<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A-2
Annual Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended July 31, 1997
Commission File No. 0-6132
CANTEL INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 22-1760285
- ----------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1135 BROAD STREET, CLIFTON, NEW JERSEY 07013
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(201) 470-8700
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Securities registered pursuant to Section 12(b) of the Act: NONE
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Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, PAR VALUE $.10 PER SHARE
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(Title of Class)
Indicate by check mark whether 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 the 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)
Aggregate market value of registrant's capital stock held by non-affiliates
(based on shares held and the closing price quoted by NASDAQ on October 8,
1997): $14,674,436
Number of shares of common stock outstanding as of the close of the period
covered by this report: 4,166,322
Documents incorporated by reference: None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The current directors and executive officers of the Company are as
follows:
NAME AGE POSITION
Charles M. Diker 63 Chairman of the Board and Director
Alan J. Hirschfield 62 Vice Chairman of the Board, Director and a
member of the Compensation Committee
James P. Reilly 57 President, Chief Executive Officer and
Director
Darwin C. Dornbush 67 Secretary, Director and a member of both the
Audit Committee and the Compensation
Committee
Robert L. Barbanell 67 Director and a member of the Audit Committee
Richard L. Bloch 68 Director and a member of the Compensation
Committee
Morris W. Offit 60 Director
Bruce Slovin 61 Director and a member of the Audit Committee
Edward E. Meltz 64 Vice President
Craig A. Sheldon 35 Vice President and Controller
Mr. Diker, who became Chairman of the Board of the Company in April 1986,
is a private investor and a non-managing principal of Weiss, Peck & Greer, an
investment management company. Mr. Diker is also a director of BeautiControl
Cosmetics, Inc. (NASDAQ), a manufacturer of cosmetics marketed by direct sales,
International Specialty Products (NYSE), a specialty chemical company, Data
Broadcasting Corp. (NASDAQ), a communication services and technology company,
and Chyron Corporation (NYSE), a supplier of graphics for the television
industry.
Mr. Hirschfield has served as Vice Chairman of the Board of the Company
since January 1988. Since July 1992, he has served as Co-Chairman and Co-Chief
Executive Officer of Data Broadcasting Corp. (NASDAQ), a communication services
and technology company. From October 1990 to July 1992, he served as Co-Chief
Executive Officer of FNN, Inc., the predecessor of Data Broadcasting Corp. From
April 1990 to December 1992, he served
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as a managing director of Wertheim Schroder, Inc., an investment banking firm.
Mr. Hirschfield is also a director of Chyron Corporation (NYSE), a supplier of
graphics for the television industry.
Mr. Reilly has served as President and Chief Executive Officer of the
Company since June 1989. Mr. Reilly is a certified public accountant.
Mr. Dornbush, Secretary of the Company since July 1990, has been a partner
in the law firm of Dornbush Mensch Mandelstam & Schaeffer, LLP, which has been
general counsel to the Company for more than the past five years. Mr. Dornbush
is also a director of Benihana, Inc. (NASDAQ), a company which operates Japanese
style restaurants.
Mr. Barbanell has served as President of Robert L. Barbanell Associates,
Inc., a financial consulting company, since July 1994. From September 1981 to
June 1994, Mr. Barbanell was employed in various capacities by Bankers Trust New
York Corporation, most recently as Managing Director of European Merchant Bank
of Bankers Trust International PLC. Mr. Barbanell is also Chairman of the Board
and a director of Marine Drilling Companies, Inc. (NASDAQ), a drilling
contractor, a director of Kaye Group Inc. (NASDAQ), an insurance brokerage and
insurance underwriting company, and a director of Sentry Technology Corporation
(AMEX), a security products company.
Mr. Bloch has served as President of Pinon Farm, Inc., a horse training and
breeding farm, since its inception in 1982. From 1968 to October 1987, Mr.
Bloch served as President of the Phoenix Suns Basketball Club, a member of the
National Basketball Association. Mr. Bloch was Chairman of the Board of
Governors of the National Basketball Association from 1985 to June 1987. He is
a director of City National Bank of Beverly Hills, California (NYSE), a bank
holding company, and serves as Chairman of the Board of Columbus Realty Trust
(NYSE), a real estate investment trust.
Mr. Offit has served as Chief Executive Officer of OFFITBANK, a limited
purpose trust company chartered by the New York State Banking Department, since
July 1990. Prior thereto, Mr. Offit served as President of Offit Associates,
Inc., an investment counselling firm. Mr. Offit is a Trustee of Johns Hopkins
University where he served as Chairman of the Board from 1990 through 1996, and
a former partner of Salomon Brothers, Inc. He serves as a director of
Mercantile Bankshares Corp. (NASDAQ), a bank holding company, and Hasbro Inc.
(AMEX), a toy manufacturer.
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Mr. Slovin has served as President and a director of MacAndrews & Forbes
Holdings Inc. and Revlon Group, Inc., privately held industrial holding
companies, since 1985. Mr. Slovin is also a director of Continental Health
Affiliates, Inc. (NASDAQ), a health care services company, The Coleman Company,
Inc. (NYSE), a manufacturer of outdoor recreation products, Meridian Sports
Incorporated (NASDAQ), a watersports company, Infu-Tech, Inc. (NASDAQ), a home
health care company, and M&F Worldwide Corp. (NYSE), a manufacturer of cigars
and licorice extract and flavorings.
The following individuals are executive officers of subsidiaries who may be
deemed executive officers of the Company pursuant to Rule 3b-7 of the Securities
Exchange Act of 1934:
Mr. William J. Vella (age 40) has been employed by Carsen Group Inc., a
wholly-owned subsidiary of the Company, in various capacities since October
1981. He has served as Executive Vice President of Carsen since December 1994.
Mr. Richard M. Rumble (age 39) has been employed by President and Chief
Executive Officer of MediVators, Inc., a wholly-owned subsidiary of the Company,
since August 1997. For more than five years prior thereto, Mr. Rumble was
employed in various capacities by Minnesota Mining & Manufacturing Company,
Inc., most recently as Business Unit Manager of the Sterilization Assurance
Division.
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ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth, for the fiscal years ended July 31, 1997,
1996, and 1995, compensation, including salary, bonuses, stock options and
certain other compensation, paid by the Company to the Chief Executive Officer
and to the other executive officers of the Company who received more than
$100,000 in salary and bonus during fiscal year 1997:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (1) AWARDS)(2)
----------------------- -----------
NAME AND SALARY BONUS OPTIONS
PRINCIPAL POSITION YEAR ($) ($) (#)
- -------------------------- ---- ------ ----- -----
<S> <C> <C> <C> <C>
Charles M. Diker 1997 100,000 0 51,000
Chairman of the Company 1996 83,333 0 1,000
1995 75,000 0 1,000
James P. Reilly 1997 250,000 12,600 1,000
President and Chief Executive 1996 250,000 0 1,000
Officer of the Company 1995 250,000 0 1,000
Edward E. Meltz (3) 1997 149,230 12,200 3,000
Vice President of the Company 1996 155,914 0 2,000
and CEO and CFO of Carsen 1995 157,242 0 2,000
William J. Vella (3) 1997 122,060 10,150 6,000
President of Carsen 1996 118,438 7,360 15,000
1995 110,670 0 2,000
</TABLE>
______________________________
(1) The Company did not pay or provide other forms of annual compensation (such
as perquisites and other personal benefits) to the above-named executive
officers having a value exceeding the lesser of $50,000 or 10% of the total
annual salary and bonus reported for such officers.
(2) The Company has no long-term incentive compensation plan other than its
1991 Employee Stock Option Plan, the MediVators 1991 Stock Option Plan, and
the 1991 Directors' Stock Option Plan described herein and various
individually granted options. The Company does not award stock appreciation
rights, restricted stock awards or long-term incentive plan pay-outs.
(3) Messrs. Meltz and Vella were paid their salary and bonus in Canadian
dollars. The dollar amounts above have been translated from Canadian
dollars to U.S. dollars based upon an average exchange rate during the
fiscal year.
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STOCK OPTIONS
The following information is furnished for the fiscal year ended July 31,
1997 with respect to the Company's Chief Executive Officer and the other
executive officers of the Company named in the Compensation Table above, for
stock options granted during such fiscal year. Stock options were granted
without tandem stock appreciation rights.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL
NUMBER OF OPTIONS POTENTIAL REALIZABLE
SHARES GRANTED TO EXERCISE VALUE AT ASSUMED ANNUAL
UNDERLYING EMPLOYEES PRICE RATES OF STOCK PRICE
OPTIONS DURING THE PER EXPIRATION APPRECIATION FOR OPTION
NAME GRANTED FISCAL YEAR SHARE ($) DATE TERM ($) (1)
- ---- ---------- ----------- --------- ---- ----------------------
5% 10%
------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Diker 50,000 (2) 40.7 7.375 10/16/06 600,655 956,443
1,000 (3) 0.8 5.50 07/30/07 8,959 14,266
James P. Reilly 1,000 (3) 0.8 5.50 07/30/07 8,959 14,266
Edward E. Meltz 3,000 (4) 2.4 7.375 10/16/01 28,238 35,633
William J. Vella 6,000 (4) 4.9 7.375 10/16/01 56,475 71,265
</TABLE>
____________________________
(1) Represents the potential value of the options granted at assumed 5% and 10%
rates of compounded annual stock price appreciation from the date of grant
of such options.
(2) These options are non-plan options and vest in three equal annual
installments, the first on the date of grant. The exercise price per
share of these options is the market value per share on the date of grant.
(3) The options were granted under the Company's 1991 Directors' Stock Option
Plan. The exercise price per share of the options was the market value per
share on the date of grant. The options are subject to vesting as follows:
50% of the total shares covered by the options vest on the first
anniversary of the date of grant and the remaining 50% vest on the second
anniversary of such date of grant.
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(4) The options were granted under the Company's 1991 Employee Stock Option
Plan. The exercise price per share of the options was the market value per
share on the date of grant. The options are subject to vesting as
follows: 25% of the total shares covered by the options vest on each of
the first four anniversaries of the date of the grant.
OPTION EXERCISE AND HOLDINGS
The following information is furnished for the fiscal year ended July 31,
1997 with respect to the Company's Chief Executive Officer and the other
executive officers of the Company named in the Compensation Table above, for
stock option exercises during such fiscal year.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
SHARES ACQUIRED VALUE NUMBER OF SHARES UNDERLYING VALUE OF UNEXERCISED IN-THE-
NAME ON EXERCISE(#) REALIZED($) UNEXERCISED OPTIONS AT 7/31/97 MONEY OPTIONS AT 7/31/97 ($)
- ---------------- --------------- ---------- ------------------------------- -------------------------------
EXERCISABLE NON-EXERCISABLE EXERCISABLE NON-EXERCISABLE
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Charles M. Diker 0 0 24,167 34,833 15,000 0
James P. Reilly 0 0 194,315 1,500 711,556 0
Edward E. Meltz 0 0 2,625 6,125 3,325 1,950
William J. Vella 5,000 18,750 11,000 19,500 10,469 2,656
</TABLE>
OPTION PLANS AND GRANTS
An aggregate of 250,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1991 Employee Stock Option Plan (the
"1991 Employee Plan"). Options granted under the 1991 Employee Plan are
intended to qualify as incentive stock options within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). The 1991
Employee Plan is administered in all respects by a committee composed of at
least two non-employee members of the Company's Board of Directors who are
designated by the Board (the "Stock Option Committee"). The Stock Option
Committee may determine the employees to whom options are to be granted and the
number of shares subject to each option. Under the terms of the 1991 Employee
Plan, all employees of the Company or subsidiaries of the Company are eligible
for option grants. The option exercise
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price of options granted under the 1991 Employee Plan is fixed by the Stock
Option Committee but must be no less than 100% of the fair market value of
the shares of Common Stock subject to the option at the time of grant, except
that in the case of an employee who possesses more than 10% of the total
combined voting power of all classes of stock of the Company (a "10%
Holder"), the exercise price must be no less than 110% of said fair market
value. Options may be exercised by the payment in full in cash or by the
tendering or cashless exchange of shares of Common Stock or of options to
acquire shares of Common Stock having a fair market value, as determined by
the Stock Option Committee, equal to the option exercise price. Options
granted under the 1991 Employee Plan may not be exercised more than ten years
after the date of grant, five years in the case of an incentive stock option
granted to a 10% Holder. All options outstanding at July 31, 1997 have a
term of five years. At July 31, 1997, options to purchase 139,750 shares of
Common Stock at prices between $3.50 and $8.75 per share were outstanding
under the 1991 Employee Plan, and 70,625 shares were available for grant
under the 1991 Employee Plan.
An aggregate of 200,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1991 Directors' Stock Option Plan (the
"Directors' Plan"). Options granted under the Directors' Plan do not qualify as
incentive stock options within the meaning of Section 422 of the Code. The
Directors' Plan provides for the automatic grant to each of the Company's
directors of options to purchase 1,000 shares of Common Stock on the last
business day of the Company's fiscal year. In addition, an option to purchase
500 shares of Common Stock is granted automatically on the last business day of
each fiscal quarter to each director (exclusive of Messrs. Diker, Reilly and
Dornbush and any other director who serves as an officer or employee of the
Company) provided that the director attended any regularly scheduled meeting of
the Board, if any, held during such quarter. Each such option grant is at an
exercise price equal to the fair market value of the Common Stock on the date of
grant and has a ten year term (but in no event more than three months following
the optionee's ceasing to serve as a director of the Company). The fiscal year
options are exercisable in two equal annual installments commencing on the first
anniversary of the grant thereof and the quarterly options are exercisable in
full immediately. At July 31, 1997, options to purchase 126,000 shares of
Common Stock at prices between $2.00 and $10.25 per share were outstanding under
the Directors' Plan, and 24,000 shares were available for grant under the
Directors' Plan.
An aggregate of 200,000 shares of Common Stock is reserved for issuance or
available for grant under the Company's 1997 Employee Stock Option Plan approved
by the Company's Board of
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Directors on October 16, 1997 (the "1997 Employee Plan"). Options granted
under the 1997 Employee Plan are intended to qualify as incentive stock
options ("ISOs") within the meaning of Section 422 of the Code. The 1997
Employee Plan is administered in all respects by the Stock Option Committee.
The Stock Option Committee may determine the employees to whom options are to
be granted and the number of shares subject to each option. Under the terms
of the 1997 Employee Plan, all employees of the Company or subsidiaries of
the Company are eligible for option grants. The option exercise price of
options granted under the 1997 Employee Plan is fixed by the Stock Option
Committee but must be no less than 100% of the fair market value of the
shares of Common Stock subject to the option at the time of grant, except
that in the case of a 10% Holder, the exercise price for incentive stock
options must be no less than 110% of said fair market value. Options may be
exercised by the payment in full in cash or by tendering shares of Common
Stock having a fair market value, as determined by the Stock Option
Committee, equal to the option exercise price. Options granted under the
1997 Employee Plan may not be exercised more than ten years after the date of
grant, five years in the case of an incentive stock option granted to a 10%
Holder. To date, no options have been granted under the 1997 Employee Plan.
The 1997 Employee Plan has been adopted by the Board of Directors and is
subject to shareholder approval.
The Company also has outstanding options granted by MediVators prior to the
Merger under the MediVators 1991 Stock Option Plan (the "MediVators Plan") which
became fully exercisable as a result of the Merger. At July 31, 1997, options
to purchase 61,131 shares of Common Stock at prices between $6.08 and $8.27 per
share were outstanding under the MediVators Plan. No future options will be
granted under the MediVators Plan.
In June 1990, Mr. Reilly was granted a ten-year non-plan option to purchase
139,815 shares of Common Stock at an exercise price of $1.75 per share. This
option is exercisable in full. In addition, in July 1990, Mr. Reilly was
granted a ten-year non-plan option to purchase 50,000 shares at an exercise
price of $1.875 per share. This option is exercisable in full.
In December 1994, Mr. Barbanell was granted a five-year non-plan option to
purchase 25,000 shares of Common Stock at an exercise price of $3.75 per share.
This option is currently exercisable in full and expires in December 1999.
In October 1996, Mr. Diker was granted a ten-year non-plan option to
purchase 50,000 shares of Common Stock at an exercise price of $7.375 per share.
This option is exercisable in three equal annual installments beginning October
1996. In addition, in October 1997, Mr. Diker was granted a ten-year non-plan
option to purchase 50,000 shares of Common Stock at an exercise price of $7.00
per share. This option is exercisable in three
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equal annual installments beginning October 1997.
DIRECTOR COMPENSATION
Directors who are not officers of the Company were paid directors' fees of
$500 per meeting attended, plus expenses. Under the 1991 Directors' Stock
Option Plan, directors who are not officers of the Company are automatically
granted quarterly options to purchase 500 shares of Common Stock, provided that
the director attended any regularly scheduled meeting of the Board, if any, held
during such fiscal year quarter. Mr. Dornbush, who is both an officer and
director of the Company (and who thereby does not receive said quarterly option
grant) is granted a non-plan option to purchase 500 shares of Common Stock for
each such meeting attended by Mr. Dornbush. In addition, under the 1991
Directors' Stock Option Plan, all directors are automatically granted annual
options to purchase 1,000 shares of Common Stock at the fiscal year end.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No officer of the Company served on the Company's compensation committee
during its last fiscal year. James P. Reilly, the President and Chief Executive
Officer of the Company, however, participated in deliberations concerning
executive compensation, except with respect to the compensation of the
Chairman of the Board and himself.
Item 12. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth stock ownership information as of October 8,
1997 concerning (i) each director and persons nominated to become directors of
Cantel, (ii) each person (including any "group" as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934) who is known by Cantel to beneficially
own more than five (5%) percent of the outstanding shares of Cantel's Common
Stock, (iii) the Chief Executive Officer and the other executive officers named
in the Summary Compensation Table below, and (iv) Cantel's executive officers
and directors as a group:
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<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE
BENEFICIAL POSITION WITH OF BENEFICIAL PERCENTAGE OF
OWNERS COMPANY OWNERSHIP (1) CLASS
- --------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Charles M. Diker Chairman of the 799,667 (2) 19.0
One New York Plaza Board and
New York, New York Director
Alan J. Hirschfield Vice Chairman of 219,333 (3) 5.2
P.O. Box 7443 the Board and
Jackson, Wyoming Director
Richard L. Bloch Director 363,500 (4) 8.7
16003 Via de Santa
Fe
Rancho Santa Fe,
California
James P. Reilly President (CEO) 220,648 (5) 5.1
1135 Broad Street and Director
Clifton, New Jersey
Bruce Slovin Director 157,500 (6) 3.8
Morris W. Offit Director 52,000 (7) 1.2
Darwin C. Dornbush Secretary and 18,180 (8) .4
Director
Robert L. Barbanell Director 59,000 (9) 1.4
Edward E. Meltz Vice President 45,070 (10) 1.1
of the Company
and CEO and CFO
of Carsen Group
Inc.
William J. Vella President and COO 30,135 (11) .7
of Carsen Group
Inc.
All officers and directors 1,980,033 (12) 43.4
as a group of 11 persons
</TABLE>
__________________________________
(1) Unless otherwise noted, Cantel believes that all persons named in the table
have sole voting and investment power with respect to all shares of Common
Stock beneficially owned by them.
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A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from October 8, 1997 upon the
exercise of options. Each beneficial owner's percentage ownership is
determined by assuming that options that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
from October 8, 1997 have been exercised.
(2) Includes 40,834 shares which Mr. Diker may acquire pursuant to stock
options. Does not include an aggregate of 478,715 shares owned by (i) Mr.
Diker's wife, (ii) certain trusts for the benefit of Mr. Diker's children,
(iii) certain accounts with Weiss, Peck and Greer, an investment firm of
which Mr. Diker is a non-managing principal, over which accounts Mr. Diker
exercises investment discretion, (iv) the DicoGroup, Inc., a corporation of
which Mr. Diker serves as Chairman of the Board, and (v) a non-profit
corporation of which Mr. Diker and his wife are the principal officers and
directors. Mr. Diker disclaims beneficial ownership as to all of the
foregoing shares.
(3) Includes 23,000 shares which Mr. Hirschfield may acquire pursuant to stock
options.
(4) Includes 20,000 shares which Mr. Bloch may acquire pursuant to stock
options.
(5) Includes 194,315 shares which Mr. Reilly may acquire pursuant to stock
options.
(6) Includes 22,500 shares which Mr. Slovin may acquire pursuant to stock
options. Does not include an aggregate of 9,000 shares owned by (i)
certain trusts for the benefit of Mr. Slovin's children and (ii) a
charitable foundation established by Mr. Slovin. Mr Slovin disclaims
beneficial ownership as to all of the foregoing shares.
(7) Includes 20,000 shares which Mr. Offit may acquire pursuant to stock
options.
(8) Includes 9,500 shares which Mr. Dornbush may acquire pursuant to stock
options.
(9) Includes 34,000 shares which Mr. Barbanell may acquire pursuant to stock
options. Does not include 2,500 shares owned by Mr. Barbanell's wife as to
which Mr. Barbanell disclaims beneficial ownership.
(10)Includes 4,375 shares which Mr. Meltz may acquire pursuant to stock
options.
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(11) Includes 16,750 shares which Mr. Vella may acquire pursuant to stock
options.
(12) Includes 400,274 shares which may be acquired pursuant to stock
options.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: January 7, 1998
CANTEL INDUSTRIES, INC.
By: /s/ James P. Reilly
-----------------------------
James P. Reilly, President
and Chief Executive Officer
(Principal Executive Officer
and Principal Financial
Officer)
By: /s/ Craig A. Sheldon
----------------------------
Craig A. Sheldon, Vice
President and Controller
(Chief Accounting Officer)
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