-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WKWBix9LRZ4ntZ65+63qSZULDdDWsEgV3nHbj9SyzsKaZBFnDFBETDnS5VL3eLgr LiTeZKD0Sxw4fCDkfg6OdQ== 0000930661-99-001885.txt : 19990813 0000930661-99-001885.hdr.sgml : 19990813 ACCESSION NUMBER: 0000930661-99-001885 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990812 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTWOOD CORP/NV/ CENTRAL INDEX KEY: 0000876884 STANDARD INDUSTRIAL CLASSIFICATION: SWITCHGEAR & SWITCHBOARD APPARATUS [3613] IRS NUMBER: 870430944 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19381 FILM NUMBER: 99686304 BUSINESS ADDRESS: STREET 1: 5314 SOUTH YALE AVENUE STREET 2: SUITE 1100 CITY: TULSA STATE: OK ZIP: 74135 BUSINESS PHONE: 9185240002 MAIL ADDRESS: STREET 1: PO BOX 35493 CITY: TULSA STATE: OK ZIP: 74153 10-K/A 1 FORM 10-K/A AMENDMENT NO. 1 Filed: August 12, 1999 FORM 10-K/A AMENDMENT NO. 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1999 Commission file number: 0-19381 WESTWOOD CORPORATION (Exact name of Registrant as specified in its charter) Nevada 87-0430944 ------ ---------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 5314 South Yale, Suite 1100, Tulsa, Oklahoma 74135 - -------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 918/524-0002 Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR VALUE $.003 ----------------------------- (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 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. ( X ) --- The approximate aggregate market value of the Registrant's common stock (based upon the July 26, 1999, closing sale price of the common stock as reported by NASDAQ) held by non-affiliates was approximately $4,552,754. The number of outstanding shares of the Registrant's common stock as of July 26, 1999 was 6,891,647 shares. DOCUMENTS INCORPORATED BY REFERENCE Part I (Items 1, 2, 3 and 4), Part II (Items 5, 6, 7, 8 and 9) and Part IV (Item 14) are incorporated by reference from the Form 10-K filed by the Registrant on June 29, 1998. Item 10. Directors and Executive Officers of the Registrant -------------------------------------------------- As of March 31, 1999, the Board of Directors consisted of Ernest H. McKee, Paul R. Carolus, Richard E. Minshall, Anthony Pantaleoni, and John H. Williams, Sr. Executive Officers and Directors Name Age Position ---- --- -------- Ernest H. McKee 61 President and Chairman of the Board Paul R. Carolus 66 Secretary-Treasurer, Chief Financial Officer and Director Richard E. Minshall 61 Director Anthony Pantaleoni 60 Director John H. Williams, Sr. 81 Director Ernest H. McKee has served as President, Chief Executive Officer, and Chairman of the Board of Directors of Westwood Corporation since 1988. Paul R. Carolus has served as Secretary-Treasurer, Chief Financial Officer, and a Director of Westwood Corporation since 1988. Mr. Carolus is a Certified Public Accountant, and a member of the American Institute of Certified Public Accountants. Richard E. Minshall has served as a Director of Westwood Corporation since 1988. Mr. Minshall is President and Chairman of the Board of Directors of Capital Advisors, Inc. of Tulsa, Oklahoma. Mr. Minshall is a Director of American Gilsonite, and First National Bank & Trust Company of Broken Arrow. Mr. Minshall is a member of the Oklahoma Society of Financial Analysts and the Oklahoma Bar Association. Anthony Pantaleoni has served as a Director of Westwood Corporation since 1988. Mr. Pantaleoni is a member of the law firm of Fulbright & Jaworski L.L.P., New York, New York. Mr. Pantaleoni is a Director of Universal Health Services, Inc., and AAON, Inc. John H. Williams, Sr. has served as a Director of Westwood Corporation since 1997. Mr. Williams is an honorary Director of The Williams Companies, Inc. (NYSE: WMB), of Tulsa, Oklahoma, having resigned as Chairman of the Board and Chief Executive Officer in late 1978. Mr. Williams joined the Williams Brothers Company in 1946, and was elected President and Chief Executive Officer in 1950. In 1971, the name of the company was changed to The Williams Companies, Inc. Mr. Williams received his civil engineering degree from Yale University in 1940. Mr. Williams presently serves on the Board of Directors of Apco Argentina Inc., Unit Corporation (NYSE: UNT) and Willbros Group, Inc. (NYSE: WG). During the fiscal year ended March 31, 1999, the Board had four meetings. Each Director attended all meetings. In March, 1998, the Board of Directors created an Audit Committee composed of Richard E. Minshall, Anthony Pantaleoni and John H. Williams, Sr. Other than the Audit Committee, the Board of Directors presently has no other standing committees. Item 11. Executive Compensation ---------------------- The following Tables I through III present information concerning the cash compensation and stock options provided to Messrs. McKee and Carolus. The notes to these tables provide more specific information regarding compensation. Ernest H. McKee and Paul R. Carolus are the only Executive Officers of the Company. No other persons are considered to be executive officers or received compensation in excess of $100,000 for the fiscal year ended March 31, 1999. Table I Summary Compensation Table
Long-Term Annual Compensation(a) Compensation -------------------------------- ---------------------- Other Annual Securities All Other Name and Compen- Underlying Compen- Principal Position Year Salary Bonus sation(b) Options sation(c) - ------------------ ---- ------ ----- --------- --------- --------- Ernest H. McKee 1999 $225,000 $ ---- - ---- $5,606 Chief Executive 1998 150,000 75,000 - ---- 4,500 Officer 1997 150,000 150,000 - 69,641 (d) 4,500 Paul R. Carolus 1999 $130,000 $ ---- - ---- $7,575 Chief Financial 1998 90,000 40,000 - ---- 4,500 Officer 1997 90,000 90,000 - 69,641 (d) 4,500
2 (a) Amounts shown include cash compensation earned by Executive Officers. (b) The value of other benefits to any Officer during fiscal year 1999 did not exceed the lesser of $50,000 or 10% of the Officer's total annual salary and bonus or fall within any other category requiring inclusion. (c) Amounts contributed to the Company's 401K Plan on behalf of the named Executive Officer. (d) Represents the issuance of a one-time grant of an Option on September 3, 1996, as automatically adjusted by the stock dividend occurring on December 22, 1996 and 1997, which Option shall vest at twenty percent (20%) per year on the anniversary date of such grant. Table II Option Grants in Last Fiscal Year No Option grants were made to Executive Officers during the last fiscal year. Table III Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Number of Value of Unexercised Unexercised Options In-the-Money Options at March 31, 1999 at March 31, 1999 ------------------- -------------------- Exer- Unexer- Exer- Unexer- Acquired on Value cisable cisable cisable cisable Name Exercise Realized (a) (b) (a) (b) ---- ----------- -------- ------- ------- ------- ------- Ernest H. McKee $0 $0 104,730 36,300 $0 $0 Paul R. Carolus 0 $0 104,730 36,300 $0 $0
(a) Represents grants of Options to acquire 16,106 shares annually on March 20, 1992 through 1996 to Messrs. McKee and Carolus pursuant to the 1992 Directors' Stock Option Plan, as amended on October 28, 1993 (the "Directors' Plan"). The shares issued under these Options have been automatically adjusted as a result of 10% stock dividends occurring annually on December 22, 1993 through 1997. The exercise prices of the 1992, 1993, 1994, 1995 and 1996 Option grants were 3 $3.00, $3.125, $3.50, $2.25 and $1.75, per share, respectively, which were the NASDAQ closing prices on the date of the grants ($1.86, $1.94, $2.39, $1.69, $1.45 and $1.76 per share, respectively, after automatic adjustment for the 10% stock dividends occurring annually on December 22, 1993 through 1997). The Options became exercisable six (6) months after the date of the grants, and will expire ten (10) years from the date of grant. (b) On September 3, 1996, an additional one-time grant of an Option to acquire 60,500 shares (as adjusted for the 10% stock dividends occurring on December 22, 1996 and 1997) was made to each of Messrs. McKee and Carolus pursuant to the Directors' Plan. The exercise price of these Option grants was $2.125 per share, which was the NASDAQ closing price on September 3, 1996. These Options will vest at the rate of 20% (12,100 shares) per year on September 3, 1997 through 2001. The Company maintains a 401K Plan which was effective January 1, 1989, and is available for participation by all employees without minimum age or service requirements. Each participating employee can defer up to 17% of his annual compensation to a specified limit. The Company matches 100% of the employee's deferrals, with such matching contributions not to exceed 3% of the employee's annual compensation. The Company's total contributions to the Plan for fiscal year 1999 were $168,000. Directors' fees are payable to each Director for attendance at all regular and special board meetings for the Company. Messrs. McKee and Carolus, although Directors, are not paid Directors' fees. Richard E. Minshall, Anthony Pantaleoni and John H. Williams, Sr., the Company's outside Directors, have each been paid the sum of $6,000 for attendance at board meetings during the fiscal year ended March 31, 1999. Compensation of $1,500 per meeting to the outside Directors was originally determined as part of the Company's acquisition of NMP Corp. in March of 1988, and has continued thereafter to provide some compensation for the efforts and time expended by Messrs. Minshall, Pantaleoni and Williams. While there are only four to six scheduled meetings of the Board of Directors in Tulsa, Oklahoma, on a yearly basis, there is a substantial number of communications by and between the Directors throughout the course of the year which are not in any way compensated. Stock Performance Graph The following graph compares the Company's five-year cumulative total return to the NASDAQ U.S. Stock Index and the S&P Electronic Defense Index over a period beginning on March 31, 1994, and ending on March 31, 1999. The total stockholder return assumes $100 invested on March 31, 1994, in the Company and each of the Indexes shown. It also assumes reinvestment of all dividends. The Company is in a unique industry and has few competitors manufacturing electrical generation and control equipment, primarily for military application, switching panel boards, 4 switchboards, and electronic components. The Company's primary competitors are not publicly traded on any U.S. Stock Market and therefore, no financial data is obtainable for comparative purposes. With the acquisition of E. Systems, Inc. in mid-1995 and Loral Corp. in January of 1996, the S&P Electronic Defense Index is now composed solely of one company, EG&G, Inc. The public acquisitions of E. Systems, Inc. and Loral Corp., at substantial premiums over the then trading prices of these companies, has, in the Company's opinion, resulted in a substantial inflation of the performance of the S&P Electronic Defense Index for the period March 31, 1995 through March 31, 1998. Moreover, since the Defense Index contains only one company, it is not actually representative of an industry group or segment. The Company has explored other possible indexes for purposes of future reporting, but does not believe that any existing industry segment index provides meaningful comparisons as of this date. Price performance of the Company's Common Stock may be affected by many factors other than earnings, including the small capitalization of the Company, limited availability of public float, and the relatively small number of market makers in the Company stock. Past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. 5 Table IV Comparison of Five-Year Cumulative Total Return* Among Westwood Corporation, NASDAQ U.S. Stock Index and S&P Electronic Defense Index** [WESTWOOD CORPORATION PERFORMANCE GRAPH APPEARS HERE] Tabular Description of Performance Graph
Measurement Period Westwood NASDAQ S&P Electronic (Fiscal Year Covered) Corporation U.S. Stock Index Defense Index - --------------------- ----------- ---------------- -------------- March 31, 1994 $ 100 $ 100 $ 100 FYE 03/31/95 71.60 109.92 109.62 FYE 03/31/96 75.09 149.21 257.68 FYE 03/31/97 67.58 165.87 255.16 FYE 03/31/98 69.74 250.38 364.04 FYE 03/31/99 35.18 336.94 337.43 - ---------------------
Assumes $100 invested on March 31, 1994, in Westwood Common Stock, NASDAQ U.S. Stock Index and S&P Electronic Defense Index. * Total Returns assumes reinvestment of dividends. ** Fiscal Year ended March 31, 1999. 6 Compensation Report The Board of Directors is responsible for setting the policies that govern the Company's compensation programs, administering the Company's stock option plans, and establishing the cash compensation of Executive Officers. Due to its small size, the Board has determined that a Compensation Committee is not needed and all matters of compensation for Executive Officers is determined by the Board as a whole. Generally, compensation matters are considered by the Board in March of each year when sufficient financial information is available for the Board to review projected year-end results. While the Board reviews the financial performance of the Company on an annual basis in connection with its compensation review, such policies of the Board are informal and are, to a large part, subjective. The Board's determination of executive compensation is centered on six factors, including: 1. Earnings per share; 2. Enhancement of net worth; 3. Backlog/development of defense contracts; 4. Reputation for quality; 5. Expansion of product base and services, including development of new electrical generation and control devices, within the defense industry; and, 6. Diversification into commercial, non-defense related, products. The Board has no quantifiable compensation formulas or policies based on the six factors set forth above. For example, the annual salaries of Messrs. McKee and Carolus were increased only once during the fiscal year 1988 through fiscal year 1994 even though the Company's net worth and earnings per share continued to grow annually during that period. The salaries of Messrs. McKee and Carolus have remained the same for four of the last five fiscal years of the Company. The bonus compensation of Messrs. McKee and Carolus for the fiscal year ending 1998 was reduced from the fiscal year March 31, 1997 in recognition of decreased net earnings and in recognition of the tightening economic conditions in the defense industry. No bonus was paid for the year ending March 31, 1999. The amount of the reduction in bonus compensation was not based on a formula, nor was it based on an equivalent percentage determined by the losses of fiscal year 1999 as compared to fiscal year 1998. 7 The decrease in bonus is not intended to reflect negatively on the performance of the Company's Executive Officers. Since approximately 1992, general economic conditions of corporations in the Tulsa, Oklahoma area as well as other corporations in the defense industry generally, indicated that the salary structures of Messrs. McKee and Carolus, were low. The level of bonus compensation was based in part on an effort to maintain the overall compensation packages of its Executive Officers in a competitive position with equivalent companies. However, rather than continue this practice, the Directors determined in 1998 to raise the base salary compensation of Messrs. McKee and Carolus and accordingly reduce bonus compensation. As amended effective March 31, 1998, Ernest H. McKee's salary was raised from $150,000 to $225,000 and the annual salary of Paul R. Carolus was raised from $90,000 to $130,000. The Board believes the new salary structure is competitive with equivalent corporations in the same or similar business sectors as the Company and is particularly appropriate given the efforts of the Executive Officers in transitioning the Company from a primarily engineered switchgear company to electrical generation and control products. Messrs. McKee and Carolus, as Directors of the Company, also participate in options granted pursuant to the Directors' Plan, along with each of the other three Directors. However, as set forth in Tables II and III hereof, participation in the Directors' Plan cannot be said to provide an adequate incentive or award for the services of the Company's Officers. The Directors' Plan, which was adopted by the Shareholders of the Company in 1992, provided for the issuance of options to acquire 16,106 (as adjusted by the annual dividends on December 22, 1993 through 1997) shares of the Company's Common Stock to Directors of the Company annually for a five-year period at an exercise price which is equal to the reported closing price of NASDAQ on the date of grant. In 1996, the Directors' Plan was amended to provide for the one- time grant of an option to acquire 60,500 shares (as adjusted for the 10% stock dividend occurring on December 22, 1996 and 1997) of the Company's Common Stock at an exercise price equal to the reported closing price of NASDAQ on September 3, 1996. The option vests 20% of the 60,500 shares on each of September 3, 1997, 1998, 1999, 2000 and 2001. The Directors' Plan is automatic in that the amount of the grants and the computation of the exercise price are fixed by the Plan previously adopted by the Shareholders and no action by the Board of Directors is required to perfect the award. It was originally designed as an incentive to maintain appropriate members on the Board and to induce others to become members of the Board should that be in the best interest of the Company's shareholders. 8 Stock Option Plans Incentive and Non-Qualified Stock Option Plan of Westwood Corporation On March 20, 1992, the Board of Directors of the Company adopted the Incentive and Non-Qualified Stock Option Plan (the "Incentive Stock Option Plan"), which was approved by the Stockholders of the Company at the Annual Meeting held September 24, 1992. The Incentive Stock Option Plan is intended to assist the Company in securing and retaining key employees by allowing them to participate in the ownership and growth of the Company through the grant of incentive and non-qualified options to full-time employees of the Company and its subsidiaries. Incentive stock options granted under the Incentive Stock Option Plan are intended to be "Incentive Stock Options" as defined by Section 422 of the Internal Revenue Code. The Incentive Stock Option Plan originally provided that 300,000 shares of Common Stock were reserved for issuance upon exercise of options to be granted under the Incentive Stock Option Plan. The Incentive Stock Option Plan was automatically adjusted as a result of the 10% stock dividends occurring annually on December 22, 1993 through 1997. A total of 483,153 shares are now reserved for issuance under its terms. The Incentive Stock Option Plan is administered by the Board of Directors, which determines who shall receive options, the number of shares of Common Stock that may be purchased under options, the time and manner of exercise of options and option prices. The term of options granted under the Incentive Stock Option Plan may not exceed ten years (five years in the case of an incentive stock option granted to an optionee owning more than 10% of the voting stock of the Company (a "10% Holder")). The price for incentive stock options shall not be less than 100% of the "fair market value" of the shares of Common Stock at the time the Option is granted; provided, however, that with respect to an incentive stock option, in the case of a 10% Holder, the purchase price per share shall be at least 110% of such fair market value. The price for non-qualified options shall not be less than 75% of the "fair market value" of the shares of Common Stock at the time the option is granted. The aggregate fair market value of the shares of Common Stock as to which an optionee may exercise incentive stock options may not exceed $100,000 in any calendar year. Payment for shares of Common Stock purchased upon exercise of options is to be made in cash, check or other instrument, but in the discretion of the Board of Directors, may be made by delivery of other shares of Common Stock of the Company. Under certain circumstances involving a change in the number of outstanding shares of Common Stock without the receipt by the Company of any consideration therefor, such as a stock split, stock consolidation or payment of a stock dividend, the class and aggregate number of shares of Common Stock in respect of which options may be granted under the Incentive Stock Option Plan, the class and number of shares subject to each outstanding option and the option price per share will be proportionately adjusted. In addition, if the Company is involved in a merger or consolidation, the options granted under the 1992 Stock Option Plan will be adjusted proportionately. 9 An option may not be transferred other than by will or by the laws of descent and distribution or pursuant to a qualified domestic relations order and, during the lifetime of the option holder, may be exercised only by such holder. The Incentive Stock Option Plan will terminate on September 24, 2002, and may be terminated at any time prior to that date by the Board of Directors. On November 17, 1994, the Board of Directors approved the total issuance of options entitling key employees to obtain, in the aggregate, 146,410 shares of the Company's Common Stock (as adjusted by the 10% stock dividends occurring annually on December 22, 1994 through 1997), with said amount being issued to nine (9) employees as determined by the Board of Directors. For purposes of determining distributions and provisions of the stock option issuances to employees, Messrs. McKee and Carolus noted that they did not plan to participate in any way in the Incentive Stock Option Plan and therefore all Directors served to determine those individuals entitled to stock options. The issuance of the options to employees on November 17, 1994, contained an exercise price of $2.25 per share, which was the NASDAQ closing share price as of that date ($1.54 per share after automatic adjustment for the 10% stock dividends occurring annually on December 22, 1994 through 1997). Options granted to employees on November 17, 1994, are exercisable for a period of five (5) years except that no option may be exercised during the first six months following the date of the grant. In the event of any of the employees' termination, for any reason, the options held on the date of termination may be exercised in whole or in part at any time within one (1) year after the date of termination. There have been no additional issuances of options under the Incentive Stock Option Plan since November 17, 1994. Directors' Stock Option Plan On March 20, 1992, the Board of Directors of the Company adopted the Directors' Stock Option Plan (the "Directors' Plan") which was approved by Stockholders of the Company at the Annual Meeting held September 24, 1992. The Directors' Plan originally provided for the issuance of up to 100,000 shares of Common Stock. An additional 100,000 shares were authorized for issuance under the Directors' Plan by the Stockholders on October 28, 1993. On March 20, 1996, grants of options to acquire 14,641 shares of the Company's Common Stock were issued to each of the Directors of the Company pursuant to the terms of the Directors' Plan, which represented the final options reserved under the October 28, 1993 authorization. In 1996, the Directors' Plan was amended (the "1996 Amendment"), as approved by the Shareholders of the Company at the Annual Meeting, to provide for the one-time grant of an option to acquire 50,000 shares of the Company's Common Stock at $2.125 per share. The 1996 Amendment imposed a vesting schedule which vests 20% of the 50,000 shares on each of September 3, 1997 through 2001. Additionally, the 1996 Amendment increased the term of the Options granted pursuant to the Directors' Plan to ten (10) years from the grant date of each Option and, with respect to the one-time grant of an Option to purchase 50,000 shares, ten years from the 10 vesting date of any 20% increment thereof. Finally, the 1996 Amendment increased the number of shares available under the Directors' Plan by an additional 200,000 shares from 266,200 to 466,200. The Directors' Plan was automatically adjusted as a result of the 10% stock dividends occurring annually on December 22, 1993 through 1997. The Directors' Plan was also increased as a result of an amendment approved by the Shareholders at the 1997 Annual Meeting of Shareholders ("1997 Amendment") which authorized the additional authorization of Options representing 50,000 shares of the Company's Common Stock to John H. Williams, Sr. as a result of his appointment to the Board of Directors. As a result of the 1997 Amendment and the 10% stock dividend occurring on December 22, 1997, a total of 619,120 shares are now reserved for issuance under its terms. All options granted are exercisable six months after the grant date, and shall expire ten years after the grant date, except in the case of a Director's death or permanent disability, upon which event the options immediately vest and are exercisable for a period of one year thereafter and then would terminate. If a Director's membership on the Board of Directors terminates for any reason, any option held on such date may be exercised any time within one year after the date of termination, unless the option terminates sooner by its terms. The Directors' Stock Option Plan was originally adopted to provide additional incentive to Directors of the Company, the benefits of which would be tied directly to stock performance of the Company. Moreover, it was hoped that the Plan could partially compensate the three outside Directors, Messrs. Minshall, Pantaleoni and Williams, for the considerable amount of consulting and communication time spent by them outside of Board meetings. While compensated at the rate of $1,500 per Board meeting, this compensation only applies when they actually participate in a Board meeting. They are not otherwise compensated for their additional efforts during the year. Additionally, Ernest H. McKee and Paul R. Carolus, do not participate in the Company's Incentive and Non-Qualified Stock Option Plan. The only Options received by Messrs. McKee and Carolus are as part of the Directors' Stock Option Plan. When originally instituted in 1992, an average trading price for Common Stock of the Company was approximately $3.00 per share and it was hoped that the price per share of the Common Stock would grow by approximately 10% per year, which would result in a potential gain to each Director of approximately $3,000 on an annual basis. However, as of the date hereof, none of the Options issued to Directors over the last eight years have resulted in any gain and none have been exercised. Item 12. Security Ownership of Certain Beneficial Owners and Management -------------------------------------------------------------- The following table sets forth information regarding the ownership of the Company's Common Stock by (i) each beneficial owner of more than 5% of the outstanding Common Stock, (ii) each Director, (iii) the Chief Executive Officer and the Chief Financial Officer, and (iv) the 11 Executive Officers and Directors as a group. The information is given as of March 31, 1999. Unless otherwise indicated, each of the Stockholders has sole voting and investment power with respect to the shares beneficially owned.
Number of Shares Name of Owner or Common Percent of Identity of Group Options(a) Stock(b) Outstanding(b) - ----------------- ---------- ------------ -------------- Ernest H. McKee 104,730 1,441,040 20.9% 2902 E. 74th Street Tulsa, Oklahoma 74136 Paul R. Carolus 104,730 380,621 5.5% 8511 South Canton Avenue Tulsa, Oklahoma 74137 Robert E. Lorton ---- 348,491 5.1% 1440 South Owasso Avenue Tulsa, Oklahoma 74120-5609 William J. Preston ---- 770,558 11.2% 1717 Woodstead Court The Woodlands, Texas 77380 Richard E. Minshall 104,730 310,856(c) 4.5% 320 South Boston Avenue, Suite 1300 Tulsa, Oklahoma 74103 Anthony Pantaleoni 104,730 163,612(d) 2.4% 666 Fifth Avenue New York, New York 10103 John H. Williams, Sr. 22,000 15,000 .2% One Williams Center, 49/th/ Floor Tulsa, Oklahoma 74172 All Executive Officers and Directors as a Group (5 persons) 440,920 2,311,129 33.5%
(a) Includes Company stock options that vest on September 3, 1999, but are not exercisable until March 3, 2000. (b) Does not include unexercised options. (c) Includes 129,967 shares of Common Stock owned beneficially by Mr. Minshall individually; 5,371 shares owned beneficially by Mr. Minshall's wife; 174,434 shares held beneficially by Capital Advisors, Inc., and 1,084 shares owned by Minshall & Company, Inc. Mr. Minshall is the Chief Executive Officer and controlling shareholder of Capital Advisors, Inc., and Minshall & Company, Inc. A revocable trust for the benefit of Mr. Minshall's Mother owns 74,855 12 shares of which Mr. Minshall is Trustee. Mr. Minshall does not claim any beneficial ownership in the shares held by the Trust. (d) Includes 51,550 shares of Common Stock owned beneficially by Mr. Pantaleoni; an aggregate of 52,062 shares held equally in two trusts for the benefit of Mr. Pantaleoni's children (Mr. Pantaleoni disclaims beneficial ownership of these shares), and 60,000 shares held by a trust of which Mr. Pantaleoni is a trustee and a beneficiary. Item 13. Certain Relationships and Related Transactions ---------------------------------------------- Messrs. McKee and Carolus have employment contracts with the Company through March 2000. These contracts, as amended effective March 31, 1998, provide for a base salary of $225,000 for Mr. McKee and $130,000 for Mr. Carolus. Bonus provisions are subject to the discretion of the Board of Directors. Both contracts provide for other benefits to these individuals, including Company owned automobiles, club memberships, and reimbursement of business expenses. Although both contracts can be terminated by the Board of Directors, at its discretion, each contract provides for continued salary payments through March of 2000. Minshall & Company, Inc., provides services to the Company in regard to public news releases and public relations matters. A fee of $1,500 per month is paid to Minshall & Company, Inc., for these services. For the fiscal year ended March 31, 1999, the total sum of $18,000 was paid to Minshall & Company, Inc., in connection with these services. In conjunction with the sale of RoxCorp. to Roxtec in September, 1997, NMP Corp., the Company's subsidiary located in Tulsa, Oklahoma, entered into an Administrative Services Agreement with RoxCorp. to provide certain administrative services and facilities to RoxCorp. on a month-to-month basis including office and warehouse space, and telephone service. Either party can terminate the Administrative Services Agreement upon sixty (60) days' notice. The services provided, and the consideration to be received, were essentially identical to those previously provided based on the then inter-corporate expense allocation determined by NMP Corp. and RoxCorp. During the fiscal year ended March 31, 1999, NMP Corp. received the sum of $88,000 from RoxCorp. pursuant to the Administrative Services Agreement. Matthew E. McKee, a son of Ernest H. McKee, serves as Production Manager of NMP Corp. For the Company's fiscal year ending March 31, 1999, Matthew E. McKee received salary of $64,000 and bonus compensation of $5,800. Matthew E. McKee's current salary is $64,000 per year which includes a car allowance of $500 per month. Mr. McKee obtained a B.B.A. degree from the University of Texas, College of Business in 1992 and has been employed in various management capacities at NMP Corp. since 1992. 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. WESTWOOD CORPORATION By: /s/ Ernest H. McKee ------------------------------------------ Ernest H. McKee, President DATE: August 12, 1999 14 -----END PRIVACY-ENHANCED MESSAGE-----