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
For the fiscal year ended April 3, 1998
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 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 Number)
incorporation or organization)
Nine Entin Road,Parsippany, NJ 07054
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 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 per share American Stock Exchange
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 27, 1998 (computed by reference to the last
reported sale price of the Common Stock on the American Stock Exchange on such
date): $10,805,037.
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 27, 1998: 50,772,615
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:
<TABLE>
NAME AGE POSITION
<S> <C> <C>
Geoffrey P. Jurick 57 Chairman of the Board, Chief
Executive Officer, President and
Director
John P. Walker 35 Executive Vice President and Chief
Financial Officer
Marino Andriani 50 President, Emerson Radio Consumer
Products Corporation
John J. Raab 62 Senior Vice President - Operations
Elizabeth J. Calianese 40 Vice President - Human Resources,
Deputy General Counsel and Secretary
Christina A. Iatrou 36 Assistant Secretary and Assistant
General Counsel
Robert H. Brown, Jr. 44 Director
(1)(2)
Peter G. Bunger (2) 57 Director
Jerome H. Farnum (1) 62 Director
Raymond L. Steele 63 Director
(1)(2)
</TABLE>
(1) Member of Audit Committee
(2) Member of Compensation and Personnel Committee
GEOFFREY P. JURICK has served as Director since September 1990, Chief Executive
Officer since July 1992, Chairman since December 1993 and President since April
1997. Mr. Jurick also previously served as President from July 1993 to October
1994. From March 1990 until approximately 1994, he was 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. Since December 1996, Mr. Jurick has
served as a Director and Chairman of the Board and since January 23, 1997 as
Chief Executive Officer of Sport Supply Group, Inc. ("SSG"), whose securities
are traded on the New York Stock Exchange. The Company owns 28% of the
outstanding common shares of SSG. See "Item 13. - Certain Relationships and
Related Transactions".
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 and Assistant Vice President-Finance from June 1991 to January 1993. Since
December 1996, Mr. Walker has served as a Director and Chief Financial Officer
of SSG. See "Item 13. - Certain Relationships and Related Transactions".
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. From March 1993 to December 1994, Mr. Andriani was President
of Orient Express Marketing. Prior to March 1993, 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 - International since October
1997, Senior Vice President-Operations from October 1995 until September 1997
and was Vice President-Far East Operations from May 1995 until September 1995.
Prior to May 1995 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.
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.
CHRISTINA A. IATROU has served as Assistant Secretary since August 1996 and as
Assistant General Counsel since May 1995. From October 1987 to May 1995, Ms.
Iatrou was a senior associate with the law firm of Crocco & De Maio, P.C. in New
York City.
ROBERT H. BROWN, JR. has been a Director since July 1992. Since July 1, 1998,
Mr. Brown has been a private investor. From January 1998 to July 1998, he was
Executive Vice President of Dain Rauscher, formerly Rauscher Pierce Refsnes,
Inc. ("Rauscher"). From February 1994 to January 1998, Mr. Brown was 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. Since December 1996, Mr.
Bunger has served as a Director of SSG. See "Item 13. - Certain Relationships
and Related Transactions".
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. 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., Video Services Corp., Modernfold, Inc., ICH,
and the GFTA Advisory Board.
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, and the four
most highly compensated executive officers, other than the CEO, serving as such
on April 3, 1998. Where a named executive officer has served during any part of
the Company's fiscal year ended April 3, 1998 ( "Fiscal 1998" ), the disclosures
reflect compensation for the full year in each of the periods presented.
SUMMARY COMPENSATION TABLE
The following table summarizes for the years indicated the compensation
awarded to, earned by, or paid to the named executives for services rendered in
all capacities to the Company:
<TABLE>
SECURI-
OTHER TIES ALL
NAME AND ANNUAL UNDER- OTHER
PRINCIPAL FISCAL COMPEN- LYING COMPEN-
POSITION(S) YEAR SALARY BONUS SATION(1) OPTIONS SATION(2)
<S> <C> <C> <C> <C> <C> <C>
GEOFFREY P. JURICK 1998 $321,407 $ - $125,208 - $8,215
CHAIRMAN OF THE 1997 443,473 38,500 121,646 - 2,207
BOARD, CHIEF 1996 490,000 137,500 102,661 - 1,693
EXECUTIVE
OFFICER
AND PRESIDENT
(3)
JOHN P. WALKER 1998 107,692 50,000 - - 2,721
EXECUTIVE VICE 1997 179,166 40,000 18,816 - 7,089
PRESIDENT AND 1996 165,000 40,000 24,307 - 4,912
CHIEF FINANCIAL
OFFICER (4)
MARINO ANDRIANI 1998 385,000 - 8,400 - 6,033
PRESIDENT, 1997 387,100 - 9,808 75,000 11,352
EMERSON 1996 51,827 - 1,400 - -
RADIO CONSUMER
PRODUCTS
CORPORATION(5)
(6)
JOHN J. RAAB 1998 210,000 - 8,400 - 5,912
SENIOR VICE 1997 212,100 - 8,638 - 11,237
PRESIDENT- 1996 178,846 - 9,131 50,000 1,882
INTERNATIONAL
(5)
ELIZABETH J. 1998 102,503 10,000 8,400 30,000 1,687
CALIANESE 1997 95,000 - 8,400 30,000 1,425
VICE PRESIDENT- 1996 95,000 5,000 8,400 - 1,425
HUMAN RESOURCES,
SECRETARY, AND
DEPUTY GENERAL
COUNSEL(5) (7)
</TABLE>
(1) Consists of (i) car allowance and auto expenses afforded to the listed
Company executive officers, including $0, $13,063, $20,745 paid to
Mr. Walker, $8,400, $8,400 and $1,400 to Mr. Andriani, $8,400, $8,400
and $8,400 to Mr. Raab and Ms. Calianese, respectively, in Fiscal 1998,
1997 and 1996, (ii) relocation and temporary lodging expenses and
associated tax gross-ups in the amount of $125,208, $120,573 and
$102,661 for Mr. Jurick, for Fiscal 1998, 1997 and 1996.
(2) Consists of the Company's contribution to its 401(k) employee savings plan,
life insurance and disability insurance. Includes $7,170 in premiums paid
in Fiscal 1998 for a life insurance policy for Mr. Jurick.
(3) Includes reimbursement of salary from SSG of $135,414 and $46,527 for Mr.
Jurick in Fiscal 1998 and 1997, respectively. Pursuant to the Management
Services Agreement, between SSG and the Company (the "Management Services
Agreement"), effective October 18, 1997, the Company reduced Mr. Jurick's
salary by $80,000 and will no longer be reimbursed by SSG for a portion of
Mr. Jurick's salary. See "Item 13. - Certain Relationships and Related
Transactions".
(4) Effective January 15, 1998, the Company no longer pays Mr. Walker's salary
directly. However, pursuant to the Management Services Agreement by and
between SSG and the Company, the Company began reimbursing SSG for Mr.
Walker's salary and bonus that on an annualized basis is equivalent to
$100,000 and $50,000 respectively during Fiscal 1998. See "Item 13. -
Certain Relationships and Related Transactions".
(5) 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. In April
1996, Mr. Andriani was granted a stock option to purchase 75,000 shares of
common stock at an exercise price of $2.563 per share and in October 1996,
Ms. Calianese was granted a stock option to purchase 30,000 shares of
common stock at an exercise price of $ 2.25 per share. Ms. Calianese's
options were repriced in May 1997 to $1.00 per share. The options vest in
annual increments of one-third, commencing one year from the date of grant,
and their exercise is contingent on continued employment with the Company.
(6) Mr. Andriani became an executive officer of the Company in February 1996.
(7) Options to acquire 30,000 shares of Common Stock granted to Ms. Calianese
in prior fiscal years were repriced during Fiscal 1998 and are, therefore,
reported as compensation in Fiscal 1998. See "Board Report on Option
Repricing".
OPTION GRANTS DURING 1998 FISCAL YEAR
There were no options granted to the named executives identified in the Summary
Compensation Table.
OPTION EXERCISES AND HOLDINGS
The following table provides information related to options exercised by the
named executive officers during Fiscal 1998 and the number and value of options
held at fiscal year end. The Company does not have any outstanding stock
appreciation rights.
OPTION EXERCISES DURING 1998 FISCAL YEAR AND FISCAL YEAR - END OPTION VALUES
<TABLE>
Number of
Securities
Underlying Value of
Unexercised Unexercised
Options/SARs In-the-Money
at FY-End Options/SARs
Shares (#) at FY-End
Acquired Value Exercisable/ ($)(1)
on Exercise Realized Unexer- Exercisable/
Name (#) ($) cisable Unexercisable
<S> <C> <C> <C> <C>
Geoffrey P. Jurick -- -- 600,000/0 $ 0/$ 0
John P. Walker -- -- 200,000/0 $ 0/$ 0
Marino Andriani -- -- 50,000/25,000 $ 0/$ 0
John J. Raab -- -- 33,333/16,667 $ 0/$ 0
Elizabeth J. Calianese -- -- 20,000/10,000 $ 0/$ 0
</TABLE>
(1) The closing price for the Company's Common Stock as reported by the
American Stock Exchange on April 3, 1998 was $ .44. Value is calculated on the
basis of the difference between the closing price and the option exercise price
of "in the money" options, multiplied by the number of shares of Common Stock
underlying the option.
BOARD REPORT ON OPTION REPRICING
The Board believes that the Company has taken constructive steps to improve
its performance and believes that hiring and retaining key employees is central
to implementing these measures. In furtherance of these goals, in May 1997, the
Board reduced the per share exercise price of options previously granted to Ms.
Calianese. The Board concluded that Ms. Calianese's eight years of continuing
service as an executive of the Company and her experience as Deputy General
Counsel were basis for repricing of options granted to her. On May 13, 1997,
the price of the options was reduced from $2.25 per share to $1.00. The closing
sales price of the Company's Common Stock on May 13, 1997, as reported by the
American Stock Exchange, was $.438. No other provisions of this option were
altered.
In accordance with the rules of the SEC, this Option Repricing Report of the
Board of Directors is not intended to be "filed" or "soliciting Material" or
subject to Regulations 14A or 14C or Section 18 of the Exchange Act, or
incorporated into any other filing by the Company with the SEC.
The following table summarizes certain information concerning the repricing of
options to buy the Company's Common Stock held by all executive officers:
TEN YEAR OPTION REPRICING
<TABLE>
Number
of Length of
Secur- Original
ities Market Option
Under- Price of Exercise Term
lying Stock at Price New Remaining
Date of Options Time of at Time of Exercise at Date of
Name Repricing Repriced Repricing Repricing Price Repricing
<S> <C> <C> <C> <C> <C> <C>
ELIZABETH J. 05/13/97 30,000 $0.438 $2.25 $1.00 N/A
CALIANESE
</TABLE>
CERTAIN EMPLOYMENT CONTRACTS
On August 13, 1992, Geoffrey P. Jurick, Chairman, Chief Executive Officer
and President 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) Ltd. and Emerson Radio
International Ltd. (formerly Emerson Radio (B.V.I.) Ltd.)
(hereinafter, collectively the "Companies"), providing for an
aggregate annual compensation of $490,000 as of April 1, 1995.
Effective October 18, 1997, Mr. Jurick's employment agreement with
the Company (but not the wholly-owned subsidiaries) was amended and Mr.
Jurick's annual salary under the Jurick Employment Agreements was reduced to
$410,000. In addition to his base salary, the Jurick Employment Agreements
provide that 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. By letter
agreement dated April 16, 1997, the terms of the Jurick Employment Agreements
were extended until March 31, 2000. However, pursuant to the Settlement
Agreement, hereinafter defined, Mr. Jurick's cash compensation from the Company
and all subsidiaries and affiliates is limited to a total of $750,000 annually
until the Settlement Amount is paid. See "Certain Relationships and Related
Transactions." Pursuant to the Management Services Agreement, SSG reimbursed
the Company for $125,444 and $46,527 in salary payments made to Mr. Jurick in
Fiscal 1998 and 1997 respectively, for the benefit of SSG. The Management
Services Agreement was amended as of October 18, 1997 to provide that SSG will
no longer reimburse the Company for any of Mr. Jurick's salary payments, but
will pay Mr. Jurick directly. See "Item 13. - Certain Relationships and Related
Transactions - Management Services Agreement".
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. If Mr. Jurick 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 April 3, 1998, based on
the terms of the employment contract, would be $823,000. However, the estimated
amounts to be paid is subject to certain limitations under the Settlement
Agreement. See "Item 13. - Certain Relationships and Related Transactions -
Certain Outstanding Common Stock".
As of April 1, 1994, 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 $165,000 as of April 1, 1995 and
increased to $210,000 effective April 1, 1996 ("Walker Employment Agreement").
Effective January 15, 1998, the Walker Employment Agreement was terminated and
the Management Services Agreement with SSG was amended to provide that the
Company will reimburse SSG for a portion of Mr. Walker's salary and bonus, if
any, thus reducing that portion paid directly by the Company to Mr. Walker to
$0.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS
There are no employment agreements deemed to have an anti-takeover effect.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Personnel Committee, which is presently comprised of
Messrs. Brown, Steele, and Bunger, (i) makes recommendations to the full Board
concerning remuneration arrangements for executive management; (ii) administers
the Company's 1994 Stock Compensation Program; and (iii) makes such reports and
recommendations, from time to time, to the Board of Directors upon such matters
as the committee may deem appropriate or as may be requested by the Board.
Geoffrey P. Jurick serves as Chairman of the Board and Chief Executive
Officer of the Company and SSG. John P. Walker serves as Executive Vice
President and Chief Financial Officer of the Company and SSG. Mr. Walker is
also a Director of SSG. Mr. Bunger, who is a Director of the Company and SSG,
serves on the Compensation Committees of the Company and SSG. Geoffrey Jurick
was also a member of the Company's Board of Directors during Fiscal 1998 and
participated in deliberations concerning executive officer compensation.
REPORT OF COMPENSATION AND PERSONNEL COMMITTEE
The Compensation and Personnel Committee of the Board of Directors (the
"Compensation Committee"), which contains two independent non-employee
Directors, oversees the Company's executive compensation strategy. The strategy
is implemented through policies designed to support the achievement of the
Company's business objectives and the enhancement of stockholder value. The
Compensation Committee reviews, on an ongoing basis, all aspects of executive
compensation.
The Compensation Committee's executive compensation policies support the
following objectives:
-- The reinforcement of management's concern for enhancing stockholder
value.
-- The attraction and retention of qualified executives.
-- The provision of competitive compensation opportunities for exceptional
performance.
The basic elements of the Company's executive compensation strategy are:
BASE SALARY. Base salaries for the executive managers of the Company
represent compensation for the performance of defined functions and
assumption of defined responsibilities. The Compensation Committee reviews
each executive's base salary on an annual basis. In determining salary
adjustments, the Compensation Committee considers the Company's growth in
earnings and revenues and the executive's performance level, as well as
other factors relating to the executive's specific responsibilities. Also
considered are the executive's position, experience, skills, potential for
advancement, responsibility, and current salary in relation to the expected
level of pay for the position. The Compensation Committee exercises its
judgment based upon the above criteria and does not apply a specific
formula or assign a weight to each factor considered.
ANNUAL INCENTIVE COMPENSATION. At the beginning of each year, the
Board of Directors establishes performance goals of the Company for that
year, which may include target increases in sales, net income and earnings
per share, as well as more subjective goals with respect to marketing,
product introduction and expansion of customer base.
LONG-TERM INCENTIVE COMPENSATION. The Company's long-term incentive
compensation for management and employees consists of the 1994 Stock
Compensation Program.
The Compensation Committee views the granting of stock options as a
significant method of aligning management's long-term interests with those of
the stockholders. The Compensation Committee determines awards to executives
based on its evaluation of criteria that include responsibilities, compensation,
past and expected contributions to the achievement of the Company's long-term
performance goals. Stock options are designed to focus executives on the long-
term performance of the Company by enabling executives to share in any increases
in value of the Company's stock.
The Compensation Committee encourages executives, individually and
collectively, to maintain a long-term ownership position in the Company's stock.
The Compensation Committee believes this ownership, combined with a significant
performance-based incentive compensation opportunity, forges a strong linkage
between the Company's executives and its stockholders.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Geoffrey P. Jurick is the Chief Executive Officer, Chairman of the
Board of Directors and President of the Company. The Compensation Committee
considered the Company's results in all aspects of its business, and the
terms of his employment agreement with the Company, in its review of
Mr. Jurick's performance during Fiscal 1998.
Mr. Jurick's annual compensation, comprised of annual base salary of
$411,600, is consistent with the Committee's targeted annual compensation level
and with the limitations established by the Settlement Agreement (See "Item 13.
- - Certain Relationships and Related Transactions - Certain Outstanding Common
Stock"). Mr. Jurick reduced his salary by $80,000 in Fiscal 1998 as a result of
SSG paying Mr. Jurick directly (See "Item 13. - Certain Relationships and
Related Transactions - Management Services Agreement"). The terms and
conditions of Mr. Jurick's employment agreement are discussed in detail
beginning on page 4 (See "Item 11. - Executive Compensation and Other
Information - Certain Employment Contracts").
POLICY ON QUALIFYING COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), for tax years beginning on or after January 1, 1994, provides that
public companies may not deduct in any year compensation in excess of $1 million
paid to any of the individuals named in the Summary Compensation Table that is
not, among other requirements, "performance based," as defined in Section
162(m). None of the named individuals received compensation in excess of $1
million during Fiscal 1998, 1997 or 1996. The Company's policy is to qualify, to
the extent reasonable, its executive officers' compensation for deductibility
under applicable tax laws. However, the Board of Directors believes that its
primary responsibility is to provide a compensation program that will attract,
retain and reward the executive talent necessary to the Company's success.
Consequently, the Board of Directors recognizes that the loss of a tax deduction
could be necessary in some circumstances.
COMPENSATION AND PERSONNEL COMMITTEE
Raymond L. Steele, Chairman
Robert H. Brown, Jr.
Peter G. Bunger
BOARD OF DIRECTORS AND COMMITTEES
The business of the Company is managed under the direction of the Board of
Directors. The Board meets during the Company's fiscal year to review
significant developments affecting the Company and to act on matters requiring
Board approval. The Board of Directors held eight formal meetings and acted by
unanimous written consent three times during the fiscal year ended April 3,
1998. During Fiscal 1998, each member of the Board participated in at least 80%
of all Board and committee meetings held during the period for which he served
as a Director and/or committee member.
During Fiscal 1998, the Board of Directors had an Audit Committee and a
Compensation and Personnel Committee to devote attention to specific subjects
and to assist the Board in the discharge of its responsibilities. The functions
of these committees and their current members are described below.
AUDIT COMMITTEE. The Company's Audit Committee is presently comprised of
Messrs. Brown (Chairman), Steele and Farnum. The Audit Committee recommends to
the Board of Directors the appointment of a firm of certified public accountants
to conduct audits of the Company's consolidated financial statements and
monitors the performance of such firm, reviews accounting objectives and
procedures of the Company and the findings and reports of the independent
certified public accountants, and makes such reports and recommendations to the
Board of Directors as it deems appropriate. During Fiscal 1998, the Audit
Committee met two times and acted by unanimous written consent one time.
COMPENSATION AND PERSONNEL COMMITTEE. The Compensation and Personnel
Committee, which is presently comprised of Messrs. Brown, Steele (Chairman), and
Bunger, (i) makes recommendations to the full Board concerning remuneration
arrangements for executive management; (ii) administers the Company's 1994 Stock
Compensation Program; and (iii) makes such reports and recommendations, from
time to time, to the Board of Directors upon such matters as the committee may
deem appropriate or as may be requested by the Board. During Fiscal 1998, the
Compensation Committee met one time. See "Item 11. - Executive Compensation and
Other Information--Report of Compensation and Personnel Committee".
The Board of Directors did not have a standing nominating committee, or any
other committee performing similar functions during Fiscal 1998. The functions
customarily attributable to a nominating committee were performed by the Board
of Directors as a whole.
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 Chairman of the Audit Committee receives an
additional $10,000 per annum and the Chairman of the Compensation and Personnel
Committee receives an additional $10,833 per month in quarterly installments.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 27, 1998, the beneficial
ownership of (i) each current Director, (ii) each officer named in the Summary
Compensation Table, (iii) the Directors and executive officers as a group and
(iv) each stockholder known to management of the Company to own beneficially
more than 5% of the Company's outstanding shares of 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
("SEC") and means generally that 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 as filed with the SEC, 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 Percent
Name and Address Of Beneficial Owners of Beneficial Ownership(1) of Class
<S> <C> <C>
Geoffrey P. Jurick (2) (3) 29,752,542 57.4%
Fidenas International Limited, L.L.C. 29,152,642 56.3%
831 Route 10
Suite 38, #113
Whippany, NJ 07981 (2)
Grace Brothers Ltd. 4,369,896 7.8%
1560 Sherman Avenue, Suite 900
Evanston, IL 60201 (7)
Oaktree Capital Management 3,056,489 5.6%
550 South Hope St., 22nd Fl
Los Angeles, CA 90071 (8)
Robert H. Brown, Jr. (4) 50,000 *
Peter G. Bunger (4) 25,000 *
Jerome H. Farnum (4) 25,000 *
Raymond L. Steele (4) 50,000 *
John P. Walker (5) 200,000 *
Marino Andriani (5) 50,000 *
John J. Raab (5) 33,333 *
Elizabeth J. Calianese (5) 20,000 *
All Directors and Officers 30,205,875 58.3%
as a Group (9 persons) (6)
</TABLE>
(*) Less than one percent
(1) Based on 50,772,615 shares of Common Stock outstanding as of July 27, 1998,
plus shares of Common Stock under option of any Director or executive
officer, exercisable within 60 days. Except as otherwise indicated, does
not include (i) shares of Common Stock issuable upon conversion of 5,137
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., or
(b) First Cambridge Securities Corporation ("First Cambridge"), and/or
representatives of First Cambridge it so designates or its beneficiaries.
(2) Consists of 15,552,542, 1,600,000 and 12,000,000 shares of Common Stock
which were held by FIN, Elision, and GSE, respectively. FIN is record
holder of an additional 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 of such additional
shares. 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 (the
"Stipulation"), the shares of Common Stock held by Elision and GSE were
transferred and registered in the name of FIN. All of the shares owned by
FIN, GSE and Elision are subject to certain restrictions. See "Item 13. -
Certain Relationships and Related Transactions - Certain Outstanding
Common Stock".
(3) Includes options, exercisable within 60 days, to purchase 600,000 shares
of Common Stock.
(4) Comprised of options issued pursuant to the Company's 1994 Non-Employee
Director Stock Option Plan. See "Security Ownership of Certain Beneficial
Owners and Management--Compensation of Directors."
(5) In July 1994, the Company granted stock options to purchase 200,000 shares
of Common Stock to Mr. Walker exercisable at an exercise price of $1 per
share. In November 1995, Mr. Raab was granted stock options to purchase
50,000 shares of Common Stock at an exercise price of $2.875 per share.
In April 1996, Mr. Andriani was granted stock options to purchase 75,000
shares of Common Stock at an exercise price of $2.563 per share and in
October 1996, Ms. Calianese was granted stock options to purchase
30,000 shares of Common Stock at an exercise price of $2.25 per share.
In May 1997, the options granted to Ms. Calianese were repriced to
$1.00 per share. The 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.
(6) Includes 1,043,333 shares of Common Stock subject to unexercised stock
options which were exercisable within 60 days under the Company's
Stock Compensation Program. Does not include options to purchase an
aggregate of 61,667 shares of Common Stock not currently exercisable
within 60 days.
(7) Based on information set forth in Schedule 13G dated May 12, 1998, filed
with the SEC by Grace Brothers Ltd. Includes 4,290,019 common shares
issuable upon conversion of the owner's holdings in the Company's Series A
Convertible Preferred shares if such holdings were converted into shares of
the Company's Common Stock as of December 31, 1997. The percentage of
beneficial ownership assumes that the common shares that would be issued
upon conversion are outstanding.
(8) Based on information set forth in Schedule 13D dated May 22, 1998, filed
with the SEC by Oaktree Capital Management LLC, Kenneth Grossman and OCM
Principal Opportunities Fund, L.P. Includes 2,956,489 common shares
issuable upon conversion of the owners' holdings of the Company's
Debentures if such holdings were converted into shares of the Company's
Common Stock. The percentage of beneficial ownership assumes that the
common shares that would be issued upon conversion are outstanding.
COMPARISON OF CUMULATIVE TOTAL RETURN
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholders' return on the
Company's Common Stock for the period December 22, 1994 (the date on which the
Company's Common Stock began trading on the American Stock Exchange) to April 3,
1998, with the cumulative total return over the same period of the American
Stock Exchange and a peer group of companies selected by the Company for
purposes of comparison, which includes Cobra Electronics Corp., Matsushita
Electric Industrial Co. Ltd., Philips Electronics N.V., Sony Corp. and Zenith
Electronics Corp. The peer group assumes the investment of $100 in the
Company's Common Stock, on December 22, 1994 and reinvestment of all dividends.
The information in the graph was provided by Media General Financial Services
("MGFS"). The comparison of the returns are as follows:
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN OF
EMERSON RADIO CORP., PEER GROUP INDEX
AND BROAD MARKET INDEX
<CAPTION>
FISCAL YEAR ENDING
COMPANY/INDEX/MARKET 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C>
Emerson Radio Corp. 100 135.14 110.81 45.95 18.92
Peer Group Index 100 103.95 114.52 141.47 142.79
NASDAQ Market Index 100 102.95 138.47 154.92 234.12
</TABLE>
The Customer Selected Stock List is made up of the following securities:
COBRA ELECTRONICS CORP.
MATSUSHITA ELEC IND CO
PHILIPS ELECTRONICS NV
SONY CORP
ZENITH ELECTRONICS CORP.
The stock price performance depicted in the above graph is not necessarily
indicative of future price performance. The Corporate Performance Graph will
not be deemed to be incorporated by reference in any filing by the Company under
the Securities Act or the Exchange Act except to the extent that the Company
specifically incorporates the graph by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SPORT SUPPLY GROUP, INC.
On August 1, 1996, the Company and Emerson Radio (Hong Kong) LTD. ("Emerson
HK"), filed a Schedule 13D with the SEC. Pursuant to the Schedule 13D, Emerson
HK reported that it acquired 669,500 shares of SSG's Common Stock (the "Initial
Shares").
On December 10, 1996, the Company acquired directly from SSG (i) an
additional 1,600,000 shares of newly-issued SSG Common Stock (the "New Shares")
for an aggregate consideration of $11,500,000, or approximately $7.19 per share,
and (ii) 5-year warrants to acquire an additional 1,000,000 shares of SSG
Common Stock at an exercise price of $7.50 per share, subject to standard anti-
dilution adjustments (the "Emerson Warrants") for an aggregate consideration of
$500,000.
Prior to the exercise of any of the Emerson Warrants, the Company and
Emerson HK own approximately 28% of the issued and outstanding shares of SSG
Common Stock. If all of the Emerson Warrants are exercised by the Company, the
Company will own approximately 36% of the issued and outstanding shares of SSG
Common Stock.
Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement"), SSG granted to the Company and Emerson HK certain demand and
incidental registration rights with respect to the resale of the shares of SSG
Common Stock they own, as well as on the exercise and resale of the shares of
SSG Common Stock the Company may acquire under the Warrant Agreement governing
the Emerson Warrants.
The total consideration paid by the Company pursuant to the Emerson
Agreement was $12 million, of which $11,500,000 was attributable to the
1,600,000 New Shares and $500,000 was attributable to the Emerson Warrants. The
$12,000,000 purchase price was borrowed by the Company from Congress Financial
Corporation ("Congress"), the Company's United States senior secured lender,
under the terms of the Company's existing credit facility and in accordance with
the terms of the consent obtained from Congress. Pursuant to a Pledge and
Security Agreement as amended, the Company has pledged to Congress 500,000 of
the New Shares together with all proceeds thereof and all dividends and other
income and distributions thereon or with respect thereto and all rights of the
Company to have such New Shares registered under the Registration Rights
Agreement.
In addition, for a period of at least 2 years after the closing, neither
SSG nor any of its subsidiaries are permitted to enter into or be a party to any
agreement or transaction with any Affiliate (as such term is defined in the
Exchange Act) of SSG or the Company, except (i) in the ordinary course of SSG's
or its subsidiaries' business and on terms no less favorable to SSG or its
subsidiaries than would be obtained in a comparable arms' length transaction
with a person not an Affiliate of SSG or the Company or (ii) unless approved by
a majority of SSG's Directors who do not have a direct or indirect material
financial interest in the agreement or transaction and which includes a majority
of Directors who are not officers or employees of SSG or the Company or
Directors of the Company.
Pursuant to the Emerson Agreement, SSG also caused a majority of the
members of its Board of Directors to consist of the Company's designees. SSG's
Board of Directors now includes the following people that are associated with
the Company: Geoffrey P. Jurick, Chairman, and Chief Executive Officer of
Emerson and SSG; John P. Walker, Executive Vice President and Chief Financial
Officer of Emerson and SSG; and Peter G. Bunger, a Director of both companies
and member of the Compensation Committee of each Company. Mr. Jurick has
employment agreements with the Company and SSG. Messrs. Jurick and Walker split
their time between the two companies.
MANAGEMENT SERVICES AGREEMENT
During Fiscal 1997, SSG and the Company entered into a Management Services
Agreement, which was amended in Fiscal 1998, in an effort to utilize SSG's
excess capacity and to enable the Company to reduce certain costs. The
Management Services Agreement implements a program whereby SSG performs certain
services for the Company in exchange for a fee. The services include payroll,
banking, computer/management information systems, payables processing, warehouse
services (including subleasing warehouse storage space), provision of office
space, design services and financial management services. During Fiscal 1998,
SSG also reimbursed the Company for the sharing of certain employees. The
Management Services Agreement may be terminated by either party upon sixty (60)
days' prior notice. Termination of the Management Services Agreement could have
a material adverse effect on the Company and its results of operations. The
Company was billed $272,000 and $3,000 for services provided with respect to
the above mentioned agreement during Fiscal 1998 and 1997 respectively.
Effective October 18, 1997, SSG began paying Mr. Jurick directly for his
services. Effective January 15, 1998, the Company began reimbursing SSG for
base salary and bonus paid to Mr. Walker for the Company's benefit in lieu of
paying Mr. Walker directly. The Company billed SSG approximately $135,000 and
$47,000 towards Mr. Jurick's salary during Fiscal 1998 and 1997 respectively.
The Company owed SSG approximately $57,000 for services as of April 3, 1998.
CERTAIN OUTSTANDING COMMON STOCK
For information on this matter, reference is made to the Company's most
recent Form 10-Q, for the quarterly period ended July 3, 1998, "Part II. - Other
Information, Item 1. - Legal Proceedings".
FUTURE TRANSACTIONS AND LOANS
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.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended ("Section
16(a)") requires the Company's officers and Directors, and persons who own more
than 10% of a registered class of the Company's equity securities to file
reports of ownership and changes in ownership with the SEC and the American
Stock Exchange. Officers, Directors and greater than 10% stockholders are
required by certain regulations to furnish the Company with copies of all
Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, the
Company believes that, during the year ended April 3, 1998, its officers,
Directors and greater than 10% beneficial owners have complied with all
applicable filing requirements with respect to the Company's equity securities.
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 date indicated.
/s/ Geoffrey P. Jurick Chairman of the Board, July 31, 1998
Geoffrey P. Jurick Chief Executive Officer and
President
/s/ John P. Walker Executive Vice President, July 31, 1998
John P. Walker Chief Financial Officer
/s/ Robert H. Brown, Jr. Director July 31, 1998
Robert H. Brown, Jr.
/s/ Peter G. Bunger Director July 31, 1998
Peter G. Bunger
/s/ Jerome H. Farnum Director July 31, 1998
Jerome H. Farnum
/s/ Raymond L. Steele Director July 31, 1998
Raymond L. Steele
