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Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K/A 2
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999 Commission File Number 1-5620
SAFEGUARD SCIENTIFICS, INC.
(Exact name of Registrant as specified in its charter)
PENNSYLVANIA 23-1609753
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
800 THE SAFEGUARD BUILDING
435 DEVON PARK DRIVE, WAYNE, PA 19087
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 293-0600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of Each Class on which registered
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COMMON STOCK ($.10 PAR VALUE) NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: NONE
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.
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Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of common stock held by non-affiliates (based on the
closing price on the New York Stock Exchange) on March 17, 2000 was
approximately $9.3 billion. For purposes of determining this amount only,
Registrant has defined affiliates as including (a) the executive officers named
in Part III of this 10-K report, (b) all directors of Registrant, and (c) each
stockholder that has informed Registrant by March 17, 2000 that it is the
beneficial owner of 10% or more of the outstanding common stock of Registrant.
The number of shares outstanding of the Registrant's Common Stock, as of March
17, 2000 was 107,329,089, taking into account a 3-for-1 split of our Common
Stock effective March 20, 2000. Unless otherwise specifically stated, the
information in this report reflects this 3-for-1 split.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) THE FOLLOWING FINANCIAL STATEMENTS AND SCHEDULES ARE FILED AS PART OF THIS
REPORT:
Consolidated Financial Statements
Balance Sheets - December 31, 1999 and 1998
Operations - years ended December 31, 1999, 1998, and 1997
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Shareholders' Equity - years ended December 31, 1999, 1998, and 1997
Comprehensive Income - years ended December 31, 1999, 1998, and 1997
Cash Flows - years ended December 31, 1999, 1998, and 1997
Notes to Consolidated Financial Statements
Independent Auditors' Report
Statement of Management's Financial Responsibility
Financial Statement Schedules
Independent Auditors' Report
Schedule I - Condensed Consolidated Financial Information of
Registrant
Schedule II - Valuation and Qualifying Accounts
The exhibits required to be filed as part of this Report are listed in the
exhibit index below.
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EXHIBITS
The following is a list of exhibits required by Item 601 of Regulation S-K
filed as part of this Report. Where so indicated by footnote, exhibits which
were previously filed are incorporated by reference. For exhibits incorporated
by reference, the location of the exhibit in the previous filing is indicated
in parentheses.
EXHIBIT NO. EXHIBIT
2.1 Asset Purchase Agreement, dated as of May 10, 1999 by and between CompuCom Systems, Inc. and Entex
Information Services, Inc.(15) (Exhibit 2.1)
3.1 Amended and Restated Articles of Incorporation of Safeguard(7) (Exhibit 3.1)
3.2 By-laws of Safeguard, as amended(19) (Exhibit 3)
4.1** 1990 Stock Option Plan, as amended(7) (Exhibit 4.3)
4.2** Stock Option Plan for Non-Employee Directors(4) (Exhibit 4.8)
4.3** Safeguard Scientifics, Inc. Amended and Restated Stock Savings Plan(5) (Exhibit 4.9)
4.4** First Amendment to Safeguard Scientifics, Inc. Stock Savings Plan(7) (Exhibit 4.6)
4.5** Safeguard Scientifics, Inc. Stock Savings Plan Trust Agreement(2) (Exhibit 4.2)
4.6 Safeguard Scientifics, Inc. 1999 Equity Compensation Plan(16) (Exhibit 4.1)
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4.7 Indenture, dated as of June 9, 1999, between Safeguard Scientifics, Inc. and Chase Manhattan Trust
Company, National Association, as trustee, including the form of 5.0% Convertible Subordinated Note due
2006(17) (Exhibit 4.2)
4.8 Purchase Agreement of Safeguard Scientifics, Inc. to issue and sell to Credit Suisse First Boston
Corporation Convertible Subordinated Notes due June 15, 2006. (Exhibits omitted)(16) (Exhibit 4.3)
4.9 Registration Rights Agreement between Safeguard Scientifics, Inc. and Credit Suisse First Boston Corporation(17)
(Exhibit 4.4)
4.10 Rights Agreement dated as of March 1, 2000 between Safeguard Scientifics, Inc. and ChaseMellon Shareholder
Services LLC, as Rights Agent(19) (Exhibit 4)
4.11 Designation of Series A Junior Participating Preferred Shares(20) (Exhibit 4.11)
10.1** Safeguard Scientifics Money Purchase Pension Plan(3) (Exhibit 10.3)
10.2** First Amendment to Safeguard Scientifics Money Purchase Pension Plan(4) (Exhibit 10.2)
10.3** Second Amendment to Safeguard Scientifics Money Purchase Pension Plan(5) (Exhibit 10.3)
10.4** Third Amendment to Safeguard Scientifics Money Purchase Pension Plan(6) (Exhibit 10.4)
10.5** Safeguard Scientifics Money Purchase Pension Plan Trust Agreement(3) (Exhibit 10.4)
10.6** Safeguard Scientifics, Inc. Long Term Incentive Plan, as amended and restated effective June 15, 1994(5)
(Exhibit 10.6)
10.7** Safeguard Scientifics, Inc. Deferred Compensation Plan(1) (Exhibit 10.12)
10.8 Asset Acquisition Agreement dated April 15, 1997 for the sale of certain assets of Premier Solutions
Ltd. to a subsidiary of Sungard Data Systems Inc. (exhibits omitted)(8) (Exhibit 10.1)
10.9 Stock Exchange Agreement dated as of February 26, 1999 among Safeguard Scientifics, Inc., aligne
incorporated, and the shareholders of aligne incorporated (exhibits and schedules omitted)(13) (Exhibit
10.12)
10.10 Transaction Agreement dated February 28, 2000 between Safeguard Scientifics, Inc. and Textron Inc. (19)
(Exhibit 10)
10.11 Amended and Restated Credit Agreement, dated April 17, 1998, among Safeguard Scientifics, Inc., Safeguard
Scientifics (Delaware), Inc., Safeguard Delaware, Inc. and PNC Bank, N.A. (exhibits omitted)(10) (Exhibit
10.1)
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10.12 Amendment dated April 12, 1999 to Amended and Restated Credit Agreement among Safeguard Scientifics,
Inc., Safeguard Scientifics (Delaware), Inc., Safeguard Delaware, Inc. and PNC Bank, N.A. (Exhibits
omitted)(14) (Exhibit 10.1)
10.13 Amendment dated March 29, 1999 to Amended and Restated Credit Agreement(21) (Exhibit 10.13)
10.14 Amendment dated August , 1999 to Amended and Restated Credit Agreement(21) (Exhibit 10.14)
10.15 Amendment dated February 17, 2000 to Amended and Restated Credit Agreement(20) (Exhibit 10.15)
10.16 Amended and Restated Credit Agreement, dated as of November 3, 1997, among CompuCom Systems, Inc., certain
lenders party hereto, and NationsBank of Texas, N.A., as administrative lender (exhibits and schedules omitted)(9)
(Exhibit 10.27)
10.17 Amendment No. 1 to Amended and Restated Credit Agreement, dated as of June 26, 1998, among CompuCom
Systems, Inc., certain lenders party hereto, and NationsBank of Texas, N.A., as administrative lender
(exhibits omitted)(11) (Exhibit 10.2)
10.18 Non-Competition, Referral and Non-Disclosure Agreement dated as of May 10, 1999, by and between CompuCom
Systems, Inc. and ENTEX Information Services, Inc.(15) (Exhibit 10.1)
10.19 CompuCom Receivables MasterTrust I Pooling and Servicing Agreement, dated as of May 7, 1999, between
Norwest Bank Minnesota National Association, CompuCom Systems, Inc., and CSI Funding, Inc.(16) (Exhibit
10.14)
10.20 CompuCom Receivables MasterTrust I Pooling and Servicing Agreement Series 1999-1 Supplement, dated as of
May 7, 1999, among PNC Bank, National Association, Market Street Capital Corporation, Norwest Bank
Minnesota, National Association, CompuCom Systems, Inc., and CSI Funding, Inc.(16) (Exhibit 10.5)
10.21 Inventory and Working Capital Financing Agreement, dated as of May 11, 1999, between IBM Credit
Corporation and CompuCom Systems, Inc.(16) (Exhibit 10.6)
10.22 Attachment A to Inventory and Working Capital Financing Agreement dated May 11, 1999.(16) (Exhibit 10.7)
10.23 Receivables Contribution and Sale Agreement dated May 7, 1999 between CompuCom Systems, Inc. and CSI Funding,
Inc. (16) (Exhibit 10.8)
10.24** Term Note dated October 22, 1998 from Edward Anderson to CompuCom Systems, Inc.(13) (Exhibit 10.25)
10.25** Pledge Agreement dated October 22, 1998 from Edward Anderson to CompuCom Systems, Inc.(13) (Exhibit 10.26)
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10.26** First Amendment to Term Note dated February 19, 1999 from Edward Anderson to CompuCom Systems,
Inc.(13) (Exhibit 10.23)
10.27** Stock Option Grant Agreement between CompuCom Systems, Inc. and Thomas C. Lynch, dated as of October 22,
1998(12) (Exhibit 10.4)
10.28** Term Note dated December 23, 1998 from Thomas Lynch to CompuCom Systems, Inc.(13) (Exhibit 10.28)
10.29** Pledge Agreement dated December 23, 1998 from Thomas Lynch to CompuCom Systems, Inc.(13) (Exhibit 10.29)
10.30** Term Note dated December 23, 1998 from Thomas Lynch to Safeguard Scientifics, Inc.(13) (Exhibit 10.30)
10.31** Security Agreement dated December 23, 1998 between Thomas Lynch and Safeguard Scientifics,
Inc.(13) (Exhibit 10.31)
10.32** Form of Promissory Notes dated June 11, 1999 given by certain executives for advances by Safeguard of income tax
withholdings on restricted stock grants.(31) (Exhibit 10.2)
10.33** Form of Promissory Notes dated August 27, 1999 given by certain executives for advances by Safeguard of
income tax withholdings on restricted stock grants.(18) (Exhibit 10.9)
10.34** Term Note dated July 22, 1999, between Safeguard Delaware, Inc. and John Halvey(18) (Exhibit 10.10)
10.35** Form of Promissory Notes dated November 3, 1999 given by certain executives for advances by Safeguard of
income tax withholdings on restricted stock grants(20) (Exhibit 10.35)
10.36** Form of Promissory Notes dated December 1, 1999 given by certain executives for advances by Safeguard of
income tax withholdings on restricted stock grants(20) (Exhibit 10.36)
10.37** Form of Promissory Notes dated February 3, 2000 given by certain executives for advances by Safeguard of
income tax withholdings on restricted stock grants(20) (Exhibit 10.37)
10.38** Stock option Grant by Safeguard Scientifics, Inc. to Harry Wallaesa dated March 1, 2000(20) (Exhibit 10.38)
10.39** Executive Employment Agreement dated November 1, 1999 between J. Edward Coleman and CompuCom Systems,
Inc. (20) (Exhibit 10.39)
10.40 Sails Mandatorily Exchangeable Securities Contract dated as of March 25, 1999 among Safeguard Scientifics, Inc.,
Safeguard Scientifics (Delaware), Inc., Credit Suisse Financial Products and CSFP Capital Inc. has Agent*
10.41 Sails Pledge Agreement dated as of March 25, 1999 among Safeguard Scientifics (Delaware), Inc, Credit Suisse
Financial Products, and Credit Suisse First Boston, New York, as Collateral Agent (exhibits omitted)*
10.42 Sails Mandatorily Exchangeable Securities Contract dated as of August 30, 1999 among Safeguard Scientifics, Inc.,
Safeguard Scientifics (Delaware), Inc., Credit Suisse Financial Products and CSFP Capital, Inc. as Agent*
10.43 Sails Pledge Agreement dated as of August 30, 1999 among Safeguard Scientifics (Delaware), Inc., Credit Suisse
Financial Products, and Credit Suisse First Boston, New York, as Collateral Agent (exhibits omitted)*
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11 Computation of Per Share Income(20) (included in Note 15 to the Consolidated Financial Statements on
page 66 of Safeguard's Annual Report to Stockholders for year ended December 31, 1999, which page is
filed as part of Exhibit 13 hereto)
13 Pages 35 to 74 of Annual Report to Stockholders for year ended December 31, 1999(21) (Exhibit 13)
21 List of Subsidiaries(20) (Exhibit 21)
23.1 Consent of KPMG LLP, Independent auditors(21) (Exhibit 23.1)
23.2 Consent of PricewaterhouseCoopers LLP, Independent accountants(21) (Exhibit 23.2)
27 Financial Data Schedule for the year ended December 31, 1999(20) (Exhibit 27)
99.1 Consolidated Financial Statements of Cambridge Technology Partners (Massachusetts), Inc.(21) (Exhibit 99.1)
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* Filed herewith
** These exhibits relate to compensatory plans, contracts or arrangements in
which directors and/or executive officers of the registrant may
participate.
(1) Filed on March 30, 1987 as an exhibit to Annual Report on Form 10-K
(No. 1-5620) and incorporated herein by reference.
(2) Filed on December 13, 1991 as an exhibit to Form 8-K (No. 1-5620) and
incorporated herein by reference.
(3) Filed on March 30, 1992 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(4) Filed on March 30, 1994 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(5) Filed on March 30, 1995 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(6) Filed on April 1, 1996 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(7) Filed on March 31, 1997 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(8) Filed May 15, 1997 as an exhibit to Form 10-Q (No. 1-5620) and
incorporated herein by reference.
(9) Filed March 31, 1998 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(10) Filed on May 15, 1998 as an exhibit to Form 10-Q (No. 1-5620) and
incorporated herein by reference.
(11) Filed August 14, 1998 as an exhibit to Form 10-Q (No. 1-5620) and
incorporated herein by reference.
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(12) Filed November 16, 1998 as an exhibit to Form 10-Q (No. 1-5620) and
incorporated herein by reference.
(13) Filed on March 31, 1999 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(14) Incorporated by reference from registrant's Form 10-Q for the quarter
ended March 31, 1999 dated May 17, 1999 and made a part hereof by such
reference.
(15) Incorporated by reference from registrant's 8-K dated May 10, 1999 and
made a part hereof by such reference.
(16) Incorporated by reference from registrant's Form 10-Q for the quarter
ended June 30, 1999 dated August 16, 1999 and made a part hereof by
such reference.
(17) Incorporated by reference from registrant's Form 10-Q/A for the quarter
ended June 30, 1999 dated September 2, 1999 and made a part hereof by
such reference.
(18) Incorporated by reference from registrant's Form 10-Q for the quarter
ended September 31, 1999 dated November 15, 1999 and made a part hereof
by such reference.
(19) Incorporated by reference from registrant's Current Report on Form 8-K
filed on February 29, 2000
(20) Filed on March 17, 2000 as an exhibit to Form 10-K (No. 1-5620) and
incorporated herein by reference.
(21) Filed on March 30, 2000 as an exhibit to Form 10-K/A (No. 1-5620) and
incorporated herein by reference.
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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.
Dated: April 14, 2000 SAFEGUARD SCIENTIFICS, INC.
By: /s/ Warren V. Musser
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Warren V. Musser,
Chairman and Chief Executive Officer