UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A1
/ X / ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (Fee Required)
For the fiscal year ended May 31, 1999.
/ /) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
Commission File Number: 1-4676
The Bethlehem Corporation
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(Name of small business issuer in its charter)
Pennsylvania 24-0525900
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25th and Lennox Streets, Easton, Pennsylvania 18044-0348
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number including Area Code: (610) 258-7111.
Securities registered under Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, no par value American Stock Exchange, Inc.
Securities registered under Section 12(g) of the Exchange Act: None.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to the filing requirements for the past 90 days. Yes /X/ No / /
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $13,710,000
As of August 20, 1999, 2,378,520 shares of the registrant's Common Stock were
outstanding and the aggregate market value of such Common Stock held by
non-affiliates was approximately $2,158,197 based on the average of the bid and
asked prices on that date of $1.6875.
<PAGE>
Part III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The directors are elected at the Annual Meeting of the
Shareholders of the Company and each director elected holds office until his
successor is elected and qualified. The Board currently consists of eight
members. The shareholders vote at the Annual Meeting for the election of
directors. There are no family relationships among any directors or executive
officers of the Company, except that directors Jan P. Gale and Ronald H. Gale
are brothers.
The names of the directors, together with certain information
regarding them, are as follows:
<TABLE>
<CAPTION>
Year First Became
Name Age Principal Occupation a Director
- --------------------- ---- ------------------------------------------------------------------------------- --------------------
<S> <C> <C> <C>
Salvatore J. Zizza 53 Chairman of the Board of Directors since 1995; Chairman and Principal of 1995
Hallmark Electrical Supplies Corp., since May of 1998; from 1991 to April 1998,
Chairman and Executive Vice President and Treasurer of The Lehigh Group, a
public company listed on the New York Stock Exchange with subsidiaries in the
distribution of electrical products
Alan H. Silverstein 50 President and Chief Executive Officer of the Company since December 1995; 1994
President and Chief Operating Officer of the Company from February 1994 to
November 1995; from July 1992 to February 1994, President of Universal
Industrial Gas, Inc., a rebuilder of industrial gas plants
James L. Leuthe 57 President, Midland Farms, Inc., since August 1998; Chairman of the Board of 1976
First Lehigh Corporation, a bank holding company, from 1982 to 1998; from 1977
until 1995 held various positions with the Company, including most recently
President and Chief Executive Officer
Jan P. Gale 45 Executive Vice President of Universal Process Equipment, Inc. ("UPE") since 1991
1978, an international supplier of complete process plants and equipment
and manufacturer of new equipment in the United States and Europe
Ronald H. Gale 48 President and Chief Executive Officer of UPE since 1978 1990
Harold Bogatz 61 Vice President and General Counsel of UPE since 1987; Secretary of the Company 1995
since 1996
James F. Lomma 53 President, J.F. Lomma Inc. since 1975, a trucking, rigging and export packaging 1998
firm located in South Kearney, N.J. Mr. Lomma also serves as the Chairman of
the Special Carrier & Rigging Association
B. Ord Houston 86 Secretary of the Company from June 1983 to December 1995; held various 1976
positions with the Company from 1966 until 1984, most recently as Executive
Vice President
</TABLE>
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<PAGE>
Item 10. EXECUTIVE COMPENSATION
The following table summarizes compensation information for the
Company's President and Chief Executive Officer, and two executive officers of
the Company whose compensation exceeded $100,000 for the Fiscal Year ended May
31, 1999. The table presents for such individuals information with respect to
compensation paid or accrued by the Company for services rendered during the
Fiscal Years ended May 31, 1997, 1998 and 1999. Messrs. Silverstein, Lind and
Mrs. Martin are collectively referred to herein as the "Named Executive
Officers."
<TABLE>
<CAPTION>
Summary Compensation Table
Fiscal Year Compensation Long Term Compensation
------------------------ ----------------------
Stock
Name and Principal Other Annual Option All Other
Position Year Salary Bonus Compensation (1) Awards Compensation (2)
- --------------------------------------- -------------- ------------------------- --------------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Alan H. Silverstein 1999 $165,000 $ 88,243 $ 6,154 100,000 $ 12,134
President and Chief 1998 154,789 91,214 6,607 50,000 11,865
Executive Officer (3) 1997 140,441 83,570 7,295 -- 11,925
Clarence T. Lind 1999 110,000 20,291 6,033 -- 612
Vice President of 1998 104,923 21,303 5,849 -- 612
Sales and Marketing (4) 1997 99,000 25,907 4,369 -- 672
Antoinette L. Martin 1999 90,000 10,924 5,564 5,000 612
Vice President of 1998 90,000 10,900 5,539 10,000 612
Finance, Chief 1997 89,038 890 5,902 -- 612
Financial Officer (5)
</TABLE>
(1) Represents lease and insurance payments made by the Company with
respect to use of an automobile.
(2) Represents life insurance premiums paid by the Company.
(3) Mr. Silverstein was elected President and Chief Operating Officer of
the Company in February 1994 and was appointed Chief Executive Officer
of the Company on December 12, 1995.
(4) Mr. Lind was elected Vice President of Sales and Marketing of the
Company on December 12, 1995.
(5) Mrs. Martin was elected Vice President of Finance and Chief Financial
Officer of the Company on September 12, 1995.
3
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth information concerning options
granted during the fiscal year ended May 31, 1999, under the Company's stock
option plans or pursuant to grants to the Named Executive Officers.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options Granted
Underlying to Employees in Per Share
Name Options Granted Fiscal Year Exercise Price Expiration Date
---- --------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Alan H. Silverstein 50,000 17.09% $1.78 December 17, 2008
Alan H. Silverstein 50,000 17.09% $1.78 January 4, 2009
Antoinette L. Martin 5,000 1.7% $1.63 August 21, 2008
</TABLE>
Aggregated Fiscal Year-End Options
The following table sets forth certain information regarding
unexercised stock options held by each of the Named Executive Officers as of May
31, 1999. No stock options were exercised by any Named Executive Officer during
the 1999 Fiscal Year.
AGGREGATED FISCAL YEAR-END OPTION VALUES
Number of Value of Unexercised
Unexercised Options in-the-Money Options
at May 31, 1999 at May 31, 1999 ($)(1)
--------------------------------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
Alan H. Silverstein 410,000/0 222,000/0
Clarence T. Lind 16,666/3,334 0/0
Antoinette L. Martin 31,666/3,334 912/0
(1) On May 31, 1999 the last reported sale price of the Common Stock, as
reported by the American Stock Exchange, was $1.8125 per share.
4
<PAGE>
Compensation of Directors
Directors are not compensated in general for their services as a
director but are entitled to reimbursement of expenses incurred in connection
with their attendance at meetings. In the past the Company has granted options
to certain directors.
Employment Agreements
Alan H. Silverstein, President and Chief Executive Officer, is employed
by the Company pursuant to an agreement (the "Employment Agreement") dated
February 1, 1994. The Employment Agreement provides for a five year term, with
automatic renewal for successive terms of two years, subject to a mutual right,
exercisable within 120 days prior to the expiration of any term, not to renew
the Employment Agreement. The salary paid to Mr. Silverstein for the first year
under the Employment Agreement was $110,000 and increased to $165,000 in the
fifth year. The Employment Agreement was renewed for an additional two year
period on February 1, 1999. The salary paid to Mr. Silverstein under the
Employment Agreement will be $165,000 for the first year increasing to $185,000
in the second year. Mr. Silverstein is entitled to a quarterly bonus based on
the defined earnings of the Company.
5
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of September 23, 1999,
information regarding ownership of the outstanding Common Stock of the Company
by (i) all persons who are known to the Company to be the beneficial owner of
more than 5% of the Common Stock; (ii) each director and Named Executive Officer
(as such term is hereinafter defined); and (iii) all directors and executive
officers of the Company as a group:
<TABLE>
<CAPTION>
Percentage of
Name and Address of Beneficial Owner* Shares Owned Beneficially (1) Outstanding Shares
- ------------------------------------- ----------------------------- ------------------
<S> <C> <C>
Universal Process Equipment, Inc. 2,706,600(2)(3) 62.2%
PO Box 338
Roosevelt, NJ 08555
Ronald H. Gale 2,779,100(4)(5) 63.8%
Jan P. Gale 2,777,100(4)(5) 61.2%
James L. Leuthe 339,124(4)(6) 13.5%
Alan H. Silverstein 410,000(7) 14.7%
Salvatore J. Zizza 188,000(8) 7.3%
B. Ord Houston 6,365(4) (9)
Harold Bogatz 10,000(10) (9)
James F. Lomma -- (9)
Clarence T. Lind 20,666(11) (9)
Antoinette L. Martin 31,666(12) (9)
All directors and executive officers as a 3,867,921(13) 75%
group (12 persons)
</TABLE>
* Unless otherwise noted the address of the Beneficial Owner is c/o the
Company, 25th & Lennox Streets, Easton, Pennsylvania 18044.
(1) All persons identified as holding options are deemed to be beneficial
owners of shares of Common Stock subject to such options by reason of
their right to acquire such shares within 60 days after September 23,
1999.
(2) Includes 1,975,000 shares subject to options. See "Certain
Relationships and Transactions."
(3) Does not include shares owned by Ronald H. Gale and Jan P. Gale.
(4) Includes 500 shares subject to options.
(5) Includes 2,706,600 shares beneficially owned by UPE, of which the
individual is an officer, director and principal shareholder.
(6) Of this total, 52,281 shares are owned by Nikki, Inc., a corporation of
which Mr. Leuthe is an officer and director and the sole shareholder,
161,343 shares are owned by Mr. Leuthe and 125,500 shares are subject
to options. This total does not include 640 shares owned by Mr.
Leuthe's adult children as to which he disclaims beneficial ownership.
6
<PAGE>
(7) Consists of 410,000 shares subject to options.
(8) Consists of 188,000 shares subject to options.
(9) Less than 1.0%.
(10) Consists of 10,000 shares subject to options.
(11) Includes 16,666 shares subject to options.
(12) Consists of 31,666 shares subject to options.
(13) Includes 2,768,332 shares subject to options.
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<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND TRANSACTIONS
Ronald H. Gale and Jan P. Gale are Directors and Shareholders
of the Company and are officers, directors and principal shareholders of UPE, a
principal shareholder of the Company. UPE and/or Ronald H. Gale and/or Jan P.
Gale are also majority shareholders or otherwise affiliated with other companies
that engage in transactions with the Company. UPE and related entities have
purchased process equipment manufactured by the Company and have utilized the
Company's remanufacturing services. The approximate total revenues derived from
sales to UPE and related parties was approximately $40,000 for the Fiscal year
ended May 31, 1999 ("Fiscal 1999") and $1,318,000 for the Fiscal year ended May
31, 1998 ("Fiscal 1998") .
On March 26, 1996, the Board of Directors of the Company,
subject to the approval of the Company's shareholders, granted an option to UPE
to purchase 350,000 shares of the Common Stock at an exercise price of $1.8125
per share. Such option was issued in consideration for debt guarantees by UPE
for various borrowings by the Company. This transaction was approved by the
Company's Shareholders at the Annual Meeting of the Shareholders held on April
23, 1998. Financing charges of $43,000 and $296,000 related to these options was
recognized in Fiscal 1999 and Fiscal 1998, respectively. The value ascribed to
these options was approximately $424,000, and the balance of $85,000 at May 31,
1999 will be amortized over the terms of the outstanding guarantees.
On March 26, 1996, the Board of Directors, subject to the
approval of the Company's shareholders, authorized the issuance to UPE of
350,000 shares of Common Stock in consideration for a 50% ownership interest in
certain resale inventory, which consists primarily of heat transfer equipment
owned by UPE. This transaction was approved by the Company's Shareholders at the
Annual Meeting of Shareholders held on April 23, 1998. The Company recorded
approximately $126,000 of non-cash compensation expense related to this
transaction in Fiscal 1998.
On August 21, 1998, the Board of Directors of the Company
authorized the issuance to UPE of 175,000 shares of Common Stock at an exercise
price of $1.63, which represented the fair market value of the stock at the date
of the grant. Such option was issued in consideration for guarantees by UPE of
borrowings by the Company from PNC Bank National Association. The financing
consists of a $4 million line of credit and term loan, secured by the Company's
inventory, accounts receivable, machinery and equipment and other assets. The
fair value ascribed to the options was $172,000. During Fiscal 1999, the Company
recorded $57,000 in financing charges. The balance of $115,000 at May 31, 1999
will be amortized over the estimated three year term of the guarantee.
In May 1998, the Company transferred inventory with a book
value of approximately $1,924,000 to UPE. As part of this transaction, UPE
assumed obligations of $1,390,000 and $534,000 of related bank debt. This
transaction did not result in a gain or loss in the Company's Fiscal 1998
statement of income.
<PAGE>
From time to time in the ordinary course of business, UPE
advances funds to the Company to enable the Company to meet certain temporary
cash requirements. The interest on the advances is prime rate (Chase Bank, New
York) plus 1%. As of September 23, 1999, $787,000 of these advances remains
outstanding.
As of June 1, 1996, the Company began a three year profit
sharing arrangement with UPE. This arrangement was agreed upon as consideration
for UPE's role in introducing the Company to Third Millenium Products, Inc.
("Millenium"), assisting in negotiating the acquisition of the assets of the
American Furnace Division of Millenium by Bethlehem Advanced Materials
Corporation ("BAM"), a wholly-owned subsidiary of the Company, and UPE's role in
originating, negotiating, developing and assisting in the marketing of the Tower
Filter Process product line. Under this arrangement, which expired in May 1999,
UPE was entitled to receive 25% of the defined pre-tax profits of BAM and the
Tower Filter Press product line. For the Fiscal Year 1999, no provision for this
profit sharing arrangement was required.
In November 1993, the Company and the Harrisburg Authority
settled a lawsuit for $1,300,000 based upon negotiations between the Company,
UPE and the Harrisburg Authority. Under the terms of the settlement agreement,
UPE agreed to serve as a guarantor and surety for the obligation. In addition,
UPE agreed to pay up to $650,000 from the proceeds of the sale of certain of its
machinery and equipment inventory and certain equipment co-owned by the Company
and UPE. Pursuant to the settlement agreement and for services rendered at that
time, the Company granted stock options to UPE. These options provide that at
UPE's discretion, the Company will issue additional shares of common stock to
UPE in exchange for payments, if any, made by UPE on behalf of the Company to
Harrisburg under the settlement agreement instead of reimbursing UPE in cash.
UPE may make payments (without prior approval of the Company) on the outstanding
amounts due to Harrisburg and thereby be entitled to exercise its options or
accept reimbursement for payments it advanced on behalf of the Company. Provided
however, for any such payment made by UPE, the Company will not be obligated to
issue more than 1,450,000 shares to UPE for such payments. The ratio of exchange
shall be as follows: three (3) shares issued for each dollar in payment made by
UPE, up to a total of 450,000 shares in exchange for a total of $150,000 in
payments, and after such total of 450,000 shares has been reached, two (2)
shares issued for each additional $1.50 in payment made by UPE up to a total of
1,000,000 additional shares in exchange for a total of $750,000 in additional
payments. On November 1, 1999, all unpaid balances of principal and accrued
interest are due and payable to the Harrisburg Authority. The principal balance
at September 23, 1999 is $549,774.
<PAGE>
The Company and Salvatore J. Zizza, Chairman of the Board of
the Company, are parties to an agreement under which Mr. Zizza renders certain
financial advisory services, including those relating to proposed mergers and
acquisitions and equity and debt financing and relations with the financial
community and investors. Mr. Zizza receives compensation in the amount of
$120,000 per annum.
On March 26, 1996, the Board of Directors, subject to the
approval of the Company's Shareholders, authorized the issuance of 125,000 and
178,000 shares of Common Stock to James L. Leuthe, a director and former
Chairman and Chief Executive Officer of the Company, and Salvatore J. Zizza,
Chairman of the Board of Directors of the Company, respectively. On April 23,
1998, this transaction was approved at the Company's Shareholder's meeting. The
Company recorded approximately $116,000 and $32,000 in compensation expense for
the fair values ascribed to these options in Fiscal 1999 and 1998, respectively.
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.
THE BETHLEHEM CORPORATION
Dated: September 27, 1999
By: /s/ Alan H. Silverstein
--------------------------
Alan H. Silverstein
President and Chief
Executive Officer
