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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A #1
AMENDMENT TO
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: SEPTEMBER 30, 1993 Commission File Number: 1-8147
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MEDIQ INCORPORATED
(Exact name of registrant as specified in its charter)
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<TABLE>
<S> <C>
DELAWARE 51-0219413
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE MEDIQ PLAZA, PENNSAUKEN, NEW JERSEY 08110
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (609) 665-9300
PORTIONS AMENDED
Part III of the Company's Annual Report on Form 10-K is amended by the
inclusion of the information in the following pages.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- ----------
<S> <C> <C>
Michael J. Rotko 55 Chairman of the Board of Directors
Bernard J. Korman 62 President and Chief Executive Officer
Michael F. Sandler 48 Senior Vice President -- Finance, Chief Financial Officer and
Treasurer
Donald M. Gleklen 57 Senior Vice President -- Corporate Development
Lionel Felzer 70 Director
Mark S. Levitan 60 Director
H. Scott Miller 44 Director
Bessie G. Rotko 83 Director
Jacob A. Shipon 55 Director
</TABLE>
Mr. Rotko has been Chairman of the Board of Directors since November 1993,
and has been a Director of the Company since 1965. Since November 1993, Mr.
Rotko has been a Partner in the law firm of Drinker, Biddle & Reath. Mr. Rotko
was the U.S. Attorney for the Eastern District of Pennsylvania from January 1993
to November 1993. Mr. Rotko was formerly First Assistant U.S. Attorney for the
Eastern District of Pennsylvania from May 1990 to January 1993. Mr. Rotko was
previously an attorney in private practice from March 1974 to May 1990. Mr.
Rotko is the son of Bessie G. Rotko.
Mr. Korman has been President, Chief Executive Officer and a director of
the Company since 1980. He has also served as Chairman of the Boards of
Directors of NutraMax Products, Inc. ('NutraMax') and PCI Services, Inc. ('PCI')
since 1990 and 1991, respectively. Mr. Korman has served as President, Chief
Executive Officer and a director of MEDIQ/PRN Life Support Services, Inc.
('MEDIQ/PRN') since June 1992, served as Chairman of the Board of Directors of
MEDIQ/PRN from March 1991 to June 1992, and was a director of MEDIQ/PRN from its
inception to January 1989. Mr. Korman also serves as a director of Mental Health
Management, Inc. (behavioral health management services), The New America High
Income Fund (financial services), The Pep Boys, Inc. (automotive supplies),
Today's Man, Inc. (retail men's clothing sales) and Omega Healthcare Investors,
Inc. (real estate investment trust).
Mr. Sandler, a certified public accountant, has been Senior Vice
President-Finance and Chief Financial Officer since November 1988, and Treasurer
since 1991, of the Company. He has served as Vice President, Chief Financial
Officer and a director of NutraMax since July 1990, and as Vice President and
Chief Financial Officer of PCI since September 1991. He has served as Vice
President, Treasurer and a director of MEDIQ/PRN since May 1992, and also served
as Chief Financial Officer of MEDIQ/PRN from January 1989 to September 1992. Mr.
Sandler also serves as a director of Mental Health Management, Inc.
Mr. Gleklen has been Senior Vice President - Corporate Development of the
Company since 1985. He has served as a Director of NutraMax since 1990. Mr.
Gleklen also serves as a director of Gandalf Technologies, Inc.
(telecommunications technology) and New West Eyeworks, Inc. (retail eyewear
stores).
Mr. Felzer has been a Director of the Company since 1968. From 1968 to
1991, he served in various senior financial management positions with the
Company, from which he retired in December 1991. Mr. Felzer is the
brother-in-law of Bessie G. Rotko.
Mr. Levitan has been a Director of the Company since 1981. He served as
Executive Vice President and Chief Operating Officer of the Company from
February 1989 to April 1991. Mr. Levitan has been Chairman of the Board of
Directors of HOMECARE USA (home medical equipment rentals) since October 1993.
From May 1991 to January 1994, Mr. Levitan was a Partner of Management
2
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Partners, Inc. (healthcare consultants), which was acquired in January 1994 by
MedQuist Inc. (healthcare information services). Mr. Levitan has continued with
MedQuist as Vice President - Consulting Division.
Mr. Miller has been a Director of the Company since May 1992. Since January
1994, Mr. Miller has been a Partner of Pulsar Equity Partners (merchant banking
services). From 1989 to January 1994, Mr. Miller was the Fixed Income Portfolio
Manager of Miller, Andersen & Sherrard (financial management services). Mr.
Miller was formerly Vice President of the Investment Banking Division of
Goldman, Sachs & Co. from 1986 to 1989.
Mrs. Rotko has been a Director of the Company since 1989. She is the widow
of Bernard B. Rotko, M.D., the founder of the Company.
Dr. Shipon has been a Director of the Company since 1981. He is a physician
in private practice. Dr. Shipon is the son-in-law of Bessie G. Rotko.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three fiscal years to the Company's Chief Executive
Officer and each of the Company's two other executive officers.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
NAME AND ANNUAL COMPENSATION ------------ ALL OTHER
PRINCIPAL --------------------- STOCK COMPENSA-
POSITION YEAR SALARY BONUS OPTIONS(#) TION(1)
---------- ------ -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Bernard J. Korman 1993 $395,000 -- 500,000(2) $46,000
President and Chief 1992 395,000 $240,000 --
Executive Officer 1991 395,000 247,000 --
Donald M. Gleklen 1993 236,000 -- 166,075(2) 15,000
Senior Vice President -- 1992 225,000 111,000 --
Corporate Development 1991 207,000 124,000 --
Michael F. Sandler 1993 236,000 -- 165,000(2) 7,000
Senior Vice President -- 1992 215,000 120,000 125,000
Finance, Treasurer & Chief 1991 200,000 120,000 --
Financial Officer
</TABLE>
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(1) Under transitional rules, amounts in the All Other Compensation column are
included only for 1993.
(2) Represents outstanding options to acquire shares of the Company's Common
Stock and/or Preferred Stock for which exercise prices were reduced in August
1993.
STOCK OPTIONS
The following table summarizes stock option activity during fiscal 1993 for
the Company's executive officers. All options included in the table represent
options which were outstanding at August 1993, when the exercise prices for such
options were reduced in connection with the distribution to the Company's
stockholders of the stock of Mental Health Management, Inc. Pursuant to the
rules of the Securities and Exchange Commission, these options are reported as
new grants for fiscal 1993.
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OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE AT
OPTIONS ASSUMED ANNUAL RATES OF
GRANTED TO MARKET PRICE STOCK PRICE APPRECIATION FOR
EMPLOYEES AT OPTION TERM (000's)
OPTIONS IN EXERCISE DATE OF EXPIRATION ---------------------------------
NAME GRANTED(1) FISCAL YEAR PRICE REPRICING DATE 0% 5%(2) 10%(2)
- ----------------------- ----------- ----------- ----------- ------------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Korman 500,000 44.6% $ 2.839 $ 4.3125 4/5/1999 $737 $1,441 $2,372
Mr. Gleklen 71,429 6.4% 3.057 4.3125 6/7/2001 90 215 390
15,000 1.3% 3.494 4.3125 2/17/2000 12 37 71
28,716 2.6% 2.729 4.3125 10/10/1998 45 82 129
9,675 .9% 4.513 4.3125 1/15/1995 -- 1 4
15,790 1.4% 4.149 4.3125 9/27/1994 3 6 10
9,675(3) 14.3%(3) 4.487 4.125 1/15/1995 -- -- 3
15,790(3) 23.3%(3) 4.125 4.125 9/27/1994 -- 4 7
Mr. Sandler 125,000 11.2% 3.057 4.3125 6/7/2001 157 376 682
15,000 1.3% 3.494 4.3125 2/17/2000 12 37 71
25,000 2.2% 3.166 4.3125 11/18/1998 29 61 103
</TABLE>
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(1) Unless otherwise indicated, options are to purchase shares of the Company's
Common Stock.
(2) The information in these columns illustrates the value that might be
realized upon exercise of the options assuming the specified compound rates
of appreciation of the Company's Common Stock and/or Preferred Stock over
the term of the options. The potential realizable value columns do not take
into account amounts required to be paid for federal or state income taxes
or option provisions regarding termination of the option following
termination of employment or nontransferability requirements. These amounts
were calculated based on requirements of the Securities and Exchange
Commission and do not necessarily reflect the Company's estimate of future
stock price growth.
(3) Represents options to purchase shares of the Company's Preferred Stock.
The following table provides information relating to the value of
unexercised options held by the above-named executive officers at the end of
fiscal 1993. No stock options were exercised during fiscal 1993 by such
executive officers.
UNEXERCISED STOCK OPTIONS AT FISCAL YEAR END
<TABLE>
<CAPTION>
TOTAL NUMBER OF VESTED VALUE OF VESTED UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT YEAR
NAME (#)(1) END(2)
- ---- ---------------------- ----------------------------
<S> <C> <C>
Mr. Korman 500,000 $893,000
Mr. Gleklen 166,075(3) 195,960
Mr. Sandler 165,000 249,440
</TABLE>
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(1) Unless otherwise noted, options are to acquire shares of the Company's
Common Stock.
(2) Based upon the closing prices at September 30, 1993.
(3) Includes options to acquire 25,465 shares of the Company's Preferred Stock.
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RETIREMENT PLAN
The following table shows the estimated annual pension benefits payable
upon retirement to participants of the Company's noncontributory defined benefit
pension plan (the 'Pension Plan') for various salary levels and years of
service:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
PAYABLE AT AGE 65 FOR VARIOUS
AVERAGE ANNUAL YEARS OF PLAN MEMBERSHIP
COMPENSATION DURING --------------------------------------------
PLAN MEMBERSHIP 10 20 30 40
- ------------------------- --------- --------- --------- -----------
<S> <C> <C> <C> <C>
$500,000 $ 31,399 $ 61,832 $ 92,148 $ 100,222
400,000 31,399 61,832 92,148 100,222
300,000 31,399 61,832 92,148 100,222
200,000 26,381 51,797 77,095 89,936
100,000 12,381 23,797 35,095 40,936
</TABLE>
Average annual compensation is based upon the participant's annual
compensation (including bonuses and similar special pay), as more fully defined
in the Pension Plan, over the number of years of participation up to a maximum
of 35 years. For Pension Plan purposes, the highest annual compensation paid to
any participant for fiscal 1993 was $395,000. During fiscal 1993, the maximum
amount of annual compensation which may be included for Pension Plan purposes is
$235,840. The figures shown above apply under the Pension Plan as of December
31, 1993. Estimated annual benefits are determined in part by the average Social
Security wage base during the 35 years ending in the year of Social Security
Normal Retirement Age. The benefit amounts listed are not subject to any
deduction for Social Security or other offset amounts. As a result of
limitations imposed under Federal income tax law, the maximum annual benefit
payable under the Pension Plan is $115,641, although the amount will be
actuarially adjusted in accordance with Federal income tax regulations if
payments commence prior to or following the date that unreduced Social Security
benefits become payable. As of December 31, 1993, Messrs. Korman, Gleklen and
Sandler had 17, 9 and 5 years of service credited, respectively, under the
Pension Plan.
COMPENSATION OF DIRECTORS
Directors who are officers of the Company or of any subsidiary of the
Company receive no additional compensation for their service as directors or as
members of committees of the Board. Non-officer directors received an annual
director's fee of $15,000 for their services in such capacity during fiscal
1993.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of January 1, 1994, the beneficial
ownership of shares of the Company's Common Stock, par value $1.00 per share and
Series A Preferred Stock, par value $.50 per share by each of the directors
of the Company, each executive officer named in the Summary Compensation Table
(included elsewhere herein) and by all directors and officers of the Company as
a group.
<TABLE>
<CAPTION>
NUMBER PERCENT NUMBER PERCENT
OF OF CLASS OF OF CLASS
NAME SHARES(1) OUTSTANDING(2) SHARES(1) OUTSTANDING(2)
- ---- ----------- -------------- ---------- --------------
<S> <C> <C> <C> <C>
Michael J. Rotko 448,655(3) 2.6% 448,655(3) 7.0%
Bernard J. Korman(4)(5) 1,900,597(6) 10.5% 801,909(6) 12.5%
Lionel Felzer 390,813(7) 2.2% 490(7) *
Mark S. Levitan 4,895(8) * -- --
H. Scott Miller 3,700(9) * 4,300(9) *
Bessie G. Rotko(5) 3,811,458(10) 21.9% 3,840,058(10) 59.7%
Jacob A. Shipon(5) 1,650(11) * 1,650(11) *
Michael F. Sandler(5) 175,539(12) * -- --
Donald M. Gleklen(5) 254,167(13) 1.5% 25,465(13) *
All directors and officers as a group (10
persons) 7,114,777(14) 38.4% 5,135,540(14) 79.4%
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</TABLE>
* Less than one percent.
(1) Unless otherwise noted below, beneficial ownership is based on sole
voting and investment power with respect to the shares, and shares are
held by the person listed or members of his or her family.
(2) All percentages are rounded to the nearest tenth, and are based
upon the number of shares outstanding, including, as appropriate, the
shares referred to in the notes below.
(3) Michael J. Rotko is the son of Bessie G. Rotko. Includes 7,308
shares of Common Stock and 7,308 shares of Preferred Stock,
respectively, held as custodian for children.
(4) The address of Mr. Korman is One MEDIQ Plaza, Pennsauken, NJ
08110-1460.
(5) The Company owns approximately 48% of the outstanding common stock
of NutraMax ('NutraMax Stock'). Mr. Korman, Mrs. Rotko, Dr. Shipon and
Messrs. Sandler and Gleklen beneficially own 29,000, 3,600, 2,240,
11,600 and 27,000 shares, respectively, of NutraMax Stock, and all of
the directors and officers of the Company, as a group (10 persons)
beneficially own an aggregate of 75,440 shares of NutraMax Stock, which
aggregate amount represents less than one percent of the outstanding
shares. The Company owns 42% of the outstanding common stock of PCI
('PCI Stock'). Messrs. Korman and Felzer, Mrs. Rotko and Messrs. Sandler
and Gleklen beneficially own 79,000, 1,000, 3,000, 26,500 and 5,000
shares, respectively, of PCI Stock, and all of the directors and
officers of the Company as a group (10 persons) beneficially own an
aggregate of 117,500 shares of PCI Stock, which aggregate amount
represents less than two percent of the outstanding shares.
(6) Includes 21,204 shares of Common Stock and 21,204 shares of
Preferred Stock, respectively, held as custodian for children, 36,800
shares of Common Stock owned by Mr. Korman's spouse, and 747,867 shares
of Common Stock and 879 shares of Preferred Stock, respectively, which
may be acquired upon exercise of stock options, acquired upon conversion
of outstanding convertible debentures, held in the Company's Employees'
Savings Plan for the account of Mr. Korman and/or held in Mr. Korman's
individual retirement account.
(7) Lionel Felzer is the brother-in-law of Bessie G. Rotko. Includes
42,526 shares of Common Stock which may be acquired upon exercise of
stock options and 490 shares of Preferred Stock held in Mr. Felzer's
individual retirement account.
(8) Includes 1,805 shares of Common Stock held in the Company's
Employees' Savings Plan for the account of Mr. Levitan.
(9) Mr. Miller provides financial advisory services to the Trust
described in note 10. Includes 3,600 shares of Common Stock and 2,700 of
Preferred Stock shares held in Mr. Miller's individual retirement
account and 1,600 shares of Preferred Stock held by the estate of Mr.
Miller's mother.
(10) Mrs. Rotko is the income beneficiary, during her lifetime, of a
trust created by her late husband, Bernard B. Rotko, M.D., who was the
founder of the Company. The trust holds 3,570,969 shares of Common Stock
and 3,570,969 shares of Preferred Stock. The Trustees, Bessie G. Rotko,
Michael J. Rotko, Judith M. Shipon, Lionel Felzer and Provident National
Bank, share voting and investment power with respect to these shares,
which are not included in the amounts set forth as being beneficially
owned by the other named Trustees as individuals. The address of the
Trustees is c/o Lionel Felzer, MEDIQ Incorporated, One MEDIQ Plaza,
Pennsauken, New Jersey 08110-1460.
(11) Jacob A. Shipon is the son-in-law of Bessie G. Rotko. Excludes
459,007 shares of Common Stock and 458,757 shares of Preferred Stock,
respectively, which are owned beneficially by Mrs. Jacob Shipon, and as
to which Jacob A. Shipon disclaims beneficial ownership.
(12) Includes 171,039 shares of Common Stock which may be acquired upon
exercise of stock options, acquired upon conversion of outstanding
convertible debentures, or held in the Company's Employees' Savings Plan
for the account of Mr. Sandler.
(13) Includes 178,886 shares of Common Stock and 25,465 shares of
Preferred Stock, respectively, which may be acquired upon exercise of
stock options or held in the Company's Employees' Savings Plan for the
account of Mr. Gleklen.
(14) Includes an aggregate of 28,512 shares of Common Stock and 28,512
shares of Preferred Stock, respectively, held as custodian for children,
36,800 shares of Common Stock held by a spouse and an aggregate of
1,178,908 shares of Common Stock and 39,847 shares of Preferred Stock,
respectively, which may be acquired upon exercise of stock options,
acquired upon conversion of outstanding convertible debentures, held in
the Company's Employees' Savings Plan for the accounts of the directors
and officers of the Company and/or in an individual retirement account.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NUTRAMAX PRODUCTS, INC.
The Company owns approximately 48% of the common stock of NutraMax
('NutraMax'). Messrs. Korman, Sandler and Gleklen, Mrs. Rotko and Dr. Shipon are
shareholders of NutraMax, and Mr. Korman is Chairman of the Board of Directors
of NutraMax. Messrs. Gleklen and Sandler are directors of NutraMax, and Messrs.
Korman and Sandler are officers of NutraMax. For the fiscal year ended September
30, 1993, the Company was paid $100,000 by NutraMax pursuant to a services
agreement for accounting, legal, tax and other services. The Company and
NutraMax have a tax allocation/sharing agreement, which provides that NutraMax
will reimburse the Company for any future tax assessment against the Company
resulting from NutraMax's operations, and the Company will reimburse NutraMax
for any future tax benefit resulting from NutraMax's operations, for periods of
time during which NutraMax was a member of the Company's consolidated group.
NutraMax was included in the Company's consolidated group until the Company's
ownership was reduced below 80% in August 1991. NutraMax obtains certain of its
insurance through the Company's insurance programs. For the fiscal year ended
September 30, 1993, NutraMax paid $213,000 of insurance expense under these
programs.
PCI SERVICES, INC.
The Company owns 42% of the common stock of PCI ('PCI'). Messrs. Korman,
Felzer, Sandler and Gleklen and Mrs. Rotko are shareholders of PCI, Mr. Korman
is Chairman of the Board of Directors of PCI and Mr. Sandler is Vice President
and Chief Financial Officer of PCI. For the fiscal year ended September 30,
1993, the Company was paid $100,000 by PCI pursuant to a services agreement for
accounting, legal, tax and other services. The Company and PCI have a tax
allocation/sharing agreement, which provides that PCI will reimburse the Company
for any future tax assessment against the Company resulting from PCI's
operations, and the Company will reimburse PCI for any future tax benefits
resulting from PCI's operations, for periods of time during which PCI was a
member of the Company's consolidated group. PCI was included in the Company's
consolidated group until the Company's ownership was reduced below 80% in 1992.
Pursuant to an agreement with the Company, PCI was responsible for the principal
and interest payments related to the debt service on PCI's Pennsauken, New
Jersey facility and the costs related to ownership and operation of the facility
during fiscal 1993. For the fiscal year ended September 30, 1993, PCI paid
$444,000 for such operating expenses, including interest, and $207,500 of
principal repayment. As of September 30, 1993, the remaining principal amount of
the mortgage was $2,559,000. It is anticipated that this facility will be
transferred to PCI in the immediate future. PCI obtains certain of its insurance
coverages through the Company's insurance programs. For the fiscal year ended
September 30, 1993, PCI paid $182,000 of insurance expense under these programs.
Effective January 1, 1993, PCI acquired PCI/Virginia, which operates a
pharmaceutical packaging facility in Virginia, from the Company for aggregate
consideration of approximately $2,300,000, which approximated the fair market
value of PCI/Virginia. PCI had previously transferred by dividend all of the
capital stock of PCI/Virginia to the Company, effective October 1, 1991, in
order to obtain relief from losses and continued funding requirements relating
to such operations. In connection with such transfer, PCI provided senior
management services to PCI/Virginia and received therefor management fees equal
to five percent of the annual net revenue of PCI/Virginia. In the fiscal year
ended September 30, 1993, PCI/Virginia paid $97,000 to PCI for management fees.
In July 1990, in order to facilitate the financing of the commencement of
packaging operations by PCI/Virginia, Messrs. Korman and Rotko and Dr. Shipon
formed P.C. Realty, Inc. ('Realty'), a Delaware corporation. Realty acquired
certain equipment and real estate which were then leased to PCI/Virginia to
commence its pharmaceutical packaging operations. For the fiscal year ended
September 30, 1993, PCI/Virginia made aggregate lease payments to Realty,
based on Realty's actual costs, of approximately $639,000. On September 30,
1993, the capital stock of Realty was contributed to PCI.
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SIGNATURES
Pursuant to requirements of Section 13 of 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: January 25, 1994 MEDIQ Incorporated
By: \s\ Michael F. Sandler
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Michael F. Sandler, Senior
Vice President -- Finance and
Chief Financial Officer
8
