SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A (No. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1993
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: 1-8096
FAIRFIELD COMMUNITIES, INC.
(Exact name of registrant as specified in its Charter)
Delaware 71-0390438
(State of incorporation) (I.R.S. Employer Identification No.)
2800 Cantrell Road, Little Rock, Arkansas 72202
(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (501) 664-6000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, $.01 par value
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 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 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. [ ]
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court. Yes X No
----- ------
The number of shares of the registrant's Common Stock outstanding as of March
18, 1994 totaled 9,792,601, of which 160,001 shares were held by wholly
owned subsidiaries of the registrant. The aggregate market value of the
registrant's Common Stock held by non-affiliates totaled approximately $42
million at February 28, 1994.
Documents Incorporated by Reference: Parts I and II of this Form 10-K
incorporate certain information by reference from the registrant's Annual
Report to Stockholders for the year ended December 31, 1993.
-1-
PART III
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Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- - -------- --------------------------------------------------
(a) Identification of Directors
---------------------------
The current Board of Directors of Fairfield began serving during
September 1992. Messrs. John W. McConnell and J. Steven Wilson were
directors of Predecessor Fairfield and served in such capacities since
March 1990.
Russell A. Belinsky, age 33, Senior Vice President and Principal of
Chanin and Company and Senior Vice President and Principal of GTC
Capital Partners since 1990. From 1986 to 1990, Mr. Belinsky was an
associate at the law firm of Skadden, Arps, Slate, Meagher & Flom.
Ernest D. Bennett, III, age 41, partner at the law firm of Taylor,
Philbin, Pigue, Marchetti and Bennett since June 1992. From 1989 to May
1992, Mr. Bennett served as General Counsel at Robert Orr/Sysco Food
Services Company. From 1980 to 1989, Mr. Bennett was a partner at the
law firm of Camp and Bennett.
Daryl J. Butcher, age 54, Vice President, Real Estate of WLD
Enterprises, Inc., a trust management company, since June 1993. From
1981 to May 1993, Mr. Butcher was President of Butcher Real Estate,
Inc., a real estate company developing commercial and industrial
properties in the Baltimore-Washington D.C. area.
Philip L. Herrington, age 41, President of Herrington, Inc., a
private investment and business advisory firm, since July 1986; Chairman
and Chief Executive Officer of Health Care Training Corporation since
1989; President and Chief Operating Officer of Destin Guardian
Corporation, a real estate development company, since 1989.
John W. McConnell, age 52, President and Chief Executive Officer of
Fairfield since 1991; President and Chief Operating Officer from 1990 to
1991; Senior Vice-President and Chief Financial Officer from 1986 to
1990.
William C. Scott, age 57, President and Director of Summitt Care
Corporation, Inc., a developer and operator of retirement and
convalescent centers, since 1985. Director of Pacific Southwest, Inc.,
a holding company.
J. Steven Wilson, age 50, Chairman and Chief Executive Officer of
Wickes Lumber Company since 1991; Chairman and President of Wilson
Financial Corporation, a holding company, since 1980; Chairman,
President and Chief Executive Office of Riverside Group, Inc., an
insurance company, since 1985; Chairman, President and Chief Executive
Officer of The Atlantic Group, Inc., a health food distribution company,
since 1986.
During 1993, there were eight meetings of the Board of Directors, three
meetings of the Audit Committee and one meeting of the Compensation
Committee. Each director attended at least 75% of the meetings of the Board
of Directors and Board Committees on which they served.
The Audit Committee recommends to the Board of Directors a firm to serve
as the independent public accountants for the Company and monitors the
performance of such firm; reviews and approves the scope of the annual audit
and quarterly reviews and evaluates with the independent public accountants
the Company's annual audit and annual consolidated financial statements;
reviews with management the status of internal accounting controls; and
evaluates all public financial reporting documents of the Company. Messrs.
Philip L. Herrington (Chairman), Russell A. Belinsky and Ernest D. Bennett,
III currently are members of the Audit Committee.
The Compensation Committee reviews the administration of Fairfield's
employee benefit plans and makes recommendations to the Board of Directors
with respect to the Company's compensation policies. Messrs. William C.
Scott (Chairman), Daryl J. Butcher and J. Steven Wilson currently are members
of the Compensation Committee.
-2-
Fairfield has no standing nominating or similar committee. The Board of
Directors will consider stockholder recommendations which are submitted in
writing and addressed to the attention of the Secretary of Fairfield. Any
recommendation should include the name and address of the stockholder making
the recommendation and the number of shares owned by said stockholder, the
candidate's name and address, a summary of the candidate's educational
background and business or professional experience during the past five
years, the names of any corporations of which the candidate is or has been a
director, and any other information the proposing stockholder considers
relevant in evaluating the candidate's qualifications. The recommendation
also should indicate the candidate's willingness to serve if nominated and
selected.
(b) Identification of Executive Officers
------------------------------------
In accordance with Regulation S-K Item 401(b), Instruction 3,
the information required by Item 10(b) concerning Fairfield's
executive officers is furnished in a separate item captioned
Executive Officers of the Registrant in Part I above.
(c) Compliance with Section 16(a) of the Exchange Act
-------------------------------------------------
Section 16(a) of the Exchange Act requires Fairfield's
directors and executive officers, and persons who own more than 10%
of its Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange
Commission ("SEC"). Such persons are required by SEC regulations
to furnish Fairfield with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms
received by it with respect to the year ended December 31, 1993,
and written representations from certain reporting persons,
Fairfield believes that all filing requirements have been complied
with as they apply to its directors, executive officers and persons
who own more than 10% of the Common Stock, except that (i) a Form 3
initial statement and one Form 4 were filed late with respect to
the ownership and disposition of Predecessor Fairfield's Common
Stock by Mr. Robert T. Waugh, President of First Federal Savings
and Loan Association of Charlotte, a wholly owned subsidiary of
Fairfield and (ii) a Form 3 initial statement of beneficial
ownership was filed late by Mr. William C. Scott with regard to his
appointment as a director of Fairfield.
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Item 11. EXECUTIVE COMPENSATION
- - -------- ----------------------
The following table summarizes the compensation paid, or to be paid, to
Fairfield's Chief Executive Officer and each of the other four most highly
compensated executive officers (collectively, the "named executive officers")
for each of the last three years.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation
-------------------------------
Other
Annual
Name and Compen-
Principal sation
Position Year Salary ($) Bonus ($) ($)
-------- ---- ---------- --------- --------
<S> <C> <C> <C> <C>
John W. McConnell 1993 275,000 185,625 -
President and 1992 250,005 - -
Chief Executive 1991 219,800 16,485 -
Officer
Morris E. Meacham 1993 200,000 72,051 -
Executive Vice 1992 207,217 - -
President (1) 1991 194,800 14,610 -
Marcel J. Dumeny 1993 175,000 67,411 -
Senior Vice 1992 164,842 - -
President, 1991 149,800 11,235 -
General Counsel
and Secretary
Robert W. Howeth 1993 164,800 49,440 -
Senior Vice 1992 172,768 - -
President, Chief 1991 164,800 12,360 -
Financial Officer and
Treasurer
Clayton G. Gring, Sr. 1993 150,000 30,000 -
Senior Vice 1992 155,769 10,000 -
President (2) 1991 34,615 - -
Long Term Compensation
- - --------------------------------------
Awards Payouts
- - --------------------------------------
Securities
Restricted Underlying All Other
Stock Options/ LTIP Compen-
Award(s) SARS Payouts sation
($) (#) ($) ($)(3)
---------- ---------- ------- ---------
<C> <C> <C> <C>
- - - 22,679
- 150,000 - 3,239
- - - -
- - - 13,589
- 100,000 - 2,174
- - - -
- - - 11,982
- 100,000 - 594
- - - -
- 100,000 - 10,064
- - - -
- - - -
- 100,000 - 17,516
- - - -
- - - -
</TABLE>
- - -------------------
(1) Effective January 1, 1994, Mr. Meacham entered into a new Employment
Agreement as Vice President of Special Projects.
(2) Mr. Gring was employed by Fairfield on September 23, 1991.
(3) In 1993, includes (a) contributions to the Company's profit sharing
plan (Mr. McConnell - $10,513; Mr. Meacham - $10,513; Mr. Dumeny -
$10,513; Mr. Howeth - $8,579 and Mr. Gring - $6,307), (b) allocated
benefits under the Company's Excess Benefit Plan (Mr. McConnell -
$7,225; Mr. Meacham - $719 and Mr. Dumeny - $334) and
(c) dollar amounts of premiums paid on life insurance policies for the
benefit of the named executives officers' respective designated
beneficiaries (Mr. McConnell - $4,941; Mr. Meacham - $2,357; Mr. Dumeny
- $1,135; Mr. Howeth - $1,485 and Mr. Gring - $11,209). In 1992,
represents premiums paid on life insurance policies for benefit of the
named executive officers' respective designated beneficiaries.
-4-
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options
granted during 1993 to the named executive officers. No grants of SARs
were made to named executive officers during 1993.
<TABLE>
Number of
Securities % of Total
Underlying Options
Options Granted to Exercise
Granted Employees Price Expiration
Name (1) in 1993 ($/Sh)(2) Date
- - ---- ---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Robert W. Howeth 100,000 23.8 3.00 9/28/2003
Clayton G. Gring, Sr. 100,000 23.8 3.00 9/28/2003
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation
for Option Term (3)
- - ---------------------
5% ($) 10% ($)
- - ------ -------
<C> <C>
188,000 477,000
188,000 477,000
</TABLE>
- - ----------------
(1) Represents stock purchase warrants granted on September 29, 1993. The
warrants become exercisable in five equal annual installments beginning
one year after the date of grant.
(2) The exercise price was not less than the fair market value of Fairfield's
Common Stock on the date of grant.
(3) As required by rules of the SEC, potential values stated are based on the
prescribed assumption that the Common Stock will appreciate in value from
the date of grant to the end of the option term (10 years from the date of
grant) at annualized rates of 5% and 10% (total appreciation of 63% and
159%), respectively, and therefore are not intended to forecast possible
future appreciation, if any, in the price of the Common Stock.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning the
number of unexercised options at December 31, 1993. There were no options
exercised by any named executive officer during 1993.
<TABLE>
Value of Unexercised
Number of Securities in-the-Money
Underlying Unexercised Options Options
at Year End at Year End ($) (1)
---------- ------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. McConnell 75,000 75,000 112,500 112,500
Morris E. Meacham 50,000 50,000 75,000 75,000
Marcel J. Dumeny 50,000 50,000 75,000 75,000
Robert W. Howeth - 100,000 - 150,000
Clayton G. Gring, Sr. - 100,000 - 150,000
</TABLE>
- - ---------------------
(1) The dollar amounts shown represent the amount by which the product of
the number of shares purchasable upon the exercise of the related options
and the December 31, 1993 closing market price of $4.50 per share exceeds
the aggregate purchase price payable upon such exercise.
-5-
Employment Arrangements
- - ----------------------
Pursuant to the Plans, Fairfield entered into employment agreements
(the "Agreements"), effective September 1, 1992 (the "Effective Date"),
with John W. McConnell, Morris E. Meacham and Marcel J. Dumeny (the
"Executives"). The Agreements are for three year terms and provide for
annual base salaries to Messrs. John W. McConnell, Morris E. Meacham and
Marcel J. Dumeny of $275,000, $200,000 and $175,000, respectively. The
Agreements also provided for the payment of incentive bonuses on August 31,
1993 (the "Anniversary Date"), subject to certain conditions, which were
fulfilled, equal to a certain percentage of each Executive's base salary
(37.5% for Mr. McConnell and 25% for Messrs. Meacham and Dumeny), plus such
additional amounts as established in the discretion of the Board based upon
certain performance criteria. For each year following the Anniversary Date,
bonuses will be paid to the Executives at the discretion of the Board. If
during the term of the Agreements, an Executive is terminated (i) for any
reason other than "for cause" (as defined in the Agreement), death,
disability or (ii) at the Executive's option due to "Constructive Discharge"
(as defined in the Agreement), then such Executive shall receive termination
pay, subject to the limitations of Section 280G of the Internal Revenue Code,
equal to 1.5 times his highest annualized salary prior to termination. No
termination pay is required by Fairfield if any Executive's employment is
terminated "for cause" or as a result of death or disability or voluntarily by
the Executive. During 1993, the Board of Directors determined that (i)
consideration of salary increases and incentive compensation programs would
be on a calendar year basis beginning in 1994 and (ii) minimum bonuses under
the Agreements would not be applicable during the second year term of the
Agreements.
Effective January 1, 1994, Mr. Meacham entered into a new employment
agreement ("New Agreement") as Vice President of Special Projects. The New
Agreement which replaces the prior employment agreement is for a three year
term and provides for an annual base salary of $120,000. The New Agreement
also provides for payment of annual incentive bonuses upon such terms as
the Board of Directors may deem appropriate. If during the term of the New
Agreement, Mr. Meacham is terminated (i) for any reason other than "for
cause" (as defined in the New Agreement), death, disability or (ii) at his
option due to "Constructive Discharge" (as defined in the New Agreement),
then such termination pay shall be equal to, subject to the limitations of
Section 280G of the Internal Revenue Code, (a) $300,000, if the termination
date occurs at any time during the period from January 1, 1994 through
December 30, 1994, (b) $240,000, if the termination date occurs at any time
during the period from December 31, 1994 through December 30, 1995, (c)
$180,000, if the termination date occurs at any time during the period from
December 31, 1995 through December 31, 1996, and (d) $120,000, if the
termination date occurs at any time from and after December 31, 1996. No
termination pay is required if Mr. Meacham is terminated "for cause" or as
a result of death or disability or voluntarily by Mr. Meacham, except that
Mr. Meacham may elect to terminate his employment effective December 31,
1996 and receive $120,000, to partially compensate him for his willingness
to terminate his prior employment contract and enter into the New
Agreement, on more favorable terms to Fairfield.
-6-
Compensation of Directors
- - --------------------------
Fairfield has a policy of compensating only outside directors for the
attendance at meetings of the Board of Directors and meetings of Board
Committees. During 1993, directors received $1,500 for each in-person
Board of Directors meeting, $1,000 for each in-person committee meeting and
50% of those respective amounts for each telephonic Board of Directors or
Board Committee meeting in which they participated, plus an annual retainer
fee of $30,000 payable in equal monthly installments. For 1993,
compensation payments to directors totaled $242,500. Fairfield also
reimburses directors for travel and out-of-pocket expenses incurred in
connection with attendance at the meetings.
Fairfield's First Amended and Restated Warrant Plan (the "1992 Plan")
provides for the grant of nonqualified stock warrants to certain key
employees and directors to purchase up to 1,000,000 shares of Common Stock.
Warrants under the 1992 Plan are to be granted at prices not less than the
fair market value of such shares on the date of grant and may be
exercisable for periods of up to 10 years from the date of grant. During
1993, warrants were granted to outside directors to purchase a total of
5,000 shares each of Common Stock. These warrants were granted effective
October 1, 1993 at an exercise price of $3.00 per share, and become
exercisable as to 20% of the shares subject thereto on each of the first
through fifth anniversaries from the date of grant.
-7-
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- - ------- --------------------------------------------------------------
Security Ownership of Certain Beneficial Owners
-----------------------------------------------
The following table sets forth certain information as of March 18,
1994 with respect to any person known by Fairfield to be the beneficial
owner of more than 5% of Fairfield's Common Stock.
Name and Address of Amount and Nature of Percent of
Beneficial Owner Beneficial Ownership Class (3)
- - ------------------- -------------------- ----------
Physicians Insurance Company
of Ohio
13515 Yarmouth Drive, NW 1,678,726 (1) 17.1
Pickerington, Ohio 43147
Magten Asset Management Corp.
33 East 21st Street 1,597,462 (2) 16.3
New York, New York 10010
Security Ownership of Management
--------------------------------
The following table sets forth certain information as of March 18,
1994 with respect to the beneficial ownership of Fairfield's Common Stock
by its directors, named executive officers and by all directors and
officers as a group. Each individual named has sole investment and voting
power with respect to his shares of Common Stock.
Amount and Nature of Percent of
Name of Beneficial Owner Beneficial Ownership Class (3)
- - ----------------------- -------------------- ---------
Russell A. Belinsky 4,000 *
J. Steven Wilson 361 *
John W. McConnell 128,000 (4) 1.3
Morris E. Meacham 50,000 (4) *
Marcel J. Dumeny 86,000 (4) *
Robert W. Howeth 20,000 *
Clayton G. Gring, Sr. 24 *
All Directors and Executive
Officers as a Group 291,885 3.0
(1) A report on Schedule 13D has been filed with the SEC by Physicians
Insurance Company of Ohio ("PICO") indicating that PICO has sole voting
and dispositive power over 1,184,000 shares and further has the right
to acquire another 494,726 shares within 60 days. The foregoing
information has been included in reliance upon, and with
independent verification of, the disclosures contained in the above-
referenced report on Schedule 13D.
(2) A report on Schedule 13G has been filed with the SEC by Magten Asset
Management Corp. indicating sole voting and dispositive power over
1,250,955 shares and shared voting and sole dispositive power over
346,507 shares. The foregoing information has been included in reliance
upon, and without independent verification of, the disclosures contained
in the above-referenced report on Schedule 13G.
-8-
(3) Based on 9,807,600 of shares outstanding as of March 18, 1994, which
excludes 160,001 shares held by wholly owned subsidiaries of Fairfield,
and includes 175,000 shares, which represent shares that the named
executive officers have the right to acquire (through the exercise of
warrants) within sixty days. The total amount of Common Stock to be
issued after resolution of all claims under the Plan from the amount of
Common Stock outstanding at March 18, 1994. Consequnetly, the
ownership interest of existing shareholders will be diluted (see Note 9
of "Notes to Consolidated Financial Statements").
(4) Includes 75,000, 50,000 and 50,000 shares, respectively, for Messrs.
McConnell, Meacham and Dumeny, which represent shares the named
executives have the right to acquire (through the exercise of warrants)
within sixty days. Under the Rules of the SEC, such shares are considered
to be beneficially owned. For the purpose of calculating percentage
ownership, such shares were also considered to be outstanding.
* Beneficial ownership represents less than 1% of the outstanding shares.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- - ------- ----------------------------------------------
In 1987, Fairfield sold to First Pioneer Partners, Ltd., a Florida
limited partnership ("First Pioneer"), certain parcels of real property
located at its development in Melbourne, Florida and, in connection with
this sale, First Pioneer issued a 10 % Promissory Note to a wholly-owned
subsidiary of Fairfield in the amount of $1.2 million (this note was
subsequently sold to Fairfield's wholly-owned insurance subsidiary). A
wholly owned subsidiary of Wilson Financial Corporation is a general
partner of First Pioneer. Mr. J. Steven Wilson, a director, is Chairman
and President of Wilson Financial Corporation. During 1993, First Pioneer
conveyed the collateral to Fairfield's insurance subsidiary in lieu of
foreclosure. The outstanding principal balance at time of conveyance was
approximately $350,000.
During 1993, Fairfield paid fees and expenses totaling $107,000 to GTC
Capital Partners, as financial advisors to Predecessor Fairfield's Official
Unsecured Bondholders' Committee during the Reorganization. Mr. Russell A.
Belinsky, a director, is a Senior Vice President and Principal of GTC
Capital Partners.
-9-
SIGNATURE
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.
FAIRFIELD COMMUNITIES, INC.
Date: April 28, 1994 /s/ William G. Sell
-------------------------------------
William G. Sell, Vice President/
Controller (Chief Accounting
Officer)
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