SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 June 30, 1995
[ ] 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 1-8048
TII INDUSTRIES, INC.
-----------------------------------
(Exact name of registrant as specified in its charter)
Delaware 66-0328885
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1385 Akron Street, Copiague, New York 11726
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 516-789-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: 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 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. [ ]
The aggregate market value of the voting stock of the registrant
outstanding as of September 27, 1995 held by non-affiliates of the registrant
was approximately $45,000,000. While such market value excludes shares which may
be deemed beneficially owned by executive officers and directors and their
associates, this should not be construed as indicating that all such persons are
affiliates.
The number of shares of the Common Stock of the registrant outstanding as
of September 27, 1995 was 7,016,758. The foregoing gives effect to the
conversion of all Class B Stock into Common Stock on September 27, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART II
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive directors and executive officers of the Company are as
follows:
Name Age Positions with the Company
- ---- --- --------------------------
Alfred J. Roach 80 Chairman of the Board and Director
Timothy J. Roach 48 President, Chief Executive Officer, Chief
Operating Officer and Director
C. Bruce Barksdale 64 Senior Vice President and Director
Virginia M. Hall 42 Vice President - Administration
John T. Hyland, Jr. 60 Vice President - Operations
Dare P. Johnston 55 Vice President - Fiber Optic Operations
Carl H. Meyerhoefer 57 Vice President - Research and Development
James A. Roach 43 Vice President - Marketing and Sales
Dorothy Roach 72 Secretary and Director
Timothy R. Graham 45 Director
James R. Grover, Jr. 76 Director
Joseph C. Hogan 73 Director
William J. Rouhana, Jr. 43 Director
William J. Sharwell 73 Director
Alfred J. Roach has served as Chairman of the Board of Directors of the
Company since July 1980, Chief Executive Officer from July 1980 to January 1995
and President and/or Chairman of the Board of Directors of the Company and its
predecessor from its founding in 1964 until July 1980. He has been a director of
the Company since its formation. Mr. Roach has also served as Chairman of the
Board of Directors of American Biogenetic Sciences, Inc. ("ABS"), a company that
conducts research and development of therapeutic and diagnostic products
primarily in the areas of blood coagulation and neurodegenerative diseases,
since September 1983.
Timothy J. Roach has served the Company in various capacities since
December 1973. He has been President of the Company since July 1980, Chief
Operating Officer since May 1987, Chief
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<PAGE>
Executive Officer since January 1995, Vice Chairman of the Board since October
1993, Assistant Chief Executive Officer from June 1985 until January 1995 and a
director since January 1978. Mr. Roach was a Captain in the United States Air
Force for four years prior to joining the Company and is a graduate of Harvard
University's Business School Program for Management Development. Mr. Roach has
also served as Treasurer, Secretary and a director of ABS since September 1983.
C. Bruce Barksdale has been Vice President of the Company since August
1971, becoming Senior Vice President (responsible for customer and product
development) in October 1993. He has served as a director of the Company since
1974. Mr. Barksdale holds a Bachelor of Science degree in Electrical Engineering
from the University of South Carolina.
Virginia M. Hall has served the Company in various capacities since
February 1976, serving as Vice President-Administration since December 1993 and
Vice President-Contract Administration from September 1990 until December 1993.
John T. Hyland, Jr. has served the Company in various capacities since June
1980, most recently serving as Vice President and Treasurer since October 1995.
Prior thereto, he served as Senior Vice President-Auditing from September 1994;
Vice President-Operations (in charge of the Company's Caribbean based
manufacturing operations) from October 1993 until September 1994; and Vice
President and Controller from December 1988 until September 1993. Mr. Hyland
holds a Bachelor of Business Administration degree in Accounting from Ohio
Christian College and a Master of Business Administration in Finance from
Pacific University.
Dare P. Johnston has been Vice President - Fiber Optic Operations since
December 1993. Ms. Johnston joined the Company in September 1993 with the
Company's acquisition of Ditel, Inc., a designer, manufacturer and supplier of
fiber optic products. Prior to joining the Company, Ms. Johnston served in
various capacities with Ditel, Inc. since January 1989, serving as President
since September 1990. Prior to joining Ditel, Inc., Ms. Johnston was employed by
NCNB National Bank of North Carolina since 1973, where she served as Senior Vice
President since October 1983. Ms. Johnston holds a Bachelor of Arts degree in
English from Duke University.
Carl H. Meyerhoefer has been Vice President - Research and Development
since December 1993. Mr. Meyerhoefer joined the Company in July 1993. Prior to
joining the Company, Mr. Meyerhoefer held various positions with Porta Systems
Corp., a manufacturer of telecommunications connection and protection products,
since December 1987, serving as Assistant Vice President of Product
Manufacturing since July 1991. Mr. Meyerhoefer holds a Bachelor of Science
degree in Mechanical Engineering from Stevens Institute of Technology.
James A. Roach has served the Company in various capacities since January
1982, serving as Vice President-Marketing and Sales since July 1987.
Dorothy Roach has been Secretary of the Company for more than the past five
years, served as Treasurer of the Company for more than five years prior to
relinquishing that position in December 1993 and, except for a brief period, has
been a director of the Company since 1964.
Timothy R. Graham has been a director of the Company since August 1992.
Since October 1994, Mr. Graham has served as Executive Vice President of WinStar
Communications, Inc. ("WinStar Communications"), a telecommunications and
information services company. From
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October 1990 through September 1994, Mr. Graham was engaged in the private
practice of law and served in various capacities with National Capital
Management Corporation (a company engaged through its subsidiaries in various
businesses including the ownership of real estate rental properties, industrial
manufacturing and insurance matters), including as Corporate Secretary and as
President of its primary real estate and insurance subsidiaries. During that
period, Mr. Graham also acted in various capacities (presently Executive Vice
President and General Counsel) for WinStar Services, Inc. ("Services"), a
wholly-owned subsidiary of WinStar Companies, Inc. ("WinStar Companies"), and
its affiliated companies, which are engaged in the business of merchant banking
and consulting. Prior to 1990, Mr. Graham was a partner in the law firm of
Nixon, Hargrave, Devans & Doyle specializing in corporate finance, regulatory
and business law.
James R. Grover, Jr. has been a director of the Company since 1978. Mr.
Grover has been engaged in the private practice of law in the State of New York
since 1974, and has been General Counsel to the Company for more than the past
five years. Mr. Grover is also a director of Sunrise Bancorp, Inc.
Dr. Joseph C. Hogan has been a director of the Company since January 1974.
Dr. Hogan served as Dean of the College of Engineering of the University of
Notre Dame from 1967 to 1981, following which he performed various services for
the University of Notre Dame until 1985, where he remains Dean Emeritus. From
1985 until his retirement in 1987, Dr. Hogan was a Director of Engineering
Research and Resource Development at Georgia Tech. He is past President of the
American Society of Engineering Education. Dr. Hogan is also a director of ABS.
William J. Rouhana, Jr. has been a director of the Company since August
1992. Since December 1984, Mr. Rouhana has been a principal (and presently also
serves as President and Chief Executive Officer) of Services and its affiliated
companies, which are engaged in the business of merchant banking and consulting.
Since February 1991, he has also been Chairman of the Board of Directors and,
since May 1994, Chief Executive Officer of WinStar Communications. Mr. Rouhana
has been a director of WinStar Communications since September 1990. Mr. Rouhana
has been President and Chief Executive Officer of WinStar Companies since 1983,
through which he served, from August 1987 to February 1989, as Vice Chairman of
the Board and Chief Operating Officer of Management Company Entertainment Group,
Inc. ("MCEG"), a diversified distributor of entertainment products, and
thereafter until May 1990 as Vice Chairman of MCEG's Board. In November 1990, a
petition for involuntary bankruptcy was filed against MCEG which, on MCEG's
motion, was converted to Chapter 11 of the Bankruptcy Code. In March 1992, MCEG
emerged from Chapter 11. From May 1991 through September 1994, Mr. Rouhana was a
director of Lancit Media Productions, Ltd., a creator of children's television
programming.
William G. Sharwell was appointed as a director of the Company in October
1995. Mr. Sharwell was President of Pace University in New York from 1984 until
his retirement in 1990. He was Senior Vice President of American Telephone &
Telegraph Company between 1976 and 1984, and previously served as executive Vice
President of Operations of New York Telephone Company. Mr. Sharwell serves as an
independent general partner of Equitable Capital Partners, L.P. and Equitable
Capital Partners (Retirement Fund), L.P., registered investment companies under
the Investment Company Act of 1940. He also serves on the Board of Directors of
ABS and US Life Corporation.
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<PAGE>
Alfred J. Roach and Dorothy Roach are married. Timothy J. Roach is their
son and James A. Roach is their nephew. There are no other family relationships
among the Company's directors and executive officers.
The Company's Board of Directors presently consists of nine directors
divided into three classes. C. Bruce Barksdale, Dr. Joseph Hogan and William G.
Sharwell serve as Class I directors, Timothy R. Graham, James R. Grover, Jr. and
Dorothy Roach serve as Class II directors and Alfred J. Roach, Timothy J. Roach
and William J. Rouhana, Jr. serve as Class III directors. The term of office of
Class II directors continues until the Company's 1996 Annual Meeting of
Stockholders scheduled to be held in December 1996, the term of office of Class
III directors continues until the next succeeding annual meeting of stockholders
and the term of office of Class I directors continues until the second
succeeding annual meeting of stockholders and, in each case, until their
respective successors are elected and qualified. Directors are elected at each
annual meeting to succeed those in the class whose term expires at that meeting.
Officers hold office until their successors are chosen and qualified. Any
officer elected or appointed by the Board of Directors may be removed at any
time by the Board. See "Executive Compensation - Employment Agreements" in Item
11 of this Report for information concerning the Company's Employment Agreements
with Timothy J. Roach, Dare P. Johnston and Carl H. Meyerhoefer.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who beneficially own more than ten percent of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership on Form 3 and reports of changes in ownership of
Common Stock and other equity securities of the Company on Form 4 or Form 5,
depending on the transaction reported thereon, within the time periods specified
by the applicable form. With respect to fiscal 1995, Carl H. Meyerhoefer filed
one late Form 4 reflecting one transaction and Alfred J. Roach amended a timely
filed Form 5 with respect to the fiscal year ended June 30, 1995, to reflect the
effects of the Company's new revolving credit agreement on the method of lease
payments under an equipment lease between the Company and a corporation
wholly-owned by Mr. Roach.
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's three fiscal years ended
June 30, 1995, information concerning the compensation paid by the Company to
Alfred J. Roach and Timothy J. Roach, each of whom served as the Company's Chief
Executive Officer during different portions of fiscal year 1995, and each other
executive officer of the Company whose salary and bonus was in excess of
$100,000 during the Company's fiscal year ended June 30, 1995:
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARD
----------------------------------- ------------
NAME AND STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- ------------------ ---- ------ ----- ----------- ------------
<S> <C> <C> <C> <C> <C>
Alfred J. Roach 1995 $150,000 $200 (2) 200,000 --
Chairman of the 1994 149,623 200 (2) -- --
Board (1) 1993 150,000 200 (2) -- --
Timothy J. Roach, 1995 143,677 -- 200,000 $7,282(3)
President, 1994 135,230 -- -- 7,155
and Operating Officer(1) 1993 120,000 -- -- 5,168
Dare P. Johnston 1995 107,692 77,071 20,000 --
Vice President - 1994(4) 82,500 75,000 20,000 --
Fiber Optics Operations
James A. Roach 1995 100,098 39,554 (5) 20,000 --
Vice President - 1994 91,284 48,220 (5) 10,000 --
Marketing 1993 74,505 16,895 (5) 4,240 --
Carl H. Meyerhoefer 1995 107,308 -- 20,000 --
Vice President - 1994(6) 91,244 -- 20,000 --
Research and
Development
</TABLE>
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(1) Timothy J. Roach succeeded Alfred J. Roach as the Company's Chief Executive
Officer in January 1995.
(2) Required to be paid under Puerto Rico law.
(3) Includes (i) $1,703, representing the dollar value to Mr. Roach of the
portion of the premium paid by the Company on split dollar life insurance
policies during such year with respect to the deemed term life insurance
portion of the premiums; and (ii) $5,579, representing the annual premium
paid by the Company on long-term disability insurance maintained by the
Company for the benefit of Mr. Roach.
(4) Ms. Johnston joined the Company in September 1993.
(5) Commissions based on sales.
(6) Mr. Meyerhoefer joined the Company in July 1993.
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<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted during
the Company's fiscal year ended June 30, 1995 to the executive officers named in
the Summary Compensation Table, above:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
---- ---------- ----------- --------- ---------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Alfred J. Roach 100,000 11.5% $4.625 9/13/2004 $290,865 $737,105
100,000 11.5% $5.125 5/14/2005 $322,308 $816,793
Timothy J. Roach 100,000 11.5% $4.625 9/13/2004 $290,865 $737,105
100,000 11.5% $5.125 5/14/2005 $322,208 $816,793
Dare P. Johnston 20,000 2.3% $4.625 9/13/2004 $58,173 $147,421
James A. Roach 20,000 2.3% $4.625 9/13/2004 $58,173 $147,421
Carl H. Meyerhoefer 20,000 2.3% $4.625 9/13/2004 $58,173 $147,421
</TABLE>
Each option was granted at an exercise price equal to the market value of
the Company's Common Stock on the date of grant and is exercisable during a ten
year term (subject to early termination in certain instances) with respect to
20% of the number of shares subject to the option in each annual period, on a
cumulative basis, commencing one year after the date of grant.
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<PAGE>
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
The following table contains information with respect to exercises of
options during the Company's fiscal year ended June 30, 1995 by, and the fiscal
year-end value of unexercised options held by, the executive officers named in
the Summary Compensation Table, above:
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED IN-
OPTIONS AT FY- THE-MONEY OPTIONS
END (#) AT FY-END ($)
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) VALUE REALIZED ($) (1) UNEXERCISABLE UNEXERCISABLE (2)
- ---- --------------- ---------------------- ------------- -----------------
<S> <C> <C> <C> <C>
Alfred J. Roach -- -- 40,360/200,000 $171,530/$375,000
Timothy J. Roach -- -- 40,000/200,000 $145,000/$375,000
Dare P. Johnston -- -- 10,000/ 30,000 $ 5,000 /$ 47,500
James A. Roach 15,000 $64,688 10,000/ 25,000 $ 21,881/$ 45,781
Carl H. Meyerhoefer -- -- 10,000/ 30,000 $ 25,313/$ 67,813
</TABLE>
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(1) Represents closing price of the underlying Common Stock on the date of
exercise of the option minus the option exercise price.
(2) Represents the closing price of the underlying Common Stock at fiscal
year-end minus the option exercise price.
REMUNERATION OF DIRECTORS
Beginning with the first meeting of the Board of Directors held after
September 20, 1995, non-employee directors receive a fee of $1,000 for each
meeting of the Board held and members of Committees of the Board receive a fee
of $500 for attending each meeting of the Committee of the Board on which they
serve. Prior thereto directors received no compensation for their service on the
Board or any committee of the Board, except that Mr. Hogan received $600 for
each meeting of the Audit Committee which he attended. Pursuant to the Company's
1994 Non-Employee Director Stock Option Plan (as amended, the "Non-Employee
Director Stock Option Plan"), the non-employee directors of the Company in
office at the time stockholders approved the plan on December 7, 1994 and, upon
his initial election to the Board on September 20, 1995, Mr. Sharwell were each
granted options to purchase 5,000 shares of the Company's Common Stock at an
exercise price equal to the fair market value of the Company's Common Stock on
the applicable date of grant. In addition, pursuant to the Non-Employee Director
Stock Option Plan, each newly elected director on the date of his or her
election to the Board and each non-employee director in office immediately
following each annual meeting of stockholders (commencing with the Company's
1995 Annual Meeting held on December 6, 1995) on the date of such meeting is
granted an option to purchase 10,000 shares of the Company's Common Stock at the
fair market value of the Company's Common Stock on the date of grant. All
options under the Non-Employee Director Stock Option Plan have a ten year term
(subject to early termination in the event of cessation of service as a
non-employee director).
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<PAGE>
From August 7, 1992 until July 31,1995, Services provided financial
consulting services to the Company, including identifying and analyzing
potential acquisitions and mergers, and evaluating potential investments and
other financing arrangements, pursuant to a Consulting Agreement dated June 2,
1992. Under the Consulting Agreement, as amended, Services received a monthly
fee of $7,500 and additional fees based upon the value of certain types of
transactions consummated by the Company. In fiscal 1995, in addition to its
monthly fee, the Company paid Services $80,000 in connection with the Company's
entering into an $8,000,000 Revolving Credit Loan Agreement with a commercial
bank in January 1995. In addition, in connection with entering into the
Consulting Agreement, the Company granted to Services options to purchase
400,000 shares of Common Stock, exercisable, for a three-year period commencing
February 7, 1993, as follows: (a) 200,000 shares at $5.00 per share; (b) 60,000
shares at $5.625 per share; (c) 60,000 shares at $6.25 per share; and (d) 80,000
shares at $7.50 per share. The holders of the shares underlying the options have
been granted the right to "piggyback" the shares in each registration statement
(with certain exceptions) filed by the Company under the Securities Act of 1933,
as amended for the sale of the Company's securities until August 6, 1997. The
Company has registered the shares of Common Stock underlying the options for
resale in connection with the registration of other securities. The Company has
also agreed to register such shares, on one occasion, upon the demand made prior
to August 7, 1997 by the holders of a majority of the underlying shares, taken
in the aggregate. Such registration statements are at the Company's cost and
expense, except commissions and legal fees of the then holders. These options
were subsequently transferred by Services to William J. Rouhana, Jr., Timothy R.
Graham and a third person, each of whom exercised all of the options in 1996
except for those options exercisable at an exercise price of $7.50 per share,
which have expired unexercised. Services is a wholly-owned subsidiary of WinStar
Companies. Mr. Rouhana, a director of the Company, is President and Chief
Executive Officer of Services and WinStar Companies and has sole voting power
over the majority of the voting shares of WinStar Companies. Mr. Graham, a
director of the Company, is Executive Vice President of and General Counsel to
Services.
EMPLOYMENT AGREEMENTS
The Company and Timothy J. Roach are parties to a five-year Employment
Agreement, effective as of August 1, 1992, pursuant to which Mr. Roach is to
serve as the Company's President, Chief Operating Officer and Vice Chairman of
the Board. Since January 1995 Mr. Roach has also served as Chief Executive
Officer of the Company. Under the Employment Agreement, Mr. Roach is presently
entitled to an annual salary of $175,000 per year (subject to periodic increases
which shall not be less than 10% per annum) and bonuses at the discretion of the
Board of Directors. In addition, the Agreement requires the Company to provide
Mr. Roach (whose principal place of business is the Company's executive offices
in Copiague, New York) with an allowance to reimburse him for the cost of
maintaining a place of abode in Puerto Rico (where the Company maintains its
principal manufacturing facilities) not to exceed 20% of his then salary, to
continue to maintain family medical and dental insurance, split dollar life
insurance policies in the aggregate amount of not less than $500,000 and
long-term disability insurance. Mr. Roach has agreed not to disclose
confidential information of the Company during the term of his employment and
for a period of four years thereafter. In the event of termination of employment
by reason of death or disability, as defined, Mr. Roach or his beneficiary is
entitled to receive a continuation of his salary and the family medical benefits
for a period of one year. In the event Mr. Roach terminates his employment "for
good reason" (in general, adverse changes in his powers, duties, position or
compensation), the Company
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<PAGE>
will be required to pay him all compensation due for the unexpired term of the
Employment Agreement, but not less than six months compensation, in a lump sum.
Dare P. Johnston is a party to an Employment Agreement, dated September 23,
1993, with the Company's subsidiary Ditel, Inc. ("Ditel"), under which Ms.
Johnston is serving as President/General Manager of the Ditel Fiber Optic
Division of the Company. The Employment Agreement, as extended provides for a
term expiring September 22, 1999. Under the Employment Agreement, Ms. Johnston's
current annual salary is $121,000 per annum, subject to review at the end of
each year of employment, with Ms. Johnston to receive a salary increase of up to
10% per year but not less than the percentage increase of a consumer price
index. In addition, for the first two years of her employment, Ms. Johnston
received a $75,000 bonus and a bonus based on the division's sales above a
specified level. Commencing in fiscal 1996, Ms. Johnston's bonus is to be
determined under a formula based on the Company's consolidated sales and
profits. Ms. Johnston has agreed not to disclose confidential information of the
Company during and after the term of the Employment Agreement and that, during
the term of her employment and for a period of two years thereafter, she will
not directly or indirectly engage in certain activities which are competitive
with the Company.
The Company and Carl H. Meyerhoefer are parties to an Employment Agreement,
dated July 1, 1993, pursuant to which Mr. Meyerhoefer is serving as Vice
President-Research & Development. The Employment Agreement, as extended,
provides for a term expiring July 19, 1997. Mr. Meyerhoefer's current
compensation is at the rate of $116,600 per annum. Mr. Meyerhoefer has agreed
that during the term of the Employment Agreement he will not directly or
indirectly engage in certain competitive activities. In addition, he has agreed
not to disclose confidential information of the Company during or after the term
of his employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are James R. Grover, Jr. and
Joseph C. Hogan. The Company has retained Mr. Grover as legal counsel during the
Company's last fiscal year and is retaining him during the Company's current
fiscal year. Fees paid Mr. Grover for services rendered to the Company during
the Company's fiscal year ended June 30, 1995 were $30,000.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 15, 1996, with
respect to the beneficial ownership of Common Stock by (i) each person
(including any "group", as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to own more than 5% of the
outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each executive officer named in the Summary Compensation Table under the caption
"Executive Compensation", above, and (iv) all executive officers and directors
of the Company as a group. The Company understands that, except as noted below,
each beneficial owner has sole voting and investment power with respect to all
shares attributable to such owner.
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<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
----------------------------
NAME AND ADDRESS PERCENT
OF SHARES OF
BENEFICIAL OWNER OWNED CLASS (1)
- ---------------- ------ ---------
<S> <C> <C>
Alfred J. Roach 762,100(2) 10.2%
Route 2-Kennedy
Avenue, Guaynabo,
Puerto Rico 00657
Dorothy Roach 60,704(3) *
Route 2-Kennedy
Avenue, Guaynabo,
Puerto Rico 00657
Timothy J. Roach 501,253(4) 6.7%
1385 Akron Street
Copiague, NY 11726
William J. Rouhana, Jr. 394,763(5) 5.3%
575 Fifth Avenue
New York, NY 10017
Overseas Private 400,000(6) 5.1%
Investment Corporation
1615 M Street, N.W.
Washington, DC 20527
C. Bruce Barksdale 23,998(7) *
Dr. Joseph C. Hogan 24,830(8) *
Timothy R. Graham 125,000(5) 1.7%
James R. Grover, Jr. 20,600(5) *
William G. Sharwell 25,000(9) *
Dare P. Johnston 24,000(10) *
Carl H. Meyerhoefer 24,000(10) *
James A. Roach 20,988(11) *
All executive officers and
directors as a group 2,006,736(12) 26.0%
</TABLE>
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<PAGE>
- ----------------
(1) Asterisk indicates that the Percent of Class is less than one percent.
Percent of Class assumes the issuance of the Common Stock issuable upon the
exercise of options or conversion of indebtedness (to the extent exercisable on
or within 60 days after February 15, 1996) held by such persons or entity but
(except for the calculation of beneficial ownership by all executive officers
and directors as a group) by no other person or entity.
(2) Includes 60,360 shares subject to options held under the Company's 1986
Stock Option Plan. Excludes the shares owned by Mr. Roach's wife, Dorothy Roach,
reflected in this table, as to which shares Mr. Roach disclaims beneficial
ownership.
(3) Includes 8,960 shares subject to options held under the Company's 1986 Stock
Option Plan. Excludes the shares owned by Mrs. Roach's husband, Alfred J. Roach,
reflected in this table, as to which shares Mrs. Roach disclaims beneficial
ownership.
(4) Includes (i) 968 shares owned by Mr. Roach's wife (who has sole voting and
dispositive power with respect to the shares owned by her and as to which Mr.
Roach disclaims beneficial ownership); (ii) 4,240 shares owned by Mr. Roach as
trustee or custodian for his children; and (iii) 60,000 shares subject to
options held under the Company's 1986 Stock Option Plan.
(5) Includes 15,000 shares subject to options held under the Company's 1994
Non-Employee Director Stock Option Plan .
(6) Represents (i) 300,000 shares issuable upon conversion of $750,000 of
indebtedness and (ii) 100,000 shares issuable upon the exercise of an option.
(7) Includes (i) 78 shares owned by Mr. Barksdale's children and (ii) 16,000
shares subject to options held under the Company's 1983 Employee Incentive Stock
Option Plan and 1986 Stock Option Plan.
(8) Includes (i) 9,750 shares subject to options held under the Company's 1986
Stock Option Plan and (ii) 15,000 shares subject to options held under the
Company's 1994 Non-Employee Director Stock Option Plan.
(9) Represents (i) 10,000 shares subject to options held under the Company's
1986 Stock Option Plan and (ii) 15,000 shares subject to options held under the
Company's 1994 Non-Employee Director Stock Option Plan..
(10) Represents 24,000 shares subject to options held under the Company's 1986
Stock Option Plan.
(11) Includes 14,000 shares subject to options held under the Company's 1986
Stock Option Plan.
(12) Includes 302,070 shares subject to options.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 18, 1991, as an inducement to the Company's then bank lenders to
restructure the Company's long-term bank loan, the Company acquired all of the
issued and outstanding shares of capital stock of Crown Tool & Die Company
("Crown"), and acquired certain and leased other equipment from PRC Leasing,
Inc. ("PRC"). At the time Crown was, and PRC remains, corporations wholly-owned
by Alfred J. Roach, Chairman of the Board of Directors and a director of the
Company. The equipment lease (as amended, the "Equipment Lease"), pursuant to
which the Company leases equipment from PRC, has a term expiring July 17, 1996
(subject to automatic extensions until July 17, 1999 and July 17, 2001, unless
terminated by either party upon at least ninety days written notice prior to the
then scheduled renewal period) and provides for rentals at the rate of $200,000
per year. The Equipment Lease provides that rentals be payable in shares of the
Company's Series A Preferred Stock, valued at their liquidation and redemption
value of $100 per share (the "Series A Preferred Stock"), for the period through
January 17, 1994 and thereafter in shares of Common Stock, valued at the average
market value thereof during the period for which rentals are payable in Common
Stock, payable at the end of the present term and each renewal period. However,
during any time that there is no restriction contained in any mortgage or loan
agreement binding on the Company, accumulated rentals are to be paid in cash and
future rentals are to be paid semiannually in cash. On January 31, 1995, the
Company entered into a Revolving Credit Loan Agreement with a commercial bank
which permitted rentals to be paid in cash. Accordingly, on March 7, 1995 and
August 3, 1995, the Company paid PRC $200,000 and $300,000, respectively, in
payment of all accrued but unpaid rentals. The Company believes that the rentals
charged by PRC are comparable to the rentals which would have been charged by
nonrelated leasing companies for similar equipment.
On August 4, 1995 and September 21, 1995, the Company redeemed 10,000 and
17,626 shares, respectively, of Series A Preferred Stock (representing all of
the issued and outstanding shares of Series A Preferred Stock) from Mr. Roach at
the $100 per share liquidation and redemption value of the Series A Preferred
Stock. The Series A Preferred Stock was convertible into Common Stock at $6.25
per share, or into an aggregate of 442,016 shares of Common Stock. The closing
sales price of the Company's Common Stock on August 4, 1995 and September 21,
1995 were $7.50 and $9.25, respectively. Of such shares of Series A Preferred
Stock: (i) 12,390 shares were acquired in exchange for all of the issued and
outstanding shares of capital stock of Crown; (ii) 11,850 shares were acquired
by Mr. Roach from PRC which, in turn, had acquired 5,000, 2,850 and 4,000 of
such shares as part of the purchase price for Crown (which received the 5,000
shares of Series A Preferred Stock in settlement of $500,000 of indebtedness
owed by Crown to PRC), for the purchase from PRC of equipment and for rental
payments through January 17, 1994 under the Equipment Lease, respectively; and
(iii) 3,386 shares were issued to Mr. Roach in payment of dividends payable in
Series A Preferred Stock on outstanding shares of Series A Preferred Stock.
Between August 1 and August 4, 1995, Alfred J. Roach, Timothy J. Roach
(President, Chief Executive Officer and a director of the Company), William J.
Rouhana, Jr. (a director of the Company) and Timothy R. Graham (a director of
the Company) exercised, in accordance with their terms, Warrants which entitled
them to purchase 200,000, 100,000, 129,600 and 48,000 shares of Common Stock,
respectively, at $5.00 per share. The Warrants had been issued in a private
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placement of Common Stock and Warrants by the Company in August 1992 in which
investors purchased an aggregate of 2,200,000 shares of Common Stock and
Warrants to purchase a like number of shares of Common Stock in units consisting
of one share of Common Stock and one Warrant for $2.50 per unit. Messrs. Alfred
J. Roach and Timothy J. Roach had acquired their units in exchange for preferred
stock, purchased by them for cash of $500,000 and $250,000, respectively, in
February 1992; WinStar Venture II, Inc., a corporation owned by WinStar
Companies (in which, in turn, Mr. Rouhana has sole voting power over the
majority of the voting shares) purchased 180,000 of the units and subsequently
transferred the Common Stock and Warrants owned by it to Messrs. Rouhana and
Graham and a third party. In addition, Mr. Graham purchased 30,000 of such units
individually. The closing sales price of the Company's Common Stock on February
21, 1992, the date the Company authorized the private placement was $5.00 per
share (adjusted to give effect to the 1 for 2 1/2 reverse split of outstanding
Common Stock effected by the Company on April 26, 1994) and on the dates of
exercise of the Warrants ranged from $7.50 per share to $7.81 per share.
See "Executive Compensation - Renumeration of Directors" in Item 11 of this
Report for information concerning fees for consulting services paid by the
Company to Services and options granted by the Company to Services with respect
thereto, which were options exercised in February 1996 by Messrs. Rouhana,
Graham and a third party.
See also "Executive Compensation - Compensation Committee Interlocks and
Insider Participation" in Item 11 of this Report for information concerning fees
paid to James R. Grover, Jr. for legal services rendered to the Company by Mr.
Grover.
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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.
TII INDUSTRIES, INC.
February 29, 1996 By: /s/ Timothy J. Roach
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Timothy J. Roach, President
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