SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SCC COMMUNICATIONS CORP.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] 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
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Notes:
[LOGO OF SCC COMMUNICATIONS CORP.]
SCC COMMUNICATIONS CORP.
Notice of 1999 Annual Meeting of Stockholders
Dear Stockholder:
We invite you to attend our 1999 Annual Meeting of Stockholders, which is
being held as follows:
Date: Thursday, December 2, 1999
Time: 8:30 A.M.
Location: Denver International Airport Courtyard
Hotel
6901 Tower Road
Denver, Colorado
At the Annual Meeting, we will ask you and our other stockholders to:
. elect six directors to one-year terms;
. ratify the appointment of Arthur Andersen LLP as our independent auditors;
and
. consider any other business properly presented at the Annual Meeting.
You may vote on these matters in person or by proxy. Whether or not you
plan to attend the Annual Meeting, we ask that you complete and return the
enclosed proxy card promptly in the enclosed addressed, stamped envelope, so
that your shares will be represented and voted at the meeting in accordance
with your wishes. If you attend the Annual Meeting, you may withdraw your proxy
and vote your shares in person. Only stockholders of record at the close of
business on October 18, 1999 may vote at the Annual Meeting.
By order of the board of directors,
/s/ George K. Heinrichs
George K. Heinrichs
President and Chief Executive
Officer
Boulder, Colorado
November 10, 1999
PROXY STATEMENT
FOR THE
SCC COMMUNICATIONS CORP.
1999 ANNUAL MEETING OF STOCKHOLDERS
Table of Contents
Page
----
Information About the Annual Meeting:
This Proxy Solicitation.................................................. 1
How to Vote.............................................................. 1
Quorum Required to Transact Business..................................... 1
1998 Annual Report on Form 10-K.......................................... 2
Discussion of Proposals:
Proposal to Elect Six Directors.......................................... 2
Proposal to Ratify Independent Auditors.................................. 3
Other Matters............................................................ 3
Stockholder Proposals for 2000 Annual Meeting............................ 3
Information About Directors:
Meetings of the Board of Directors....................................... 4
Committees of the Board of Directors..................................... 4
Compensation of Directors................................................ 4
Information About Executive Officers:
Background Information About Executive Officers.......................... 5
Compensation of Executive Officers ...................................... 5
Compensation Earned..................................................... 5
Option Exercises and Holdings........................................... 6
Employment and Severance Arrangements .................................. 6
Compensation Committee Interlocks and Insider Participation............. 6
Management Incentive Compensation Plan.................................. 6
Compensation Committee Report on Executive Compensation................. 7
Information About Related-Party Transactions............................. 9
Information About Common Stock Ownership and Performance:
Stock Owned by Directors, Executive Officers and Greater-than-5%
Stockholders............................................................ 10
Compliance with Reporting Requirements................................... 11
Stock Performance Graph.................................................. 12
Information about the Annual Meeting
This Proxy Solicitation
We have sent you this proxy statement and the enclosed proxy card because our
board of directors is soliciting your proxy to vote at the Annual Meeting,
including any adjournment or postponement of the Annual Meeting.
. This proxy statement summarizes information about the proposal to be
considered at the Annual Meeting and other information you may find
useful in determining how to vote.
. The proxy card is the means by which you actually authorize another
person to vote your shares in accordance with your instructions.
We will pay the cost of soliciting these proxies. Our directors, officers and
employees may solicit proxies in person or by mail, telephone or telegraph. We
will reimburse brokers and other nominee holders of shares for expenses they
incur in forwarding proxy materials to beneficial owners of those shares. We
have not retained the services of any proxy solicitation firm to assist us in
this solicitation.
We mailed this proxy statement and the enclosed proxy card to stockholders for
the first time on or about November 10, 1999.
How to Vote
You are entitled to one vote at the Annual Meeting for each share of common
stock registered in your name at the close of business on October 18, 1999.
You may vote your shares at the Annual Meeting in person or by proxy:
. To vote in person, you must attend the Annual Meeting, and then complete
and submit the ballot provided at the Annual Meeting.
. To vote by proxy, you must complete and return the enclosed proxy card.
Your proxy will be valid only if you sign, date and return it before the
Annual Meeting. By completing and returning the proxy card, you will
direct the designated persons to vote your shares at the Annual Meeting
in the manner you specify in the proxy card. If you complete all of the
proxy card except the voting instructions, then the designated persons
will vote your shares for each of the proposals. If any other business
properly comes before the meeting, then the designated persons will have
the discretion to vote in any manner.
If you complete and return a proxy, you may revoke it at any time before it is
exercised by taking one of the following actions:
. send written notice to Carol Nelson, our Chief Financial Officer, at our
address set forth on the Notice appearing before this proxy statement;
. send us another signed proxy with a later date; or
. attend the Annual Meeting, notify Ms. Nelson that you are present, and
then vote in person.
Quorum Required to Transact Business
At the close of business on October 18, 1999, 11,051,947 shares of common stock
were outstanding. Our by-laws require that a majority of the common stock be
represented, in person or by proxy, at the Annual Meeting in order to
constitute the quorum we need to transact business. We will count abstentions
and broker non-votes in determining whether a quorum exists.
1
1998 Annual Report on Form 10-K
We have filed our Annual Report on Form 10-K for the year ended December 31,
1998 with the SEC on March 31, 1999. Stockholders may obtain a copy of this
report, without charge, by writing to Carol Nelson, Chief Financial Officer, at
our address set forth on the Notice appearing before this proxy statement.
Discussion of Proposals
Proposal to Elect Six Directors
One of the proposals on the agenda for the Annual Meeting is the election of
six persons to serve as directors for one-year terms beginning at the Annual
Meeting and ending at the 2000 Annual Meeting of Stockholders.
The board of directors has nominated George Heinrichs, Stephen James, David
Kronfeld, Mary Beth Vitale, Winston Wade and Darrell Williams for election as
directors. Brief biographies of the nominees, as of October 28, 1999, follow.
You will find information about the nominees' holdings of common stock on
page 10.
George K. Heinrichs A co-founder of SCC, Mr. Heinrichs has served as our
President and one of our directors since 1979 and as our
Chief Executive Officer since 1995. Mr. Heinrichs is 42
years old.
Stephen O. James Mr. James has served as one of our directors since October
1999. Mr. James has been an independent executive business
consultant since 1993. From 1984 to 1993, Mr. James was
President and Chief Executive Officer of Biomagnetic
Technologies, Inc. Mr. James is 55 years old.
David Kronfeld Mr. Kronfeld has served as one of our directors since
March 1998, and previously served as one of our directors
from February 1992 to June 1996. Mr. Kronfeld has been a
manager of JK&B Management L.L.C. since its founding in
October 1995. Since 1989, Mr. Kronfeld has been a general
partner of Boston Capital Ventures Limited Partnership,
Boston Capital Ventures II Limited Partnership, Boston
Capital Ventures III L.P. and Boston Capital Ventures, all
of which are venture capital funds. Mr. Kronfeld currently
serves as a director of 21st Century Telecom Group, Inc.,
MGC Communications, Inc. and Phone.com, Inc. Mr. Kronfeld
is 51 years old.
Mary Beth Vitale Ms. Vitale has served as one of our directors since
October 1999. Since December 1998, Ms. Vitale has been the
President and Chief Operating Officer of RMI.NET.
Ms. Vitale was the President-Western States for AT&T in
1997 and held several positions, including Vice President
and Corporate Officer, Local Service Organization, Western
Region for AT&T from 1994 to 1996. From 1989 to 1994, Ms.
Vitale, held several positions with U.S. West, including
Vice President of Marketing. Ms. Vitale currently serves
as a Director of RMI.NET. Ms. Vitale is 45 years old.
Winston J. Wade Mr. Wade has served as one of our directors since October
1999. Mr. Wade was the Chief Executive Officer of MediaOne
Malaysia from 1997 to 1999 and the Managing Director of
MediaOne India, BPL/US West from 1996 to 1997. From 1981
through 1995, Mr. Wade held several positions with US
West, including Vice President-Network Operations, Vice
President-Network Infrastructure, Vice President-Technical
Services and President-Information Technologies Group. Mr.
Wade currently serves as a director of Transcrypt
International, Inc. and AmeritasAcacia. Mr. Wade is 60
years old.
2
Darrell A. Williams Mr. Williams has served as one of our directors since
February 1998. Since January 1995, Mr. Williams has been
the Vice President, Venture Capital of the Ameritech
Development Corporation, which was acquired by SBC
Communications Inc. in October 1999. From 1992 to January
1995, Mr. Williams was Director, Investment Acquisitions
and Divestitures of Ameritech Corporation. Mr. Williams is
40 years old.
If for any reason any of the nominees becomes unavailable for election, the
persons designated in the proxy card may vote the proxy for the election of a
substitute. All of the nominees have consented to serve as directors if
elected, and the board of directors has no reason to believe that any of the
nominees will become unavailable for election.
The six nominees receiving the greatest number of votes cast will be elected as
directors. We will not count abstentions or broker non-votes when we tabulate
votes cast for the election of directors.
The board of directors recommends that you vote FOR the election of each of the
nominees named above.
Proposal to Ratify Independent Auditors
The board of directors has appointed the firm of Arthur Andersen LLP, our
current independent auditors, to serve in the same capacity for the year ending
December 31, 1999, and is asking the stockholders to ratify this appointment.
The affirmative vote of a majority of the shares represented and voting at the
Annual Meeting is required to ratify the selection of Arthur Andersen LLP.
In the event the stockholders fail to ratify the appointment, the board of
directors will reconsider its selection. Even if the selection is ratified, the
board in its discretion may direct the appointment of a different independent
auditing firm at any time during the year if the board of directors believes
that such a change would be in the best interests of SCC and our stockholders.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting, will have the opportunity to make a statement if he or she desires to
do so, and will be available to respond to appropriate questions.
The board of directors recommends that you vote FOR the ratification of the
selection of Arthur Andersen LLP to serve as our independent auditors for the
year ending December 31, 1999.
Other Matters
Neither we nor the board of directors intends to propose any matters at the
Annual Meeting other than the election of directors and the ratification of our
independent auditors. Neither we nor our board knows of any matters to be
proposed by others at the Annual Meeting.
Stockholder Proposals for 2000 Annual Meeting
A stockholder who intends to present a proposal at the 2000 Annual Meeting of
Stockholders for inclusion in our 2000 proxy statement must submit the proposal
by February 16, 2000. In order for the proposal to be included in the proxy
statement, the stockholder submitting the proposal must meet certain
eligibility standards and must comply with certain procedures established by
the SEC, and the proposal must comply with the requirements as to form and
substance established by applicable laws and regulations. The proposal must be
mailed to our Secretary at our address set forth on the Notice appearing before
this proxy statement.
In addition, in accordance with our by-laws, a stockholder wishing to bring an
item of business before the 2000 Annual Meeting must deliver notice of the item
of business to us at our principal offices by no later than February 16, 2000
even if the item is not to be included in our proxy statement.
3
Information About Directors
Meetings of the Board of Directors
The board of directors held 11 meetings and acted by unanimous written consent
4 times during 1998. Each director attended at least 75% of the board meetings.
Committees of the Board of Directors
The board of directors has appointed an audit committee and a compensation
committee. It has not appointed a standing nominating committee.
The audit committee met once during 1998. The audit committee:
. reviews the scope and results of the annual audit of our consolidated
financial statements conducted by our independent accountants;
. reviews the scope of other services provided by independent auditors;
. reviews proposed changes in our financial and accounting standards and
principles and in our policies and procedures for our internal
accounting, auditing and financial controls; and
. makes recommendations to the board of directors on the engagement of the
independent accountants.
The audit committee consists of David Kronfeld and Darrell Williams, each of
whom attended the meeting of the audit committee in 1998.
The compensation committee met twice during 1998. The compensation committee:
. reviews and acts on matters relating to compensation levels and benefits
plans for our executive officers and key employees; and
. is responsible for granting stock options and other awards to be made
under our existing incentive compensation plans.
The compensation committee consists of Darrell Williams. From April 1998
through June 1999, the compensation committee was composed of two directors,
Mr. Williams and John G. Hill. Mr. Hill retired from the board of directors in
June 1999. From January 1998 to April 1998, the compensation committee was
composed of George Heinrichs and Mr. Hill.
Compensation of Directors
We reimburse our directors for all reasonable and necessary travel and other
incidental expenses incurred in connection with their attendance at meetings of
the board and committees of the board. In addition, all board members are
eligible for compensation equal to $1,000 for each board meeting attended in
person and $500 for each telephonic board meeting. Such compensation is payable
in cash or stock at the director's discretion. Board members may be paid
additional amounts for consulting services that extend beyond their normal
Board duties, although no such payments were made to date.
4
Information About Executive Officers
Background Information About Executive Officers
Brief biographies of our executive officers, as of October 28, 1999, follow.
You will find information about their holdings of common stock on page 10.
George K. Heinrichs You will find background information
President and Chief Executive Officer about Mr. Heinrichs on page 3.
Carol Nelson Ms. Nelson has served as our Chief
Chief Financial Officer Financial Officer since July 1999. From
May 1994 to July 1999, Ms. Nelson was
SCC's Controller and then Director of
Finance except during the period October
1996 to October 1997, during which time
she was the Director of Accounting at
Coram Healthcare. From June 1987, to May
1994, Ms. Nelson worked at Arthur
Andersen, LLP in various rolls, the
latest of which was Audit Manager. Ms.
Nelson is 34 years old and is a CPA.
Compensation of Executive Officers
Compensation Earned
The following table sets forth the compensation earned during the year ended
December 31, 1998 by our named officers, who consist of our chief executive
officer and our two other executive officers who earned more than $100,000 in
salary and bonus in either 1997 or 1998.
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
------------
Awards
------------
Annual Compensation Securities
-------------------- Underlying
Name and Principal Position Year Salary($) Bonus($) Option(#)
- ------------------------------------- ---- ---------- --------- ------------
George K. Heinrichs 1998 $ 233,333 $ 84,812 --
President and Chief Executive Officer 1997 173,746 180,000 66,667
John J. Sims 1998 233,333 65,965 --
Chief Operating Officer 1997 225,000 100,000 120,000
Nancy K. Hamilton 1998 179,167 47,118 --
Senior Vice President and Chief
Financial Officer 1997 148,750 100,000 57,333
Bonuses included in 1998 were earned in 1998 but paid in 1999.
Mr. Sims resigned in February 1999, and Ms. Hamilton resigned in May 1999.
5
Option Exercises and Holdings
The following table sets forth information regarding exercises of stock options
during the year ended December 31, 1998 and exercisable and unexercisable
options held as of December 31, 1998 by each of the named officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Options at Fiscal Year-End(#) at Fiscal Year-End($)
on Value -------------------------------- -------------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ----------- -------------- --------------- ----------- -------------
George K. Heinrichs -- -- 262,009 74,290 $912,490 $44,364
John J. Sims -- -- 125,239 104,820 212,640 73,084
Nancy K. Hamilton 15,000 $168,750 113,319 46,831 311,949 77,305
The value realized by Ms. Hamilton on her option exercise equals the total
market price of the shares purchased, based on the last sale price of the
common stock on the Nasdaq National Market on the exercise date, minus the
total exercise price paid for those shares.
The value of each unexercised option is based on a market price of $4.688 per
share, the last sale price of the common stock on the Nasdaq National Market on
December 31, 1998, minus the per share exercise price, multiplied by the number
of shares underlying the option.
Employment and Severance Arrangements
Until her resignation in May 1999, Nancy Hamilton was employed as our Senior
Vice President and Chief Financial Officer pursuant to an employment agreement
with us dated February 9, 1999. Under the employment agreement, Ms. Hamilton is
working as a part-time employee of SCC until May 2000, in exchange for the
continuation of her base salary and benefits.
Compensation Committee Interlocks and Insider Participation
The compensation committee currently consists solely of Darrell Williams. Mr.
Williams has never been an officer or employee of SCC. From April 1998 through
June 1999, the compensation committee consisted of Mr. Williams and John Hill,
who resigned from the board in June 1999. From January 1998 to April 1998, the
compensation committee consisted of George Heinrichs and Mr. Hill. Mr.
Heinrichs has been one of our executive officers since 1979.
None of the named officers or our current executive officers has ever served as
a member of the board of directors or compensation committee of any other
entity that has or has had one or more executive officers serving as a member
of our board or compensation committee.
Management Incentive Compensation Plan
In early 1998, the compensation committee approved the management incentive
compensation plan, under which the named officers were eligible to receive
bonus payments. At the beginning of the year, the compensation committee
established and approved financial objectives for each participant in the
program. These objectives require that we achieve a minimum performance level
before any bonus could be earned by a participant. Thereafter, an established
progression rewarded higher levels of achievement with greater bonus payments.
Aggregate bonuses payable under the management incentive compensation plan were
limited to a
6
pre-determined percentage of each participant's salary. We exceeded the minimum
performance levels in the first and second quarters of 1998, and as a result,
the named officers received bonuses as specified under "--Compensation Earned."
Compensation Committee Report on Executive Compensation
The compensation committee reviews and acts on matters relating to compensation
levels and benefits plans for our executive officers and key employees. The
compensation committee also provides for grants of stock awards, stock options,
stock appreciation rights and other awards to be made under our existing
incentive compensation plans.
General Compensation Policy. The fundamental policy of the compensation
committee is to provide our executive officers with competitive compensation
opportunities based upon their contribution to our development and financial
success and their personal performance. The compensation committee's objective
is to have a portion of each executive officer's compensation contingent on our
performance as well as on the executive officer's own level of performance.
Accordingly, the compensation package for each executive officer is comprised
of three elements: (1) base salary, which principally reflects an executive
officer's performance and is designed primarily to be competitive with salary
levels in the industry; (2) bonus, which principally reflects our performance;
and (3) long-term incentive compensation, which strengthens the mutuality of
interests between our executive officers and stockholders.
Factors. The principal factors that the compensation committee considered in
ratifying the components of each executive officer's compensation package for
1998 are summarized below. The compensation committee may apply entirely
different factors in advising the chief executive officer and the board of
directors with respect to executive compensation for future years.
. Base Salary. The suggested base salary for each executive officer is
determined on the basis of experience, personal performance, the salary
levels in effect for comparable positions within and without the
industry, and internal base salary comparability considerations. The
weight given to each of these factors differs from individual to
individual, as the compensation committee deems appropriate.
. Bonus. The suggested bonus for each executive officer is determined on
the basis of our performance, personal performance, and the bonus levels
in effect for comparable positions within and without the industry. The
compensation committee establishes maximum annual bonus amounts for each
executive officer based on the bonus levels for comparable positions, and
earned bonus amounts are based on performance results. The weight given
to each of these factors differs from individual to individual, as the
compensation committee deems appropriate. In addition, the compensation
committee may from time to time award additional cash bonuses when it
determines those bonuses to be in our best interest.
. Long-Term Incentive Compensation. Long-term incentives are provided
primarily through grants of stock options. The grants are designed to
align the interests of each executive officer with those of the
stockholders and to provide each individual with a significant incentive
to manage SCC from the perspective of an owner with an equity stake. Each
option grant allows the executive officer to acquire shares of the common
stock at a fixed price per share, typically equal to the market price on
the grant date, over a specified period of time of up to ten years.
Options generally become exercisable in installments over a 50-month
period, contingent upon an executive officer's continued employment with
SCC. Accordingly, an option grant generally provides a return to the
executive officer only if the executive officer remains employed by us
during the vesting period, and then only if the market price of the
underlying shares appreciates. The number of shares subject to each
option grant is set at a level intended to create a meaningful
opportunity for stock ownership based on the executive officer's current
position, the base salary associated with that position, the size of
comparable awards made to individuals in similar positions within the
industry, the executive officer's potential for increased responsibility
and promotion over the option term, and the executive officer's personal
performance in
7
recent periods. The compensation committee also considers the number of
unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that executive officer. The
compensation committee does not adhere to any specific guidelines as to
the relative option holdings of our executive officers. No stock options
were granted to executive officers in 1998.
CEO Compensation. SEC regulations require the board of directors to disclose
the basis for compensation paid to George Heinrichs, our President and Chief
Executive Officer, in 1998 and to discuss the relationship between our
performance and Mr. Heinrichs' performance in 1998. In advising the board with
respect to Mr. Heinrichs' compensation, the compensation committee seeks to
establish a level of base salary competitive with that paid by companies of
comparable size within the industry and by companies outside of the industry
with which we compete for executive talent. The base salary established for
Mr. Heinrichs for 1998 on the basis of the foregoing criteria was intended to
provide a level of stability and certainty each year. Accordingly, this
element of compensation was not affected to any significant degree by our
performance factors.
Compliance with Internal Revenue Code Section 162(m). As a result of Section
162(m) of the Internal Revenue Code, we are not allowed a federal income tax
deduction for compensation paid to certain executive officers to the extent
that compensation exceeds $1,000,000 per officer in any year. This limitation
applies to all compensation paid to the covered executive officers that is not
considered to have been performance based. The management incentive
compensation plan contains provisions intended to ensure that any compensation
deemed paid in connection with the exercise of stock options granted under the
plan with an exercise price equal to the market price of the common stock on
the grant date will qualify as performance-based compensation. The
compensation committee does not expect that the compensation that will be paid
to any of our executive officers during 1999 will exceed $1,000,000.
COMPENSATION COMMITTEE
Darrell A. Williams
8
Information About Related-Party Transactions
Our certificate of incorporation generally eliminates directors' personal
liability to us and our stockholders for monetary damages for breaches of
fiduciary duties. The certificate of incorporation does not eliminate or limit
the personal liability of a director for (1) any breach of the director's duty
of loyalty to us or our stockholders, (2) any act or omission not in good faith
or involving intentional misconduct or a knowing violation of law, (3) any
unlawful payment of dividends or unlawful stock repurchase or redemption or (4)
any transaction from which the director derived an improper personal benefit.
Our by-laws provide that we shall indemnify our directors and executive
officers to the fullest extent permitted under the Delaware General Corporation
Law and that we may indemnify our other officers, employees and agents as set
forth in the Delaware General Corporation Law. In addition, effective June 23,
1998, we entered into indemnification agreements with each of our directors and
executive officers. The indemnification agreements require us to indemnify our
directors and executive officers against specified liabilities that may arise
by reason of their status or service as directors or executive officers of SCC
or other entities to which they provide service at our request. The
indemnification agreements also require that we advance expenses to our
directors and executive officers incurred as a result of any proceeding against
them as to which they could be indemnified. The indemnification agreements do
not provide indemnification for liabilities arising from intentional or knowing
and culpable violations of law. We intend to execute similar indemnification
agreements in the future with other individuals who become directors or
executive officers of SCC. We believe the indemnification agreements are
desirable to attract and retain qualified directors and executive officers. We
have obtained an insurance policy covering our directors and officers for
claims that they may otherwise be required to pay or for which we are required
to indemnify them.
We provide 9-1-1 operations support systems, or OSS, services pursuant to a 9-
1-1 service agreement dated August 31, 1994 with Ameritech Information Systems.
Under a master lease dated March 11, 1996, we lease personal property from
Ameritech Credit Corporation. Additionally, we have entered into a consulting
agreement dated October 27, 1997 with Ameritech Mobile Communications, under
which we performed a market survey regarding the provision of 9-1-1 services to
cellular telephone subscribers. Ameritech Information Systems, Ameritech Credit
Corporation and Ameritech Mobile Communications are affiliates of Ameritech
Development Corp., which beneficially owned approximately 14.9% of our common
stock as of September 30, 1999. Under these agreements, we received net
proceeds of approximately $6,735,000 in 1998, $6,959,000 in 1997 and $6,606,000
in 1996.
We believe that the terms of the transactions described above were no less
favorable to us than would have been obtained from an unaffiliated third party.
Any further transactions between us and any of our officers, directors or
principal stockholders will be on terms no less favorable to us than could be
obtained from unaffiliated third parties and will be approved by a majority of
the independent and disinterested members of the board of directors.
9
Information About Common Stock Ownership and Performance
Stock Owned by Directors, Executive Officers and Greater-than-5% Stockholders
The following table sets forth certain information as of September 30, 1999,
with respect to the beneficial ownership of the common stock by (1) each person
that we know owns of record or beneficially more than 5% of the outstanding
common stock, (2) each of the named officers, (3) each director, and (4) all
current executive officers and directors as a group.
In accordance with SEC rules, beneficial ownership includes any shares as to
which a person or entity has sole or shared voting power or investment power
and any shares as to which the person or entity has the right to acquire
beneficial ownership within 60 days after September 30, 1999 through the
exercise of any stock option. Except as noted below, we believe that the
persons named in the table have sole voting and investment power with respect
to the shares of common stock set forth opposite their names. Percentage of
beneficial ownership is based on 11,051,068 shares of common stock outstanding
as of September 30, 1999. Except as noted, the address of each of our executive
officers and directors is in care of SCC Communications Corp., 6285 Lookout
Road, Boulder, Colorado 80031.
Shares Beneficially Owned
-----------------------------
Name and Address of Beneficial Owner Number Percent
- ------------------------------------ --------------- -------------
David Kronfeld (1)............................. 2,004,492 18.1%
Boston Capital Ventures Limited Partnership
(2)........................................... 1,747,658 15.8
45 School Street
Boston, Massachusetts 02109
Ameritech Development Corporation (3).......... 1,645,214 14.9
30 S. Wacker Drive, 37th Floor
Chicago, Illinois 60606
Darrell A. Williams (3)........................ 1,645,214 14.9
The Hill Partnership III (4)................... 1,194,932 10.8
885 Arapahoe
Boulder, Colorado 80302
Joel M. Greenblatt (5)......................... 595,000 5.4
100 Jericho Quadrangle, Suite 212,
Jericho, NY 11753
George A. Heinrichs (6)........................ 467,979 4.1
Nancy K. Hamilton (7).......................... 131,851 1.2
5755 Central Avenue
Boulder, Colorado 80301
John J. Sims (8)............................... 53,982 *
110 Wild Basin Road
Austin, Texas 78746
Stephen O. James
Mary Beth Vitale
Winston J. Wade
All directors and executive officers as a group
(7 persons) (9)............................... 4,131,302 36.4
- --------
* Less than 1%.
(1) Includes 264,016 shares held by Boston Capital Ventures, Limited
Partnership, 264,016 shares held by Boston Capital Ventures II, Limited
Partnership, 1,219,626 shares held by Boston Capital Ventures III Limited
Partnership, 171,223 shares held by JK&B Capital Limited Partnership and
85,611 shares held by JK&B Capital II Limited Partnership. The general
partner of Boston Capital Ventures Limited Partnership is BC&V Limited
Partnership. The general partner of Boston Capital Ventures II Limited
Partnership is Boston Capital Partners II. The general partner of Boston
Capital Ventures III Limited Partnership is BD
10
Partners Limited Partnership. David Kronfeld, a director of SCC, is a
general partner of certain of the entities associated with the Boston
Capital Ventures entities. The general partner of JK&B Capital Limited
Partnership and of JK&B Capital II Limited Partnership is JK&B Management
LLC and Mr. Kronfeld is the manager of JK&B Management LLC. Mr. Kronfeld
disclaims beneficial ownership of any of the shares owned by Boston Capital
Ventures Limited Partnership, Boston Capital Ventures II Limited
Partnership, Boston Capital Ventures III Limited Partnership, JK&B Capital
Limited Partnership and JK&B Capital II Limited Partnership, except to the
extent of his pecuniary interest in certain of such entities.
(2) Includes 264,016 shares held by Boston Capital Ventures, Limited
Partnership, 264,016 shares held by Boston Capital Ventures II, Limited
Partnership and 1,219,626 shares held by Boston Capital Ventures III
Limited Partnership. The general partner of Boston Capital Ventures Limited
Partnership is BC&V Limited Partnership. The general partner of Boston
Capital Ventures II Limited Partnership is Boston Capital Partners II. The
general partner of Boston Capital Ventures III Limited Partnership is BD
Partners Limited Partnership. David Kronfeld, a director of SCC, is a
general partner of certain of the entities associated with the Boston
Capital Ventures entities. Mr. Kronfeld disclaims beneficial ownership of
any of the shares owned by Boston Capital Ventures Limited Partnership,
Boston Capital Ventures II Limited Partnership and Boston Capital Ventures
III Limited Partnership, except to the extent of his pecuniary interest in
certain of such entities.
(3) Ameritech Development Corporation is a wholly owned subsidiary of Ameritech
Corporation which was acquired by SBC Communications Inc. in October 1999.
Darrell Williams, a director of SCC, is a Vice President of Ameritech
Development Corporation. As of September 30, 1999, Ameritech Corporation,
as the sole stockholder of Ameritech Development Corporation, had voting
and investment control over the shares held by Ameritech Development
Corporation. Mr. Williams disclaims beneficial ownership of such shares.
(4) The general partner of the Hill Partnership III, L.P. is Hill Carman
Ventures, L.P. John Hill and Carl Carman are the general partners of Hill
Carman Ventures, L.P. and have joint voting and investment control over the
shares held by the Hill Partnership III, L.P. Mr. Hill and Mr. Carman
disclaim beneficial ownership of such shares except to the extent of their
pecuniary interest in Hill Carman Ventures, L.P. Mr. Hill resigned from the
board of directors effective June 17, 1999.
(5) Based on a Schedule 13G dated October 2, 1998 and filed with the SEC on
October 14, 1998. Shares reported for Joel Greenblatt represent shares
beneficially owned by Gotham Capital V, LLC, which may be deemed to be
controlled by Mr. Greenblatt as the manager thereof.
(6) Includes options to purchase 293,688 shares of common stock exercisable
within 60 days of September 30, 1999. Includes 1,539 shares held by Mr.
Heinrichs' minor daughter and 1,539 shares held by Mr. Heinrichs' minor
son.
(7) Includes options to purchase 111,851 shares of common stock exercisable
within 60 days of September 30, 1999. Ms. Hamilton resigned as our Chief
Financial Officer effective May 20, 1999.
(8) Includes options to purchase 49,067 shares of common stock exercisable
within 60 days of September 30, 1999. Mr. Sims resigned as our Chief
Operating Officer effective February 26, 1999.
(9) Also includes options to purchase 301,740 shares of common stock which are
exercisable within 60 days of September 30, 1999. See Notes (1), (3) and
(6).
Compliance with Reporting Requirements
Section 16(a) of the Securities Exchange Act requires our executive officers,
our directors and persons who own more than ten percent of a registered class
of our equity securities, to file changes in ownership on Form 4 or 5 with the
SEC. These executive officers, directors and ten-percent stockholders are also
required by SEC rules to furnish us with copies of all Section 16(a) reports
they file. Based solely on our review of the copies of these forms, we believe
that all Section 16(a) reports applicable to our executive officers, directors
and ten-percent stockholders with respect to reportable transactions during the
fiscal year ended December 31, 1998 were filed on a timely basis.
11
Stock Performance Graph
The graph depicted below shows a comparison of cumulative total stockholder
returns for us, the Nasdaq Stock Market-US Index and a stock index comprised of
companies in a line of business similar to our during the same period.
[GRAPH APPEARS HERE]
SCC NASDAQ NASDAQ
Communications Stock Computer and Data
Corp. Market (U.S.) Processing Stocks
6/24/1998 $ 100 $ 100 $ 100
12/31/1998 $ 34 $ 118 $ 124
The graph covers the period from June 24, 1998, the initial date of the
registration of our common stock under the Securities Exchange Act, to December
31, 1998. The graph assumes that $100 was invested on June 24, 1998 in our
common stock and in each index, and that any dividends were reinvested. No cash
dividends have been declared on our common stock.
THE BOARD OF DIRECTORS
SCC COMMUNICATIONS CORP.
Dated: November 10, 1999
12
Please detach here
SCC COMMUNICATIONS CORP.
PROXY
Annual Meeting of Stockholders, December 2, 1999
This Proxy is Solicited on Behalf of the Board of Directors of
SCC Communications Corp.
The undersigned revokes all previous proxies, acknowledges receipt of the
Notice of the 1999 Annual Meeting of Stockholders of SCC Communications Corp.
("SCC") to be held on December 2, 1999 and the related proxy statement, and
appoints George K. Heinrichs and Carol Nelson, and each of them, the proxy of
the undersigned, with full power of substitution, to vote all shares of common
stock of SCC that the undersigned is entitled to vote, either on his or her own
behalf or on behalf of any entity or entities, at the 1999 Annual Meeting of
Stockholders of SCC to be held at the Denver International Courtyard Airport
Hotel, 6901 Tower Road, Denver, Colorado on Thursday, December 2, 1999 at 8:30
a.m. Mountain Time and at any adjournment or postponement thereof, with the
same force and effect as the undersigned might or could do if personally
present thereat. The shares represented by this Proxy shall be voted in the
manner set forth on the reverse side.
Your vote is important. Please mark, sign, and date your proxy card and return
it in the postage-paid envelope provided with these materials.
Please detach here
The Board of Directors Recommends a Vote FOR Items 1 and 2.
1.To elect the following directors to serve for one-year terms ending in the
year 2000 or until successors are duly elected and qualified:
01 George K. Heinrichs 02 Stephen O. James [ ] Vote FOR [ ] Vote WITHHELD
all nominees from all
03 David Kronfeld 04 Mary Beth Vitale nominees
05 Winston J. Wade 06 Darrell A. Williams
(Instructions: To withhold
authority to vote for any indicated
nominee, write the number(s) of the [ ]
nominee(s) in the box provided to
the right.)
2. To ratify the appointment of Arthur
Andersen LLP as independent auditors [_]For [_]Against [_]Abstain
of the Company for the fiscal year
ending December 31, 1999.
3. In accordance with the discretion of [_]For [_]Against [_]Abstain
the proxy holders, to act upon all
matters incident to the conduct of
the meeting and upon other matters
as may properly come before the
meeting.
The Board of Directors recommends a vote IN FAVOR OF the directors
listed above and a vote IN FAVOR OF the ratification of
independent auditors. This proxy, when properly executed, will be
voted as specified above. If no specification is made, this proxy
will be voted IN FAVOR OF the election of the directors listed
above and IN FAVOR OF the ratification of the independent
auditors.
Date _______________
[ ]
Signature(s) in Box
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc., should
include title and authority. Corpora-
tions should provide full name of
corporation and title of authorized
officer signing the Proxy.