SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
X Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Fiscal Year Ended August 30, 1997.
Transaction report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the transition period from _____
to _____.
Commission File Number 0-4173
DMI FURNITURE, INC.
(Exact name of registrant as specified in its charter)
Kentucky 41-0678467
(State or other jurisdiction of (IRS Identification No.)
Employer incorporation or organization)
One Oxmoor Place
101 Bullitt Lane
Louisville, Kentucky 40222
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (502)426-4351,
Ext. 227
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock
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 _____.
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-K 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-K or any amendment to this Form 10-K.
__X__
The aggregate market value of the voting stock held by non-affiliates
of the Registrant was $7,295,272 as of August 30, 1997.
Indicate the number of shares oustanding of each of the Registrant's
classes Common Stock as of the last practicable date:
Class Outstanding as of August 30, 1997
Common Stock, Par Value 3,152,483
$.10 per Share
DMI Furniture, Inc. (the "Corporation") hereby amends its annual
report on Form 10-K for the year ended August 27, 1997 to add the
information required by Items 10 through 13 of Part III of Form 10-K.
PART III
Item 10. Directors and Executive Officers of Registrant.
Class I Directors
Donald D. Dreher (age 48) has served as President and Chief
Executive Officer of the Corporation since 1986 and as a director
since 1980. Mr. Dreher is a director and Past President of the
American Furniture Manufacturers Association and of the American
Furniture Hall of Fame. Mr. Dreher has served in various executive
capacities with the Corporation since 1977. Before joining the
Corporation, he was Corporate Systems Manager for Filtrol Corporation,
which produces products for the mining and oil and gas industries.
Joseph G. Hill (age 47), Vice President-Finance, Chief Financial
Officer, Treasurer, and Secretary of the Company since 1986, was
elected to the Board of Directors in September 1993. Mr. Hill has
served in various executive capacities with the Company since 1984.
He is also a director and Past President of the American Furniture
Manufacturers Association Finance Division. Before joining the
Company, Mr. Hill was employed by Meidinger, Inc., now William M.
Mercer, Incorporated, a subsidiary of Marsh McLennan, Inc., a national
management consulting firm, where he held the positions of Vice
President, Treasurer, and Consultant.
Thomas M. Levine (age 48), a Class II director from 1984 to 1996,
was elected as a Class I director in 1996. Mr. Levine is an
independent management consultant. For more than the past five years,
he has held the position of Executive Vice President of Fostin Capital
Corp., which is active in originating and participating in venture
capital ventures and leveraged buy-outs on behalf of itself, its
clients, and affiliates.
Joseph L. Ponce (age 70) has been a director of the Corporation
since 1977. Since 1991 Mr. Ponce has been a financial consultant to
Laser Technology, a manufacturer of non-destructive test equipment,
for whom he has served as a director since 1987. From 1986 to 1991,
he was Chairman of the Board of Plastech International, Inc., a
manufacturer of plastic products. Previously, Mr. Ponce was Managing
Director of Philadelphia First Group, Inc., an investment banking firm,
from 1987 to 1988. From 1979 through 1987, he was Managing Director of
Wm. Sword & Co., Incorporated, an investment banking firm. Mr. Ponce is
also a director of Scott Specialty Gases, Inc., a specialty chemical company,
and Science Management Corporation, a management consulting and engineering
firm.
Alexander N. Rubin, Jr. (age 72), a director of the Corporation
since 1977, has been of counsel to the law firm of Montgomery,
McCracken, Walker & Rhoads, Philadelphia, Pennsylvania, since November
1993. Previously, he had been a partner in the law firm of Rubin
Quinn Moss Heaney & Patterson and its predecessor firm since 1951.
Thomas A. Dieruf (age 52), has been a director of the Corporation
since December 1996. Since 1976 Mr. Dieruf has been associated with
Pattco, Inc., a venture capital and management firm with interests in
the restaurant, telecommunications, medical services and other
industries, where he has served as Vice President since 1980. Mr.
Dieruf also serves in various management capacities with affiliates of
Pattco, Inc., including as Chairman, Chief Executive Officer and a
director of Lexon Medical National, Inc., a medical management
services firm; as Chairman and a director of Resource America, Inc., a
medical information systems firm; and as Vice President of Western
Restaurants, Inc., which operates restaurants in Kentucky and
surrounding states. Mr. Dieruf is a certified public accountant.
Class II Directors
Mary F. Glasscock (age 55) has been a Class II director since
September 1996. Mrs. Glasscock has been President of Glasscock, Inc.,
a women's apparel and antique retailer located in Louisville,
Kentucky, since its inception in 1977.
Mark E. Pulliam (age 39) has been a Class II director since
September 1996. Mr. Pulliam is Vice President of Pattco, Inc. and
since 1992 has served in various capacities with Pattco, Inc. and its
affiliates. Mr. Pulliam serves as Vice President of Lexon Medical
National, Inc. and as Vice President of Global Trading Company, an
import/export firm. Prior to joining Pattco, Mr. Pulliam served as
Senior Vice President, Director of Development for David Hocker &
Associates, a regional real estate firm specializing in retail
development. He has also served as a Financial Analyst with Hospital
Corporation of America, and as a Health Care Investment Analyst with
HCA Capital, the venture capital subsidiary of Hospital Corporation of
America.
Item 11. Executive Compensation.
The following table sets forth the compensation paid by the
Corporation for the fiscal years ended August 30, 1997, August 31,
1996, and September 2, 1995, to the Corporation's Chief Executive
Officer and the most highly compensated executive officers as to whom
total cash and cash-equivalent remuneration exceeded $100,000 during
fiscal 1997.
<TABLE>
Summary Compensation Table
<CAPTION>
Long Term
Annual Compensation Compensation
Awards
Securities
Name and Principal Fiscal Other Annual Underlying All Other
Position Year Salary Bonus Compensation(1) Options/SARS(#) Compensation(2)
<S> <C> <C> <C> <C> <C> <C>
Donald D. Dreher 1997 $275,000 $389,500 $-0- $-0- $3,509
President and Chief 1996 264,000 156,233 -0- -0- 3,734
Executive Officer 1995 242,000 88,155 -0- -0- 2,901
Joseph G. Hill 1997 $161,250 $119,843 $-0- $-0- $3,109
Vice President - 1996 155,000 43,891 -0- -0- 3,305
Finance, Chief 1995 150,917 39,435 -0- -0- 3,018
Financial Officer,
Treasurer &
Secretary
<FN>
(1) Certain perquisites provided to each of the named executive officers totaled
less than 10 percent of each officer's total salary and bonus.
(2) All amounts represent the Corporation's contributions to its defined
contribution plan.
</FN>
</TABLE>
Stock Option Grants
No stock options were awarded to the Chief Executive Officer and
the other named executive officers during fiscal 1997.
The following table sets forth certain information regarding
options exercised by the Chief Executive Officer and the named
executive officers during fiscal 1997 and unexercised stock options
held by them as of August 30, 1997.
Aggregated Option Exercises in Fiscal 1997 and Year-End Stock Option
Values
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired Value Underlying Unexercised In-the-Money
on Exercise Realized Options/SARs at 8/30/97 Options/SARs at 8/30/97
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable (1)
<S> <C> <C> <C> <C>
Donald D. Dreher -0- $-0- 445,903/-0- $507,157/$0
Joseph G. Hill -0- -0- 157,968/-0- 195,664/0
_______________________
<FN>
(1) Market value of underlying securities at year-end, minus the exercise or base price.
</FN>
</TABLE>
At August 30, 1997, the Corporation had options for 939,099
shares of Common Stock outstanding at exercise prices ranging from
$1.19 to of $3.50 per share.
Employment Agreements
The Corporation currently has employment agreements with Messrs.
Dreher and Hill (the "Employment Agreements"). The Employment
Agreements generally have one- or two-year terms and may be extended
by the Board of Directors. The Employment Agreements provide for base
salary, a bonus related to the Corporation's performance (as more
fully described below), certain perquisites, and other benefits
generally available to the Corporation's employees. If the executive
officer's employment with the Corporation terminates for any reason
other than expiration of the Employment Agreement, death, illness or
disability, for cause (as defined), or voluntary cessation by the
officer, the Employment Agreement entitles the officer to the balance
of his base salary plus a pro rata portion of the cash bonus the
officer would have earned during the year of termination. The
Employment Agreements also contain a noncompetition covenant for one
year if employment terminates for any of the reasons listed in the
preceding sentence.
The Employment Agreement with Mr. Dreher expires August 31, 2000
and provides for an initial annual salary of $275,000, which will be
reviewed annually. Mr. Dreher can earn an annual cash bonus under a
formula based on the Corporation's adjusted net pre-tax income (as
defined). Mr. Dreher also earns a stock bonus equal to 59.3% of his
cash bonus, which was waived for fiscal 1997. The stock bonus is
payable in shares of Common Stock having an aggregate market value
equal to the closing bid price for the Common Stock reported on NASDAQ
on the last trading day of the Corporation's fiscal year.
The Employment Agreement with Mr. Hill expires on August 31,
1999, and provides for an initial annual salary of $170,000, which is
reviewed annually. Mr. Hill can earn an annual cash bonus under a
formula based on the Corporation's adjusted net pre-tax income (as
defined). Mr. Hill also earns a stock bonus equal to 45.45% of his
cash bonus, which was waived for fiscal 1997. The stock bonus is
payable in shares of Common Stock having an aggregate market value
equal to the closing bid price of the Corporation's stock reported on
NASDAQ on the last trading day of the fiscal year.
Severance Agreements
The Corporation has entered into contracts (the "Severance Agree-
ments") with Donald D. Dreher and Joseph G. Hill (the "Covered
Officers") to provide an additional incentive for Messrs. Dreher and
Hill to remain in the employ of the Corporation in the event of a
change in control of the Corporation or the possibility thereof.
These Severance Agreements were not entered into because of any belief
by management that a change in control of the Corporation was
imminent.
The Severance Agreements had an initial three-year term beginning
January 1, 1988 and automatically renew for additional three-year
periods unless the Corporation gives notice not later than September
30th of the year preceding expiration that it does not wish to extend
the Severance Agreement. The Severance Agreements have been
automatically renewed through December 31, 1999.
The Severance Agreements provide for the payment of compensation
to the Covered Officers (a) upon the termination of a Covered
Officer's employment other than for cause after a change in control of
the Corporation, as defined in the Severance Agreement, occurs; (b) if
a change in control of the Corporation occurs within nine months after
such termination; or (c) if the Covered Officer terminates his
employment after the 60-day period immediately following a change in
control.
Compensation to be paid under the Severance Agreements includes
(a) the unpaid balance of the Covered Officer's base salary through
the date of termination; (b) an amount equal to three times the
Covered Officer's annual base salary (present valued to a lump sum)
plus the most recent cash bonus paid to the Covered Officer; and (c)
all legal fees and expenses incurred by the Covered Officer resulting
from termination. However, the amount of compensation to be paid
under the Severance Agreement will be reduced, if necessary, to $1.00
below the amount of benefits that the Corporation can properly deduct
under Section 280G(a) of the Internal Revenue Code of 1986, as
amended. If the Covered Officer dies or terminates his own employment
for any reason within the 60-day period immediately following a change
in control, the Corporation will pay the Covered Officer his full base
salary through the date of termination plus all other compensation to
which he is entitled under any plan, agreement or arrangement of the
Corporation, and the Corporation will have no further obligations to
the Covered Officer under the Severance Agreement. The Covered
Officers will not be required to seek other employment, and compen-
sation will not be reduced by any income received from other sources.
Compensation of Directors
The Corporation's nonemployee directors receive a retainer of
$1,500 per month and $1,350 for each board meeting attended ($200 for
a telephonic board meeting). In addition, nonemployee directors who
attend an Audit or Compensation/Stock Option Committee meeting receive
$200 per meeting, and each committee chairman receives an additional
$200 per meeting. Nonemployee members of the Long Range Planning
Committee receive $850 per meeting attended. All directors were
reimbursed for travel expenses to attend Board or committee meetings.
Under the Corporation's Compensation and Deferral Plan for
Outside Directors (which was approved by stockholders at the 1994
Annual Meeting), a minimum of one-third of the total monthly retainer
for the year (or more at the director's option) is paid at the end of
the fiscal year in the form of shares of Common Stock, valued at the
closing bid price for the Common Stock on the last trading day of the
fiscal year. For fiscal 1997, each of the Corporation's three
nonemployee directors was paid 2,087 shares of Common Stock, valued at
$2.875 per share, as the stock portion of the monthly retainer.
Under the Corporation's Nonemployee Directors Stock Option
Program (the "Program"), each nonemployee director automatically
received an option for 6,000 shares on the March 15th next following
initial election and an option for 1,000 shares on the March 15
following election in each subsequent year. Nonemployee directors in
office on May 5, 1987 received an initial option for 5,000 shares plus
1,000 shares for each year in office before 1987. The Board of Direc-
tors had no discretion with respect to awards under the Program.
All options granted under the Program have an exercise price
equal to the closing bid price for the Common Stock on NASDAQ on the
date of the grant of the options. The exercise price for the options
granted on March 15, 1997, was $2.81 per share. Options become
exercisable with respect to one-half of the shares on the first
anniversary of the grant and fully exercisable on the second
anniversary of the grant.
The Program expired in 1997. The Board expects to submit a new
plan providing for automatic grants of options to nonemployee
directors for stockholder approval at the Annual Meeting of the
Corporation's stockholders in 1998.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Corporation had two classes of capital stock with shares
issued and outstanding as of December 19, 1997. A total of 3,164,251
shares of Common Stock and 1,995,050 shares of Series C Preferred
Stock were issued and outstanding as of that date.
Except as provided in the Corporation's Certificate of
Incorporation, each share of Common Stock is entitled to one vote on
any matter submitted for the vote or written consent of stockholders
of the Corporation, including the election of directors. The
Corporation's Restated Certificate of Incorporation provides that
holders of the Series C Preferred are entitled to elect up to two
Class II directors to serve a one-year term on the Board of Directors.
Holders of Series C Preferred also have a contingent right to elect a
majority of the Board of Directors, upon request by holders of ten
percent of the Series C Preferred, if (i) unpaid dividends of at least
$269,500 on the Series C Preferred accrue, (ii) the Corporation fails
to earn annual Consolidated Net Income of at least $769,500, or (iii)
an Event of Noncompliance (as defined in the Restated Certificate of
Incorporation) occurs during the preceding fiscal year. If the
holders of Series C Preferred become entitled to exercise this
conditional right and choose to do so, certain of the Class I
directors would cease to be directors in accordance with the
Corporation's by-laws. The Corporation earned Consolidated Net Income
of more than $769,500 in fiscal 1997 and is current with respect to
dividends payable on the Series C Preferred.
The following table sets forth certain information as of December
19, 1997 relating to the shares of Series C Preferred and Common Stock
beneficially owned by the Corporation's directors and executive
officers and by beneficial owners of more than five percent of any
class of the Corporation's voting stock.
<TABLE>
<CAPTION>
Shares
Name & Address of Beneficially Percentage
Beneficial Owner Title of Class Owned of Class (1)
<S> <C> <C> <C>
Pattco, Inc. Series C Preferred 910,616 45.6%
James F. Patterson Common Stock 264,434(2) 8.4%
10000 Shelbyville Road
Louisville, KY 40222
C. Edward and Mary F. Series C Preferred 332,858 16.7%
Glasscock Common Stock 102,416(3) 3.2%
3200 Providian Center
Louisville, KY 40202
The Prudential Ins. Series C Preferred 172,623 8.7%
Co. of America Common Stock 0(4) --(4)
100 Mulberry Street
Gateway Four
Newark, NJ 07102
Allied Capital Corp. Series C Preferred 199,920 10.0%
1666 K St., N.W. Common Stock 0(5) --(5)
(Suite 901)
Washington, D.C. 20006
LBR&M Associates, L.P. Series C Preferred 149,847 7.5%
681 Andersen Drive Common Stock --(6) --(6)
Foster Plaza 6
Pittsburgh, PA 15220
Phillip D. Miller Common Stock 199,266 6.3%
140 East 29th St.
Holland, MI 49423
Donald D. Dreher Series C Preferred 45,531 2.3%
One Oxmoor Place Common Stock 536,040(7) 14.9%(7)
101 Bullitt Lane
Louisville, KY 40222
Joseph G. Hill Series C Preferred 45,531 2.3%
One Oxmoor Place Common Stock 197,099(8) 5.9%(8)
101 Bullitt Lane
Louisville, KY 40222
Thomas M. Levine Common Stock 9,016(9) *
Joseph L. Ponce Common Stock 78,497(10) 2.5%
Thomas A. Dieruf -- -- --
Mark E. Pulliam -- -- --
All directors and Series C Preferred 423,920 21.2%
executive officers as Common Stock 923,068(11) 24.4%(11)
a group (7 persons)
________________________________
<FN>
* Indicates less than 1% of class.
(1) In determining the percentage of class, Common Stock and
Series C Preferred are considered as separate classes. Shares of
Common Stock subject to currently exercisable options are deemed
outstanding for computing the percentage of class of the person
holding such options but are not deemed outstanding for computing the
percentage of class of any other person. Percentages of class of Com-
mon Stock assume shares of Series C Preferred will not be converted
into Common Stock. Percentages resulting from such conversion by a
holder of Series C Preferred are included in footnotes.
(2) Does not include 1,129,413 shares issuable upon the
conversion of 894,972 shares of Series C Preferred at a purchase price
of $1.63 per share and 15,644 shares of Series C Preferred at a
purchase price of $1.00 per share, which would increase the percentage
of class to 32.5%. As controlling shareholder of Pattco, Inc., Mr.
Patterson is deemed to be the beneficial owner of shares owned by
Pattco, Inc.
(3) Does not include 412,836 shares issuable upon the conversion
of 327,139 shares of Series C Preferred at a purchase price of $1.63
per share and 5,719 shares of Series C Preferred at a purchase price
of $1.00 per share, which would increase the percentage of class to
14.4%.
(4) Does not include 211,807 shares issuable upon the conversion
of the Series C Preferred at a purchase price of $1.63 per common
share, which would represent 6.3% of the class.
(5) Does not include 399,840 shares of Common Stock issuable
upon conversion of the Series C Preferred at a purchase price of $1.00
per common share, which would represent 11.2% of the class.
(6) Does not include 183,861 shares of Common Stock issuable
upon the conversion of Series C Preferred at a purchase price of $1.63
per common share, which would represent 5.5% of the class.
(7) Includes exercisable stock options for 445,093 shares. Does
not include 56,471 shares issuable upon the conversion of 44,749
shares of Series C Preferred at a purchase price of $1.63 per share
and 782 shares of Series C Preferred at a purchase price of $1.00 per
share, which would increase the percentage of class to 16.2%.
(8) Includes exercisable stock options for 157,968 shares. Does
not include 56,471 shares issuable upon the conversion of 44,749
shares of Series C Preferred at a purchase price of $1.63 per share
and 782 shares of Series C Preferred at a purchase price of $1.00 per
share, which would increase the percentage of class to 7.5%.
(9) Includes exercisable stock options for 3,500 shares.
(10) Includes exercisable stock options for 8,500 shares.
(11) Includes exercisable stock options for an aggregate of
615,061 shares. Does not include 525,778 shares issuable upon the
conversion of 416,637 shares of Series C Preferred at a purchase price
of $1.63 per share and 7,283 shares of Series C Preferred at a
purchase price of $1.00 per share, which would increase the percentage
of class to 33.7%.
</FN>
</TABLE>
Item 13. Certain Relationships and Related Transactions.
None.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
DMI FURNITURE, INC.
Date: December 30, 1997 By /s/ Joseph G. Hill
Joseph G. Hill,
Vice President, Finance
Chief Financial Officer
