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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A NO. 1
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended February 23, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to ________________
COMMISSION FILE NUMBER 0-10558
ALPHA MICROSYSTEMS
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3108178
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2722 SO. FAIRVIEW STREET, SANTA ANA, CA 92704
(address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 957-8500
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing sale price of its common stock on May 19, 1997
on the NASDAQ National Market, a date within 60 days prior to the date of
filing, was $17,247,398.
As of May 19, 1997, there were 10,821,897 shares of the registrant's common
stock outstanding.
The purpose of this amendment is to amend Items 10, 11, 12 and 13 to read as
set forth herein.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the executive
officers and directors of the Company as of June 16, 1997:
Name Age Position
- ---- --- --------
Clarke E. Reynolds 76 Chairman of the Board of Directors
Douglas J. Tullio 54 President, Chief Executive Officer
and Director
James A. Sorensen 56 Vice President and Chief Financial
Officer
John F. Glade 54 Vice President, Engineering and
Manufacturing, Secretary and Director
Dennis E. Michael 39 Vice President of Marketing
Randall S. Parks 36 Vice President of Services
Rockell N. Hankin 50 Director
Richard E. Mahmarian 60 Director
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CLARKE E. REYNOLDS, 76, has served as Chairman of the Board of Directors of the
Company since May, 1991 and has been a director of the Company since 1989. Mr.
Reynolds served as Chief Executive Officer of the Company from January 1991 to
August 1991, as President from November 1990 to May 1991, as Vice Chairman of
the Board from October 1990 to May 1991, and as Chief Operating Officer of the
Company from November 1990 to May 1991. Mr. Reynolds provided independent
consulting services to the Company from 1984 through 1990, was an employee of
the Company from November 1990 through May 1993, and presently provides
independent consulting services to the Company. Mr. Reynolds was previously
employed by NCR Corporation for over 47 years, during which time Mr. Reynolds
held a variety of sales and marketing and general management positions including
Vice President Pacific Region, Managing Director and Chairman of the Board NCR
United Kingdom, Vice President NCR Europe and Vice President Executive Office.
Mr. Reynolds serves as a Director of Sparta, Inc., which provides a wide range
of scientific, engineering and technical assistance services, primarily for the
U.S. military services and the Department of Defense.
DOUGLAS J. TULLIO, 54, has served as President, Chief Executive Officer and a
Director of the Company since 1991. Mr. Tullio also served as Chief Operating
Officer from May 1991 to March 1994. Mr. Tullio joined the Company in January
1990 and served as Executive Vice President of the Company and President of the
Company's subsidiaries, Rexon Business Machines and AMS Computers. (In April
1990, these subsidiaries were merged into the Company.) From 1984 to 1989, he
worked for General Automation, Inc., in the positions of President and member of
the Board of Directors, Executive Vice President, Vice President, General
Manager and Vice President of Sales and Marketing.
JAMES A. SORENSEN, 56, has served as Vice President and Chief Financial Officer
of the Company since November 1996. Prior to joining the Company, Mr. Sorensen
was a financial consultant. From 1993 to 1995, he was the Chief Financial
Officer for Interfilm, a public company in the entertainment and computer
industry. From 1986 to 1993, he was the Chief Financial Officer for Showscan
Corporation, and from 1976 to 1985, was the Chief Financial Officer of Plitt
Theaters, a national theater chain. Prior to 1976 he held various accounting and
financial positions, including several years with Ernst & Young.
JOHN F. GLADE, 54, was appointed a Director in May 1996 and has served as
Secretary of the Company since January 1987 and Vice President, Engineering and
Manufacturing since May 1988. Mr. Glade joined the Company as Director of
Engineering in September 1978, served as Vice President, Engineering from
February 1979 until June 1985 and served as Vice President, Advanced Products
Development from June 1985 until May 1988. He also served as Secretary of the
Company from February 1983 to August 1985 and a Director of the Company from
1979 through 1994.
DENNIS E. MICHAEL, 39, was named Vice President of Marketing in May 1996 and
previously held the position of Director of Marketing for the Company. He served
in various marketing management capacities at the Company between 1983 and 1990
and with AST from 1990 to 1995.
RANDALL S. PARKS, 36, has served as Vice President of Services for the Company
since 1995. Prior to his position as Vice President of Services, Mr. Parks
served as Director of Service Operations, Eastern Regional Manager and Branch
Field Engineering Manager for the Company. His previous experience was as field
service engineer with several companies, including Uni Dynamics, Mettler
Instruments and Consultant Field Engineering.
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Rockell N. Hankin, 50, who has served as a Director of the Company since 1987,
is a senior partner of Hankin & Co., which was established in June 1986 and
provides consulting services. Mr. Hankin is also a Director of Semtech
Corporation (NMS), which manufactures electronic components, Chairman of the
Board of House of Fabrics, a national retail chain which markets sewing
supplies and crafts, a Director of Quidel (NMS), which manufactures and
distributes rapid diagnostic tests for medical applications, and a Director of
Sparta, Inc., which provides a wide range of scientific, engineering and
technical assistance services, primarily for the U.S. military services and the
Department of Defense.
Richard E. Mahmarian, 60, who has served as a Director of the Company since
1995, became in 1997 and is currently Chairman of the Board, President, and
Chief Executive Officer of Verification Systems International, Incorporated,
which designs, engineers and manufactures bar code and two-dimensional
symbology quality assurance instruments. Prior to its sale in 1996, Mr.
Mahmarian was Vice Chairman of the Board and Executive Vice President of RJS,
Inc., a manufacturer of bar code printers, verification scanners, software, and
consumable products. Mr. Mahmarian had been a principal of RJS, Inc. since
1987, when it was purchased in a leveraged buyout. Prior to joining RJS, Inc.,
he held various management positions for Manx Engineering Corporation, Bell &
Howell Company, Northrop Corporation and NCR Corporation.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
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Section 16(a) of the Securities Exchange Act of 1934, as amended
("Section 16(a)"), requires the Company's directors and executive officers, and
persons who own more than ten percent of the Company's common stock, to file
with the Securities and Exchange Commission and the National Association of
Securities Dealers, Inc. initial reports of ownership and reports of changes in
ownership of Common Stock. Officers, directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended February 23, 1997 all such
reports required pursuant to Section 16(a) by the Company's officers, directors
and greater than ten-percent beneficial owners were timely filed, other than
reports on Form 5 required to reflect director fees paid pursuant to the
Company's 1996 Nonemployee Director Stock Compensation Plan and automatic
stock grants to directors pursuant to the Company's 1993 Director Stock Option
Plan.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth for each of the Company's executive officers
earning in excess of $100,000 during the fiscal year ended February 23, 1997,
compensation allocated or paid on or before July 1, 1997, for services in all
capacities with the Company and its subsidiaries during the fiscal year ended
February 23, 1997.
LONG TERM
COMPENSATION AWARDS
----------------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
-------------------------------------- RESTRICTED OPTIONS/
NAME AND OTHER ANNUAL STOCK AWARD(S) SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($)(1) (#)(2) COMPENSATION(3)
- ------------------------ ---- --------- -------- --------------- --------------- ---------- ---------------
Douglas J. Tullio....... 1997 225,004 90,000 * -- 180,000 --
President and CEO 1996 217,713 28,894 * -- 15,000 --
1995 206,400 28,359(4) * 5,859 514
John F. Glade........... 1997 120,016 12,500 * -- 20,000 --
Vice President, 1996 131,211 7,500 * -- 7,500 --
Engineering and 1995 133,262 17,430(4) * 2,930 -- 365
Manufacturing, and
Secretary
Philip D. Smith(5)...... 1997 110,000 -- * -- -- --
President, 1996 131,993(6) -- * -- 40,000 --
Alpha Health Care 1995 114,821 -- * -- -- 321
Michael J. Lowell(5).... 1997 106,698 -- * -- -- --
Vice President, Chief 1996 114,014 16,686 * -- 40,000 --
Financial Officer 1995 -- -- * -- -- --
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* Aggregate amount does not exceed 10% of the total of annual salary and bonus
reported for the named executive officer.
(1) The number of aggregate restricted unvested stock holdings outstanding as of
February 23, 1997 was 5,625 and the aggregate value of such restricted stock
was $11,953. Stock awards to Mr. Tullio and Mr. Glade as additional
compensation for fiscal 1995 vested 50% on May 5, 1996, and 50% vesting on
May 5, 1997. Although the Company has not paid and does not anticipate
paying dividends, any dividends paid would accrue to the benefit of the
grantees.
(2) All options were granted under the 1993 Alpha Microsystems Employee Stock
Option Plan.
(3) Consists solely of Company contributions to the Employee Profit Sharing and
Savings Plan.
(4) Includes awards of stock valued at the following amounts as of the date of
the award: for fiscal 1995: Tullio: $5,859, and Glade: $2,930.
(5) Mr. Smith resigned as President of AlphaHealthCare, the Company's subsidiary
(the assets of which were sold in fiscal 1997), effective August 30, 1996.
Mr. Lowell resigned as Vice President, Chief Financial Officer, effective
November 15, 1996.
(6) Includes commissions of $3,039 paid to Mr. Smith.
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STOCK OPTION GRANTS
The following table provides information on stock options granted under the
1993 Alpha Microsystems Employee Stock Option Plan to the executive officers
named in the Summary Compensation Table.
OPTION/SAR GRANTS IN LAST FISCAL YEAR (1)
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
PERCENT OF INDIVIDUAL GRANTS ANNUAL RATES OF
NUMBER OF TOTAL ---------------------- STOCK
SECURITIES OPTIONS/SARS MARKET PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF PRICE ON FOR OPTION TERM
OPTIONS/SARS EMPLOYEES IN BASE PRICE DATE OF EXPIRATION -------------------
NAME GRANTED (#) FISCAL YEAR ($/SH) GRANT DATE 5% ($) 10% ($)
- --------------------------- ------------ ------------ ----------- -------- ---------- -------- --------
Douglas J. Tullio.......... 180,000 29% $3.00 $ 3.00 6/16/2001 149,192 $329,675
President and CEO
John F. Glade.............. 20,000 3% $3.00 $ 3.00 6/16/2001 16,577 $ 36,631
Philip D. Smith............ -- -- -- -- -- -- --
Michael J. Lowell(2)....... 125,000 20% $3.00 $ 3.00 6/16/2001 103,606 $228,941
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(1) All options were granted under the 1993 Alpha Microsystems Employee Stock
Option Plan. Options granted to Mr. Tullio and Mr. Glade become exercisable
as follows: 25% on August 13, 1996, 25% on June 16, 1997, 25% on June 16,
1998 and 25% on June 16, 1999. In the event that the employment of optionee
shall be terminated, otherwise than by reason of death or permanent
disability or misconduct, the option and all rights terminate on the 30th
day after termination of employment.
(2) Options granted to Mr. Lowell (which were not exercised and expired in
fiscal 1997 as a result of his resignation) became exercisable as follows:
25% on August 13, 1996, 25% on June 16, 1997, 25% on June 16, 1998, and 25%
on June 16, 1999.
FISCAL YEAR-END VALUES OF OUTSTANDING STOCK OPTIONS
The following table provides information with respect to the executive
officers named in the Summary Compensation Table concerning unexercised stock
options held as of the end of the Company's 1997 fiscal year.
FISCAL YEAR-END OPTION/VALUES
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FY-END (#) AT FY-END ($)
EXERCISE REALIZED --------------------------- ---------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ----------- ------- ----------- ------------- ----------- -------------
Douglas J. Tullio............. -- -- 348,189 138,750 121,702 5,039
John F. Glade................. -- -- 20,625 16,875 9,409 2,520
Philip D. Smith............... 10,000 $10,625 -- -- -- --
Michael J. Lowell............. 10,000 -- -- -- -- --
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for acting as a member of the Board of Directors or any committee
thereof. Outside directors receive a monthly retainer of $2,000, and a fee of
$1,000 for each Board meeting and committee meeting (excluding telephonic
meetings) attended in excess of 12 each year, with all Board and committee
meetings held in a single day to be deemed as one meeting. In addition,
directors are reimbursed for their reasonable travel expenses incurred for
attendance at such meetings. Under the 1996 Nonemployee Director Stock
Compensation Plan, directors may accept directors' fees in stock in lieu of
cash. In accordance with the terms of the 1996 Nonemployee Director
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Stock Compensation Plan, the number of shares of Common Stock received by the
nonemployee directors is based upon the fair market value of a share of Common
Stock at the date on which the cash compensation was otherwise payable to the
nonemployee director. Each of the Company's outside directors elected to receive
his director fees in fiscal year 1997 in the form of Company stock.
In June 1993, the Company entered into a Consulting Agreement with Mr.
Reynolds whereby Mr. Reynolds agrees to provide consulting services to the
Company. Under the agreement, the Company pays to Mr. Reynolds a retainer of
$2,000 per month. The agreement may be terminated by either party upon 30 days'
written notice.
EMPLOYMENT AGREEMENTS AND GUARANTEED SEVERANCE PAYMENTS
The Company has entered into employment agreements with Messrs. Tullio and
Glade. The agreements establish each employee's base salary and entitle each
employee to receive benefits, vacation and sick leave in accordance with the
Company's policies. The agreements are not for any specified term as either
party may terminate the employment relationship at any time in accordance with
the terms of the agreements. The agreements also contain provisions concerning
the non-disclosure by the employee of Company proprietary information and the
ownership of inventions conceived or made by the employee during the period of
employment with the Company. Pursuant to such employment agreements, under
certain circumstances, if an officer is terminated, voluntarily or
involuntarily, as a result of a "change in control" of the Company during the
term of his employment, the officer shall be entitled to monthly severance
payments for a period ranging under the individual agreements from 90 days to as
much as eighteen (18) months (the "Severance Period") following the effective
date of such termination. The term "change in control" means any of the
following: (a) merger or consolidation of the Company; (b) sale of all or
substantially all of the assets of the Company; (c) sale of more than 50% of the
outstanding common stock of the Company by any person or persons; or (d) change
of identity of at least a majority of the Board of Directors within a
twelve-month period. The severance payments are based upon the average total
compensation paid to such officer during the previous fiscal year (excluding any
non-cash compensation). The severance payments shall be reduced by any
compensation, fees or remuneration received by such officer during the Severance
Period. The Company is also obligated to continue to provide medical and dental
benefits to the officer during the Severance Period. Additionally, any rights
the officer may have in connection with Company's stock options and stock awards
and the Company's profit sharing plan shall continue uninterrupted during the
Severance Period, to the extent permitted by applicable tax law, other laws and
the Company plans. The severance payments to the executive officers are
required, under certain circumstances, to be placed in a trust to ensure
payment.
In addition to the foregoing, Mr. Tullio is entitled to receive severance
payments and a continuation of employee benefits following termination if
termination is for any reason other than for causes arising out of breach of
Company policy or illegal acts. Such severance payments and benefits are for up
to six (6) months for Mr. Tullio.
The Company has also entered into an agreement with James A. Sorensen, its
Vice President and Chief Financial Officer, pursuant to which Mr. Sorensen is
entitled to receive six (6) months termination pay at his base rate of pay in
effect at the time of termination if his employment is terminated by the Company
for any reason other than misconduct, fraud, or other unlawful acts.
INDEMNIFICATION AGREEMENTS
The Company has entered into indemnification agreements with its directors
and certain key officers which provide such individuals with contractual
indemnification rights. Such indemnification agreements apply retroactively as
well as prospectively to any actions taken by the indemnified parties while
serving as officers or directors of the Company. Such indemnification agreements
also provide that the Company shall indemnify such persons to the fullest extent
permitted by law, notwithstanding that such indemnification is not specifically
authorized by the indemnification agreement, the Company's Articles of
Incorporation, the Company's Bylaws or by statute.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee for fiscal 1997 was composed of
Messrs. Hankin, Mahmarian and Reynolds. Mr. Reynolds is Chairman of the Board
and has served the Company in the past in numerous executive positions,
including Chief Executive Officer.
ITEM 12. SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table contains certain information as of June 15, 1997 as to
each director, each individual included in the Summary Compensation Table, all
officers and directors as a group and each person who, to the knowledge of the
Company, was the beneficial owner of 5% or more of the outstanding shares of
Common Stock. Persons named in the following table have sole voting and
investment powers with respect to all shares shown as beneficially owned by
them, subject to community property laws where applicable, and other information
contained in the footnotes to the table. Information with respect to beneficial
ownership is based on the Company's Common Stock records and data supplied to
the Company by its shareholders.
NUMBER OF SHARES PERCENT OF
NAME OR IDENTITY OF GROUP BENEFICIALLY OWNED(1) CLASS
------------------------------------------------- ---------------------- ----------
John F. Glade.................................... 216,200(2) 2.0
Rockell N. Hankin................................ 39,572 *
Richard E. Mahmarian............................. 34,197 *
Clarke E. Reynolds............................... 51,572 *
Douglas J. Tullio................................ 441,939 3.9
All directors and officers as a group (8
persons)....................................... 805,980 7.1
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* Does not exceed 1% of the outstanding shares of Common Stock of the Company.
(1) Includes shares issuable upon exercise of options and warrants which are
presently exercisable or will become exercisable on or before August 15,
1997, in the following amounts: Glade: 27,500; Hankin: 13,125; Mahmarian:
8,750; Reynolds: 13,125; Tullio: 396,939; and by all officers and directors
as a group: 481,939.
(2) Includes 156,200 shares held in a revocable trust of which Mr. Glade and his
wife, Alana L. Glade, are sole trustees. Mr. and Mrs. Glade, acting jointly,
have the power to vote and dispose of such shares.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: June 20, 1997 ALPHA MICROSYSTEMS
By: /s/ DOUGLAS J. TULLIO
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Douglas J. Tullio
President, Chief Executive Officer
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