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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of report (Date of earliest event reported) December 30, 2005
MASTEC, INC.
(Exact Name of Registrant as Specified in Its Charter)
Florida
(State or Other Jurisdiction of Incorporation)
(State or Other Jurisdiction of Incorporation)
| Florida | 0-08106 | 65-0829355 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
800 Douglas Road, Floor 12, Coral Gables, Florida 33134
(Address of Principal Executive Offices) (Zip Code)
(Address of Principal Executive Offices) (Zip Code)
(305) 599-1800
(Registrant’s Telephone Number, Including Area Code)
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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EXPLANATORY NOTE
This Form 8-K/A (Amendment No. 1) includes and updates information filed on January 6, 2005 on
Form 8-K which has recently become available. In Item 8.01 this
amendment also includes executive compensation, director compensation
and employee benefit and stock plan
information updated through December 31, 2005 to the extent available.
ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On December 31, 2005, the executive committee of the board of directors of MasTec, Inc., a
Florida corporation (“MasTec”) voted to sell substantially all of MasTec’s state Departments of
Transportation related projects and assets. These projects will be treated as a discontinued
operation beginning in the fourth quarter of 2005. The decision was made as a result of an
evaluation of, among other things, the short and long term prospects of these projects. At this
time, MasTec is unable in good faith to make a full determination of the estimates required by
paragraphs (b), (c) or (d) of Item 2.05 of this Form 8-K. MasTec will file an amendment to this
Form 8-K under this Item 2.05 within four business days after it makes a determination of such
estimates or range of estimates.
The carrying value of the subject net assets for sale
was $57.7 million as of September 30, 2005. This amount is comprised of total assets of $91.3 million
which includes $11.5 million of goodwill less total liabilities of $33.6 million. MasTec
anticipates that it will need to record a material impairment charge related to these net assets.
The following additional information has recently become available:
Pro Forma Information on Continuing Operations
The following unaudited pro forma consolidated financial information of MasTec is derived from
MasTec’s historical consolidated financial statements and should be read in conjunction with the
audited financial statements and notes thereto appearing in our Annual Report on Form 10-K for the
year ended December 31, 2004 and our Form 10-Q for the period ended September 30, 2005. The
accompanying unaudited pro forma condensed consolidated statements of operations for the nine
months ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002 are presented
as if MasTec had accounted for the state Departments of Transportation related projects and assets
as discontinued operations as of January 1, 2002. The unaudited pro forma condensed consolidated
balance sheet is presented as if the projects and assets were a discontinued operation as of
September 30, 2005. The unaudited pro forma condensed consolidated financial information is
preliminary and may be subject to change based on terms of an actual sale.
The unaudited pro forma condensed consolidated financial information has been presented for
informational purposes only and is not indicative of any future results of operations or the
results that might have occurred if the discontinued operations were actually effective on the
indicated dates. The unaudited pro forma condensed consolidated financial statements are based on
our management’s estimate of the effects of the discontinued operations. Pro forma adjustments are
based on currently available information, historical results and certain assumptions that our
management believes are reasonable and described in the accompanying notes.
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MASTEC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, 2005
| September 30, | Pro Forma | ||||||||||||||
| 2005 | Adjustments | Pro Forma | |||||||||||||
| (In thousands) | |||||||||||||||
| Assets | |||||||||||||||
|
Current assets:
|
|||||||||||||||
|
Cash and cash equivalents
|
$ | 2,894 | $ | — | $ | 2,894 | |||||||||
|
Accounts receivable, unbilled revenue and retainage, net
|
228,052 | (44,453 | )(a) | 183,599 | |||||||||||
|
Inventories
|
42,649 | (24,669 | )(a) | 17,980 | |||||||||||
|
Income tax refund receivable
|
1,511 | — | 1,511 | ||||||||||||
|
Prepaid expenses and other current assets
|
42,689 | (2,423 | )(a) | 40,266 | |||||||||||
|
Current assets held for sale
|
— | 71,545 | (a) | 71,545 | |||||||||||
|
Total current assets
|
317,795 | — | 317,795 | ||||||||||||
|
Property and equipment, net
|
56,451 | (4,581 | )(b) | 51,870 | |||||||||||
|
Goodwill
|
138,640 | (11,497 | )(b) | 127,143 | |||||||||||
|
Deferred taxes, net
|
52,658 | — | 52,658 | ||||||||||||
|
Other assets
|
43,845 | (3,699 | )(b) | 40,146 | |||||||||||
|
Long-term assets held for sale
|
— | 19,777 | (b) | 19,777 | |||||||||||
|
Total assets
|
$ | 609,389 | $ | — | $ | 609,389 | |||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||
|
Current liabilities:
|
|||||||||||||||
|
Current maturities of debt
|
$ | 112 | $ | — | $ | 112 | |||||||||
|
Accounts payable and accrued expenses
|
125,790 | (32,649 | )(c) | 93,141 | |||||||||||
|
Other current liabilities
|
59,917 | — | 59,917 | ||||||||||||
|
Current liabilities related to assets held for sale
|
— | 32,649 | (c) | 32,649 | |||||||||||
|
Total current liabilities
|
185,819 | — | 185,819 | ||||||||||||
|
Other liabilities
|
37,039 | (929 | )(c) | 36,110 | |||||||||||
|
Long-term debt
|
196,126 | — | 196,126 | ||||||||||||
|
Long-term liabilities related to assets held for sale
|
— | 929 | (c) | 929 | |||||||||||
|
Total liabilities
|
418,984 | — | 418,984 | ||||||||||||
|
Commitments and contingencies
|
|||||||||||||||
|
Shareholders’ equity:
|
|||||||||||||||
|
Preferred stock, $1.00 par value; authorized
shares—5,000,000; issued and outstanding shares—none
|
— | — | — | ||||||||||||
|
Common stock, $0.10 par value authorized
shares—100,000,000 issued and outstanding
shares—49,142,346 as of September 30, 2005
|
4,914 | — | 4,914 | ||||||||||||
|
Capital surplus
|
355,469 | — | 355,469 | ||||||||||||
|
Accumulated deficit
|
(170,433 | ) | — | (170,433 | ) | ||||||||||
|
Accumulated other comprehensive income
|
455 | — | 455 | ||||||||||||
|
Total shareholders’ equity
|
190,405 | — | 190,405 | ||||||||||||
|
Total liabilities and shareholders’ equity
|
$ | 609,389 | $ | — | $ | 609,389 | |||||||||
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MASTEC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 2005
| Pro Forma | ||||||||||||
| Historical | Adjustments | Pro Forma | ||||||||||
| (In thousands except per share data) | ||||||||||||
|
Revenue
|
$ | 697,427 | $ | (72,822 | )(d) | $ | 624,605 | |||||
|
Costs of revenue, excluding depreciation
|
621,560 | (78,176 | )(d) | 543,384 | ||||||||
|
Depreciation
|
13,950 | (1,306 | )(d) | 12,644 | ||||||||
|
General and administrative expenses
|
51,470 | (5,594 | )(d) | 45,876 | ||||||||
|
Interest expense, net
|
14,412 | (66 | )(d) | 14,346 | ||||||||
|
Other income, net
|
3,402 | (293 | )(d) | 3,109 | ||||||||
|
(Loss) income from continuing operations before minority interest
|
(563 | ) | 12,027 | 11,464 | ||||||||
|
Minority interest
|
(995 | ) | — | (995 | ) | |||||||
|
(Loss) income from continuing operations
|
$ | (1,558 | ) | $ | 12,027 | $ | 10,469 | |||||
|
Basic weighted average common shares outstanding
|
48,876 | 48,876 | ||||||||||
|
Basic (loss) income per share from continuing operations
|
$ | (0.03 | ) | $ | 0.21 | |||||||
|
Diluted weighted average common shares outstanding
|
48,876 | 49,674 | ||||||||||
|
Diluted (loss) income per share from continuing operations
|
$ | (0.03 | ) | $ | 0.21 | |||||||
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MASTEC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
For the Year Ended December 31, 2004
| Pro Forma | ||||||||||||
| Historical | Adjustments | Pro Forma | ||||||||||
| (In thousands except per share data) | ||||||||||||
|
Revenue
|
$ | 913,795 | $ | (106,611 | )(d) | $ | 807,184 | |||||
|
Costs of revenue, excluding depreciation
|
828,743 | (109,461 | )(d) | 719,282 | ||||||||
|
Depreciation
|
17,099 | (2,174 | )(d) | 14,925 | ||||||||
|
General and administrative expenses
|
74,550 | (3,040 | )(d) | 71,510 | ||||||||
|
Interest expense, net
|
19,478 | — | 19,478 | |||||||||
|
Other income, net
|
191 | 410 | (d) | 601 | ||||||||
|
Loss from continuing operations before minority interest
|
(25,884 | ) | 8,474 | (17,410 | ) | |||||||
|
Minority interest
|
(333 | ) | — | (333 | ) | |||||||
|
Loss from continuing operations
|
$ | (26,217 | ) | $ | 8,474 | $ | (17,743 | ) | ||||
|
Basic and diluted weighted average common shares outstanding
|
48,382 | 48,382 | ||||||||||
|
Basic and diluted loss per share from continuing operations
|
$ | (0.54 | ) | $ | (0.37 | ) | ||||||
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MASTEC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2003
| Pro Forma | ||||||||||||
| Historical | Adjustments | Pro Forma | ||||||||||
| (In thousands except per share data) | ||||||||||||
|
Revenue
|
$ | 827,480 | $ | (115,268 | )(d) | $ | 712,212 | |||||
|
Costs of revenue, excluding depreciation
|
744,587 | (115,297 | )(d) | 629,290 | ||||||||
|
Depreciation
|
27,586 | (2,289 | )(d) | 25,297 | ||||||||
|
General and administrative expenses
|
70,112 | (3,625 | )(d) | 66,487 | ||||||||
|
Interest expense, net
|
19,180 | — | 19,180 | |||||||||
|
Other income, net
|
1,242 | (160 | )(d) | 1,082 | ||||||||
|
Loss from continuing operations before benefit for income taxes
|
(32,743 | ) | 5,783 | (26,960 | ) | |||||||
|
Benefit for income taxes
|
8,303 | (2,134 | )(d) | 6,169 | ||||||||
|
Loss from continuing operations
|
$ | (24,440 | ) | $ | 3,649 | $ | (20,791 | ) | ||||
|
Basic and diluted weighted average common shares outstanding
|
48,084 | 48,084 | ||||||||||
|
Basic and diluted loss per share from continuing operations
|
$ | (0.51 | ) | $ | (0.43 | ) | ||||||
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MASTEC, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2002
| Pro Forma | ||||||||||||
| Historical | Adjustments | Pro Forma | ||||||||||
| (In thousands except per share data) | ||||||||||||
|
Revenue
|
$ | 766,467 | $ | (109,482 | )(d) | $ | 656,985 | |||||
|
Costs of revenue, excluding depreciation
|
683,855 | (97,001 | )(d) | 586,854 | ||||||||
|
Depreciation
|
33,760 | (3,184 | )(d) | 30,576 | ||||||||
|
General and administrative expenses
|
107,446 | (3,060 | )(d) | 104,386 | ||||||||
|
Goodwill impairment
|
79,710 | — | 79,710 | |||||||||
|
Interest expense, net
|
18,306 | — | 18,306 | |||||||||
|
Other expense, net
|
9,973 | (150 | )(d) | 9,823 | ||||||||
|
Loss from continuing operations before benefit for income taxes
|
(166,583 | ) | (6,087 | ) | (172,670 | ) | ||||||
|
Benefit for income taxes
|
59,345 | 2,347 | (d) | 61,692 | ||||||||
|
Loss from continuing operations
|
$ | (107,238 | ) | $ | (3,740 | ) | $ | (110,978 | ) | |||
|
Basic and diluted weighted average common shares outstanding
|
47,922 | 47,922 | ||||||||||
|
Basic and diluted loss per share from continuing operations
|
$ | (2.24 | ) | $ | (2.32 | ) | ||||||
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheets:
The unaudited pro forma condensed consolidated balance sheet was prepared assuming the state
Departments of Transportation related projects and assets were accounted for as discontinued
operations as of September 30, 2005 and included “Pro Forma Adjustments” as follows:
(a) Adjustments to the unaudited condensed consolidated balance sheet include the
reclassification of current assets to current assets held for sale of $71.5 million and are
comprised of the following (in thousands):
Accounts receivable |
$ | 44,453 | ||
Inventories |
24,669 | |||
Other current assets |
2,423 | |||
| $ | 71,545 | |||
(b) Adjustments to the unaudited condensed consolidated balance sheet include the
reclassification of long-term assets to long-term assets held for sale of $19.8 million and are
comprised of the following (in thousands):
Property and equipment |
$ | 4,581 | ||
Goodwill |
11,497 | |||
Other long-term assets |
3,699 | |||
| $ | 19,777 | |||
(c) Adjustments to the unaudited pro forma condensed consolidated balance sheet include the
reclassification of accounts payable and accrued expenses of $32.6 million to current liabilities
related to assets held for sale and the reclassification of long-term debt of $929,000 to long-term
liabilities related to assets held for sale.
Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations:
The unaudited pro forma condensed consolidated statements of operations for the nine months
ended September 30, 2005 and the years ended December 31, 2004, 2003 and 2002 have been presented
as if MasTec had accounted for the state Departments of Transportation related assets and projects
as discontinued operations as of January 1, 2002.
These statements include “Pro Forma Adjustments” as follows:
(d) These adjustments to the unaudited pro forma condensed consolidated statements of
operations for the nine months ended September 30, 2005 and the years ended December 31,
2004, 2003 and 2002 reflect only the direct costs of the discontinued operations of the state
Departments of Transportation related projects and assets as if
MasTec had accounted for the state Departments of Transportation
related assets and projects as discontinued operations as of
January 1, 2002.
At this time, MasTec has not completed its determination of the fair value of the assets and
does not have an estimate of the write-down or other charges associated with the sale of the net
assets. The pro
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forma adjustments do not give effect to any write-down of the fair value of the net assets as
of September 30, 2005.
Information
regarding the sale of substantially all of MasTec’s state
Departments of Transportation related projects and assets was contained in a January 6, 2006 press release which
was attached as Exhibit 99.2 to this Form 8-K as filed on
January 6, 2006 and is hereby incorporated by reference in its entirety.
ITEM 8.01 OTHER EVENTS
Executive Compensation
| Executive Officer Summary Compensation Table |
The following table summarizes all compensation earned by our
Chief Executive Officer and the other most highly compensated
executive officers of MasTec whose total salary and bonus
exceeded $100,000 (together, the “Named Executive
Officers”) for services rendered in all capacities to
MasTec and its subsidiaries for the years ended
December 31, 2005, 2004 and 2003.
| Summary Compensation Table |
| Annual Compensation | Long Term Compensation | ||||||||||||||||||||||||
| Other Annual | Securities | All Other | |||||||||||||||||||||||
| Salary | Bonus | Compensation | Underlying | Compensation | |||||||||||||||||||||
| Name and Principal Position | Year | ($) | ($) | ($) | Options(11) | ($) | |||||||||||||||||||
|
Austin Shanfelter
|
2005 | 639,231 | (2) | — | (3) | — | 150,000 | 500,061 | (16) | ||||||||||||||||
| President & Chief | 2004 | 560,769 | (2) | 101,971 | (4) | — | — | 500,675 | (16) | ||||||||||||||||
| Executive Officer | 2003 | 542,308 | (2) | 175,000 | (5) | — | 150,000 | 500,000 | (16) | ||||||||||||||||
|
C. Robert Campbell
|
2005 | 350,000 | — | (3) | 7,200 | (8) | 40,000 | — | |||||||||||||||||
| Executive Vice President & | 2004 | (1) | 67,308 | 75,000 | (6) | 1,385 | (8) | 100,000 | (12) | — | |||||||||||||||
| Chief Financial Officer | 2003 | — | — | — | — | — | |||||||||||||||||||
|
Jose Ramon Mas
|
2005 | 246,156 | — | (3) | — | 150,000 | 3,000 | (17) | |||||||||||||||||
| Vice Chairman | 2004 | 242,605 | — | 163,019 | (9) | — | 4,350 | (17) | |||||||||||||||||
| Executive Vice President | 2003 | 225,000 | — | 21,156 | (10) | 150,000 | 1,627 | (17) | |||||||||||||||||
|
Gregory Floerke
|
2005 | (1) | 300,000 | 50,000 | (7) | — | 40,000 | (13) | — | ||||||||||||||||
| Chief Operations Officer | 2004 | 244,616 | — | — | 75,000 | (14) | — | ||||||||||||||||||
| 2003 | 38,462 | — | — | — | — | ||||||||||||||||||||
|
Michael Nearing
|
2005 | (1) | 306,686 | — | (3) | 7,200 | (8) | 50,000 | (15) | — | |||||||||||||||
| General Counsel—Litigation | 2004 | 271,154 | — | 6,508 | (8) | — | |||||||||||||||||||
| 2003 | — | — | — | — | — | ||||||||||||||||||||
| (1) | Mr. Campbell became Executive Vice President and Chief Financial Officer in October 2004. Mr. Floerke became Chief Operations Officer in January 2005; prior to that he was a Senior Vice President. Mr. Nearing served as our Executive Vice President and General Counsel until November 2005. | |
| (2) | Mr. Shanfelter elected to reduce his salary by 10% in 2003 in light of MasTec’s operating results. In 2004 that reduction continued, but the 2004 reduction, in the amount of $39,231 was refunded to Mr. Shanfelter in 2005. | |
| (3) | The amount of bonus earned in the year ended December 31, 2005 is not currently determinable. | |
| (4) | Represents the fourth installment payment of $101,971 of deferred compensation awarded in 2001 for performance in 2000. | |
| (5) | Represents a $75,000 payment of deferred compensation awarded in 2001 for performance in 2000; and a bonus of $100,000 paid to Mr. Shanfelter in 2003 in connection with his amended employment agreement related to 2002 performance. | |
| (6) | Represents a bonus paid to Mr. Campbell in 2004 in connection with his employment agreement. | |
| (7) | Represents a bonus paid to Mr. Floerke in 2005 in connection with his employment agreement. | |
| (8) | Represents car allowance payments paid to Messrs. Campbell and Nearing. | |
| (9) | Represents a payment of $13,019 related to a split dollar life insurance arrangement entered in 2000 and cancelled in 2004; and $150,000 paid in connection with a new split dollar life insurance arrangement entered in 2004. |
| (10) | Represents payments related to a split dollar life insurance arrangement entered in 2000. |
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| (11) | The options were granted in the year indicated based on performance in the previous year unless otherwise noted. |
| (12) | Represents options to acquire 100,000 shares of our common stock that were granted to Mr. Campbell in connection with his employment agreement. |
| (13) | Represents options to acquire 40,000 shares of our common stock that were granted to Mr. Floerke in connection with his employment agreement. |
| (14) | Represents options to acquire 35,000 and 40,000 shares of our common stock that were granted to Mr. Floerke in connection with his hiring and promotion, respectively. |
| (15) | Represents options to acquire 50,000 shares of our common stock that were granted to Mr. Nearing in connection with his employment agreement. |
| (16) | Of this amount, $500,000 represents premiums paid by MasTec for insurance on the lives of Mr. Shanfelter and member of his family and interest owed to Mr. Shanfelter. |
| (17) | Represents premiums attributed for the term portion of life insurance on the life of Mr. Mas. In 2004, $3,300 represents income attribution. |
The following table provides information with respect to options
to purchase common stock granted to the Named Executive Officers
for the year ended December 31, 2005:
| Individual Grants | ||||||||||||||||||||||||
| Potential Realizable Value | ||||||||||||||||||||||||
| Number of | Percent of | at Assumed Annual Rates | ||||||||||||||||||||||
| Shares | Total Options | of Stock Price Appreciation | ||||||||||||||||||||||
| Underlying | Granted to | for Option Term(3) | ||||||||||||||||||||||
| Options | Employees for | Exercise Price | Expiration | |||||||||||||||||||||
| Name | Granted | Fiscal Year(1) | ($/Sh)(2) | Date | 5% | 10% | ||||||||||||||||||
|
Austin J. Shanfelter
|
150,000 | 11.60 | % | $ | 9.67 | 08/05/15 | $ | 912,212 | $ | 2,311,723 | ||||||||||||||
|
C. Robert Campbell
|
40,000 | 3.10 | % | $ | 10.01 | 11/01/15 | $ | 251,809 | $ | 638,134 | ||||||||||||||
|
Jose R. Mas
|
150,000 | 11.60 | % | $ | 9.67 | 08/05/15 | $ | 912,212 | $ | 2,311,723 | ||||||||||||||
|
Gregory S. Floerke
|
40,000 | 3.10 | % | $ | 9.73 | 01/03/15 | $ | 244,766 | $ | 620,285 | ||||||||||||||
|
Michael G. Nearing(4)
|
50,000 | 3.87 | % | $ | 10.48 | 11/04/15 | $ | 329,541 | $ | 835,121 | ||||||||||||||
| (1) | Based on options to purchase an aggregate of 1,293,000 shares of common stock granted to employees in 2005. |
| (2) | All options were granted at an exercise price equal to fair market value based on the closing price of our common stock on the New York Stock Exchange on the date of grant. |
| (3) | Amounts represent hypothetical gains assuming exercise at the end of the option term and assuming rates of stock price appreciation of 5% and 10% compounded annually from the date the respective options were granted to their expiration date. The 5% and 10% assumed rates of appreciation are mandated by the rules of the Securities and Exchange Commission. These assumptions are not intended to forecast future appreciation of our stock price. The potential realizable value computation does not take into account federal or state income tax consequences of option exercises or sales of appreciated stock. The actual gains, if any, on the stock option exercises will depend on the future performance of our common stock, the optionee’s continued employment through applicable vesting periods and the date on which the options are exercised and the underlying shares are sold. |
| (4) | Mr. Nearing served as our Executive Vice President and General Counsel until November 2005. |
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Aggregate
Option Exercises and Year-End Option Values
The following table sets forth information with respect to each
exercise of stock options during the year ended
December 31, 2005 by the Named Executive Officers and the
value at December 31, 2005 of unexercised stock options
held by the Named Executive Officers.
| Value of Unexercised in | ||||||||||||||||
| Shares | Number of Shares Underlying | the Money Options at | ||||||||||||||
| Acquired | Unexercised Options at | December 31, 2005 | ||||||||||||||
| on | Value | December 31, 2005 | Exercisable/ | |||||||||||||
| Exercise | Realized | Exercisable/ Unexercisable | Unexercisable(1) | |||||||||||||
|
Austin J. Shanfelter
|
— | — | 1,054,929/51,000 | $1,459,770/139,230 | ||||||||||||
|
C. Robert Campbell
|
— | — | 50,000/90,000 | $99,824/142,576 | ||||||||||||
|
Jose R. Mas
|
— | — | 470,429/51,000 | $390,270/139,230 | ||||||||||||
|
Gregory S. Floerke
|
— | — | 88,200/26,800 | $99,824/142,576 | ||||||||||||
|
Michael G. Nearing
|
— | — | 58,000/42,000 | $90,090/46,410 | ||||||||||||
| (1) | Market value of shares underlying in-the-money options at December 30, 2005 based on the product of $10.47 per share, the closing price of MasTec’s common stock on the New York Stock Exchange, less the exercise price of each option, multiplied by the number of in-the-money options as of that date. |
| Compensation of Directors |
During 2004, we took into consideration the adoption of a new
independent director compensation program, based upon the
greatly increased responsibilities and time demands on
independent directors. Research was conducted to ensure that the
independent directors’ compensation program would be
competitive with current market practice and trends in
comparable industries. We decided to provide each independent
director with an annual cash retainer, committee service
retainer, committee chairperson service retainer, formula stock
option grants for appointment/
re-election and
continued service, and restricted stock grants for appointment/
re-election to the
Board, all as governed by our Amended and Restated 2003 Stock
Incentive Plan for Non-Employees. In addition, directors are
reimbursed for their reasonable expenses in attending Board and
committee meetings.
Each of the independent directors is paid an annual retainer of
$30,000. In addition, the Audit Committee Chairperson is paid
$15,000 per year and each other audit committee member is
paid $10,000 per year for service. The Compensation
Committee Chairperson and the Nominating and Governance
Committee Chairperson are paid $5,000 per year and each of
the other members of these committees is paid $4,000 per
year for service. All other committee members and chairpersons
receive $1,000 per year. All cash compensation is paid on a
quarterly basis.
The Amended and Restated 2003 Stock Incentive Plan for
Non-Employees governs the formula option grants of
20,000 shares of our common stock upon election or
appointment to the Board, 20,000 shares of our common stock
upon each re-election and 7,500 shares of our common stock
following each Annual Meeting of Shareholders for continued
service during the elected term. In addition to the foregoing,
the Compensation Committee, which administers the Amended and
Restated 2003 Stock Incentive Plan for Non-Employees, may make
discretionary grants of stock options and restricted stock
awards to non-employee directors. All options expire ten years
from the date of grant and vest annually over three years. All
options are granted at an exercise price equal to the fair
market value of MasTec’s common stock based on the closing
price of our common stock on the New York Stock Exchange on the
date of grant.
Pursuant to the Amended and Restated 2003 Stock Incentive Plan
for Non-Employees, Carlos M. de Cespedes, Robert J. Dwyer, Frank
E. Jaumot, Jose S. Sorzano and John Van Heuvelen each received a
formula grant of options to purchase 7,500 shares of
our common stock in June 2005 for
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continued service on our Board, Julia L. Johnson received a
formula grant for options to purchase 20,000 shares of
our common stock in June 2005 for her re-election to our Board.
Ernst N. Csiszar received a formula grant of options to
purchase 20,000 shares of our common stock in November
2005 upon his appointment to our Board.
Under the Amended and Restated 2003 Stock Incentive Plan for
Non-Employees, each director receives a grant of restricted
stock with a value equal to $50,000 upon appointment to the
Board and $50,000 of restricted stock upon re-election.
Restricted stock becomes vested and nonforfeitable on the third
anniversary of the date of grant. Upon issuance of the shares of
the restricted stock, the recipient has immediate rights of
ownership in the shares of restricted stock, including the right
to vote the shares and the right to receive dividends. Pursuant
to the Amended and Restated 2003 Stock Incentive Plan for
Non-Employees, Ernst N. Csiszar received 4,841 shares of
restricted stock in October 2005.
On December 19, 2005, the Compensation Committee approved a
Deferred Fee Plan for the benefit of our directors and their
beneficiaries. The plan became effective on January 1,
2006. Under the terms of the plan, directors may elect to defer
the receipt of cash and stock fees for their services as
directors. Each director may elect the type of fees to be
deferred, the percentage of such fees to be deferred, and the
form in which the deferred fees and any earnings thereon are to
be paid. Deferred cash fees may be directed to a deferred cash
account or a deferred stock account (or both). Deferred stock
fees only may be directed to a deferred stock account. Elections
to defer fees remain in force, unless amended or revoked within
the required time periods.
The deferred cash account will be credited with interest on the
cash balance at the end of each calendar quarter. The interest
rate is equal to the rate of interest payable by us on our
senior credit facility, as determined as of the first day of
each calendar quarter. The deferred stock account will be
credited with stock dividends (or with cash dividends that are
converted to deferred stock credits pursuant to the plan).
Distribution of a director’s cash and stock accounts will
begin on the January 15 of the year following the
director’s termination of all services with us.
Distributions from the deferred stock account will be made in
shares of our stock while distributions from the deferred cash
account will be made in cash. Distributions will either be made
in a lump-sum payment or in up to five consecutive annual
installments as elected by the director.
| Employee Benefit and Stock Plans |
The following table sets forth information about our common
stock that may be issued under all of our existing equity
compensation plans as of December 31, 2005 which include
the 1994 Stock Incentive Plan, 1994 Stock Option Plan for
Non-Employee Directors, 1997 Annual Incentive Compensation Plan,
1997 Non-Qualified Employee Stock Purchase Plan, Non-Employee
Directors’ Stock Plan, 1999 Non-Qualified Employee Stock
Option Plan, 2003 Employee Stock Incentive Plan, Amended and
Restated 2003 Stock Incentive Plan for Non-Employees and
individual option agreements. The 1994 Stock Incentive Plan,
1994 Stock Option Plan for Non-Employee Directors, the
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1997 Annual Incentive Compensation Plan, 2003 Employee Stock
Incentive Plan and the Amended and Restated 2003 Stock Incentive
Plan for Non-Employees were approved by our shareholders.
| Number of Securities | |||||||||||||
| Remaining Available for | |||||||||||||
| Number of Securities to | Weighted Average | Future Issuance Under | |||||||||||
| be Issued Upon Exercise | Exercise Price | Equity Compensation | |||||||||||
| of Outstanding Options, | Outstanding Options, | (Excluding Securities | |||||||||||
| Warrants and Rights | Warrants and Rights | Reflected in Column (a) | |||||||||||
| Plan Category | (a) | (b) | (c) | ||||||||||
|
Equity compensation plans approved by security holders
|
6,620,658 | (1) | $ | 11.06 | 7,098,468 | (3) | |||||||
|
Equity compensation plans not approved by security holders
|
2,033,403 | (2) | $ | 17.39 | 1,148,610 | (4) | |||||||
|
Total
|
8,654,061 | 8,247,078 | |||||||||||
| (1) | Represents 2,737,048 shares issuable under the 1994 Stock Incentive Plan, 384,750 shares issuable under the 1994 Stock Option Plan for Non-Employee Directors, 2,881,360 shares issuable under the 2003 Employee Stock Incentive Plan, and 617,500 shares issuable under the Amended and Restated 2003 Stock Incentive Plan for Non-Employees. |
| (2) | Represents 1,800,203 shares issuable under the 1999 Non-Qualified Employee Stock Option Plan and 233,200 shares issuable under the Individual Option Grants. |
| (3) | Under the 2003 Employee Stock Incentive Plan, the Amended and Restated 2003 Stock Incentive Plan for Non-Employees and the 1997 Annual Incentive Compensation Plan, 3,778,735, 1,819,733, 1,500,000 shares, respectively, remain available for future issuance. We are no longer issuing options under the 1994 Stock Option Plan for Non-Employee Directors and the 1994 Stock Incentive Plan. We have never issued any shares under the 1997 Annual Incentive Compensation Plan and have no current plans to do so. |
| (4) | Under the MasTec, Inc. 1997 Non-Qualified Employee Stock Purchase Plan, Non-Employee Directors’ Stock Plan, and 1999 Non-Qualified Employee Stock Option Plan, 250,511, 142,552, and 755,547 shares, respectively, remain available for future issuance. |
| Summaries of Plans Approved by Our Shareholders |
2003 Employee Stock Incentive Plan. The 2003
Employee Stock Incentive Plan is administered by the
Compensation Committee. In consideration of their services,
employees who serve as officers or employees of MasTec or a
member of our controlled group of companies and who are actively
employed at the time an award is made are eligible to receive
awards under the 2003 Employee Stock Incentive Plan. The plan
permits grants of incentive stock options, nonqualified stock
options, reload options, restricted stock, and performance
shares. The total aggregate amount of shares reserved for
issuance under the plan is 7,000,000 shares. As of
December 31, 2005, we had 3,778,735 shares available
for issuance under the plan.
Amended and Restated 2003 Stock Incentive Plan for
Non-Employees. The Amended and Restated 2003 Stock
Incentive Plan for Non-Employees is administered by the
Compensation Committee. Any “advisor” (an individual
who serves as an advisor or consultant to MasTec or a member of
our controlled group of companies under a relationship other
than that of employee), and any member of MasTec’s Board of
Directors who is not and never has been either an officer or
employee of MasTec, or a member of MasTec’s controlled
group, is eligible to receive awards under the plan. The Amended
and Restated 2003 Non-Employee Plan provides for formula and
discretionary grants of non-qualified stock options and
restricted stock awards. The total aggregate amount of shares
reserved for issuance under the plan is 2,500,000 shares.
As of December 31, 2005, we had 1,819,733 shares
available for issuance under the plan.
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1997 Annual Incentive Compensation Plan. The Annual
Incentive Compensation Plan is administered by the Special
Committee of the Board of Directors. The approximately 50
individuals eligible to participate in the Annual Incentive
Compensation Plan are certain executive officers and other
salaried employees of MasTec and its subsidiaries whose
performance significantly contributes to the success of MasTec.
The plan provides for the granting of awards that consist of
either cash, MasTec common stock or a combination of cash and
stock as determined by the Committee if certain performance
goals set by the Committee in its discretion are achieved in a
particular performance period. No participant may receive an
award with respect to a performance period in excess of
$4,000,000. A total of 1,500,000 shares of common stock was
reserved for issuance under the plan. No shares have ever been
granted under this plan.
1994 Stock Incentive Plan. The 1994 Stock Incentive Plan
is administered by the Compensation Committee. Key employees,
including executive officers, of MasTec and its subsidiaries are
eligible to receive awards under the plan. The 1994 Stock
Incentive Plan provides for the granting of options that qualify
as incentive stock options, nonqualified stock options,
restricted stock and bonuses payable in stock. We no longer can
make awards under this plan, but as of December 31, 2005,
options to purchase 2,737,048 shares under the plan
remained outstanding.
1994 Stock Option Plan for Non-Employee
Directors. The 1994 Stock Option Plan for Non-Employee
Directors is administered by the Board of Directors. The plan
provides for the grant of stock options to any non-employee or
outside director who is not and has not been an employee of
MasTec or any of its subsidiaries and who is not otherwise
eligible to participate in any plan of MasTec or any of its
subsidiaries which would entitle such director to acquire
securities or derivative securities of MasTec. We no longer can
make awards under this plan, but as of December 31, 2005,
options to purchase 384,750 shares under the plan remained
outstanding.
| Summaries of Plans Not Approved by Our Shareholders |
1997 Non-Qualified Employee Stock Purchase Plan. The
MasTec, Inc. 1997 Non-Qualified Employee Stock Purchase Plan is
administered by the Compensation Committee, and permits
employees of MasTec who meet certain criteria set by the
Committee to purchase our common stock at a 15% discount to the
market price at the time of purchase. Such purchases are made
through regular payroll deductions or lump sum investments.
Employees are limited to a maximum investment of $25,000 in the
plan each year. The total amount of common stock reserved under
the plan is approximately 600,000 shares, substantially all
of which has been purchased.
Non-Employee Directors’ Stock Plan. The MasTec,
Inc. Non-Employee Directors’ Stock Plan adopted in 1999
permits non-employee directors to elect to receive all or a
specified percentage of any director fees paid for each year of
service on the board in shares of our common stock. The number
of shares issued to each non-employee director is determined by
dividing the director’s fees owed to such director by the
fair-market value of a share of common stock on the date of the
issue. The shares issued are delivered to the non-employee
director and the non-employee director has all the rights and
privileges of a stockholder as to the shares. The shares are
immediately vested upon grant and are not forfeitable to us. The
maximum number of shares of common stock that may be issued
under the plan is 150,000. As of December 31, 2005,
142,552 shares remained available for issuance under
this plan.
1999 Non-Qualified Employee Stock Option Plan. The
1999 Non-Qualified Employee Stock Option Plan is administered by
the Compensation Committee of the Board and permits the
Committee to grant non-qualified options to purchase up to
2,000,000 shares of common stock to any MasTec employee.
The Compensation Committee determines the recipient of options,
the number of shares covered by each option, and the terms and
conditions of options within the parameters of the plan
(including the exercise price, vesting schedule, and the
expiration date) and may adopt rules and regulations necessary
to carry out the plan. Options may be granted pursuant to the
plan until January 31, 2009. The Compensation Committee has
the authority to change or discontinue the plan or
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the options issued pursuant thereto at any time without the
holders consent so long as the holders’ rights would not be
impaired. The plan permits the Compensation Committee to
determine and accept different forms of payment pursuant to the
exercise of options.
The plan provides for the termination of all outstanding options
whether or not vested in the event of a termination of
employment, and permits the Committee to take certain actions in
the event of a change of control to ensure fair and equitable
treatment of the employees who hold options granted under the
plan, including accelerating the vesting of any outstanding
option, offering to purchase any outstanding option and making
other changes to the terms of the outstanding options.
As of December 31, 2005, 755,547 shares remained
available for issuance under this plan.
Individual Option Grants. We have entered into
various option agreements with non-employee directors, advisors
and other parties in connection with providing certain services,
acquisitions and other matters. Such options have various
vesting schedules and exercise prices and have been included in
the equity compensation plan table above.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
| (a) | Financial Statements of Business Acquired. | ||
| Not applicable | |||
| (b) | Pro Forma Financial Information. | ||
| Not applicable | |||
| (c) | Exhibits | ||
| 99.1— Press Release dated January 6, 2006* |
| * | Previously filed. |
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SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, MasTec, Inc. has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
| Date: January 23, 2006 | MASTEC, INC. |
|||
| By: | /s/ Austin J. Shanfelter | |||
| Austin J. Shanfelter | ||||
| Chief Executive Officer | ||||
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