_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_______________________
FORM 10-K/A-1
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-25226
EMERSON RADIO CORP.
(Exact name of registrant as specified in its charter)
____________Delaware_____________ ____________22-3285224____________
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
___Nine Entin Road, Parsippany, NJ______ _________07054_________
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:______(201) 884-5800____
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, par value $.01 American Stock Exchange
per share
Securities registered pursuant to Section 12(g) of the Act: Series A Preferred
Stock and Warrants.
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
requirement for the past 90 days. [X] YES [ ] 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. [ ].
Aggregate market value of the voting stock of the registrant held by non-
affiliates of the registrant at July 25, 1996 (computed by reference to the last
reported sale price of the Common Stock on the American Stock Exchange on such
date): $26,249,816.
Indicate by check mark whether the registrant has filed all documents and
reports 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. [X] YES [ ] NO.
Number of Common Shares outstanding at July 25, 1996: 40,295,196
DOCUMENTS INCORPORATED BY REFERENCE: None
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K
pursuant to the Securities Exchange Act of 1934, as amended, as set forth in the
pages attached hereto:
PART III, Items 10 - 13 are amended by the inclusion of such items herein.
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS
MANAGEMENT
OFFICERS AND DIRECTORS
The following table sets forth certain information regarding the officers
and directors of Emerson Radio Corp. (the "Company") as of the date hereof:
Name Age Position
Geoffrey P. Jurick 55 Chairman of the Board and Chief Executive
Officer, Director
Eugene I. Davis 41 President, Director
John P. Walker 33 Executive Vice President, Chief
Financial Officer
Marino Andriani 48 President, Emerson Radio Consumer
Products Corporation
John J. Raab 60 Senior Vice President-Operations
Eddie Rishty 36 Senior Vice President-Controller and Logistics
Stuart D. Slugh (3) 41 Vice President-Engineering/After Sales Service
Elizabeth J.Calianese 38 Vice President-Human Resources, Secretary
Robert H. Brown, Jr. 42 Director
(1)(2)
Peter G. Bunger(2) 55 Director
Jerome H. Farnum (1) 60 Director
Raymond L. Steele 61 Director
(1)(2)
___________________________________
(1) Member of Audit Committee
(2) Member of Compensation and Personnel Committee
(3) As set forth below, Stuart D. Slugh will resign from his position with the
Company effective August 23, 1996.
GEOFFREY P. JURICK has served as Director since September 1990, Chief Executive
Officer since July 1992 and Chairman since December 1993. Mr. Jurick
served as President from July 1993 to October 1994. Since March 1990, he has
been President and Director of Fidenas Investment Limited. Since December 1993,
Mr. Jurick has served as a Director of Fidenas International Limited, L.L.C. and
its predecessor ("FIN") and, since May 1994, as an officer and general manager
of Fidenas International. Mr. Jurick has served as a Director, Chairman and
Chief Executive Officer of GSE Multimedia Technologies Corporation ("GSE"),
which is traded in the over-the-counter market, since May 1994. Since March
1996, Mr. Jurick has served as Chairman of Elision International Ltd.
("Elision"). For more than the past five years, Mr. Jurick has held a variety
of senior executive positions with several of the entities comprising the
Fidenas group of companies ("Fidenas Group"), whose activities encompass
merchant banking, investment banking, investment management, and corporate
development.
EUGENE I. DAVIS has served as President since October 1994 and as a Director
since September 1990. Mr. Davis served as Interim Chief Financial Officer from
February 1993 until November 1995 and as Executive Vice President from
July 1992 to October 1994. From June 1989 to July 1992, Mr. Davis was a
shareholder and director of the law firm of Holmes Millard & Duncan, P.C., in
Dallas, Texas. Since August 1992, Mr. Davis has served as a director of
Tipperary Corporation, which is traded on the American Stock Exchange and, from
October 1993 until January 1995 he served as a director of Crandall Finance
Corporation, which was traded on the pink sheets of the over-the-counter market.
Since May 1995, Mr. Davis has also served as a Director of Beth Israel Health
Care Services, a private corporation.
JOHN P. WALKER has served as Executive Vice President and Chief Financial
Officer since April 1996 and was Senior Vice President from April 1994 until
March 1996. Mr. Walker was Vice President-Finance from February 1993 to April
1994, Assistant Vice President-Finance from June 1991 to January 1993 and
Director of Financial Management from September 1989 to May 1991.
MARINO ANDRIANI has served as President of Emerson Radio Consumer Products
Corporation since February 1996. From December 1994 until February 1996, Mr.
Andriani was President of Appliance Corp. of America, a Welbilt Consumer
Products Company. Prior thereto, Mr. Andriani was Executive Vice President-
Sales of the Company from September 1990 to March 1993.
JOHN J. RAAB has served as Senior Vice President-Operations since October
1995 and was Vice President-Far East Operations from May 1995 until September
1995. Prior thereto, he was President and Chief Operating Officer of Robeson
Industries Corp. from March 1990 to March 1995. Robeson Industries Corp. filed
for relief under Chapter 11 of the United States Bankruptcy Code and emerged
from Bankruptcy and was sold in the end of 1994.
EDDIE RISHTY has served as Senior Vice President-Controller and Logistics
since April 1996, was Vice President-Controller from July 1993 until March 1996,
and was Corporate Controller from October 1991 to June 1993. Prior thereto, Mr.
Rishty was Assistant Controller from April 1989 to September 1991.
STUART D. SLUGH has served as Vice President-Engineering and After Sales Service
since September 1994. Prior thereto, Mr. Slugh was Assistant Vice President-
Engineering and After Sales Service from April 1994 to September 1994, and was
Director of Technical Services for the Company from May 1993 to April 1994.
Prior thereto and for more than the preceding five years, Mr. Slugh was National
Parts Manager for the Company. Mr. Slugh has submitted his resignation from the
Company effective August 23, 1996.
ELIZABETH J. CALIANESE has served as Secretary since January 1996, as Vice
President-Human Resources since May 1995 and as Deputy General Counsel since May
1995. From April 1991 to May 1995, Ms. Calianese served as Assistant General
Counsel. Prior thereto, from June 1989 until March 1991, Ms. Calianese was a
corporate attorney with the Company.
ROBERT H. BROWN, JR. has been a Director since July 1992. Presently, he is
Executive Vice President of Rauscher Pierce Refsnes, Inc. ("Rauscher"). Since
February 1994, Mr. Brown has been Executive Vice President of Capital Markets
of Rauscher, in Dallas, Texas. From January 1990 until February 1994, Mr. Brown
was Senior Vice President and Director of the Corporate Finance Department of
Rauscher. Since May 1993, Mr. Brown has served as a Director of Stevens
Graphics Corp., which is traded on the American Stock Exchange.
PETER G. BUNGER has been a Director since July 1992. Presently, he is a
consultant with Savarina AG. Since October 1992, Mr. Bunger has served as
Director of Savarina AG, engaged in the business of portfolio management
monitoring in Zurich, Switzerland, and since 1992, as Director of ISCS, a
computer software company. From December 1991 until December 1993, he was Vice
Chairman of Montcour Bank and Trust Company Limited, a bank organized in the
Bahamas and an affiliate of Fidenas International. From 1981 until 1992, Mr.
Bunger was owner and Managing Director of Peter G. Bunger Investment Consulting,
a firm which supervised, controlled, and analyzed investments for individuals.
JEROME H. FARNUM has been a Director since July 1992. Since July 1994, Mr.
Farnum has been an independent consultant. From 1979 until 1994, Mr. Farnum
served as a senior executive with several of the entities comprising the Fidenas
Group, in charge of legal and tax affairs, accounting, asset and investment
management, foreign exchange relations, and financial affairs.
RAYMOND L. STEELE has been a Director since July 1992. He has been retired
since September 1993. From August 1990 until September 1993, Mr. Steele served
as Executive Vice President of Pacholder Associates, Inc., a company providing
investment management and other financial advisory services to institutional
clients. Mr. Steele is a member of the Board of Directors of Pharmhouse, Inc.,
a publicly-traded retail drug chain, Modernfall, Inc. and the GFTA Advisory
Board.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's Directors and executive officers, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership and
reports of change in ownership of Common Stock and other equity securities of
the Company. Executive officers, Directors and greater than ten percent
stockholders are required by SEC Regulations to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, during the year ended March 31, 1996, all Section 16(a) filing
requirements applicable to the officers, Directors and greater than ten percent
beneficial owners were complied with. It is the practice of the Company to
attend to the filing of Section 16(a) forms on behalf of the officers and
directors of the Company.
ITEM 11 - EXECUTIVE COMPENSATION AND OTHER INFORMATION
COMPENSATION OF EXECUTIVE OFFICERS
The following executive compensation disclosures reflect all plan and non-
plan compensation awarded to, earned by, or paid to the named executive officers
of the Company. The "named executive officers" are the Company's Chief
Executive Officer (the "CEO"), regardless of compensation level, the four most
highly compensated executive officers, other than the CEO serving as such on
March 31, 1996, and one individual for whom disclosure would have been provided
but for the fact that this individual was not serving as an executive officer on
March 31, 1996. Where a named executive officer has served during any part of
the Company's fiscal year ended March 31, 1996 ("Fiscal 1996"), the disclosures
reflect compensation for the full year in each of the periods presented.
THREE-YEAR COMPENSATION SUMMARY
The following table summarizes for the years indicated the compensation
awarded to, earned by or paid to the named executive officers for services
rendered in all capacities to the Company:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Awards Payouts
RE- SECUR- ALL
OTHER STRICT- ITIES OTHER
NAME AND ANNUAL ED UNDER- LTIP COM-
PRINCIPAL FISCAL COMPEN- STOCK LYING PAY- PEN-
POSITION(S) YEAR SALARY BONUS SATION AWARDS OPTIONS OUTS SATION
(1) (4) (2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GEOFFREY P. 1996 $490,000 $137,500 $102,661 - - - $1,693
JURICK 1995 378,333 275,000 78,702 - 600,000 - 311
CHAIRMAN OF 1994 250,000 195,000 - - - - -
THE BOARD AND
CHIEF EXECUTIVE
OFFICER
EUGENE I. DAVIS 1996 450,000 87,500 90,745 - - - 12,997
PRESIDENT 1995 360,000 175,000 102,024 - 600,000 - 6,986
1994 360,000 150,000 102,385 - - - 5,524
JOHN P. WALKER 1996 165,000 40,000 24,307 - - - 4,912
EXECUTIVE VICE 1995 110,000 75,000 20,420 - 200,000 - 3,841
PRESIDENT AND 1994 110,000 85,000 9,483 - - - 1,918
CHIEF FINANCIAL
OFFICER
JOHN J. RAAB 1996 178,846 - 9,131 - 50,000 - 1,882
SENIOR VICE 1995 - - - - - - -
PRESIDENT- 1994 - - - - - - -
OPERATIONS (3)
EDDIE RISHTY 1996 130,000 20,000 21,360 - - - 3,814
SENIOR VICE 1995 110,000 40,000 9,289 - 30,000 - 3,261
PRESIDENT- 1994 105,154 25,000 8,082 - - - 2,485
CONTROLLER &
LOGISTICS
ALBERT G. 1996 157,500 - 17,574 - - - 4,645
McGRATH, JR. 1995 175,000 75,000 19,958 - 200,000 - 5,451
SENIOR VICE 1994 175,000 100,000 18,462 - - - 4,671
PRESIDENT,
SECRETARY AND
GENERAL COUNSEL
(3)
</TABLE>
(1) Consists of (i) car allowance and auto expenses afforded to the listed
Company executive officers, including $39,967 and $30,546 paid to Mr.
Davis, and $20,745 and $19,114 paid to Mr. Walker, respectively, in Fiscal
1996 and 1995, and $20,433 paid to Mr. Rishty in Fiscal 1996, (ii) tax
preparation services provided to Mr. Davis, (iii) expenses paid by the
Company on behalf of Mr. Davis, covering his club membership, and (iv)
relocation and temporary lodging expenses and associated tax gross-ups in
the amount of $102,661, $73,394 and $0 for Mr. Jurick, $24,493, $43,002 and
$64,643 for Mr. Davis and $0, $0 and $9,137 for Mr. McGrath paid by the
Company in Fiscal 1996, 1995 and 1994, respectively. See "Certain
Relationships and Related Transactions."
(2) Consists of the Company's contribution to its 401(k) employee savings plan,
life insurance and disability insurance.
(3) Mr. Raab became an executive officer of the Company in March 1995.
Effective January 1, 1996, Mr. McGrath resigned from his position at the
Company and simultaneously entered into a one-year consulting agreement
with the Company. Pursuant to the agreement, Mr. McGrath received payments
aggregating $48,462 in Fiscal 1996 which are not included in the above
table.
(4) In July 1994, the Company granted stock options to purchase 600,000,
600,000, 200,000 and 200,000 shares of common stock to each of Messrs.
Jurick, Davis, McGrath and Walker, respectively, exercisable at an exercise
price of $1 per share (except $1.10 in the case of Mr. Jurick). In October
1994, Mr. Rishty was granted a stock option to purchase 30,000 shares of
common stock at an exercise price of $1 per share. In November 1995, Mr.
Raab was granted a stock option to purchase 50,000 shares of common stock
at an exercise price of $2.875 per share. Pursuant to the agreement entered
into with Mr. McGrath described above, stock options to purchase
133,333 shares were cancelled. On June 28, 1996, Mr. McGrath exercised
his remaining options and acquired 42,424 shares of Common Stock. The
outstanding options vest in annual increments of one-third, commencing
one year from the date of grant, and their exercise is contingent on
continued employment with the Company.
STOCK OPTIONS
The following table sets forth information regarding the grant of stock
options during Fiscal 1996 to the named executive officers:
<TABLE>
OPTION GRANTS IN FISCAL 1996
Potential
Realizable
Value at
Assumed
Annual Rates
of Stock
Price
Appreciation
for Option
Individual Grants Term (2)
%
of Total
Options
Granted
to Exer-
Employees cise
Number in Price Expir-
of Options Fiscal Per ation
Name Granted 1996 Share Date (1) 5% 10%
<S> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK - - - - - -
EUGENE I. DAVIS - - - - - -
JOHN P. WALKER - - - - - -
JOHN J. RAAB 50,000 40% $2.875 7/7/04 $90,404 $229,100
EDDIE RISHTY - - - - - -
ALBERT G. MCGRATH,
JR. - - - - - -
</TABLE>
(1) The stock options were granted under the 1994 Stock Compensation Program,
and are exercisable commencing one year after the grant date in the three
equal annual installments, with full vesting occurring on the third
anniversary of the date of the grant.
(2) The dollar amounts under these columns are the result of calculations at
the assumed compounded market appreciation rates of 5% and 10% as required
by the Securities and Exchange Commission over a ten-year term and
therefore, are not intended to forecast possible future appreciation, if
any, of the stock price.
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the named
executive officers concerning the exercise of options during Fiscal 1996 and
unexercised options held at March 31, 1996:
<TABLE>
OPTION EXERCISES IN FISCAL 1996
AND MARCH 31, 1996 OPTION VALUES
Number of Value of
Unexercised Unexercised
Options at In-the-Money
Number of March 31, Options at
Shares 1996 March 31, 1996
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
(1)
<S> <C> <C> <C> <C>
GEOFFREY P.JURICK - - 200,000/400,000 $292,500/$585,000
EUGENE I. DAVIS - - 200,000/400,000 $312,500/$625,000
JOHN P. WALKER - - 66,667/133,333 $104,167/$208,333
JOHN J. RAAB - - 0/ 50,000 $ 0/$ 0
EDDIE RISHTY - - 10,000/ 20,000 $ 15,625/$ 31,250
ALBERT G. MCGRATH,
JR. - - 66,667/ 0 $104,167/$ 0
</TABLE>
(1) Calculated based on the difference between the aggregate fair market
value of the shares subject to options at March 31, 1996 and the aggregate
option exercise price.
CERTAIN EMPLOYMENT CONTRACTS
On August 13, 1992, the Board of Directors of the Company approved the
Employment Agreements of certain of the Company's senior management, including
certain of the senior management included in the table set forth above. A
description of the material terms of such employment agreements, each of which
is effective as of July 7, 1992 (unless stated to the contrary) follows.
Geoffrey P. Jurick, Chairman and Chief Executive Officer of the Company,
entered into five-year employment agreements ("Jurick Employment Agreements")
with the Company and two of its wholly-owned subsidiaries, Emerson Radio (Hong
Kong) and Emerson Radio International Ltd. (formerly Emerson Radio (B.V.I.)
Ltd.) (hereinafter, collectively the "Companies"), providing for an aggregate
annual compensation of $250,000, which was increased to $390,000 in May 1994 and
to $490,000 effective April 1, 1995. In addition to his base salary, Mr. Jurick
is entitled to an annual bonus upon recommendation by the Compensation and
Personnel Committee of the Company's Board of Directors, subject to the final
approval of the Company's Board of Directors.
Subject to certain conditions, each of the Jurick Employment Agreements
grants to Mr. Jurick severance benefits, through expiration of the respective
terms of each of such agreements, commensurate with Mr. Jurick's base salary, in
the event that his employment with the Companies terminates due to permanent
disability, without cause or as a result of constructive discharge (as defined
therein). In the event that Mr. Jurick's employment with the Companies
terminates due to termination for "cause", because Mr. Jurick unilaterally
terminates the agreements or for reasons other than constructive discharge or
permanent disability, Mr. Jurick shall only be entitled to base salary earned
through the applicable date of termination. Similar provisions are set forth in
each of the contracts described below.
Eugene I. Davis, President of the Company, entered into a five-year
employment agreement ("Davis Employment Agreement") with the Company, providing
for an annual compensation of $360,000, which was increased to $450,000
effective April 1, 1995. In addition to his base salary, Mr. Davis is entitled
to an annual bonus equal to an amount up to 30% of Mr. Davis' base salary,
based upon attainment of objectives identified in the Company's five-year
business plan adopted by the Board of Directors ("Business Plan"). Mr. Davis
may also receive an additional annual performance bonus to be recommended by the
Compensation and Personnel Committee of the Company's Board of Directors,
subject to the final approval of the Company's Board of Directors.
Pursuant to the Davis Employment Agreement, the Company granted to Mr.
Davis an option to purchase 500,000 shares of Common Stock. Such option was
cancelled pursuant to the Plan of Reorganization; however, the Company
subsequently granted Mr. Davis options to purchase 600,000 shares of Common
Stock. The Company has also agreed for the term of the Davis Employment
Agreement and three years thereafter, to pay for and maintain legal malpractice
insurance covering Mr. Davis for occurrences and actions taken by him at any
time prior to or during the term of such agreement on behalf of the Company or
its employees. The Company has also agreed to pay all sums, which may be
deductible amounts, not otherwise paid by such insurer.
Upon execution of the Davis Employment Agreement, the Company provided Mr.
Davis with a one-time lump sum payment of $100,000, which figure is net of
applicable taxes and withholdings. In connection with Mr. Davis' relocation to
New Jersey, the Company assumed certain relocation expenses and associated tax
gross-ups on Mr. Davis' behalf aggregating $239,915. See "Summary Compensation
Table."
John P. Walker, Executive Vice President and Chief Financial Officer,
entered into a three-year employment agreement with the Company providing for an
annual compensation of $110,000, which was increased to $165,000 effective April
1, 1995 and increased to $210,000 effective April 1, 1996. In addition to his
base salary, Mr. Walker is entitled to an annual bonus equal to an amount up to
30% of Mr. Walkers' base salary, upon attainment of objectives identified by the
Executive Committee. Mr. Walker may also receive an additional annual
performance bonus to be recommended by the Compensation and Personnel Committee
of the Company's Board of Directors, subject to the final approval of the
Company's Board of Directors.
If Messrs. Jurick, Davis and Walker were to be terminated due to permanent
disability, without cause or as a result of constructive discharge, the
estimated dollar amount to be paid after March 31, 1996 to each such individual,
based on the terms of their respective contracts, would be $622,000, $571,000
and $210,000, respectively.
COMPENSATION OF DIRECTORS
Directors of the Company who are employees do not receive compensation for
serving on the Board. Non-employee Directors are paid $20,000 per annum in
quarterly installments. The Chairmen of the Audit Committee and Compensation and
Personnel Committee each receive an additional $10,000 per annum. Pursuant to
the terms of the Company's 1994 Non-Employee Director Stock Option Plan, each
non-employee Director was granted options to purchase 25,000 shares of Common
Stock on October 7, 1994. On October 7, 1994, each Chairman was also granted
options to purchase an additional 25,000 shares of Common Stock.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of July 26, 1996, by (i) each
Director and nominee for Director of the Company, (ii) executive officers and
Directors of the Company as a group and (iii) each person or entity known by the
Company to be the beneficial owner of more than 5% of the Company's outstanding
Common Stock. For purposes of this Form 10-K/A-1, beneficial ownership of
securities is defined in accordance with the rules of the Securities and
Exchange Commission and means generally the power to vote or exercise investment
discretion with respect to securities, regardless of any economic interests
therein. Except as otherwise indicated and based upon the Company's review of
information on file with the Securities and Exchange Commission, the Company
believes that the beneficial owners of the securities listed below have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable.
<TABLE>
Amount and
Nature of
Name and Address of Beneficial
Beneficial Owner Ownership(2) Percent of Class
<S> <C> <C>
Geoffrey P. Jurick (1)(3) 29,552,642 72.6%
Nine Entin Road
Parsippany, NJ 07054
Fidenas International 29,152,542 72.3%
Limited, L.L.C. (1)
831 Route 10
Suite 38, #113
Whippany, NJ 07981
Elision International, 1,600,000 4.0%
Inc.
275 Wyman Street
Waltham, MA 02154
GSE Multimedia 12,000,000 29.8%
Technologies Corporation
Kostheimer-Landstrasse 36
55246 Mainz - Kostheim
Germany D6502
Eugene I. Davis (3) 490,000 1.2%
Robert H. Brown, Jr. 16,667 (4)
Peter G. Bunger 8,333 (4)
Jerome H. Farnum 8,333 (4)
Raymond L. Steele 16,667 (4)
All Directors and Officers 30,235,975 73.2%
as a Group (11 persons)
(5)(6)
</TABLE>
(1) Consists of 15,552,542, 1,600,000 and 12,000,000 shares of Common Stock
held by FIN, Elision and GSE, respectively. FIN is record holder of
847,458 shares of Common Stock and formerly held such shares as nominee.
The nominee relationship has been terminated and FIN and Mr. Jurick
disclaim beneficial ownership. Mr. Jurick indirectly owns, through a
controlled holding company, approximately 95% of FIN. In addition, Mr.
Jurick is the manager of FIN. FIN owns approximately 14.3% of Elision.
Mr. Jurick indirectly owns, through certain holding companies and
beneficial interests in affiliates, a controlling interest in each of GSE
and Elision. In accordance with a Stipulation and Order of Settlement,
dated June 11, 1996, on its effective date and after court approval, the
shares of Common Stock held by Elision and GSE will be transferred and
registered in the name of FIN. See "Legal Proceedings."
(2) Based on 40,295,196 shares of Common Stock outstanding as of July 26, 1996,
plus shares of Common Stock under option of any director or executive
officer, exercisable within 60 days. Does not include (i) shares of Common
Stock issuable upon conversion of 10,000 shares of Series A Preferred
Stock, (ii) Common Stock issuable upon conversion of certain warrants
issued to the Company's former creditors, (iii) Common Stock issuable upon
exercise of outstanding options, which are not currently exercisable within
60 days, (iv) Common Stock issuable upon conversion of the Company's 8-1/2%
Senior Subordinated Convertible Debentures Due 2002 (the "Debentures") or
(v) Common Stock issuable upon the exercise of warrants granted to (a)
Dresdner Securities (USA) Inc, ("the placement agent") and authorized
dealers in connection with the private placement of the Debentures or (b)
First Cambridge Securities Corporation in connection with a consulting
agreement.
(3) Includes options, exercisable within 60 days, to purchase 400,000 shares of
Common Stock. Does not include options to purchase an aggregate of 200,000
shares of Common Stock not currently exercisable.
(4) Represents less than 1.0% of the outstanding Common Stock.
(5) Includes 993,333 shares of Common Stock subject to unexercised stock
options which were exercisable within 60 days under the Company's Stock
Compensation Program.
(6) Does not include options to purchase an aggregate of 711,667 shares of
Common Stock not currently exercisable within 60 days.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the execution of the Stipulation of Settlement and
Order, dated June 11, 1996 ("Stipulation") between Mr. Jurick, Barclays Bank
PLC, Petra Stelling, the Official Liquidator of Fidenas International Bank
Limited, FIN, Elision, GSE and the Official Liquidator of FIL, the Company
will advance certain expenses and fees including certain expenses of the
Advisor and Settlement Agent, to be appointed pursuant to the terms of the
Stipulation, in each instance to be reimbursed from the proceeds of the first
sale of the Settlement Shares. The maximum amount to be paid by the Company for
the initial advance for such reasonable fees and expenses is $250,000 ("initial
advance"), which amount is to be reimbursed from the proceeds of the first sale
of Settlement Shares and which is to be paid prior to any payment of the
Aggregate Amount as set forth in the Stipulation. After full reimbursement
to the Company of the initial advance, from time to time the Company shall
pay, on a revolving basis, additional reasonable expenses, not to exceed
$75,000 at any one time, incurred by the Settlement Agent (including those
incurred in its capacity as Collateral Agent) and the Advisor. The Company
shall be reimbursed for such further advances from the proceeds of the first
sale of Settlement Shares following an advance of any portion of the $75,000.
Additionally, to the extent not reimbursed from the sales of Settlement Shares
as set forth herein, the Company shall be reimbursed for the expense incurred
in connection with the registration of Settlement Shares from the first proceeds
of sales of such Settlement Shares. See "Legal Proceedings."
The law firm of Lowenstein, Sandler, Kohl, Fisher & Boylan, P.A., was
retained as the Company's outside counsel following the settlement of a proxy
contest conducted in 1992. Payments aggregating approximately $1,070,000 were
made by the Company for the fiscal year ended March 31, 1994. The firm was
retained by the Company as special corporate counsel during the Restructuring
proceedings and received payment for services rendered and expenses incurred
during such proceedings. In addition, the firm provides ongoing services for
the Company. The firm received approximately $637,000 and $737,000 during
Fiscal 1996 and the year ended March 31, 1995 ("Fiscal 1995"), respectively. A
family member of Mr. Davis joined such law firm subsequent to its retention by
the Company and served of counsel to such law firm. During Fiscal 1996, such
family member became a member of another law firm and such law firm now serves
as the Company's outside general counsel. The Company was billed approximately
$95,000 for legal services during Fiscal 1996 by such law firm.
In connection with the execution of his employment agreement with the
Company, Eugene I. Davis, the Company's President, agreed to relocate his
residence to the general locality of the Company's principal executive offices.
To assist in such relocation, in the fiscal year ended March 31, 1993 ("Fiscal
1993"), the Company provided to Mr. Davis an interest-free bridge loan of
$120,000. The maturity date of Mr. Davis' loan has been extended and is due in
the fiscal year ending March 31, 1997.
Mr. Pablo Bunger, the brother of Peter Bunger, a director of the Company,
was the Managing Director of the Company's Spanish branch. Pursuant to a
consulting arrangement, Mr. Pablo Bunger received compensation and reimbursement
of expenses aggregating $28,000 and $118,000 in Fiscal 1996 and Fiscal 1995,
respectively. The Company has closed the Spanish branch and the consulting
arrangement was terminated.
The Company reorganized its Canadian operations in Fiscal 1996. In
connection with such reorganization, Emerson's Canadian subsidiary has entered
into a series of agreements with Tammy Venator, doing business as Venator
Electronics Sales and Services, Ltd. ("Venator"). Ms. Venator is the daughter of
Theo Heuthorst, former President of Emerson's Canadian subsidiary, and she was
formerly the National Service Manager of such subsidiary. Effective April 1,
1995, Emerson's Canadian subsidiary entered into several three-year agreements
with Venator providing for (i) Venator receiving returned products, (ii) Venator
purchasing returned products on an "as-is" basis for refurbishing and resale by
Venator, (iii) Venator processing warranty claims submitted by service centers
authorized to engage in warranty service of Emerson products sold in Canada,
(iv) Venator distributing parts to customers and service centers for Emerson
products, which it will purchase from the Company's Canadian subsidiary at a
premium over their costs, and (v) Venator maintaining an effective service
center network to accommodate all customers of Emerson's Canadian subsidiary,
maintaining a factory service center, and maintaining a parts distribution
center and providing other after sales services. The Company was billed $37,569
for services provided with respect to the above-mentioned agreements during
Fiscal 1996. In addition, the Company billed Venator approximately $269,000 for
spare part purchases and returned product purchases over the same period. The
Company was owed approximately $68,000 for these purchases as of March 31, 1996
and the Company owed Ventor approximately $2,000 for services provided as of
March 31, 1996. Through these agreements, the Company has reduced its costs of
operations in Canada, while maintaining its market presence in Canada. The
Company believes that the terms on which it has entered into the agreements with
Venator described above are no less favorable than could have been obtained from
an unrelated third party.
In Fiscal 1996 and Fiscal 1995, the Company sold finished goods and spare
parts to GSE for approximately $178,000 and $341,000, respectively, on terms no
more favorable than those available to third parties. The Company was owed
approximately $18,000 for these purchases as of March 31, 1996.
In October 1994 and February 1995, the Company employed two individuals who
were professional advisers to Mr. Jurick and certain entities with which Mr.
Jurick is affiliated or associated. One individual was paid $38,587 and $52,885
by the Company for Fiscal 1996 and Fiscal 1995, respectively, as well as
receiving automobile benefits and related expenses in the amount of $1,256 and
$3,027, respectively. The other individual was paid $41,716 and $6,856 by the
Company in Fiscal 1996 and Fiscal 1995, respectively, as well as receiving
automobile benefits in the amount of $897 and $1,295, respectively. The
services of both individuals were terminated in Fiscal 1996. In addition to
services rendered to the Company, each of the individuals, while employed by the
Company devoted substantial amounts of time to services for Mr. Jurick and his
associated or affiliated entities, and consequently, Mr. Jurick may be deemed to
receive an indirect benefit from the payment by the Company of the salary and
other expenses of these two individuals.
Peter G. Bunger, a Director of the Company, was engaged as a consultant to
two foreign subsidiaries of the Company. The agreements, effective as of
October 1, 1994, provided for aggregate annual compensation of $140,000, had
terms of two years and authorized reimbursement for reasonable travel and
business expenses. Pursuant to the consulting agreements, Mr. Bunger received
compensation and reimbursement of expenses aggregating $48,333 in Fiscal 1996.
These agreements were terminated as of September 30, 1995.
In Fiscal 1995, the Company paid Elision the sum of $34,275 for consulting
services with respect to management information services. Elision owns
1,600,000 shares of Common Stock. Mr. Jurick indirectly owns a controlling
interest in Elision.
The Company has adopted a policy that all future affiliated transactions
and loans will be made or entered into on terms no less favorable to the Company
than those that can be obtained from unaffiliated third parties. In addition,
all future affiliated transactions and loans, and any forgiveness of loans, must
be approved by a majority of the independent outside members of the Company's
Board of Directors who do not have an interest in the transactions.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the Registrant
and in the capacities and on the dated indicated.
/s/ Geoffrey P. Jurick Chairman of the Board July 26, 1996
Geoffrey P. Jurick Chief Executive Officer
/s/ Eugene I. Davis President and Director July 26, 1996
Eugene I. Davis
/s/ Robert H. Brown, Jr. Director July 26, 1996
Robert H. Brown, Jr.
Director July , 1996
Peter G. Bunger
/s/ Jerome H. Farnum Director July 26, 1996
Jerome H. Farnum
/s/ Raymond L. Steele Director July 26, 1996
Raymond L. Steele
