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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, 1994 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 set forth 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 56 Chairman of the Board of Directors
Jacob A. Shipon 56 Vice Chairman of the Board of Directors
Bernard J. Korman 63 President and Chief Executive Officer
Michael F. Sandler 49 Senior Vice President -- Finance, Chief Financial Officer,
Treasurer and Director
Lionel Felzer 71 Director
Mark S. Levitan 61 Director
H. Scott Miller 45 Director
Bessie G. Rotko 85 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.
Dr. Shipon has been Vice Chairman of the Board of Directors since June 1994
and has been a Director of the Company since 1981. Dr. Shipon is also a
physician in private practice. Dr. Shipon is the son-in-law 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 is Chairman of the Board of
Directors and Chief Executive Officer of PRN Holdings, Inc. ('PRN'), a
wholly-owned subsidiary of MEDIQ. 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), Omega
Healthcare Investors, Inc. (real estate investment trust) and MMI Medical, Inc.
(provider of specialized services to hospital radiology departments).
Mr. Sandler, a certified public accountant, has been Senior Vice
President-Finance and Chief Financial Officer since 1988, Treasurer since 1991,
and a Director since March 1994, of the Company. He has served as a director
since July 1990, and Chief Financial Officer from July 1990 to August 1994, of
NutraMax, and as Vice President and Chief Financial Officer of PCI since
September 1991. He has served as Vice President, Treasurer and a director of
PRN since May 1992, and also served as Chief Financial Officer of PRN from
January 1989 to September 1992. Mr. Sandler also serves as a director of
Mental Health Management, Inc. and MMI Medical, Inc.
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 Partners,
Inc. (healthcare consultants), which was acquired in January 1994 by MedQuist
Inc.
2
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(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.
Regulations adopted by the Securities and Exchange Commission require the
Company to identify persons who failed to file or filed late reports required
under Section 16(a) of the Securities Exchange Act of 1934. Generally,
directors and officers are required to report changes in their ownership of
the Company's equity securities. Based upon available information, the Company
believes that all reports required to be filed in fiscal 1994 were filed on a
timely basis except as follows: Mr. Korman filed a report in August 1994 to
correct information as to holdings of the Company's covertible debentures in
his retirement accounts and to report acquisitions in such retirements accounts
in May and June 1994 of the Company's convertible debentures, indicating total
holdings in such retirement accounts of debentures convertible into an
aggregate of 16,933 shares of the Company's Common Stock. The Company has
undertaken a compliance program to assist in the timely filing of required
reports.
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
ANNUAL COMPENSATION -------------
-------------------- STOCK ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS(#) COMPENSATION(1)
- --------------------------------------------------- --------- --------- --------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael J. Rotko 1994 $ 43,000 -- -- --
Chairman
Bernard J. Korman 1994 395,000 -- -- $ 50,000
President and Chief 1993 395,000 -- 500,000(2) 46,000
Executive Officer 1992 395,000 $ 240,000 --
Michael F. Sandler (3) 1994 250,000 103,500 -- 7,000
Senior Vice President -- 1993 236,000 -- 165,000(2) 7,000
Finance, Treasurer & Chief Financial Officer 1992 215,000 120,000 125,000
Donald M. Gleklen (4) 1994 236,000 -- 166,075(5) 16,000
Senior Vice President -- 1993 236,000 -- 166,075(2) 15,000
Corporate Development 1992 225,000 111,000 --
</TABLE>
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(1) Under transitional rules, amounts in the All Other Compensation column are
not included for 1992. Amounts reported for Mr. Korman for 1994 include
$42,139 of interest on certain compensation deferred in fiscal years 1985,
1986 and 1987, $2,310 representing the Company's matching contributions
under the Employees' Savings Plan, $3,510 representing life insurance
premiums and $2,072 of automobile expenses. Amounts reported for Mr.
Sandler for 1994 include $2,310 representing the Company's matching
contributions under the Employees' Savings Plan, $870 representing life
insurance premiums and $3,966 of automobile expenses. Amounts reported
for Mr. Gleklen for 1994 include $8,428 of interest on certain
compensation deferred in fiscal years 1985, 1986 and 1987, $2,310
representing the Company's matching contributions under the Employees'
Savings Plan, $2,250 representing life insurance premiums and $2,990 of
automobile expenses.
(2) Represents outstanding options to acquire shares of the Company's Common
Stock and/or Preferred Stock for which exercise prices were adjusted in
August 1993 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 were
reported as new grants for fiscal 1993.
(3) The Company has an employment agreement with Mr. Sandler expiring in
November 1995, pursuant to which he is currently entitled to receive an
annual base salary of $250,000, and may also receive incentive compensation,
depending upon the Company's performance.
(4) Mr. Gleklen served as Senior Vice President -- Corporate Development of the
Company since 1985 and resigned on March 2, 1994. Pursuant to an employment
agreement with the Company, Mr. Gleklen received $127,000 for the remainder
of fiscal 1994 (which is included as salary in the table) and pursuant to a
severance agreement will receive $118,000 in each of fiscal 1995 and 1996.
(5) Represents outstanding options for which the expiration dates were extended
and/or which were reissued by the Company during fiscal 1994 in connection
with Mr. Gleklen's severance agreement with the Company. Pursuant to the
rules of the Securities and Exchange Commission, these options are
reported as new grants for fiscal 1994.
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STOCK OPTIONS
The following table summarizes stock option activity during fiscal 1994 for
the executive officers listed in the Summary Compensation Table. All options
included in the table represent options which were previously outstanding for
which the expiration dates were extended and/or were reissued by the Company
during fiscal 1994 in connection with Mr. Gleklen's severance agreement.
Pursuant to the rules of the Securities and Exchange Commission, these
options are reported as new grants for fiscal 1994.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
OPTIONS MARKET PRICE APPRECIATION FOR
GRANTED TO PRICE AT OPTION TERM ($000'S)
OPTIONS EMPLOYEES IN EXERCISE DATE OF EXPIRATION ----------------------
NAME GRANTED(1) FISCAL YEAR PRICE REPRICING DATE 0%(2) 5%(2) 10%(2)
- ------------- ----------- --------------- ----------- ----------- ----------- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mr. Rotko -- -- -- -- -- -- -- --
Mr. Korman -- -- -- -- -- -- -- --
Mr. Sandler -- -- -- -- -- -- -- --
Mr. Gleklen 71,429 41.5% $ 3.057 $ 3.938 9/30/1996 63 98 136
15,000 8.7% 3.494 4.063 2/17/2000 -- -- 4
28,716 16.7% 2.729 4.063 10/10/1998 -- 5 12
9,675 5.6% 4.513 4.063 9/30/1996 38 63 92
15,790 9.2% 4.149 4.063 9/30/1996 9 27 50
9,675(3) 20.5%(3) 4.487 3.906 9/30/1996 -- -- 2
15,790(3) 33.4%(3) 4.125 3.906 9/30/1996 -- 3 9
<CAPTION>
<CAPTION>
</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 1994. No stock options were exercised during fiscal 1994 by such
executive officers.
UNEXERCISED STOCK OPTIONS AT FISCAL YEAR END
<TABLE>
<CAPTION>
VALUE OF VESTED
UNEXERCISED
TOTAL NUMBER OF VESTED IN-THE-MONEY OPTIONS
NAME UNEXERCISED OPTIONS (#)(1) AT YEAR END(2)
- ----------------------------------------------- -------------------------- -------------------------
<S> <C> <C>
Mr. Rotko -- --
Mr. Korman 500,000 $ 581,500
Mr. Sandler 165,000 146,315
Mr. Gleklen 166,075(3) 111,446
</TABLE>
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(1) All options are to acquire shares of the Company's Common Stock, unless
otherwise noted.
(2) Based upon the closing prices at the end of fiscal 1994.
(3) Includes options to acquire 25,465 shares of the Company's Preferred Stock.
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:
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<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
PAYABLE AT AGE 65 FOR VARIOUS
YEARS OF PLAN MEMBERSHIP
AVERAGE ANNUAL COMPENSATION ------------------------------------------
DURING PLAN MEMBERSHIP 10 20 30 40
- ------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
$500,000 $ 19,280 $ 35,575 $ 55,740 $ 65,016
400,000 19,280 35,575 55,740 65,016
300,000 19,280 35,575 55,740 65,016
200,000 19,280 35,575 55,740 65,016
100,000 12,280 23,575 34,740 40,516
</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. During fiscal 1994, the maximum amount of annual compensation
which may be included for Pension Plan purposes is $150,000. The figures
shown above apply for new participants under the Pension Plan as of December
31, 1994. 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 $118,800, 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, 1994, Messrs. Korman,
Gleklen and Sandler had 20, 10 and 6 years of service credited,
respectively, under the Pension Plan. Mr. Rotko has not participated in 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
1994.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of January 1, 1995, 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 OF PERCENT NUMBER OF PERCENT
COMMON OF CLASS PREFERRED OF CLASS
NAME SHARES(1) OUSTANDING(2) SHARES(1) OUSTANDING(2)
- -------------------------------------------------- ----------- ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Michael J. Rotko 448,655(3) 2.5% 448,655(3) 7.0%
Bernard J. Korman(4)(5) 2,051,625 11.0% 801,030(6) 12.5%
Lionel Felzer 380,013(7) 2.1% 490(7) *
Mark S. Levitan 5,134(8) * -- --
H. Scott Miller 3,700(9) * 4,300(9) *
Bessie G. Rotko(5) 3,811,458(10) 21.5% 3,840,058(10) 60.0%
Jacob A. Shipon(5) 1,650(11) * 1,650(11) *
Michael F. Sandler(5) 177,284(12) * -- --
Donald M. Gleklen(5) 164,325(13) * 25,465(13) *
All directors and officers as a group (10 persons) 7,165,405(14) 37.7% 5,134,661(14) 79.7%
</TABLE>
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(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.
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<PAGE>
(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. (*) Indicates less than one percent.
(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 47% of the outstanding common stock of
NutraMax ('NutraMax Stock'). Mr. Korman, Mrs. Rotko, Dr. Shipon and Messrs.
Sandler and Gleklen beneficially own 40,535, 3,600, 2,240, 17,880 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 98,255 shares of NutraMax Stock, which aggregate amount
represents approximately one percent of the outstanding shares. The Company
owns approximately 47% of the outstanding common stock of PCI ('PCI
Stock'). Messrs. Korman and Felzer, Mrs. Rotko and Messrs. Sandler and
Gleklen beneficially own 94,000, 1,000, 3,000, 27,000 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 133,000
shares of PCI Stock, which aggregate amount represents approximately 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 898,895 shares of Common
Stock which may be acquired upon exercise of stock options, acquired upon
conversion of outstanding convertible debentures and/or held in retirement
accounts.
(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 a retirement account.
(8) Includes 1,805 shares of Common Stock held in a retirement account.
(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 a 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 172,784 shares of Common Stock which may be acquired upon exercise
of stock options, acquired upon conversion of outstanding convertible
debentures, or held in a retirement account.
(13) Includes 164,325 shares of Common Stock and 25,465 shares of Preferred
Stock, respectively, which may be acquired upon exercise of stock options
or held in a retirement account. Mr. Gleklen resigned from his position
with the Company in March 1994.
(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 921,740
shares of Common Stock and 41,178 shares of Preferred Stock, respectively,
which may be acquired upon exercise of stock options, acquired upon
conversion of outstanding convertible debentures and/or held in retirement
accounts.
6
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
NUTRAMAX PRODUCTS, INC.
The Company owns approximately 47% of the common stock of 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, 1994,
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, 1994, NutraMax paid $464,000 of insurance premiums under these programs.
PCI SERVICES, INC.
The Company owns approximately 47% of the common stock of 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, 1994, 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 through February 1994, when the facility was transferred to PCI for
consideration consisting of the assumption of the mortgage. During fiscal 1994,
PCI paid $173,000 for such operating expenses, including interest, and $69,000
of principal repayment. As of February 1994, the remaining principal amount
of the mortgage was $2,490,000. PCI obtains certain of its insurance
coverages through the Company's insurance programs. For the fiscal year
ended September 30, 1994, PCI paid $681,000 of insurance premiums under
these programs.
LEGAL FEES
For the fiscal year ended September 30, 1994, the Company incurred legal
fees of approximately $250,000 to a law firm of which Mr. Rotko is a partner.
7
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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 27, 1995
MEDIQ Incorporated
By: _____/s_/__Michael F. Sandler_____
Michael F. Sandler, Senior
Vice President -- Finance and
Chief Financial Officer
8
