<PAGE> 1
10-K405
Amendment No. 1 to Form 10-K/A Report
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1 To
Form 10-K/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended February 3, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 1-1594
CROWLEY, MILNER AND COMPANY
(Exact name of registrant as specified in its charter)
Michigan 38-0454910
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2301 West Lafayette Boulevard, Detroit, MI 48216
(Address of principal executive offices with Zip Code)
Registrant's telephone number, including area code: (313) 962-2400
Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock
Name of each Exchange on which registered: American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days: Yes [X] No [ ]
Indicate by check mark whether the 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 the 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]
As of April 30, 1996, there were 956,069 shares of the registrant's Common
Stock outstanding and the aggregate market value of such Common Stock held by
non-affiliates (based on the closing price on the American Stock Exchange on
such date) was $2,882,228.
THIS AMENDMENT NO. 1 CONTAINS PART III OF THIS REPORT NOT PREVIOUSLY INCLUDED
IN THE INITIAL FILING.
<PAGE> 2
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
Directors.
The following table sets forth the name, age, principal occupation for the
past five years, other directorships with publicly owned companies and with
public institutions, term of service as a director of the Company, and
beneficial shareholdings with respect to the four individuals who will be
nominated for election and the seven directors who were previously elected or
appointed and who will continue for the terms indicated, as provided to the
Company by each such person.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
HAS MAY 22, 1996(1)
SERVED ------------------------
NOMINEES FOR ELECTION AS A PERCENT
AS DIRECTOR UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
1999 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS(2)
- --------------------------- ---------------------------------- --- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Joseph C. Keys............. Buyer for the Company............. 55 1983 132,113(1)(3) 13.8%
Richard S. Keys............ Buyer for the Company............. 57 1981 132,353(1)(3) 13.8%
Paul R. Rentenbach......... Member in the firm of Dykema
Gossett PLLC, Detroit,
Michigan (attorneys)........... 50 1991 3,000(3) *
James L. Schaye, Jr........ Vice-President, Schottenstein
Professional Asset Management
Corporation (formerly Jubilee
Co., Inc.) since 1990; formerly
President, Eleven Group, Inc.
(apparel manufacturer) from
1988 to 1989................... 47 1993 2,500(1)(3) *
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS WHOSE TERM
WILL CONTINUE UNTIL THE
1998 ANNUAL MEETING
- ---------------------------
<S> <C> <C> <C> <C> <C>
Dennis P. Callahan......... President and Chief Executive
Officer of the Company since
November 1992; previously
employed as Senior Vice
President -- Merchandising of
Hess's Department Stores,
Allentown, Pennsylvania, from
May 1990 to November 1992.... 52 1992 66,420(1) 6.8%
JoAnn S. Cousino........... Private investor; former buyer
for the Company................. 56 1983 133,526(1)(3) 13.9%
Alfred M. Entenman, Jr..... Executive Consultant to BEI
Associates, Inc.
(architectural and
engineering services) since
January 1988................. 75 1973 3,000(3) *
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED AS OF
HAS MAY 22, 1996(1)
SERVED ------------------------
DIRECTORS WHOSE TERM AS A PERCENT
WILL CONTINUE UNTIL THE PRINCIPAL OCCUPATION DIRECTOR OF
1997 ANNUAL MEETING AND OTHER DIRECTORSHIPS AGE SINCE NUMBER CLASS(2)
- --------------------------- -------------------------------- --- -------- ------- --------
<S> <C> <C> <C> <C> <C>
Carroll E. Ebert........... Retired Chairman, Carson Pirie
Scott & Co................... 72 1991 3,500(3) *
Julius L. Pallone.......... Management consultant since June
1993; President and Chief
Executive Officer of Royal
Financial Services, Inc. from
January 1989 to June 1993;
Chairman of the Board and
President of its wholly-owned
subsidiary, Royal Maccabees
Life Insurance Co. from 1968
to June 1993. Also serves as
a trustee of the Woodward
Funds........................ 65 1988 6,000(3) *
Jerome L. Schostak......... Chairman of the Board and Chief
Executive Officer of Schostak
Brothers & Company, Inc.
(real estate-commercial and
industrial-sales, leases,
development and industrial).
Also serves as a director of
Charter One Financial,
Inc. ........................ 62 1995 -- --
Andrew J. Soffel........... Chairman of the Board of
Directors of the Company since
March 1991 and consultant to
the Company since January 31,
1993; President and Chief
Executive Officer of the
Company from March 1988 to
November 1992................ 65 1988 14,000(3) 1.5%
</TABLE>
- -------------------------
* Less than 1%.
(1) See "Item 12. Security Ownership of Certain Beneficial Owners and
Management".
(2) For purposes of computing the applicable percentages of the named persons,
shares which can be acquired upon the exercise of any option within the
60-day period beginning May 22, 1996 were added to the shares owned
beneficially by such persons and to the total shares outstanding on that
date, provided that such shares were not deemed to be outstanding for
purposes of computing the percentages of any other person. Does not include
shares beneficially owned by the Steinbach Shareholders. See "Item 12.
Security Ownership of Certain Beneficial Owners and Management".
(3) Includes options to purchase 2,000 shares of Common Stock granted under the
1995 Director Stock Option Plan which are presently exercisable.
Except as otherwise described, the individuals named above have been
principally engaged in the occupations described above for the past five years.
Richard and Joseph Keys are brothers and JoAnn S. Cousino is their cousin.
None of the above individuals is a party to any contract, arrangement, or
understanding with any person with respect to any securities of the Company
except for the Shareholder Agreement among Ms. Cousino and Messrs. Joseph Keys
and Richard Keys (see "Item 12. Security Ownership of Certain Beneficial
Owners and Management") and except for the Acquisition Agreement in which case
Mr. Schaye serves as the Vice President of an affiliate of the Steinbach
Shareholders (see "Item 12. Security Ownership of Certain Beneficial Owners
and Management").
<PAGE> 4
Executive Officers.
Set forth below is certain information concerning the Company's present
executive officers, including name, age, principal occupation and business
experience during the past five years and length of service as an officer of the
Company.
<TABLE>
<CAPTION>
NAME AND AGE OFFICE(S) AND LENGTH OF SERVICE
- ------------------------------ -------------------------------------------------------------
<S> <C>
Dennis P. Callahan, 52........ President and Chief Executive since November 1992; previously
employed as Senior Vice President -- Merchandising of
Hess's Department Stores, Allentown, Pennsylvania, from May
1990 to November 1992, and as President of Bon Ton Stores,
York, Pennsylvania, from July 1985 to January 1989.
Mark A. VandenBerg, 39........ Vice President -- Finance and Chief Financial Officer since
July 1991; Secretary since February 1987; and Treasurer since
February 1986.
Michael G. Toloff, 41......... Vice President -- Stores (the Company) since March 1995; Vice
President -- Stores and Operations from July 1991 to March
1995; Director of Control from February 1988 to July 1991.
Nancy L. Borchers, 49......... Vice President -- Stores (Steinbach) since March 1996,
although hired by the Company in January 1996; Store Manager,
Steinbach, from June 1995 to December 1995, previously
employed as a real estate salesperson, Johnson & Johnson,
Point Pleasant, New Jersey, from May 1994 to May 1995 and
as Merchandise Manager -- Stores, Royal Doulton, Somerset,
New Jersey, from January 1991 to May 1994.
June A. Ley, 44............... Vice President -- General Merchandise Manager since March
1995; General Merchandise Manager from April 1994 to March
1995; Divisional Merchandise Manager from June 1993 to
April 1994; previously self-employed as Retail Consultant,
Pittsburg, Pennsylvania, from February 1992 to June 1993,
and as Divisional Merchandise Manager of Streets of
Oklahoma City, Oklahoma City, Oklahoma, from February 1990
to November 1991.
Stephen J. Mechavich, 45...... Vice President -- General Merchandise Manager since March
1996; General Merchandise Manager from April 1994 to March
1996; Divisional Merchandise Manager from August 1991 to
April 1994; and Merchandise Advisor from April 1990 to July
1991.
John E. Godfrey, Jr., 58...... Vice President -- General Merchandise Manager since April
1996; previously employed as Senior Vice President -- General
Merchandise Manager, Bon Ton Stores Corporation, York,
Pennsylvania, from April 1984 to January 1996.
James A. Smith, 40............ Vice President -- Operations since March 1995; Director of
Distribution & Traffic from 1990 to March 1995.
Roger E. Werling, Jr., 39..... Vice President -- Management Information Systems since March
1996; Director of Management Information Systems from August
1990 to March 1996.
Edward J. Pestovic, 57........ Vice President -- Advertising since March 1996, although
hired by the Company in January 1996; previously employed as
Director of Advertising and Sales Promotion, Steinbach,
from September 1981 to January 1996.
</TABLE>
Certain Reporting Requirements.
Under the federal securities laws, the Company's directors and executive
officers and any persons holding more than 10% of the Company's Common Stock
(collectively, the "Reporting Persons") are required to file reports with the
Securities and Exchange Commission and with the American Stock Exchange relative
to their ownership of the Common Stock. Specific due dates for filing these
reports have been established and the Company is required to disclose in this
Proxy Statement any failure to timely file these reports.
Based on the written representations of its Reporting Persons and on copies
of the reports filed with the Securities and Exchange Commission, the Company
believes that all of these requirements were satisfied by the Company's
Reporting Persons.
<PAGE> 5
ITEM 11. EXECUTIVE COMPENSATION.
The following information about the Company's method of compensating its
executive officers is intended to both comply with the disclosure rules of the
Securities and Exchange Commission ("SEC") and provide shareholders with a
better understanding of the Company's objectives, policies and arrangements for
executive compensation.
Summary Compensation Table.
The following table sets forth, for the fiscal years ended February 3, 1996
("fiscal year 1995"), January 28, 1995 ("fiscal year 1994") and January 29, 1994
("fiscal year 1993"), information with respect to the cash and other
compensation paid to, or accrued for, the Chief Executive Officer, the only
executive officer whose total annual salary and bonuses exceeded $100,000 (the
"Named Executive Officer").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
---------------------------------
AWARDS PAYOUTS
----------------------- -------
ANNUAL RESTRICTED SECURITIES
COMPENSATION STOCK UNDERLYING LTIP
NAME AND PRINCIPAL ------------------ AWARDS OPTIONS PAYOUTS ALL OTHER
POSITION FISCAL YEAR SALARY BONUS ($) (#) ($) COMPENSATION($)
- ------------------------- ----------- -------- ------- ---------- ---------- ------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis P. Callahan(1).... 1995 $292,677 $50,000 -- 30,000 -- $ 4,901(2)
President and Chief 1994 286,273 75,000 (3) (4) $50,000(5) 4,901(2)
Executive Officer 1993 250,042 75,000 -- -- -- 24,349(6)
</TABLE>
- -------------------------
(1) Mr. Callahan became President and Chief Executive Officer of the Company
effective November 2, 1992. Pursuant to the terms of an employment
agreement, he is entitled to, among other things, a base salary of $250,000
per year.
(2) Includes $4,200 (or $350 per month) for a car allowance, $501 of premiums
paid by the Company on a term life insurance policy maintained for the
benefit of Mr. Callahan, and $200 contributed by the Company on Mr.
Callahan's behalf to the Company's profit-sharing plan.
(3) The award of restricted stock was made as of August 24, 1994 pursuant to the
terms of the 1992 Incentive Stock Plan and the Restrictive Stock Agreement,
dated August 24, 1994, between the Company and Mr. Callahan (the
"Restricted Stock Agreement"). Such terms contain the following general
provisions relative to vesting and transfer restrictions: (i) effective as
of the fiscal year ended January 28, 1995 and the fiscal years ending
February 3, 1996 and February 1, 1997, as the case may be, one-third of the
30,000 shares in the award shall be automatically forfeited to the Company
unless certain performance objectives are satisfied; in the event the
performance objectives are satisfied, such one-third portion not so
forfeited shall be deemed vested; and (ii) the 30,000 shares in the award
(including any vested shares) generally are restricted from transfer for a
period of five years from January 30, 1994, except that such transfer
restrictions shall lapse at such time, if any, as the Company's Board of
Directors shall, in their sole discretion, determine from time to time,
and, in certain cases, upon termination of employment. During the five-year
restriction period, Callahan retains full voting rights and is entitled to
receive all dividends and distributions with respect to the shares in the
award. With respect to the fiscal year ended January 28, 1995, the
performance objectives were satisfied. However, with respect to the fiscal
year ended February 3, 1996, the performance objectives were not satisfied
and 10,000 shares were automatically forfeited.
(4) Effective March 19, 1996, the Company and Mr. Callahan agreed to cancel
incentive stock options granted on April 13, 1994 to purchase 20,000 shares
at a per share purchase price of $10.00.
(5) As of January 28, 1995, 10,000 shares of Common Stock subject to an award of
restricted stock vested subject to certain restrictions on transfer. For a
description of such award, see note (2) above. The dollar value reflected
in the table was calculated by multiplying such 10,000 shares by the
closing price of the Common Stock reported on the American Stock Exchange
on February 2, 1996 (the last reported trade prior to February 3, 1996), or
$5.00 per share. With respect to the payout reported in the table, the
performance objective related to the vesting of such 10,000 shares was
reduced by the Company and by Mr. Callahan.
<PAGE> 6
(6) Includes $19,000 for moving expenses, $4,200 (or $350 per month) for a car
allowance, $1,049 of premiums paid by the Company on a term life insurance
policy maintained for the benefit of Mr. Callahan, and $100 contributed by
the Company on Mr. Callahan's behalf to the Company's profit-sharing plan,
for the fiscal year 1993.
Unexercised Options and Holdings.
The following table sets forth information with respect to the Named
Executive Officer concerning the exercise of options previously granted under
the 1992 Incentive Stock Plan during the fiscal year ended February 3, 1996 and
unexercised options held as of that date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND 1995 FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES VALUE FISCAL YEAR-END FISCAL YEAR-END
ACQUIRED ON REALIZED (#) EXERCISABLE/ ($) EXERCISABLE/
NAME EXERCISE (#) ($) UNEXERCISABLE UNEXERCISABLE(1)
- ------------------------------------------- ------------ -------- ---------------- ----------------
<S> <C> <C> <C> <C>
Dennis P. Callahan......................... 0 $0 16,667/60,000 $0/$26,250
</TABLE>
- -------------------------
(1) The estimated value of the unexercised option shares (i.e., the difference
between the fair market value of the securities underlying the options and
the exercise price of the option at fiscal year-end) was based on the
closing price of the Common Stock reported on the American Stock Exchange
on February 2, 1996 (the last reported trade date prior to February 3,
1996), or $5.00 per share. The dollar values in this table (and all others
contained in this report) are calculated on a pre-tax basis.
Employment Contracts, Termination of Employment, and Change-in-Control
Arrangement.
Executive officers of the Company (including the Named Executive Officer)
are appointed annually by the Board of Directors and, subject to the employment
agreement with Mr. Callahan described below, serve at the pleasure of the Board.
The Company has entered into a written employment agreement with Mr.
Callahan employing him as the President and Chief Executive Officer of the
Company. This agreement provides for a two year term of employment (initially,
from November 1, 1992 to October 31, 1994, subject to certain automatic renewal
provisions) unless he is terminated due to permanent disability (as defined in
the agreement), he is terminated without cause (as defined in the agreement), he
voluntarily terminates his employment or he is terminated for good reason or for
cause (as defined in the agreement, including the willful engagement in
dishonest or fraudulent actions or omissions). Termination for good reason
includes (a) a change in control (generally, (i) the acquisition by a person or
group of more than 50% of the fair market value or total voting power of the
Company, (ii) the acquisition within a twelve-month period by a person or group
of more than one-third in fair market value of the Company's assets, or (iii)
the replacement of a majority of the directors within a twelve-month period)
followed by a diminution or adverse change in the employee's duties and
responsibilities, in the employee's rights or benefits under certain bonus,
stock, and other employee benefit plans or by a requirement that the employee
relocate his principal place of employment beyond a 100 mile radius of Detroit,
Michigan, (b) a material breach of the employment agreement, and (c) the failure
by the Company to obtain a satisfactory agreement from any successor to perform
the employment agreement. If the employee is terminated without cause or for
good reason, the employee would be entitled to receive a single cash payment,
within ten business days following the date of termination, equal to the present
value of two years' base salary (initially, the base salary is $250,000 per
year) and, further, the employee would be entitled to exercise any previously
granted outstanding stock options. The agreement restricts employee disclosure
of material or secret information and employee competition within a fifteen-mile
radius of any of the Company's stores for a period of one year after employment.
<PAGE> 7
Compensation Committee Interlocks and Insider Participation.
During the fiscal year ended February 3, 1996, the Compensation Committee
consisted of Messrs. Pallone (Chairman), Ebert, Entenman, Richard S. Keys and
Schaye. Mr. Keys was employed by the Company as a Buyer during the year ended
February 3, 1996.
Compensation Committee Report on Executive Compensation.
General. The compensation of the Company's executive officers (including
the Named Executive Officer) is determined annually by the Compensation
Committee of the Board of Directors. The Compensation Committee consists of five
directors, four of whom are not employed by the Company and are not eligible to
participate in any of the Company's benefit plans except for the 1995 Director
Stock Plan. The Board of Directors, with the guidance and supervision of the
Compensation Committee, has developed and implemented compensation policies that
seek to provide fair and competitive compensation, encourage the retention of
qualified individuals and enhance stockholder value by encouraging executive
officers to focus their effort on achieving profitability for the Company. The
Company's compensation policies are intended to align the financial interest of
the Company's officers (including its executive officers) with those of the
shareholders as well as to create an atmosphere which recognizes the individual
contribution and/or performance of each executive officer.
In addition to merit-based promotions, the essential components of the
compensation policy for the Company's executive officers are base compensation,
short-term cash performance bonus awards and long-term stock incentive awards in
the form of stock options and/or restricted stock.
Base Compensation. The base compensation for the executive officers of the
Company, including the Chief Executive Officer, is reviewed in March of each
year by the Compensation Committee. Each year, the Compensation Committee
reviews with the Chief Executive Officer and approves, with any modifications it
deems appropriate, annual salaries for the Company's executive officers
(excluding the Chief Executive Officer) for the following year. Annual salaries
are developed after a review of several factors, including the overall salary
increase for Company personnel, comparative competitive industry data and
assessments of the executive's individual performance. The general salary
increase for Company employees as a whole is primarily dependent upon the
Company's earnings performance, the inflation rate for southeastern Michigan and
any reported trends reflecting general increases in compensation among retailers
of comparable size. The peer group of retailers used for compensation analysis
is not generally the same as the Peer Group Index discussed below in the Stock
Performance Graph. The Compensation Committee believes that the Company's most
direct competitors for executive talent are not necessarily comprised of all of
the companies included in a peer group established for comparing shareholder
returns. The Compensation Committee, where appropriate, also considers certain
other non-financial measures, such as increases in market share, improvements in
service quality, and improvements in relations with customers, suppliers and
employees.
The base compensation of the Chief Executive Officer under his employment
agreement is determined by reference to the same factors applicable to the
executive officers but such determination is made by the Compensation Committee
without the involvement by the Chief Executive Officer. Each year the
Committee's determination on base compensation is presented to and approved by
the Company's Board of Directors, without participation by any affected employee
directors.
Performance Bonus Awards. For several years, the Company has maintained a
program to provide incentives to selected officers and employees who have
principal responsibility for profitability and growth in the form of contingent
awards payable in cash. This program consists primarily of cash awards under a
short-term performance plan and an annual cash bonus plan and is administered by
the Compensation Committee, which administration includes the establishment of
performance objectives and awards and the selection of participants. The
establishment of performance objectives and awards is accomplished by taking
into consideration general market and economic considerations and management's
financial plan in the form presented to the Board of Directors at the beginning
of each fiscal year.
Under the short-term performance plan, the Compensation Committee
establishes annual performance objectives, stated in terms of net profits after
taxes, and performance awards based on the satisfaction of such objectives.
Awards to participants are made based on the pro rata base compensation of each
participant. As has been the case for the past several years, no awards were
made under the plan for the fiscal year ended February 3, 1996.
<PAGE> 8
Under the annual cash bonus plan, ten percent (10%) of pre-tax earnings in
excess of an "earnings base" is paid to eligible participants on the basis of
their contributions to the Company as determined by the Compensation Committee.
For the fiscal year ended February 3, 1996, this earnings base was $529,213 and,
as has been the case for the past several years, no awards were made under the
plan.
The Company also has from time to time paid discretionary bonuses to
certain officers and key employees of the Company selected by the Compensation
Committee, based upon their performance during the prior fiscal year. For the
fiscal year ended February 3, 1996, the Compensation Committee approved a
discretionary bonus to the Chief Executive Officer of $50,000 and discretionary
bonuses to four other officers and key employees totalling $12,000, all of which
were made primarily as a result of the contributions to the Company's
acquisition of Steinbach.
Stock Incentive Awards. The Company's incentive program includes the 1992
Incentive Stock Plan, which is intended to retain qualified executive officers
and to motivate such officers to improve the operating results of the Company
and, thereby, improve the long term stock performance of the Company through the
grant of stock options and/or the award of restricted stock. Under this Plan,
which is administered by the Compensation Committee, grants of incentive stock
options and awards of restricted stock have been made to eligible participants
as follows: (i) during the fiscal year ended January 30, 1993, options were
granted to acquire 30,000 shares (pursuant to which options to acquire 166
shares have been exercised and certain options have terminated such that 3,834
shares have been returned to the Plan);(ii) no grants or awards were made during
the fiscal year ended January 29, 1994; (iii) during the fiscal year ended
January 28, 1995, options were granted to acquire 40,000 shares (of which,
options to acquire 20,000 shares were granted to the Chief Executive Officer)
and a restricted stock award was made to the Chief Executive Officer for 30,000
shares of Common Stock subject to certain performance objectives and vesting
requirements; (iv) during the fiscal year ending February 3, 1996, options were
granted to acquire 40,000 shares (of which, options to acquire 30,000 shares
were made to the Chief Executive Officer); and (v) to date, during the fiscal
year ending February 1, 1997, options have been granted to acquire 115,000
shares (of which, options to acquire 100,000 shares were made to the Chief
Executive Officer and, in connection therewith, options previously granted to
the Chief Executive Officer on April 13, 1994 to acquire 20,000 shares at a per
share exercise price of $10.00 were cancelled).
As is the case with respect to cash compensation, the amount of any grants
of stock options and/or awards of restricted stock to the Chief Executive
Officer will be established separately by the Compensation Committee without the
participation of the Chief Executive Officer. Any such award will be based,
among other things, upon factors applicable to executive officer awards as well
as information regarding option grants to chief executive officers of retailers
of similar size or performance, the Chief Executive Officer's base compensation
and his anticipated future contribution to the Company.
Conclusion. Through the compensation programs described above, a
significant portion of the executive compensation is based on individual and
corporate performance and on stock performance. In the case of the Chief
Executive Officer, approximately fifteen percent (15%) of his executive
compensation (excluding long-term compensation awards and payouts) for the
fiscal year ended February 3, 1996 consisted of a performance based element. The
Compensation Committee intends to continue the policy of linking the executive
compensation to corporate performance and shareholder returns.
Members of the Compensation Committee:
Jules L. Pallone, Chairman
Carroll E. Ebert
Alfred M. Entenman, Jr.
Richard S. Keys
James L. Schaye, Jr.
<PAGE> 9
Stock Performance Graph.
The following graph compares the percentage change in the cumulative total
shareholder return on the Company's Common Stock during the Company's last five
fiscal years with the cumulative total return on the American Stock Exchange
(the "AMEX Index") and the Media General Retail Trade -- Department Stores Index
(the "Peer Group Index"). The comparison assumes the investment of $100 in the
Company's Common Stock and in each index on February 2, 1991 and the
reinvestment of all dividends, if any, through February 3, 1996.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
CROWLEY, MILNER AND COMPANY, THE AMERICAN STOCK EXCHANGE INDEX,
AND MEDIA GENERAL RETAIL TRADE -- DEPARTMENT STORES INDEX
(PERFORMANCE RESULTS FROM FEBRUARY 2, 1991
THROUGH FEBRUARY 3, 1996)
[GRAPH]
<TABLE>
<CAPTION>
CROWLEY,
MEASUREMENT PERIOD MILNER AND PEER GROUP
(FISCAL YEAR COVERED) COMPANY INDEX AMEX INDEX
<S> <C> <C> <C>
1991 100 100 100
1992 67.80 127.68 123.29
1993 98.31 147.77 121.08
1994 125.42 189.87 144.58
1995 55.93 160.80 126.18
1996 67.80 208.30 161.74
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pursuant to the terms and conditions of an Agreement and Plan of
Reorganization (the "Acquisition Agreement"), dated as of November 17, 1995, as
amended, among the Company and the shareholders (the "Steinbach Shareholders")
of Steinbach Stores, Inc., an Ohio corporation ("Steinbach"), the Company has
agreed to acquire from the Steinbach Shareholders all of the issued and
outstanding shares of Common Stock of Steinbach (the "Acquisition") in exchange
for 514,800 shares of the Common Stock of the Company (representing
approximately 35.0% of the issued and outstanding shares of Common Stock of the
Company as of the date hereof). The obligations of the Steinbach Shareholders
and the Company to go forward with the closing of the Acquisition are subject
to the satisfaction or waiver of several conditions, including the approval by
the shareholders of the Company at the upcoming Annual Meeting of Shareholders
of the issuance by the Company of 514,800 shares of Common Stock of the Company
in connection with the Acquisition; preliminary proxy materials were filed with
the SEC on May 14, 1996 relative to the foregoing and the Company anticipates
holding the Annual Meeting in July 1997, with the closing of the Acquisition
to occur as soon as practicable thereafter.
The following table sets forth certain information concerning the ownership
of the Company's Common Stock as of May 22, 1996 and as adjusted to reflect the
issuance of 514,800 shares to the Steinbach Shareholders pursuant to the
Acquisition (i) by those persons who were believed by the Company to be
beneficial owners of more than 5% of the Company's outstanding Common Stock, as
reported to the SEC and/or to the Company by such persons, (ii) by the Named
Executive Officer (as defined below in "Executive Compensation"), and (iii) by
all directors and officers (including the Named Executive Officer) of the
Company as a group.
<TABLE>
<CAPTION>
SHARES
SHARES BENEFICIALLY OWNED
BENEFICIALLY OWNED AS OF THE CLOSING
AS OF MAY 22, 1996 OF THE ACQUISITION
--------------------- ---------------------
NUMBER NUMBER
NAME AND ADDRESS OF PERCENT OF PERCENT
OF BENEFICIAL OWNER SHARES OF CLASS SHARES OF CLASS
------------------------------------------------- ------- -------- ------- --------
<S> <C> <C> <C> <C>
JoAnn S. Cousino(1)(2)........................... 133,526 13.9% 133,526 9.1%
500 St. Clair
Grosse Pointe, Michigan 48230
Joseph C. Keys(1)(2)............................. 132,113 13.8% 132,113 9.0%
701 N. Oxford Road
Grosse Pointe Woods, Michigan 48236
Richard S. Keys(1)(2)............................ 132,353 13.8% 132,353 9.0%
414 Notre Dame Ave.
Grosse Pointe, Michigan 48230
FMR Corp. ....................................... 51,690 5.4% 51,690 3.5%
82 Devonshire Street
Boston, Massachusetts 02109
Dennis P. Callahan(3)............................ 66,420 6.8% 66,420 4.5%
All directors and executive officers (including
the Named Executive Officer) of the Company as
a group (20 in number)(4)(5)................... 520,312 51.1% 520,312 34.0%
Jay L. Schottenstein(5).......................... -- -- 514,800 35.0%
c/o 1800 Moler Road
Columbus, Ohio 43207
</TABLE>
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(1) Pursuant to a Shareholder Agreement dated August 18, 1992, as amended, JoAnn
Cousino, Joseph Keys and Richard Keys have agreed to restrict the
disposition of, and regulate the voting of, 390,062 shares (approximately
40.8%) of the Company's outstanding Common Stock. This Shareholder Agreement
continues in force through August 18, 1996, unless sooner terminated as
provided therein.
(2) Includes options to purchase 2,000 shares of Common Stock granted under the
1995 Director Stock Option Plan which are presently exercisable.
(3) Includes shares held indirectly by members of Mr. Callahan's immediate
family and 20,000 shares as to which Mr. Callahan has the right to acquire
pursuant to outstanding stock options within 60 days from May 22, 1996.
(4) Includes shares which can be acquired within the 60-day period beginning
May 22, 1996. Does not include shares beneficially owned by the Steinbach
Shareholders.
(5) Upon the closing of the Acquisition Agreement, the Company will issue
514,800 shares of Common Stock (representing approximately 35.0% of the then
issued and outstanding shares of Common Stock) to the Steinbach
Shareholders. Mr. Schottenstein, as the sole trustee of the several trusts
comprising the Steinbach Shareholders, is deemed to be the beneficial owner
of 514,800 shares. Upon such issuance, and assuming 1,470,869 shares of
Common Stock were issued and outstanding as a result thereof, the
beneficial ownership of all directors and officers (including the Named
Executive Officer) as a group would be diluted to approximately 34.0% and
the beneficial ownership of all of the current shareholders of the Company
would be diluted to approximately 65.0% of the then issued and outstanding
shares of Common Stock.
For a discussion of certain information concerning the ownership of the
Company's Common Stock by the directors and nominees for director, see above
"Item 10. Directors and Executive Officers of the Registration -- Directors"
which is hereby incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to two long-term store leases (one of which was executed in 1964
and terminates in 2001 and the other of which was executed in 1980 and
terminates in 2000) between the Company and two partnerships in which Jerome L.
Schostak, a director of the Company since 1995, is a partner, the Company paid
an aggregate of $849,754 in rentals during the fiscal year ended February 3,
1996. Mr. Schostak has a substantial interest in such partnerships. The terms of
the two leases were negotiated by the Company with such partnerships at a time
when the partnerships were not an affiliated person or entity.
The law firm of Dykema Gossett PLLC, of which Mr. Rentenbach is an equity
member, has performed legal services for the Company during its last fiscal year
and is expected to perform such services during the current year. The amounts
paid to Dykema Gossett during the fiscal year ended February 3, 1996 by the
Company for legal services did not exceed five percent of that firm's gross
revenues for its last fiscal year.
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Registrant has duly caused this Annual Report on Form 10-K/A,
Amendment No. 1 to be signed on its behalf by the undersigned, thereunto duly
authorized, on June 11, 1996.
CROWLEY, MILNER AND COMPANY (Registrant)
By: /s/ MARK A. VANDENBERG
Mark A. Vandenberg, Vice President-Finance and Chief
Financial Officer (principal financial and
accounting officer)
