of 10 years and one week. See "Director Compensation" for
vesting schedules. The options under the Company's 1994 Plan have a term of
10 years and become exercisable in four 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. 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.
/3/ Options granted under the Company's 1994 Plan.
/4/ Options granted under the Company's 1987 Director Plan.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1999
AND 1999 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised in-the-Money Options at
Options at March 31, 1999/1/ March 31, 1999/2/
------------------------------------------ -------------------------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------- ------------------- --------------------- ------------------------ -----------------------
<S> <C> <C> <C> <C>
Craig E. Davies 0 0 N/A N/A
William M. Weisfield 30,000 200,000 $0 $0
Thomas L. Markl 0 0 N/A N/A
James E. Bartholomew 32,000 35,000 $0 $0
</TABLE>
/1/ Consists of options granted under the Company's 1984 Restated Stock Option
Plan, 1987 Director Plan and 1994 Plan.
/2/ Based on a closing price of $1.5625 per share on March 31, 1999.
9
<PAGE>
Employment Contracts and Termination of Employment and Change of Control
Arrangements
Employment Agreements. The Company has entered into an executive
employment agreement with William M. Weisfield. This agreement establishes a
starting annual base salary and eligibility to participate in Company bonus and
stock plans. The agreement obligates the Company to continue employment and
compensation of Mr. Weisfield until November 1, 2001 unless terminated by Mr.
Weisfield upon 60 days' notice or by the Company upon 30 days' notice. If the
Company terminates Mr. Weisfield's employment during the term of the agreement
for reasons other than "cause" (as defined in the agreement), the Company will
be obligated to pay to Mr. Weisfield an amount equal to four month's salary,
presently $100,000. The Company has also entered into a senior management
employment agreement with Mr. Weisfield with an initial term of two years.
Unless earlier terminated by either the Company or Mr. Weisfield upon 30 days'
notice, on each annual anniversary date, this agreement shall automatically be
renewed for successive two-year terms. This agreement also obligates the Company
to make certain payments to Mr. Weisfield in the event of termination for
reasons other than "cause" or in the event of a "Change of Control" (as defined
in the agreement) up to an amount equal to two times his annual base salary then
in effect, presently $600,000, plus an amount equal to the bonus paid to Mr.
Weisfield for the prior fiscal year.
The executive employment agreement with Mr. Weisfield, effective November
1, 1998, established an initial annual base salary of $300,000. The agreement
required the Company to grant to Mr. Weisfield at the commencement of his
employment, options to purchase 200,000 shares of Common Stock under the 1994
Plan.
Under the terms of Mr. Davies' employment agreement, the Company is
obligated to provide certain benefits and the payment of severance pay equal to
one year's annual base salary, said payments to continue through November 4,
1999.
The Company was not obligated to provide benefits or make payments to Mr.
Markl following his resignation effective November 13, 1998, except for the
payment of amounts due Mr. Markl under the Company's deferred compensation plan,
as set forth in the Summary Compensation Table.
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 the
Company or a Company employee benefit plan) of, in the case of transactions not
approved by a majority of the Incumbent Directors, 15% 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 66-2/3% 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.
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.
10
<PAGE>
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
1999, 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 1999
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, provide
the basis for assessments of base salary and adjustments, several of which were
made during fiscal 1999 to those executive officers receiving a promotion.
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.
11
<PAGE>
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 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. During fiscal year 1999, 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.
During fiscal 1999, the Committee and the Board granted a total of 459,000
stock options to executive officers and senior managers. These options were
scheduled to vest in either four or five years after the grant date.
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. During fiscal 1999, 29 of the Company's
employees received these nonqualified stock options as a result of achieving
their individual objectives.
Compensation of Chief Executive Officer. In November 1998, William
Weisfield was elected President and Chief Executive Officer to replace Mr.
Davies. Mr. Weisfield currently receives an annual base salary of $300,000 and
a performance-based target bonus of up to 100% of his annual base salary.
Pursuant to his employment agreement, the Company granted Mr. Weisfield at the
commencement of his employment, options to purchase 200,000 shares of Common
Stock under the 1994 Plan.
The compensation package for Mr. Weisfield 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. Weisfield's past services
to the Company, his expertise and relevant operational experience as well as his
demonstrated achievement in prior positions.
Under the terms of the April 1994 employment agreement between Mr. Davies
and the Company, an initial annual base salary of $200,000 was established and a
performance-based target bonus of up to 50% of annual base salary. The
Committee considered similar criteria to determine Mr. Davies' compensation as
that used to establish the compensation for Mr. Weisfield.
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
12
<PAGE>
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, 1999 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, 1994 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/
[PERFORMANCE GRAPH APPEARS HERE]
DATA FROM PERFORMANCE GRAPH
Company Market Peer
Date Index Index Index
---------- ------- ------- -------
03/31/1994 100.000 100.000 100.000
03/31/1995 51.111 111.254 98.669
03/29/1996 35.556 151.062 125.957
03/31/1997 77.778 167.833 225.702
03/31/1998 97.778 254.430 389.793
03/31/1999 27.778 342.421 249.993
/1/ Broad market index consisting of all United States companies traded on The
Nasdaq Stock Market during the period indicated.
/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); Cerbco, Inc. (CERB); Devcon International Corporation (DEVC);
Enviroq Corporation (EROQ); Euroweb International Corporation (EWEB); Global
Industries, Ltd. (GLBL); Granite Construction, Inc. (GCCO); Harding
Associates, Inc. (HRDG); Horizon Offshore, Inc. (HOFF); 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); Noxso Corporation (NOXO); and UTILX Corporation (UTLX).
13
<PAGE>
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 selected PricewaterhouseCoopers 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 previously been
auditor of the Company since 1986.
A representative of PricewaterhouseCoopers 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 2000 Annual Meeting of Stockholders on
approximately July 28, 2000. In order for proposals of stockholders to be
considered for inclusion in the Proxy Statement and Proxy for the 2000 Annual
Meeting of Stockholders, such proposals must be received by the Secretary of the
Company no later than February 24, 2000.
1999 ANNUAL REPORT
A copy of the Company's 1999 Annual Report for the year ended March 31,
1999, as filed with the Securities and Exchange Commission is being mailed with
this Proxy Statement to each stockholder of record as of June 2, 1999. Any
stockholder not receiving this report will be provided such report without
charge by submitting a written request addressed to the 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
/s/ Anne G. Cameron
Anne G. Cameron
Corporate Secretary
14
<PAGE>
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS OF
UTILX CORPORATION
1999 Annual Meeting of Stockholders - July 30, 1999
The undersigned hereby appoints William M. Weisfield and Anne G. Cameron, 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 1999 Annual Meeting of Stockholders
to be held at the corporate headquarters located at 22820 Russell Road, Kent,
Washington 98032 on Friday, July 30, 1999, at 10:30 a.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.
<TABLE>
<CAPTION>
<S> <C>
--------------------
IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE SEE REVERSE
SIDE
--------------------
</TABLE>
[X] Please mark
your votes
as in this
example.
<TABLE>
<CAPTION>
The Board of Directors recommends a vote FOR Proposal 1. If no direction is given, this proxy will be voted FOR Proposal 1.
<S> <C> <C> <C> <C>
FOR WITHHELD
1. Election of Nominees: Stanley J. Bright and
all nominees [ ] [ ] William M. Weisfield
for three year terms
expiring in 2002.
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.
</TABLE>
