SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
HANDLEMAN COMPANY
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(Name of Issuer)
Common Stock - $.01 Par Value
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(Title of Class of Securities)
410252100
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(CUSIP Number)
with a copy to:
Ms. Stephney Costello George J. Mazin, Esq.
Palisade Capital Management, L.L.C. Lowenstein Sandler PC
One Bridge Plaza 65 Livingston Avenue
Fort Lee, New Jersey 07024 Roseland, New Jersey 07068
(201) 585-7733 (973) 597-2418
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
March 8, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [X]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 410252100
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1) Names of Reporting Persons/I.R.S. Identification Nos. of Above Persons
(entities only):
Palisade Capital Management, L.L.C./I.R.S. Identification No. 22-3330049
________________________________________________________________________________
2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
________________________________________________________________________________
3) SEC Use Only
________________________________________________________________________________
4) Source of Funds (See Instructions): OO
________________________________________________________________________________
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e):
Not Applicable
________________________________________________________________________________
6) Citizenship or Place of Organization: New Jersey
Number of 7) Sole Voting Power: 1,717,400*
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Shares Beneficially 8) Shared Voting Power: 0
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Owned by
Each Reporting 9) Sole Dispositive Power: 2,048,200*
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Person With 10) Shared Dispositive Power: 0
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________________________________________________________________________________
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 2,048,200*
________________________________________________________________________________
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(See Instructions): Not Applicable
________________________________________________________________________________
13) Percent of Class Represented by Amount in Row (11): 7.2%*
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14) Type of Reporting Person (See Instructions): IA
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* Palisade Capital Management, L.L.C. ("Palisade") is a registered investment
advisor which has discretionary authority over the accounts of its clients.
Palisade is the beneficial owner of 2,048,200 shares or 7.2% of Handleman
Company (the "Company') common stock, par value $.01 per share (the "Common
Stock"), on behalf of its clients. No one such client account contains more than
five percent of the Common Stock. Palisade has sole power to direct the
disposition of 2,048,200 shares of the Common Stock. While Palisade has the sole
power to vote 1,717,400 shares of the Common Stock, some of its clients maintain
the sole power to vote, in the aggregate, 330,800 shares of the Common Stock
held in their respective Palisade accounts.
<PAGE>
Palisade Capital Management, L.L.C. ("Palisade") hereby amends its
Schedule 13G, filed with the Securities and Exchange Commission on February 10,
2000, relating to the shares of Handleman Company (the "Company") common stock,
$.01 par value (the "Common Stock"), as follows:
Item 1. Security and Issuer.
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This statement relates to the Common Stock of the Company, whose
principal executive offices are located at 500 Kirts Boulevard, Troy, Michigan
48084-4142.
Item 2. Identity and Background.
-----------------------
The reporting person filing this statement is Palisade, a New Jersey
limited liability company, whose business address is One Bridge Plaza, Fort Lee,
New Jersey 07024. Palisade is an investment advisor registered under the
Investment Advisers Act of 1940, as amended. Palisade has never been convicted
in any criminal proceeding, nor has it been a party to any civil proceeding
commenced before a judicial or administrative body of competent jurisdiction as
a result of which it was or is now subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The source of all funds used to purchase shares of the Common Stock
was client assets managed by Palisade. The aggregate amount of funds used in
making the purchases reported on the Schedule 13G, previously filed with the
Securities and Exchange Commission, and this Schedule 13D was approximately
$26,061,685.
Item 4. Purpose of Transaction.
----------------------
At the time of each of the acquisitions of the Common Stock,
previously reported on the Schedule 13G and filed with the Securities and
Exchange Commission and this Schedule 13D, Palisade acquired the Common Stock
for investment purposes only on behalf of its clients, over whose accounts
Palisade exercises investment discretion.
In light of the poor performance of the Company's stock, on March 8,
2000, on behalf of Palisade, Richard Meisenberg, Executive Vice President of
Palisade, caused a letter to be sent to the President and Chief Executive
Officer of the Company, requesting that copies of same be provided to all
members of the board of directors of the Company (the "Board"), proposing that
the Board immediately consider steps to increase shareholder value through,
among other things, a sale by auction of approximately 25% of the Company's
Common Stock and the implementation of a Common Stock repurchase plan.
Depending on the performance of the Common Stock, the Company's future
prospects and other factors, including but not limited to the Company's response
to the above-referenced proposal, Palisade may continue to make its views known
to management and the Board concerning the actions which Palisade believes
should be taken to increase shareholder value. Palisade may also communicate
with other shareholders of the Company, or persons who may desire to become
<PAGE>
shareholders of the Company, regarding the management and operation of the
Company and respond to inquiries regarding the same from the press and other
media.
Item 5. Interest in Securities of the Issuer.
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Based upon information set forth in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended January 31, 2000, as of March 3, 2000
there were outstanding 28,444,922 shares of the Common Stock. As of March 8,
2000, 2,048,200 shares (7.2%) of the Common Stock are owned by Palisade on
behalf of its clients in accounts over which Palisade has investment discretion.
Palisade possesses sole power to direct the disposition of all shares of the
Common Stock beneficially owned by it. Palisade also possesses sole power to
vote all but 330,800 shares of the Common Stock beneficially owned by it. The
power to vote such 330,800 shares is reserved by various clients for whom
Palisade maintains investment accounts.
The following table details the transactions during the past sixty
days, each of which was effected in an ordinary brokerage transaction, in the
Common Stock by Palisade or any other person or entity controlled by Palisade or
any person or entity for which Palisade possesses voting or investment control
over the securities thereof:
(Purchases)
Date Quantity Price
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January 11, 2000 5,000 $10.60
January 12, 2000 10,000 $10.08
(Sales)
Date Quantity Price
---- -------- -----
January 20, 2000 10,000 $10.51
February 8, 2000 1,500 $11.20
February 10, 2000 5,000 $12.50
Additionally, on January 21, 2000, a client of Palisade whose account
held 9,300 shares of Common Stock terminated its relationship with Palisade so
that Palisade no longer possessed any voting and/or dispositive control over
such 9,300 shares. Moreover, on February 18, 2000, a client of Palisade whose
account held 8,100 shares of Common Stock terminated its relationship with
Palisade so that Palisade no longer possessed any voting and/or dispositive
control over such 8,100 shares (collectively, with the 9,300 shares referenced
in the preceding sentence, the "Terminated Shares"). Accordingly, for the
purposes of Regulation Section 240.13d-3, Palisades is no longer deemed the
beneficial owner of the Terminated Shares.
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuers
No contracts, arrangements, understandings or relationships exist with
respect to any securities of the Company as between Palisade and any person or
entity.
Item 7. Material to be Filed as Exhibits.
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(1) Letter, dated March 8, 2000, from Richard Meisenberg, Executive
Vice President of Palisade, to Stephen Strome, President and Chief Executive
Officer of the Company.
Signature
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
April 26, 2000
/s/Steven E. Berman
____________________________________
Steven E. Berman, in his capacity as
a member of Palisade Capital
Management, L.L.C.
Attention: Intentional misstatements or omissions of fact constitute
Federal criminal violations (See 18 U.S.C. 1001).
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit Name
(1) Letter, dated March 8, 2000, from
Richard Meisenberg, Executive Vice
resident of Palisade, to Stephen
Strome, President and Chief Executive
Officer of the Company.
<PAGE>
EXHIBIT (1)
(on Palisade Capital Management, L.L.C. letterhead)
March 8, 2000
Mr. Stephen Strome
President, Chief Executive Officer
Handleman Company
500 Kirts Blvd.
Troy, MI 48084
Dear Steve:
As you know, Palisade Capital is the largest holder of Handleman stock and we
are taking the time to write this letter to you and the Board to express our
frustration with performance of the stock. Unfortunately, as a public company,
this is the only metric by
which you are measured.
While your operating numbers are excellent, there appears to be a lack of
direction on where the company wants go and how they are going to get there. You
are in three distinct businesses, peripherally related, which can be separated
to better realize the value for the shareholders.
The management team has done a fine job of restructuring the company over the
last two years, paying down debt, buying back 17% of the stock and rationalizing
unproductive distribution centers - but it is not enough. Handleman stock is
trading at the same valuation it traded at three years ago.
By our calculations the stock is now trading at 3-1/2 times cash flow, with a
virtually debt- free balance sheet, yet the management (Board) refuses to "step
to the plate" and consummate an aggressive buyback. Why? The answers we've heard
for a year have included (1) potential acquisitions on the horizon, (2) the cost
of financial restructuring was prohibitive, and (3) the Board is not on-board.
Therefore we propose that the Board of Directors immediately consider the
following proposals to increase shareholder value:
1) Dutch Auction for 7-8 million shares at between $13-15 per share
2) Aggressive buyback in open market (no formula)
3) Retention of an investment advisor/banking firm to explore strategic
alternatives to enhance shareholder value
<PAGE>
Mr. Stephen Strome
March 8, 2000
Page 2
We would be happy to discuss these ideas or introduce you to bankers. Time is of
the essence.
We respectfully ask that a copy of this letter be given to all Board members and
that we receive a reply.
Sincerely,
/s/Richard Meisenberg
Richard Meisenberg
Executive Vice President
