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
[ x ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO SECTION 240.14A-11(C) OR SECTION
240.14A-12
SURGICAL TECHNOLOGIES, INC.
-------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SURGICAL TECHNOLOGIES, INC.
-------------------------------------------------------
(Name of Person(s) Filling Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SALT LAKE CITY, UTAH 84119
(801) 974-5555
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 15, 1995
TO THE SHAREHOLDERS OF SURGICAL TECHNOLOGIES, INC.
The annual meeting of the shareholders (the "Annual Meeting") of Surgical
Technologies, Inc. (the "Company"), will be held at Little America Hotel, 500
South Main Street, Salt Lake City, Utah 84101, on Friday, September 15, 1995, at
2:00 p.m., local time, for the following purposes:
(1) To elect two directors to each serve for a term of three years
and until their respective successors are elected and qualified:
(2) To approve the appointment of Arthur Andersen LLP as independent
certified public accountants and auditors of the Company for its 1996
fiscal year; and
(3) To transact such other business as may properly come before the
Annual Meeting.
Your board of directors unanimously recommends a vote "FOR" the above
proposals which are described in more detail in the accompanying proxy
statement.
ONLY SHAREHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JULY 24, 1995 (THE
"RECORD DATE"), ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE ANNUAL MEETING.
THE ATTENDANCE AT AND/OR VOTE OF EACH SHAREHOLDER AT THE ANNUAL MEETING IS
IMPORTANT, AND EACH SHAREHOLDER IS ENCOURAGED TO ATTEND.
BY ORDER OF THE BOARD OF DIRECTORS
Jana K. Meyer, Secretary
Salt Lake City, Utah
Dated: August 15, 1995
IMPORTANT
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE FILL IN,
SIGN, DATE, AND RETURN THE ENCLOSED PROXY PROMPTLY IN THE SELF-ADDRESSED,
STAMPED ENVELOPE PROVIDED. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
SPECIAL REQUEST
IF YOUR SHARES ARE HELD IN THE NAME OF A BROKERAGE FIRM, NOMINEE, OR OTHER
INSTITUTION, ONLY IT CAN VOTE YOUR SHARES. PLEASE CONTACT PROMPTLY THE PERSON
RESPONSIBLE FOR YOUR ACCOUNT AND GIVE INSTRUCTIONS FOR YOUR SHARES TO BE VOTED.
<PAGE>
SURGICAL TECHNOLOGIES, INC.
2801 SOUTH DECKER LAKE LANE
SALT LAKE CITY, UTAH 84119
(801) 974-5555
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the board of directors of Surgical Technologies, Inc. (the
"Company"), to be voted at the Annual Meeting of Shareholders to be held at
Little America Hotel, 500 South Main Street,, Salt Lake City, Utah 84101, on
Friday, September 15, 1995, at 2:00 p.m., and at any adjournment thereof.
Proxies properly executed and returned in a timely manner will be voted at the
meeting in accordance with the directions set forth thereon. If no instructions
are indicated, they will be voted:
FOR the election of two directors to each serve for a term of three years
and until their respective successors are elected and qualified;
FOR the approval of the appointment of Arthur Andersen LLP as independent
certified public accountants and auditors of the Company for its 1996 fiscal
year; and
IN accordance with the best judgment of the persons acting under the
proxies on other matters presented for a vote.
Any shareholder submitting a proxy may revoke it at any time before it is
voted either by giving a written notice to the secretary of the Company or by
voting in person at the Annual Meeting of Shareholders. If the Proxy is
returned to the Company without specific direction, the Proxy will be voted in
accordance with the board of directors' recommendations set forth above.
The entire expense of this proxy solicitation will be borne by the Company.
In addition to this solicitation, officers, directors, and regular employees of
the Company, who will receive no extra compensation for such services, may
solicit proxies by mail, by telephone, or in person. This statement and form of
proxy were first mailed to stockholders on or about August 15, 1995.
Only holders of the Company's 4,328,741 shares of common stock, par value
$0.01 per share (the "Common Stock"), outstanding as of the close of business on
July 24, 1995 (the "Record Date"), will be entitled to vote at the meeting.
Each share of Common Stock is entitled to one vote. Holders of at least one-
third of the 4,328,741 shares of the Company's Common Stock outstanding on the
Record Date must be represented at the Annual Meeting to constitute a quorum for
conducting business.
All properly executed and returned proxies as well as shares represented in
person at the meeting will be counted for purposes of determining if a quorum is
present, whether or not the proxies are instructed to abstain from voting or
consist of broker non-votes. Under the Utah Revised Business Corporation Act,
matters, other than the election of directors and certain specified
extraordinary matters, are approved if the number of votes cast for exceed the
number of votes cast against, and abstentions and broker non-votes are not
counted for purposes of determining whether a matter has been approved.
Directors are elected by plurality of the votes cast, without counting
abstentions and broker non-votes.
<PAGE>
PROPOSAL NO. 1: ELECTION OF DIRECTORS
GENERAL
The Company's articles of incorporation provide that the board of directors
shall be divided into three classes, with each class as equal in number as
practicable. One class is elected each year for a three-year term. The board
of directors has nominated Rex Crosland and Donald A. Spring for election as
directors to each serve for a three-year term expiring at the annual meeting for
fiscal year 1998 and until their respective successor shall have been elected
and qualified.
It is intended that votes will be cast, pursuant to authority granted by
the enclosed proxy, for the election of the nominee named below as director of
the Company, except as otherwise specified in the proxy. In the event the
nominee shall be unable to serve, votes will be cast, pursuant to authority
granted by the enclosed proxy, for such person as may be designated by the board
of directors. Biographical information follows for the person nominated and for
each director whose term of office will continue after the Annual Meeting. The
officers of the Company are elected at the annual meeting of the board of
directors to hold office until their respective successors are elected and
qualified. The information concerning the nominee and directors and their
security holdings has been furnished by them to the Company. (See "PRINCIPAL
SHAREHOLDERS" below.)
EXECUTIVE OFFICERS, DIRECTORS, AND NOMINEES
The following table sets forth the name, age, and position of each
executive officer and director of the Company:
<TABLE>
<CAPTION>
Name Age Office
---- --- ------
<S> <C> <C>
Rex Crosland 71 Chief Executive Officer, President,
Chairman
Rockwell D. Schutjer 49 Vice-President-Operations, Treasurer,
Director
Todd B. Crosland 35 Vice-President-Finance, Director
Reed Fogg 57 Director
Donald A. Spring 57 Director
</TABLE>
NOMINEES
The board of directors' nominees for election for a three-year term
expiring at the 1998 annual meeting of the shareholders of the Company are:
Rex Crosland, a co-founder of the Company, has served as chairman, chief
executive officer, and president of the Company since its inception. Mr.
Crosland was also founder and chairman of Mountain States Insulation & Supply
Company and Rocmont Industrial Corporation, two of the Company's subsidiaries
that discontinued operations in early 1992. Mr. Crosland has also been the
chairman and president of R.C. Enterprises, a real estate investment company
since 1975. Mr. Crosland's term of office as a director continues until the
1995 Annual Meeting.
Donald A. Spring was elected a director in September 1992. Dr. Spring is
president and medical director of Sierra Heart Institute at Washoe Medical
Center, Reno, Nevada, and director of the cardiac laboratory at Sparks Family
Hospital, Sparks, Nevada. Dr. Spring's term of office as a director continues
until the 1995 annual meeting.
OTHER DIRECTORS
Reed Fogg became a director of the Company at the 1992 annual meeting held
in August 1992. Dr. Fogg specializes in orthopedics related to the lumbar
spine. For in excess of the past five years he has served as the chairman of
the Department of Orthopedic Surgery at Cottonwood Hospital and Medical Director
of the Intermountain Spine Institute, both in Salt Lake City, Utah. Dr. Fogg
graduated from the University of Utah School of Medicine in 1962. Dr. Fogg's
term of office as a director continues until the 1997 annual meeting.
Rockwell D. Schutjer, a co-founder of the Company, has served as an officer
and director of the Company since its inception. Mr. Schutjer currently serves
as vice-president-operations, director, and treasurer. From 1983 until January
1992, Mr. Schutjer was co-founder and president of Rocmont Industrial
Corporation, a Company subsidiary discontinued in early 1992. Mr. Schutjer
received his B.S. degree in business finance from the University of Utah. Mr.
Schutjer's current term of office as a director continues until the 1996 Annual
Meeting.
Todd B. Crosland, a co-founder of the Company, was executive vice-
president-operations of the Company from inception until December 1989. In
December 1989, Mr. Crosland was appointed to vice-president-finance and in
December 1992, became a director of the Company. From 1984 through 1988 he
owned an auto import dealership, Autobahn Imports, of Salt Lake City, Utah. Mr.
Crosland received a B.A. degree in business finance from the University of Utah.
Mr. Crosland's current term of office as a director continues until the 1996
Annual Meeting.
Rex Crosland is the father of Todd B. Crosland and the father-in-law of
Rockwell D. Schutjer.
BOARD MEETINGS AND COMMITTEES
The board of directors had one formal meeting during the 1995 fiscal year,
at which all of the directors were in attendance. The directors also met
informally on several occasions throughout the year and discussed the business
and affairs of the Company. Additionally, the board of directors took several
actions through unanimous written consent in lieu of a meeting. Directors who
are not employees received $1,000 for each of the meetings they attended, plus
reimbursement of direct expenses incurred in attending the meetings. Directors
who are employees of the Company receive no compensation for services as
directors.
The board of directors has standing audit, compensation, and option
committees.
Members of the audit committee for the 1995 fiscal year were Rockwell D.
Schutjer, Reed Fogg, and Donald A. Spring. These three individuals will
continue to serve as members of the audit committee for the 1996 fiscal year,
provided that Mr. Spring is elected to the board of directors. The audit
committee met once during the fiscal year ended March 31, 1995. The audit
committee is responsible for assuring that, in all material respects, management
shall cause the Company's financial statements to comply with applicable laws
and regulations and to make fair and accurate disclosure of the Company's
financial position and its results of operations. The audit committee meets
with the Company's financial officers and employees and independent public
accountants to review the Company's financial statements and reporting
practices, the system of internal accounting controls, and the scope, results,
and fees associated with services performed by the independent public
accountants.
<PAGE>
Members of the compensation committee for the 1995 fiscal year were Rex
Crosland and Reed Fogg. These two individuals will continue to serve as members
of the compensation committee for the 1996 fiscal year, provided that Mr.
Crosland is elected to the board of directors. The compensation committee met
once during the fiscal year ended March 31, 1995. The compensation committee
recommends to the board of directors compensation of the officers of the Company
and the board of directors and its committees, except the compensation
committee.
The Company also has an option committee which determines the number, if
any, and terms of any options granted by the Company, except to members of such
committee. Members of the option committee for the 1995 fiscal year were Reed
Fogg and Donald A. Spring. These two individuals will continue to serve as
members of the option committee for the 1996 fiscal year, provided Mr. Spring is
elected to the board of directors. The option committee met once during the
fiscal year ended March 31, 1995.
VOTE REQUIRED
Directors are elected by a plurality of the votes cast by a quorum of the
shares entitled to vote and represented in person or by proxy at the Annual
Meeting. There is no provision for cumulative voting.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of forms 3, 4, and 5 and amendments thereto,
furnished to the Company during or respecting its last fiscal year, no director,
officer, beneficial owner of more than 10% of any class of equity securities of
the Company or any other person known to be subject to Section 16 of the
Exchange Act of 1934, as amended, failed to file on a timely basis reports
required by Section 16(a) of the Exchange Act for the last fiscal year or prior
fiscal years, except that one report covering one 1994 transaction was not
timely filed by Rex Crosland, one report covering a sale of 500 shares of common
stock by the spouse of Rockwell D. Schutjer in 1992 was not filed and one report
filed in 1992 by Mr. Schutjer contained a coding error that reported he had sold
1,000 shares of common stock that were actually sold by his spouse.
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
awarded to, earned by, or paid to the chief executive officer of the Company,
Rex Crosland, as of the end of the fiscal year ended March 31, 1995. None of
the Company's other four most highly compensated executive officers as of the
end of the last fiscal year received a total annual salary and bonuses in excess
of $100,000 for all services rendered in all capacities to the Company,
including its subsidiaries.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Securities
Compen-sation Restric Underlying All Other
Year ($) ted Options/ LTIP Compen-
Name and Ended Salary Bonus Stock SARs Payouts sation
Principal Position Mar. 31 ($) ($) Award(s) (#) ($) ($)
($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rex Crosland 1995 $50,000 -- $3,698(1) -- -- -- --
Chief Executive Officer 1994 50,000 -- 3,698(1) -- 50,000 -- --
1993 50,000 -- 3,698(1) -- 55,000 -- --
<FN>
(1) Consists of reimbursement of automobile expenses.
</TABLE>
Effective September 1, 1989, the Company entered into five year employment
agreements with Rex Crosland and other executive officers. The annual
compensation to Mr. Crosland under such agreements, subject to increase at the
discretion of the board of directors, was $100,000. For the 1995, 1994, and
1993 fiscal years, Mr. Crosland's salary was reduced to $50,000. Mr. Crosland's
employment agreement provided for incentive compensation as determined by the
board of directors based on his contributions to the Company and other factors
deemed relevant by the board or compensation committee. The agreement included
a covenant not to compete for one year after termination of employment in
certain limited geographical areas. Mr. Crosland also receives reimbursement
for certain automobile expenses and pays for life insurance and medical benefits
on the same terms as provided to other employees.
Since expiration of the employment agreements on September 1, 1994, Mr.
Crosland and the other executive officers of the Company have continued to be
employees of the Company on a month-to-month basis. Such employment is on the
same terms and conditions as contained in the employment agreements.
During the last completed fiscal year, the Company did not grant options
and stock appreciation rights ("SARs") to the chief executive officer of the
Company.
The following table set forth information respecting the exercise of
options and SARs during the last completed fiscal year by the chief executive
officer of the Company and the fiscal year end values of unexercised options and
SARs.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL
YEAR AND FY-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs at FY End In-the-Money
(#) Options/SARs at FY End
($)
Exercisable/
Unexercisable Exercisable/
Shares Acquired on Unexercisable
Name Exercise (#) Value Realized ($)
<S> <C> <C> <C> <C>
Rex Crosland -- -- 105,000/-- --/--
</TABLE>
1992 DIRECTORS' STOCK OPTION PLAN
In June 1992, the board of directors adopted the 1992 Directors' Stock
Option Plan (the "1992 Directors' Plan"), pursuant to which stock options are
automatically awarded to those directors who are not officers or employees of
the Company (the "Outside Directors"). It is anticipated there will be two or
three outside directors eligible each year under the 1992 Directors' Plan.
Under the terms of the 1992 Directors' Plan, starting at the 1992 annual meeting
of shareholders, each Outside Director who is elected for the first time to the
board of directors receives options to purchase 10,000 shares of Common Stock.
Thereafter, options to purchase 5,000 shares of Common Stock will be issued to
each Outside Director every fiscal year 10 days after the year end results of
operations are released to the public. Under this plan, on August 10, 1993, the
Company issued options to purchase at $4.25 per share a total of 10,000 shares
to the Company's two Outside Directors. All options have an exercise price
equivalent to the market price of the Common Stock at the time of grant. The
1992 Directors' Plan will terminate in 1997 after options, if any, are issued
after the release of operating results for the fiscal year ended March 31, 1997.
The 1992 Directors' Plan was adopted to increase participation by the directors
in the equity ownership of the Company and to aid the Company in recruiting and
retaining directors who will continue to use their best efforts to promote the
success of the Company's business.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 1993, the Company's president, Rex Crosland, purchased an
approximately 43,000 square foot office, manufacturing, research, and warehouse
facility, including certain office and manufacturing equipment, located at 2801
South Decker Lake Lane, Salt Lake City, Utah, from an unrelated seller at a
purchase price of $2,200,000. The Company subsequently leased the property from
Mr. Crosland and incurred total rental expenses during the fiscal year ended
March 31, 1994, of approximately $25,500. In February 1994, the Company
purchased the facilities and related machinery and equipment from Mr. Crosland
in consideration of a $1,570,600 promissory note and $1,076,000 paid by issuing
400,000 shares of its restricted common stock. The 400,000 shares were valued
at $2.69 per share, an approximate 14% discount from the market price of $3.124
on the date the transaction was approved by the board of directors. This
discount was based on the restricted status of the securities and the fact that
such a large block of thinly traded stock could not be readily sold. The
promissory note was issued bearing interest at 7.25% per annum with monthly
payments through July 1, 1994. At the time of completing the purchase of the
facility, the Company also purchased certain office equipment from Mr. Crosland
for $71,600, the approximate fair market value of such items as of the date of
purchase.
On April 22, 1994, the Company refinanced its $1,576,000 note to Mr.
Crosland by issuing a long-term note payable in the amount of $1,000,000 to an
insurance company and a short-term note payable in the amount of $570,600 to a
bank. The long-term $1,000,000 note payable bears interest at 8.5% with monthly
principal and interest payments of $8,521 through May 1, 1999, at which time the
remaining balance is due, and is secured by the property and building. The
$570,600 note payable was paid in full by the Company in August 1994 from
proceeds from the sale of common stock and the refinancing of the Company's
revolving line of credit.
Effective March 31, 1995, the Company sold the facilities and related
machinery and equipment, excluding 5.3 acres of contiguous unimproved property
(see below), to an unrelated purchaser for $2,100,000 paid by issuing to the
Company a promissory note in the amount of $981,375.32 on the same terms as the
Company's long-term note payable, and paying the remaining purchase price in
cash to the Company in April 1995. The Company rents a portion of the
facilities for its offices and operations for monthly payments of $8,521.
On May 8, 1995, the Company sold approximately 5.3 acres of contiguous
unimproved property previously purchased from Mr. Crosland, but excluded in the
sale referred to in the preceding paragraph, for $397,350 in cash.
The foregoing transactions with Mr. Crosland were not the result of arm's
length negotiations, but in the opinion of management, are on terms as favorable
to the Company as could be obtained in arm's length transactions.
<PAGE>
PRINCIPAL SHAREHOLDERS
The table below sets forth information as to each person owning of record
or who was known by the Company to own beneficially more than 5% of the
4,328,741 shares of issued and outstanding Common Stock of the Company as of
July 24, 1995, and information as to the ownership of the Company's Common Stock
by each of its directors and executive officers and by the directors and
executive officers as a group. Except as otherwise indicated, all shares are
owned directly, and the persons named in the table have sole voting and
investment power with respect to shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS NATURE OF NUMBER OF
OF BENEFICIAL OWNERS OWNERSHIP SHARES OWNED PERCENT
<S> <C> <C> <C>
PRINCIPAL SHAREHOLDER
Rex Crosland(1) Common Stock 1,300,003 30.0%
2801 South Decker Lake Options 105,000 2.4%
-----------
Lane
Salt Lake City, Utah 84119 Total 1,405,003 31.7%
DIRECTORS
Rex Crosland - - - - - - - - - - - - - - - See Above - - -
- - - - - - - - - - -
Rockwell D. Schutjer(1)(2) Common Stock 93,724 2.2%
Options 70,000 1.6%
-----------
Total 163,724 3.7%
Todd B. Crosland(1) Common Stock(3) 123,439 2.9%
Options 55,000 1.3%
-----------
Total 178,439 4.1%
Reed Fogg Options(4) 20,000 0.5%
Donald A. Spring Options(4) 20,000 0.5%
ALL EXECUTIVE OFFICERS AND Common Stock 1,517,166 35.1%
DIRECTORS AS A GROUP (5 Options 270,000 5.9%
PERSONS) -----------
Total 38.9%
1,787,166
<FN>
(1)Todd B. Crosland is the adult son and Rockwell D. Schutjer is the son-
in-law of Rex Crosland. Rex Crosland disclaims any beneficial ownership in
the shares held by such persons.
(2)Includes shares held in the name of spouse of which the person is
deemed a beneficial owner.
(3)Includes shares held by TBC Limited, a family partnership of which
Todd B. Crosland is the general partner.
(4)See "EXECUTIVE COMPENSATION: 1992 Directors' Stock Option Plan."
</TABLE>
<PAGE>
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Company's auditors for the 1995 fiscal year were Arthur Andersen LLP,
certified public accountants. The Company has engaged Arthur Andersen LLP as
its auditors for its current fiscal year and is presenting this selection to the
shareholders for ratification. While ratification by the shareholders of this
appointment is not required by law or the Company's certificate of incorporation
or bylaws, the Company believes such ratification is desirable. If the
appointment is not approved by the shareholders, the board of directors will,
upon consultation with the audit committee, select other independent
accountants. If Arthur Andersen LLP declines to act, becomes incapable of
acting, or if its engagement is otherwise terminated by the audit committee
(none of which events are currently anticipated), the board of directors will
appoint other auditors for the current fiscal year. It is anticipated that
representatives of Arthur Andersen LLP will be present at the Annual Meeting to
respond to questions from the shareholders in attendance and to make a statement
to the shareholders if they so desire.
The board of directors recommends a vote "FOR" the proposal to ratify the
appointment of Arthur Andersen LLP as the Company's independent certified
accountants and auditors for fiscal year 1996. Ratification will occur if more
shareholders vote in favor of the proposal than against.
On March 9, 1994, the Company selected Arthur Andersen LLP to audit and
report on the Company's financial statements for the year ended March 31, 1994,
and dismissed Grant Thornton LLP as the Company's previous auditor.
The audit committee and the board of directors approved the change of
auditors.
The report of Grant Thornton LLP on the Company's financial statements,
consisting of consolidated balance sheets as of March 31, 1993, and 1992, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the three years in the period ended March 31, 1993, did
not contain an adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles.
During the Company's two fiscal years and the subsequent interim period
preceding the dismissal of Grant Thornton LLP, there were no disagreements with
Grant Thornton LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope of procedure, which
disagreement, if not resolved to the satisfaction of Grant Thornton LLP, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report.
<PAGE>
During the two fiscal years and the subsequent interim period preceding
Grant Thornton LLP's dismissal, the Company was not advised by Grant Thornton
LLP that internal controls necessary for the Company to develop reliable
financial statements did not exist nor that information came to its attention
that led it to no longer be able to rely on management's representations or that
made it unwilling to be associated with the financial statements prepared by
management. The Company has not been advised by Grant Thornton LLP of the need
to expand significantly the scope of the Company's audit, nor has the Company
been advised that during the two fiscal years and the subsequent interim period
preceding its dismissal, information has come to the attention of Grant Thornton
LLP that on further investigation may (i) materially impact the fairness or
reliability of either a previously issued audit report or the underlying
financial statements or financial statements issued covering the fiscal period
immediately subsequent to March 31, 1993, or (ii) cause Grant Thornton LLP to be
unwilling to rely on management's representations or be associated with the
Company's financial statements. The Company has not been advised by Grant
Thornton LLP that information has come to its attention that it concluded
materially impacts the fairness or reliability of either (i) a previously issued
audit report or the underlying financial statements or (ii) the financial
statements issued covering the fiscal period immediately subsequent to March 31,
1993, and, due to the dismissal of Grant Thornton LLP, such issue was not
resolved to its satisfaction prior to its dismissal.
No consultations occurred between the Company and Arthur Andersen LLP
during the two fiscal years and the subsequent interim period prior to Arthur
Andersen LLP's appointment regarding the application of accounting principles to
a specific completed or contemplated transaction, the type of audit opinion, or
other information considered by the Company in reaching a decision as to an
accounting, auditing, or financial reporting issue.
<PAGE>
SHAREHOLDER PROPOSALS
No proposals have been submitted by shareholders of the Company for
consideration at the Annual Meeting. It is anticipated that the next annual
meeting of shareholders will be held during August 1996. Shareholders may
present proposals for inclusion in the proxy statement to be mailed in
connection with the 1996 annual meeting of shareholders of the Company, provided
such proposals are received by the Company no later than April 15, 1996, and are
otherwise in compliance with applicable laws and regulations and the governing
provisions of the certificate of incorporation and bylaws of the Company.
OTHER MATTERS
Management does not know of any business other than that referred to in the
Notice which may be considered at the Annual Meeting. If any other matters
should properly come before the Annual Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote the proxies held by them
in accordance with their best judgment.
In order to assure the presence of the necessary quorum and to vote on the
matters to come before the Annual Meeting, please indicate your choices on the
enclosed proxy and date, sign, and return it promptly in the envelope provided.
No postage is required if mailed in the United States. The signing of a proxy
by no means prevents your attending the Annual Meeting.
By order of the Board of Directors,
SURGICAL TECHNOLOGIES, INC.
/s/ Jana K. Meyer
Jana K. Meyer, Secretary
Salt Lake City, Utah
August 15, 1995
