<PAGE> 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1995
................................................
Commission file number 1-6687
....................................................
JOHNSTON INDUSTRIES, INC.
..........................................................................
(Exact name of registrant as specified in its charter)
Delaware 11-1749980
..........................................................................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
105 Thirteenth Street, Columbus, Georgia 31901
..........................................................................
(Address of principal executive offices) (Zip Code)
(706) 641-3140
..........................................................................
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12 (b) of the Act:
Name on each exchange
Title of each class on which registered
------------------- -------------------
Common Stock, $.10 Par Value New York Stock Exchange
Securities Registered pursuant to Section 12 (g) of the Act: None
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 requirements for the past 90 days.
Yes XX No
...... ......
Indicated 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 (X).
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant on September 25, 1995 was $48,041,224. The
aggregate market value was computer by reference to the closing price of the
stock on the New York Stock Exchange on such date.
<PAGE> 2
The number of shares outstanding of the Registrant's Common Stock as of
September 15, 1995 was 10,564,979 shares, $.10 Par Value.
DOCUMENTS INCORPORATED BY REFERENCE:
Part of Form 10-K
Document into which incorporated
-------- -----------------------
(1) Specified portions of the Johnston
Industries, Inc. 1995 Annual Report
are incorporated by reference Parts I and II
<PAGE> 3
Part I.
Item 1. Business
Johnston Industries, Inc. currently is a diversified manufacturer
of home furnishings, industrial and, to a lesser extent, basic apparel and
automotive textile fabrics. Johnston Industries, Inc. is a Delaware
corporation which became the successor to a New York corporation of the same
name on December 31, 1987 through a reincorporation merger, and references to
"JII" or the "Company" include its predecessor and its subsidiaries, unless the
context indicates otherwise.
In January, 1995, the Company increased its ownership of Jupiter
National, Inc. ("Jupiter") to over 50% and at June 30, 1995 owned 54.8%.
Jupiter is traded on the American Stock Exchange. The Company's ownership of
over 50% of Jupiter now requires the operating results of Jupiter and the
Company to be consolidated in compliance with Generally Accepted Accounting
Principles effective January, 1995. In November, 1992, Jupiter, which
previously had operated solely as a "business development company" under the
Investment Company Act of 1940 (the "1940 Act") purchased 100% ownership of the
custom fabrics division of WestPoint Pepperell, now named Wellington Sears
Company ("Wellington Sears"). In December, 1994, with shareholder approval,
Jupiter filed a Form N-54C notifying the Securities and Exchange Commission
that Jupiter was withdrawing its election to be treated as a Business
Development Company, and as a result, is no longer subject to regulation under
the 1940 Act.
On August 16, 1995, the Company jointly announced with Jupiter an
agreement and plan of merger under which the public shareholders of Jupiter
would receive approximately $32.875 per share in cash from the Company subject
to adjustment based upon the market value of certain investment securities
1
<PAGE> 4
held by Jupiter on a date close to the date the merger proxy statement is
mailed to Jupiter shareholders. The merger is subject to approval by Jupiter's
shareholders and is expected to close early in 1996.
During 1992, the Company entered into a 50%/50% partnership with
an English company to establish Tech Textiles, USA ("Tech Textiles") for the
joint manufacture and sale of certain specialized textile products. The
Company's investment in this entity was $4,174,000, $2,335,000 and $2,303,000
at June 30, 1995, 1994 and 1993 respectively. On September 8, 1995 the Company
completed the purchase of the English company's 50% ownership to become the
sole owner of Tech Textiles.
The Company engages in textile manufacturing through its 100%
owned subsidiaries Southern Phenix Textiles, Inc., and Opp and Micolas Mills,
Inc.; Wellington Sears, a subsidiary of Jupiter, and Tech Textiles, which in
the aggregate occupy 3,519,000 square feet of manufacturing, warehouse and
administrative facilities. The Company spins its own yarn using Autocoro
open-end automatic rotor spinning and winding machines, Murata air jet
spinners, and some ring spinning equipment. Fabric is manufactured on a
variety of shuttleless, rapier and air jet weaving machines as well as some
shuttle looms. Non-woven fabric is made in the Company's Southern Phenix
Textile's Stitchbond facility. The mills have an annual capacity of
approximately 215 million linear yards of fabric (approximately 110 million
pounds), about 21 million pounds of sales yarn, and approximately 93 million
pounds in non-woven operations (reclamation of textile waste products).
Approximately 87% of production is for the industrial, home furnishings and
automotive manufacturers; the balance is for basic apparel manufacturers and
2
<PAGE> 5
the specialty markets such as yarn and recycled textile fibers. The following
table sets forth the percentage of sales to each major industry served by it:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Automotive 6% 10% 10%
Industrial 25% 24% 24%
Home Furnishing 55% 57% 48%
Apparel 4% 7% 14%
Specialty Markets 9% - -
Miscellaneous 1% 2% 4%
---- ---- ----
100% 100% 100%
==== ==== ====
</TABLE>
The Company believes that it is not generally directly affected by
foreign competition although there is an indirect effect. As total domestic
textile sales volume is reduced as a result of imports, the companies that are
directly affected (generally fashion and apparel manufacturers) search for
sales volume in other areas to replace their lost volume. This results in
increased competition and price pressures in some of the specialized markets
that the Company serves.
The majority of the Company's products are manufactured for the
industrial and home furnishings segments of the market with some sales in the
basic apparel areas (duck and pocketing) and in automotive products. With the
addition of Wellington Sears, the Company has a new market area called the
Specialty Markets which is composed of mostly sales yarn and recycled textile
fibers. The direct effect of foreign competition in these areas is very
minimal.
In the past, the Company has attempted to market its products in
Europe. In April, 1995, the position of Vice President of International Sales
was established and staffed to direct the Company's sales efforts on a global
basis. Through June 30, 1995, the international direct sales volume has been
3
<PAGE> 6
no more than 3% of sales. The Company's goal is to eventually have
international sales account for approximately 10% of total sales revenue.
Southern Phenix Textiles, Inc.
Southern Phenix Textiles, Inc. ("Southern Phenix") manufactures
woven fabrics from 100% polyester fiber for use in the automotive industry,
home furnishings industry, for the coating and laminating trades, and by
various other fabricators. Its operations include spinning, weaving,
stitchbonding and finishings and its products are used in backing for foam car
seat cushions, tufted upholstery and marine coated products, mattress ticking
for popularly priced mattresses, and products for soft furniture. More than
75% of production is against firm orders, with finishing, packaging and other
specifications determined by customers.
Southern Phenix's single supplier for most of its polyester fiber
is Wellman, Inc., formerly Fiber Industries, Inc. ("Wellman"). Southern Phenix
does not have a long term agreement with Wellman and does not maintain supply
contracts with Wellman or any other polyester suppliers. Other potential
suppliers of polyester include DuPont and Hoechst-Celanese, as well as a number
of other domestic and foreign sources. In the event any one supplier ceases to
be available, management does not expect any difficulty in quickly obtaining
polyester from another supplier.
Sales of Southern Phenix products to the automotive industry are
made through Acme Mills Company, as its exclusive automotive marketing
representative. Such sales to Acme Mills Company account for approximately 5%
of the Company's consolidated revenue.
Southern Phenix also has a contract with Glabman Teichner Company
to market the majority of its decorative and upholstery fabrics. Other
products are generally sold by the Company's five salesmen.
4
<PAGE> 7
Backlog
At June 30, 1995, Southern Phenix's backlog of orders was
approximately $11,890,000 compared to $13,299,000 at June 30, 1994 and
$11,491,000 at June 30, 1993. The decrease in backlog is due to customer
resistance to the increased raw material costs and a general slowing of the
economy. All backlog at year-end is expected to be delivered in the current
fiscal year.
For the fiscal year 1995, Southern Phenix facilities operated at
approximately 81% of full capacity. Southern Phenix has a manufacturing
capacity of 73 million linear yards (36 million pounds).
Employees
As of June 30, 1995, Southern Phenix had approximately 555
full-time employees, none of whom is covered by collective bargaining
agreements. Southern Phenix believes its relations with its employees are
good.
Competition
Southern Phenix's competition consists principally of six
companies, a number of which are larger and have significantly greater
resources than Southern Phenix or the Company. While the Company believes that
there are several competitors with larger market shares than it in each product
group, market shares vary substantially from product to product within a group
and there are individual products for which Southern Phenix is the market
leader as well as others for which it does not have a significant market share.
Areas of competition include quality of product and of service - chiefly the
ability to respond and meet customer product requirements expeditiously and
reliably - as well as price. The Company believes that service is an important
positive competitive factor for Southern Phenix and that only its relatively
small size is a negative factor, though one which is not viewed as
5
<PAGE> 8
significant. The Company believes that competition from domestic manufacturers
has intensified over the last several years and will continue to increase in
the future.
The Company believes that while it is not directly affected by
foreign competition, it is indirectly affected by such competition as discussed
on Page 3.
Opp and Micolas Mills, Inc.
Opp and Micolas Mills, Inc. ("Opp and Micolas") manufactures more
than 122 different styles (in the "greige" state, i.e., unbleached and undyed
as taken from the loom) of all cotton fabrics and cotton/polyester blended
fabrics for the coating, home furnishings and apparel markets. Opp and Micolas
also produces fabrics for the footwear and building supplies industries and for
various industrial operations. Its fabrics are used in a broad range of coated
products including wall coverings, coated fabrics for autos such as convertible
tops, cloth roof coverings and felt window liners, rubber coated products such
as automotive V-belts and other belts for industrial machinery, apparel,
industrial protective clothing and specialty items, such as tote bags, handbags
and shoes.
Opp and Micolas buys most of its polyester from Wellman, formerly
Fiber Industries, Inc., and its cotton from ten established domestic cotton
merchants in the open market. Opp and Micolas does not maintain a supply
agreement with Wellman or any other supplier. Management believes that
adequate supplies of cotton are available in the open market and should any one
of its principal suppliers of cotton or polyester cease to be available,
management does not expect any difficulty in quickly locating another supplier.
6
<PAGE> 9
Opp and Micolas manufactures fabrics primarily through the use of
the "open-end" spinning method but has some conventional "ring" spinning
equipment still in use. Open-end spinning is a fully automated spinning
process which yields a consistency and quality of yarn unobtainable from ring
spinning. In recent years Opp and Micolas has engaged in an extensive capital
expenditure program aimed at converting both mills to open-end spinning and
shuttleless weaving.
The fabrics produced by Opp and Micolas are manufactured to firm
orders and are sold directly to manufacturers which have their own converting
departments or finishing facilities and to fabric converters who dye and print
unfinished fabrics. Opp and Micolas employs seven full-time salesmen and
accepts orders from a small number of commissioned agents. Sales by agents
accounted for less than 2% of its fiscal 1995 sales.
Backlog
At June 30, 1995, Opp and Micolas' backlog of orders was
approximately $28,236,000 compared to $31,798,000 at June 30, 1994 and
$26,180,000 at June 30, 1993. The decrease in backlog at June 30, 1995 from
June 30, 1994, was the result of decreases in orders due to resistance to
higher raw material costs and weaknesses in the economy in general. All back
log at year-end is expected to be delivered in the current fiscal year.
For the fiscal year 1995, Opp and Micolas operated at
approximately 92% of full capacity. The Opp and Micolas Mills have an aggregate
annual capacity of 102 million linear yards of fabric (47 million pounds).
Employees
As of June 30, 1995, Opp and Micolas had approximately 950
full-time employees, none of whom are covered by collective bargaining
agreements. Opp and Micolas believes its relations with its employees are
good.
7
<PAGE> 10
Competition
Opp and Micolas competition consists principally of 10 companies,
a number of which are larger and have significantly greater resources than Opp
and Micolas. While the Company believes that there are several competitors with
larger market shares than it in each product group, market shares vary
substantially from product to product within a group and there are individual
products for which Opp and Micolas is the market leader as well as others for
which it does not have a significant market share. Areas of competition
include quality of product and service - chiefly the ability to respond and
meet customer product requirements expeditiously and reliably - as well as
price. The Company believes that service is an important positive competitive
factor for Opp and Micolas and that only its relatively small size is a
negative factor, though one which is not viewed as significant.
The Company believes that while it is not directly affected by
foreign competition, it is indirectly affected by such competition as discussed
on Page 3.
Jupiter National, Inc.
Jupiter National is a holding company consisting of two major
activities, its investment activities and Wellington Sears Company. Jupiter
National commenced operations in 1960 as a federally-licensed small business
investment company ("SBIC"). In 1981, it elected to be treated as a "small
business development company" under the Small Business Investment Act of 1958
("1958 Act"), which restricts its investment to qualifying small business
concerns as defined in the 1958 Act. In 1992, Jupiter National acquired
Wellington Sears, a diversified manufacturer of cotton and polyester fabrics.
8
<PAGE> 11
Investment Activities
The investment activities of Jupiter National are conducted through its
wholly-owned subsidiary, Greater Washington Investments, Inc. ("GWI"). GWI
invests in companies which have the potential of above-average capital
appreciation as well as a current return on investment. Because of the
speculative nature of GWI's investments and the lack of any ready market for
most of its investment when purchased, there is minimal liquidity and a
significantly greater risk of loss on each investment than is the case with
traditional investment companies. However, such investments offer a
sufficiently higher return when the companies are successful to compensate for
the increased risk. Following is a list of the major investments held by GWI
as of June 30, 1995.
<TABLE>
<CAPTION>
Company Security Value
------- -------- -----
<S> <C> <C>
Viasoft, Inc. OTC 567,915 shares common stock $ 7,116,193
McDATA Corporation 166,666 shares convertible 4,700,000
preferred stock
Gulf Components, Inc. $2,110,000 9% subordinated 3,163,935
notes due 1998
Zoll Medical 210,000 shares common stock 2,625,000
Corporation OTC
Fuisz Technologies, Ltd. $2,000,000 9% subordinated 2,250,000
note due 1998
Mediatech, Inc. $1,400,000 10-12% subordinated 1,700,000
note due 1998
Sensor Medics Corporation 233,654 shares convertible 1,548,243
preferred stock
33,750 shares common stock
Monitoring Technology $1,000,000 12% subordinated 1,000,000
Corporation note due 2004
Maddex Farm, L. P. $980,000 10% participating 1st 980,000
mortgage due 2000
Aegean R&D Corporation $970,000 10% subordinated 970,000
note due 1998
</TABLE>
9
<PAGE> 12
GWI's debt consists of subordinated debentures ("Debentures")
which are guaranteed by the Small Business Administration ("SBA") and bear an
effective weighted-average interest rate of 7.8% at June 30, 1995. Principal
payments due on these Debentures are as follows:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C>
1998 $ 2,500,000
2001 7,000,000
2003 5,000,000
-----------
$14,500,000
===========
</TABLE>
Debentures carry certain restrictions, and GWI may not (1) make any
distribution to its shareholder other than periodic payments out of accumulated
net realized income or (2) permit its cumulative operating deficit plus any net
unrealized appreciation on investments to exceed 50% of its paid-in capital.
In addition, the Debentures cannot be prepaid except with SBA approval based
upon such exceptional circumstances as license surrender, reorganization and
merger, debt restructure for credit or cash-flow reasons, or liquidation of
idle funds as a result of large capital gains or anticipated portfolio
payments. At June 30, 1995, GWI did not have available funds for distribution
to its shareholder nor funds for the prepayment of its Debentures.
Wellington Sears Company
Wellington Sears is a diversified manufacturer of cotton and
polyester fabrics for the home furnishings and industrial products markets.
Its operations include spinning, weaving, finishing, product testing, waste
textile fiber and fabric reclamation and other nonwoven production. Its
fabrics are used in outdoor furniture, wiper cloths, napery, furniture
upholstery, mattress pads, bed linens, and other industrial applications.
10
<PAGE> 13
Wellington Sears' supplier for most of its polyester is Wellman,
Inc. Its cotton comes from several established domestic cotton merchants in
the open market. Wellington Sears does not maintain a supply agreement with
Wellman or other suppliers. Management believes that adequate supplies of
cotton and polyester are available in the open market even if one of its
suppliers of cotton or polyester ceases to exist.
Wellington Sears spins its own yarn using manual and automated
open-end spinning machines for its weaving operations. Fabric is woven on
rapier and projectile weaving machines as well as some shuttle looms.
Wellington Sears services approximately 2,400 customers with no
single customer accounting for more than 8% of total sales.
It uses both in-house sales personnel and independent brokers in
the sale of its products. Approximately 70% of revenues are generated by
in-house sales personnel, with the remaining 30% being generated by brokers.
Fabrics sold through in-house personnel include abrasive, napery, rubber
products, filtration, duck, wipe cloth and reprocessed waste products.
Mattress pads are sold through commissioned sales agents.
The sales and merchandising department includes 45 Company
employees. The sales force is organized along geographical lines, with sales
offices located in Valley, Alabama - Corporate Office; Akron, Ohio; Ann Arbor,
Michigan; Paramus, New Jersey; and Tarboro, North Carolina. Six sales
representatives are located in the field offices and sell all of Wellington
Sears' products with the exception of mattress pads, utilization products, and
upholstery. The remaining 39 sales and merchandising personnel provide support
services such as design, technical support, customer services, and coordination
of production with the mill. Individuals within this group are also
responsible for the sale of utilization products and mattress pad sales.
11
<PAGE> 14
Backlog
At June 30, 1995, Wellington Sears' backlog of orders was
approximately $21,721,000 compared to $22,411,000 at June 30 1994 and
$13,739,000 at June 30, 1993. All backlog at year-end is expected to be
delivered in the current fiscal year.
The weaving mills have an annual capacity of approximately 40
million linear yards of fabric (approximately 27 million pounds).
Approximately 55% of production is for industrial and home products, with the
balance for the upholstery market. In addition, the mills have yarn capacity
for sales yarn of approximately 21 million pounds annually. The nonwoven
operations production capacity is approximately 93 million pounds annually.
Employees
At June 30, 1995, Wellington Sears had approximately 1,500
full-time employees, none of whom are covered by collective bargaining
agreements. Wellington Sears believes its relations with its employees are
good.
Competition
Wellington Sears' competition consists primarily of 20-25
companies, a number of which are larger and have significantly greater
resources than Wellington Sears. While Wellington Sears believes that there
are several competitors with larger market shares than it in each product
group, market shares vary greatly from product to product within a group; and
there are individual products for which Wellington Sears is the market leader
as well as others for which it does not have a significant market share. Types
of competition include quality of products and services--chiefly the ability
to respond and meet customer product requirements expeditiously and
reliably--as well as price.
Wellington Sears believes it is generally not directly affected by
foreign competition (now that it has exited the duck market), although there is
an indirect effect when competitors start looking for sales volume in other
areas to replace their lost volume as discussed on page 3.
12
<PAGE> 15
Item 2. Properties
Johnston Industries, Inc.
The executive offices of the Company are located at 105 13th
Street, Columbus, Georgia 31901 in a 20,000 square foot, two story, brick
office building, which was purchased August 20, 1993.
Southern Phenix Textiles, Inc.
Southern Phenix's two manufacturing facilities totaling 708,000
square feet are located in Phenix City, Alabama. The primary mill houses
Southern Phenix's administrative offices, weaving mill and finishing operations
on 13 acres of a 124 - acre tract accessible both by road and rail. The mill,
which was one of the first in the United States to make woven goods from 100%
polyester, was built in 1968, but its equipment and machinery continue to be
extensively modernized. A second mill with 78,000 square feet on 11 acres
contains the stitchbond operation. Capital expenditures at Southern Phenix in
fiscal 1995 amounted to $4,991,000.
Opp and Micolas Mills, Inc.
The Opp and Micolas Mills located on a major U. S. highway in Opp,
Alabama is composed of the Opp Mill encompassing 13 acres and has approximately
340,000 square feet of plant facility and the Micolas Mill, which is located
very near to the Opp Mill, sits on 19 acres with approximately 441,000 square
feet of plant facility. A nearby Company-owned tract of 140 acres is
available for future expansion. The mills, which share some basic facilities
and services but are equipped to operate independently, are single level
facilities which were built in 1922, and have undergone
13
<PAGE> 16
extensive modernization programs from the late 1980's on into the 1990's.
During fiscal 1995 the Opp and Micolas Mills spent $8,880,000 in its capital
expenditure program.
Jupiter National, Inc.
Jupiter's National headquarters is located in Rockville,
Maryland where it owns and occupies a 3,400 square foot building on
approximately three-quarters of an acre of land.
Wellington Sears Company
Wellington Sears Company's operations are composed of three
manufacturing facilities, a finishing operation, a U.S. Certified testing
laboratory, a fabric design center, a retail outlet and a corporate facility
located just off Interstate I-85 between Valley, Alabama and West Point,
Georgia. Wellington Sears has four additional manufacturing facilities with
two located in Columbus, Georgia and one each in DeWitt, Iowa and Tarboro,
North Carolina. Together the facilities total approximately 2,030,000 square
feet of building space sitting on approximately 238 acres of land. Wellington
Sears has been involved in a highly extensive modernization program since its
purchase by Jupiter in November, 1992 with capital expenditures totaling
$10,636,000 for fiscal 1995.
JI International, Inc. (d.b.a. Tech Textiles, USA)
The Tech Textiles operation is located in Phenix City, Alabama and
shares the manufacturing facility housing Southern Phenix Textiles stitchbond
operation. It occupies 25,200 square feet of the 78,000 square foot facility.
In fiscal 1995, Tech Textiles spent $173,000 on capital expenditures.
14
<PAGE> 17
Item 3. Legal Proceedings
Johnston Industries, Inc.
In 1981, a subsidiary of the Company closed a steel fabricating
facility in Pennsylvania which it had operated before its closing. The
facility was purchased from the Company and again operated as a steel
fabricating facility by the new owner for approximately two years and
thereafter was purchased by the present owner who also operated it as a steel
fabricating facility for about three years. Since that time, the facility has
been closed.
In February 1994, the present owners of the property filed a
complaint against the Company and the previous owner alleging responsibility of
those parties for the cost remediation of the plant site. The original
complaint alleged that such costs were in excess of $1,500,000. In July 1995,
the plaintiff amended its complaint alleging estimated costs to be $3,900,000.
The Company is not in agreement concerning these estimated costs, but assuming
the estimate is found to be accurate, it is believed that the court will
apportion the liability among each of the parties including the plaintiff for
the cost of remediation of the plant site.
The trial of the case began on July 20, 1995 and was concluded
August 25, 1995. Briefs by all of the parties are to be filed before a
decision is rendered, which is not expected until sometime in 1996. In June
1995, the Company established a $1,000,000 reserve for costs which it may incur
in connection with the final resolution of the dispute. In addition, the
Company has established a reserve in the amount of $200,000 as an estimate of
potential legal and other costs to be incurred in connection with defending
this matter. Although management believes the accrual described above is
15
<PAGE> 18
sufficient to cover the estimated costs of such matter, the ultimate outcome of
the litigation cannot be presently determined.
The Company is periodically involved in legal proceedings arising
out of the ordinary conduct of its business. Management does not expect that
any of these legal proceedings or the legal proceedings involving Jupiter,
Polylok and Duhl discussed below, to have a material adverse effect on the
Company's consolidated financial position or results of operations.
Jupiter Litigation
The purchase of the assets of Polylok Corporation ("Polylok")
which comprises Wellington Sears' Tarboro facility ("Tarboro") produced
significant litigation among Jupiter National, Wellington Sears, Polylok, and
Daniel Duhl ("Duhl"), Polylok's principal shareholder. The first action, which
was settled in August 1994, involved assertions against Polylok and Duhl of
misrepresentations made in connection with the purchase of Polylok's assets.
Subsequently, in March 1995, Polylok and Duhl commenced an action against
Jupiter National and Wellington Sears, which action asserted a breach of
contract relating to installment payments due Duhl pursuant to a $1,600,000
purchase money note. Jupiter National and Wellington Sears filed counterclaims
against Polylok and Duhl for breach of Duhl's consultancy agreement and breach
of the prior August 1994 settlement. The case is scheduled for trial in
November 1995, and Duhl has filed motions for summary judgment for installment
payments on the $1,600,000 note, amounting to approximately $900,000, and on
Jupiter National and Wellington Sears' counterclaim. It is not possible at
this time to predict the eventual outcome of this litigation with reasonable
accuracy.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the
fourth quarter of the fiscal year ended June 30, 1995.
16
<PAGE> 19
Part II.
Item 5. Market for the Registrant's Common Equity and Related Stockholders
Matters
The information appearing in the Johnston Industries, Inc. 1995
Annual Report under the caption "Quarterly Price Range of Common Stock" was
reproduced in Exhibit 13(a) of the original Form 10-K filed by the Company
on September 28, 1995
Item 6. Selected Financial Data
The information appearing in the Johnston Industries, Inc. 1995
Annual Report under the caption "Financial Highlights" was reproduced in Exhibit
13(b) of the original Form 10-K filed by the Company on September 28, 1995.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information in the Johnston Industries, Inc. 1995 Annual
Report under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" is reproduced in Exhibit 13(c).
Supplementary Data in the Johnston Industries, Inc. 1995 Annual Report under
the caption "Quarterly Information" is reproduced in Exhibit 13(d).
Item 8. Financial Statements and Supplementary Data
The Company's consolidated financial statements of June 30, 1995
and 1994 and for each of the years in the three year period ended June 30,
1995, notes thereto and Independent Auditors' Report were reproduced in Exhibit
13(e) of the original Form 10-K filed by the Company on September 28, 1995.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
17
<PAGE> 20
PART III.
Item 10. Directors and Executive Officers of Johnston Industries, Inc.
The Directors and Executive Officers of Johnston Industries, Inc.
are as follows:
David L. Chandler has served as Chairman of the Board of Johnston
Industries, Inc. since 1981 and as Chief Executive Officer since January, 1990.
Mr. Chandler has been a Director since 1981. He had also served as President
of Johnston from January, 1990 to October 1992. Mr. Chandler is 69 years old.
Mr. Chandler has been Chairman of the Board of Redlaw Industries,
Inc. (a former manufacturer of automotive and transportation products) and its
wholly-owned subsidiary, GRM Industries, Inc., which owns approximately 41% of
the Common Shares of Johnston Industries, Inc., for more than five years. He
has been Chairman of the Board of Galtaco, Inc. (a former ferrous casting
products manufacturer) for more than five years. Mr. Chandler is also Chairman
of the Board and Chief Executive Office of Jupiter National, Inc., a 55% owned
affiliate of Johnston Industries, Inc.
On October 27, 1994, Mr. Chandler, in an administrative
proceeding, without admitting or denying the findings or undertaking to pay any
fine or penalty, consented to the issuance of a cease and desist order and
findings of the Securities and Exchange Commission in connection with certain
incorrect or late filings of Forms 3, 4 and 5 and Schedules 13D required to be
filed with respect to Johnston and Redlaw. Under the order, Mr. Chandler may
not commit or cause any violation of Section 13(d) and 16(a) of the Securities
Exchange Act of 1934 and Rules 13d-1, 13d-2, 16a-2 and 16a-3 promulgated
threunder.
Gerald B. Andrews has served as President and Chief Operating
Officer since October, 1992. Mr. Andrews has been a Director since 1993.
Prior to that time, he had served in a variety of senior management positions
at WestPoint Pepperell, over a period of 38 years, most recently as Executive
Vice President of Merchandising. Mr. Andrews is 58 years old.
J. Reid Bingham has been a Director of Johnston Industries, Inc.
since 1991. Mr. Bingham has been a partner of Concepcion, Sexton, Bingham &
Urdaneta (formerly Bingham & Castilla) (attorneys) since May, 1994. Prior to
that time, he was a partner of Kirkpatrick & Lockhart since 1989, prior thereto
he was a partner of Hughes Hubbard & Reed since 1987, and prior thereto he was
a partner of Sage, Gray, Todd & Sims for more than five years. Mr. Bingham is
49 years old.
Larry L. Galbraith has served as Executive Vice President of the
Company since November 1, 1992 and as President and Chief Executive Officer of
Southern Phenix Textiles, Inc. since July, 1989. Prior to that time he had
served as Vice President for engineering, purchasing and finishing at Southern
Phenix Textiles, Inc. for more than five years. Mr. Galbraith is 55 years old.
Roger J. Gilmartin has served as Executive Vice President of the
Company since November 1, 1992 and as Chairman and Chief Executive Officer of
Opp and Micolas Mills, Inc. since January, 1990. Prior to that time Mr.
Gilmartin was Senior Vice President and Director of Werner International, Inc.,
management consultants to the textile industry for more than five years. Mr.
Gilmartin is 51 years old.
William J. Hart has been a Director of Johnston Industries, Inc.
since 1981. He has been a partner of Farrington & Curtis (attorneys) for more
than five years. Mr. Hart is 54 years old.
William I. Henry has served as Vice President of Product and
Operations Planning since January 1, 1993, and for more than five years prior
had served as Vice President, Operations of Southern Phenix Textiles, Inc. Mr.
Henry is 55 years old.
Gaines R. Jeffcoat has been a Director of Johnston Industries,
Inc. since 1986. Prior to Mr. Jeffcoat's retirement on June 30, 1990, he had
served as Vice President of the Company since January 1, 1988 and as Chairman
of the Board of Opp and Micolas Mills, Inc., a subsidiary of the Company
("Opp"), from January 1, 1988 to December 31, 1989. He was President of Opp
for more than five years prior to that time. Mr. Jeffcoat is a Director of
Jupiter National. Mr. Jeffcoat is 73 years old.
John W. Johnson has served as Vice President and Chief Financial
Officer since September 1, 1994. Mr. Johnson had been Treasurer and Secretary
of the Company from January 1, 1992 until September 1, 1994. From July 1, 1991
to December, 1991 he was Assistant Secretary-Treasurer of the Company and for
more than five years prior was Vice President, Finance of Southern Phenix
Textiles, Inc. Mr. Johnson is 59 years old.
C.J. Kjorlien has been a Director of Johnston Industries, Inc.
since 1989. Mr. Kjorlien is a director of Fieldcrest Cannon, Inc., of Service
America Corp. (a food service company), and of Jupiter National. From June 1974
to May 1989 he was a director of WestPoint Stevens, Inc. (a textile
manufacturer). For five years prior to December 1986 he was President and
Chief Operating Officer of WestPoint Stevens. Mr. Kjorlien is 79 years old.
Charles F. Fazio has served as Vice President of International
Sales since March, 1995. Prior to that time he had served in a variety of
international sales positions with several textile companies, most recently for
more than five years as Vice President International Products Division, Bibb
Company. Mr. Fazio is 50 years old.
F. Ferrell Walton has served as Secretary and Treasurer since
September 1, 1994. Mr. Walton had been Director of Financial Operations for
the Company from April 1, 1993 to September 1, 1994 and for more than five
years prior to that time was Vice President, Finance of Opp and Micolas Mills,
Inc. Mr. Walton is 51 years old.
The Directors of Johnston Industries, Inc. are elected for a one
year term by the Company's Stockholders at the Annual Meeting of Stockholders.
The officers of Johnston Industries, Inc. are elected for a one year term by
the Board of Directors at the Annual Meeting of the Board held following the
Annual Meeting of Stockholders.
Each director and executive committee member who is not an officer of or
a consultant to the Company receives a Director's fee of $12,000 per year plus
$1,000 for each Board or Committee meeting attended during the fiscal year.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who beneficially own
more than 10% of the Company's Common Stock, to file with the Commission and
the NYSE reports of beneficial ownership and changes in beneficial ownership of
Common Stock. Officers, directors and greater than 10% stockholders are
required by Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on a review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, the Company believes that, during Fiscal 1995, all
filing requirements applicable to its directors, executive officers and 10%
stockholders were fully complied with.
18
<PAGE> 21
Item 11. Executive Compensation
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth information concerning the compensation
for the Company's last three completed fiscal years with respect to its chief
executive officer and the four other most highly compensated executive officers
who served as such at June 30, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- ---------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS / SAR'S COMPENSATION (4)
- --------------------------- ---- ------ ----- ------------ --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
David L. Chandler (1) 1995 $467,500 $213,000 $46,138 (2) 44,444 $118,391
Chairman of the Board and 1994 390,000 176,788 47,296 (2) 12,718
Chief Executive Officer 1993 390,000 135,758 48,449 (2) --
Gerald B. Andrews 1995 370,000 200,000 15,306
President and 1994 361,945 185,000 3,321
Chief Operating Officer 1993 256,572 105,000 150,000 sh (3) 666
Roger J. Gilmartin 1995 285,000 138,053 7,761
Executive Vice President; 1994 285,000 142,643 1,514
Chairman of Opp and 1993 260,000 94,000 63,750 sh (3) 924
Micolas Mills
Larry L. Galbraith 1995 $245,000 35,648 15,561
Executive Vice President; 1994 $235,000 55,695 3,297
President of Southern 1993 $235,000 23,500 255
Phenix Textiles
John W. Johnson 1995 $157,500 64,800 7,170
Vice President - Finance 1994 $112,083 54,000 2,473
and Chief Financial Officer 1993 $107,500 38,000 133
</TABLE>
(1) Mr. Chandler also received compensation for his services as Chief Executive
Officer of Jupiter National, which became a majority owned subsidiary of
the Company during January 1995. Accordingly, the amounts shown in the
table for fiscal 1995 include compensation paid to Mr. Chandler by Jupiter
National for the six months ended June 30, 1995, as follows: salary of
$77,500; bonus of $25,000; 44,444 shares underlying options grants; and
$37,500 contributed by Jupiter National to a deferred compensation trust in
which Mr. Chandler is the sole participant. Because Jupiter National was
not a subsidiary of the Company prior to January 1995, the table does not
reflect compensation paid to Mr. Chandler by Jupiter National during those
periods.
(2) Present value of consulting payments (as described on page 25).
(3) Option awards.
(4) Payments relating to the stock purchase plan described on pages 21 and 22.
19
<PAGE> 22
STOCK INCENTIVE PLAN
GENERAL. The Amended and Restated Stock Incentive Plan for Key Employees
of Johnston Industries, Inc. and its Subsidiaries (the "Incentive Plan"),
approved by shareholders in December 1988, authorizes the grant of awards in
the form of Incentive Stock Options ("ISO's"), within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended (the "Code"),
Non-Qualified Stock Options ("NQSO's"), Stock Appreciation Rights ("SAR's"),
Restricted Stock or a combination of these forms of awards. All officers and
key employees of the Company and its subsidiaries who are in positions which
enable them to make significant contributions to the long-term performance and
growth of the Company are eligible to receive awards. The Incentive Plan is
administered by the Stock Option Committee (the "Committee") of the Board of
Directors. Members of the Committee are not eligible to participate.
INCENTIVE STOCK OPTIONS. The exercise price of an ISO may not be less
than 100% of the fair market value on the date of the grant and the aggregate
exercise price of all shares that become exercisable by an individual optionee
in a single calendar year for options granted after January 1, 1987 may not
exceed $100,000, plus any unused limit carryover to such year within the
meaning of Section 422A of the Code. Additional restrictions apply to ISO's
granted to a 10 percent stockholder (as defined in Section 422A(b)(6) of the
Code). An ISO may be exercised in whole or in part throughout the period of the
ISO with the exercise price to be paid in cash or in such alternate form as the
Committee may authorize. An ISO terminates upon termination of the optionee's
employment, subject, in the case of termination of employment by reason of
death or disability, to the right to exercise within 12 months after such
termination, unless the expiration date of the ISO occurs sooner.
NON-QUALIFIED STOCK OPTIONS. NQSO's granted under the Incentive Plan (a)
may be for such (i) number of shares, (ii) purchase price and (iii) term (up to
10 years) as the Committee, in its sole discretion, may determine and (b)
become exercisable six months after date of grant (or later if the Committee so
determines). An NQSO terminates upon termination of the optionee's employment,
unless the Committee in its sole discretion determines otherwise, subject in
the case of termination by reason of retirement at or after age 65, disability,
or death, to the right to exercise within three months after retirement or
disability or one year after death, unless the expiration date of the NQSO
occurs sooner.
STOCK APPRECIATION RIGHTS. Pursuant to the terms of the Incentive Plan,
SAR's are granted only (i) in conjunction with the granting of options, (ii) in
an amount not in excess of the number of Shares granted in the related option
and (iii) on terms providing that the exercise of an option for a given number
of Shares terminates the related SAR for that number of Shares (so that the
total number of Shares for which an option and the related SAR may be exercised
cannot exceed the number of Shares granted in the option). SAR's provide the
participant with an amount equal to the difference between the fair market
value of the Shares on the date the SAR is exercised and the exercise price of
the option. Each SAR is subject to the same conditions on termination of
employment as the related option.
RESTRICTED STOCK. The Committee may make awards entitling the recipient to
receive shares at no out-of-pocket costs or at such price as the Committee
determines, the shares purchased to be subject to the restrictions set by the
Committee and which lapse or may be waived as determined by it.
The following table provides information concerning options granted,
options exercised, and year-end option values for the last fiscal year with
respect to its chief executive officer and the four other most highly
compensated executive officers who served as such at June 30, 1995.
20
<PAGE> 23
OPTION/SAR GRANTS IN LAST FISCAL YEAR
No options nor SAR's were granted during the fiscal year ended June 30,
1995. The following table sets forth certain information regarding stock
options granted during fiscal 1995 by Jupiter National to the individuals named
in the Summary Compensation Table.
JUPITER NATIONAL OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------
% of Total Potential Realized Value at
Number of Jupiter Options Exercise Assumed Annual Rates of Stock Price
of Jupiter Granted in Price Appreciation for Option Term
Options Employees Per Expiration -----------------------------------
Name Granted in FY 1995 Share Date 0% 5% 10%
- ------------------ ---------- --------------- -------- ---------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Chandler 44,444 37% $21 04/30/05 $50,000 $666,660 $1,616,151
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES ACQUIRED VALUE OPTIONS/SAR'S AT FY-END OPTIONS/SAR'S AT FY-END
NAME ON EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ----------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
David L. Chandler
Company Options --- --- 180,000 / 0 $417,600 / $0
Jupiter National Options --- --- 100,000 / 44,444 (1) $1,685,000 / $266,664
Gerald B. Andrews
Company Options --- --- 112,500 / 37,500 $107,775 / $35,925
Jupiter National Options --- --- --- ---
Roger J. Gilmartin --- --- 48,750 ---
Company Options --- --- 48,750 / 15,000 ---
Jupiter National Options --- --- --- ---
</TABLE>
(1) The Board of Directors has authorized a transaction whereby, upon
completion of the proposed merger between Johnston and Jupiter
National, Mr. Chandler may choose to forego receiving the difference
between the exercise price of his Jupiter National options and the
purchase price of $32.50 for shares of Jupiter National common stock
specified in the Merger Agreement, and in return would receive options to
purchase Johnston common stock equivalent in value to 74,444 of his
Jupiter National options as well as a cash payment of $2,616,487.73
(sufficient to provide Mr. Chandler with $30.00 per share after taxes for
each of his remaining 70,000 options). Should the merger not be
consummated, for any reason whatsoever, the Board has approved the
possible purchase of up to 70,000 shares of Jupiter National common stock
from Mr. Chandler at a purchase price of $30.00 per share.
STOCK PURCHASE PLAN
The Company has a stock purchase plan (the "Plan") under which the Company
may assist selected key employees and directors of the Company and its
subsidiaries in the purchase of shares of its Common Stock; as amended by the
Board to date, an aggregate of 947,797 shares are covered by the Plan. The Plan
is administered by a committee of directors (members of which are not eligible
to participate in the Plan while serving on the committee).
The committee determines the eligible key employees and directors who will
be granted participation in the Plan, the number of shares which a participant
may purchase, the purchase price thereof, the manner in which such purchase
will be effected, any provisions for loans to be arranged to enable Plan
participants to pay for their shares, any provisions for the payment of cash
bonuses to reimburse Plan participants for any interest payable on their loans
not covered by the dividends paid on their shares, any provisions for Company
guarantee of such loans, and other terms and conditions consistent with the
provisions of the Plan.
The Plan authorizes the Company to guarantee loans arranged by the
committee for the purchase of shares under the Plan up to a maximum of
$9,000,000 in aggregate outstanding principal amount of loans.
21
<PAGE> 24
The shares purchased may consist of authorized but unissued shares, or
treasury shares, or shares purchased in the open market on behalf of the
participants under arrangements approved by the committee.
The Company has furnished the participants with guarantees of loans for the
purchase price of the shares (which bear interest at rates of 1/2% under or
1/2% above the prime lending rate of the lending bank).
The committee also authorized the payment of additional compensation to the
Plan participants who have purchased the 947,797 shares in the form of
quarterly cash bonuses in amounts that will equal the excess of the interest
payable on their loans over the dividends paid on their shares. Under the terms
of the stock purchase agreements entered into between the Plan participants and
the Company, the Company's obligation to pay such cash bonuses terminates upon
the termination of employment of the Plan participant by the Company or any of
its subsidiaries for any reason.
The Plan is neither qualified under Section 401(a) of the Internal Revenue
Code of 1986 nor subject to the provisions of the Employee Retirement Income
Security Act of 1974.
The amount of any cash bonus received under the Plan must be treated as
compensation income by the employee and the Company will be entitled to a
corresponding tax deduction in the same amount which the employee is required
to treat as compensation income (subject to appropriate withholding of taxes).
HOURLY EMPLOYEES' PENSION PLAN
The Company maintains a non-contributory Hourly Employees' Pension Plan
(the "Hourly Plan") which covers substantially all hourly employees who have
been employed on a full-time basis for at least one year. An employee may elect
to receive distribution of benefits under the Hourly Plan upon retirement in
one of several annuity forms including single life, ten years certain and life
or joint and survivor. Effective July 1, 1989, accrued benefits under this plan
become vested proportionately (20% per year) after an employee has been
credited with three years of service under the Pension Plan. Employees attain
100% vesting of accrued benefits after seven years of credited service.
If an employee participates in the Hourly Plan until normal retirement date
(age 65, 66 or 67, based on the year of birth), and, if he elects to receive
his distribution in the form of a single life annuity, the amount of the annual
benefit upon retirement will be the sum of (a) and (b), where (a) is $96 times
the number of years of service to 1992 and (b) is $192 times the number of
years of service thereafter. The Hourly Plan provides that if an employee's
employment terminates prior to normal retirement date, payments at normal
retirement date will be reduced to reflect the early termination of his
employment; if his employment terminates later than normal retirement date,
payments will be equal to the benefits which are actuarially equivalent to the
benefits otherwise payable at normal retirement date, but not less than the
accrued benefit determined at date of retirement; and if he elects a method of
distribution of benefits other than a single life annuity, payments will be
adjusted to provide benefits which are actuarially equivalent to the benefits
to which he would be entitled if he had elected the single life annuity method.
22
<PAGE> 25
SALARIED EMPLOYEES' PENSION PLAN
The Company maintains a non-contributory Salaried Employees' Pension Plan
(the "Pension Plan") which covers substantially all salaried employees who have
been employed on a full-time basis for at least one year. An employee may elect
to receive distribution of benefits under the Pension Plan upon retirement in
one of several annuity forms, including single life, ten years certain and life
or joint and survivor. Effective July 1, 1987, accrued benefits under this plan
become vested proportionately (20% per year) after an employee has been
credited with three years of service under the Pension Plan. Employees attain
100% vesting of accrued benefits after seven years of credited service.
If an employee participates in the Pension Plan until normal retirement
date (age 65, 66 or 67, based on the year of birth), and, if he elects to
receive his distribution in the form of a single life annuity, the amount of
his annual benefit upon retirement will be the sum of (a) and (b), where (a) is
36% (assuming 20 or more years of service) of average annual earnings and (b)
is 26.25% (assuming 35 or more years of service) of the net amount of average
annual earnings less Social Security average wages. (Average annual earnings
means the annual average of the employee's earnings for the ten consecutive
calendar years of benefit service immediately preceding his normal retirement
date. Social Security average wages means the average of the maximum amount of
wages subject to Social Security tax for the 35 years preceding the
participant's Social Security normal retirement date.) The maximum benefit is
$118,800 at normal retirement date for participants whose normal retirement
dates fall during the plan year July 1, 1994, through June 30, 1995.
The following table sets forth the estimated annual normal retirement
benefits (assuming Social Security Average wages of $45,000 per year) for
various combinations of preretirement remuneration and years of benefit
service:
<TABLE>
<CAPTION>
Average Annual Salary Years of Benefit Service
Last 10 Years ------------------------
(or Less Where Applicable) 5 10 15 20 25 30 35
- -------------------------- - -- -- -- -- -- --
<S> <C> <C> <C> <C> <C> <C> <C>
$125,000 14,250 28,500 42,750 57,000 60,000 63,000 66,000
$175,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$225,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$275,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$325,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$375,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$425,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$475,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$525,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
$575,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
</TABLE>
The years of benefit service under the plan as of June 30, 1995, for
Messrs. Galbraith, Chandler, Gilmartin, Andrews and Johnson were 23, 22, 5, 2
and 22, respectively.
The Pension Plan provides that if an employee's employment terminates prior
to normal retirement date, payments at normal retirement date will be reduced
to reflect the early termination of his employment; if his employment
terminates later than normal retirement date, pay-
23
<PAGE> 26
ments will be adjusted to provide benefits which are actuarially equivalent to
the benefits otherwise payable at the normal retirement date, but not less than
the accrued benefit determined at date of retirement; and if he elects a method
of distribution of benefits other than a single life annuity, payments will be
adjusted to provide benefits which are actuarially equivalent to the benefits
to which he would be entitled if he had elected the single life annuity method.
EXECUTIVE INSURANCE PLAN
The Company has maintained a contributory Executive Insurance Plan (the
"Executive Plan") covering selected executives of the Company and its
subsidiaries, administered by an Administrative Committee consisting of the
Chief Executive Officer, the Vice President/Finance and the Secretary/Treasurer
and providing for life insurance coverage of participants in the Executive Plan
in an amount equal to approximately three times annual compensation up to a
maximum annual salary of $100,000.
The Executive Plan provides for benefits to the executive or his
beneficiaries in the event of death before retirement, termination of
employment, disability, termination of the Executive Plan or retirement. The
Company is reimbursed for all premiums paid if the executive dies prior to
retirement or if such policy is fully assigned to the executive.
In January 1989, the Company determined to "freeze" the Executive Plan by
neither extending benefits to persons not already participants nor changing the
coverage for those persons who were already participants. It was also
determined to commence benefits for participants at age 65 with the
participants to elect either to purchase the insurance contract at age 65 or
take payout of their benefits over a 10-year certain period commencing at that
age. Participants who had already reached age 65 received payments equivalent
to the amounts they would have received had their payments begun at age 65.
24
<PAGE> 27
EMPLOYMENT AGREEMENTS
The Company has an employment agreement with Mr. Chandler which continues
until December 31, 1996. The agreement commits Mr. Chandler to serve as chief
executive officer and entitles him to a base salary of not less than $350,000,
an annual bonus equal to 1 1/2% of consolidated pre-tax earnings (as defined in
the agreement and net of any consolidated pretax losses for prior years) and,
upon the conclusion of his employment, to a monthly consultancy fee of $8,333
for a term equal to the number of months of his employment under the new
agreement from January 1, 1990 forward. The agreement permits Mr. Chandler to
terminate his employment under it at any time on six months' notice and gives
him the option to terminate his employment within 30 days of the Company's
merger or consolidation with or sale of all its assets to another company.
The Company and Mr. Chandler are also parties to an agreement with a
trustee bank establishing a trust to which payments on account of bonus and
consultancy fees may be made. At the option of the Company (whose authority in
this regard has been delegated by the Board of Directors to a committee of
Messrs. Hart, Jeffcoat and Kjorlien) it may make the quarterly estimated bonus
payment to the trust rather than to Mr. Chandler directly and may satisfy its
obligations with respect to future consultancy fees by paying to the trust
quarterly their current actuarial equivalent.
Jupiter National has entered into an employment agreement with Mr. Chandler
providing for his continued employment as a senior executive of Jupiter
National until December 31, 1996. Under his employment agreement, Mr. Chandler
is entitled to receive an annual salary of at least $125,000, plus such bonuses
or other compensation as Jupiter National may determine. At the conclusion of
his employment, Mr. Chandler is also entitled to receive a consulting fee of
$6,250 per month until the earlier of (i) the completion of a term equal to the
number of months during which he was employed by Jupiter National under the
employment agreement (beginning with January 1991), or (ii) his death. In the
event that Mr. Chandler dies prior to the completion of the term described in
clause (i) of the preceding sentence, his wife will be entitled to receive
$3,125 per month for that period.
Mr. Andrews' employment agreement provides for his employment as President
of the Company until October 1996. He is entitled to a base salary of not less
than $280,000, to payments to a deferred benefit trust of $70,000 minimum each
year and to annual incentive compensation in accordance with the terms of an
incentive compensation plan--which may also be paid into the deferred benefit
trust.
Mr. Gilmartin's employment agreement provides for his employment as
Chairman and Chief Executive Officer of Opp and Micolas Mills, Inc. until
December 31, 1998 and entitles him to a base salary of not less than $285,000 a
year and such additional compensation as is determined by the Chief Executive
Officer.
Mr. Galbraith's employment agreement provides for his employment as
President and Chief Executive Officer of Southern Phenix Textiles, Inc. until
June 30, 1998, and entitles him to a base salary of not less than $245,000 a
year and such additional compensation as is determined by the Chief Executive
Officer.
Jupiter National has also entered into employment agreements with Kurt R.
Harrington and H. Haywood Miller which expire in July 1997, but will be
automatically renewed for successive one year terms thereafter unless the
employee or the Company gives one year's advance notice of his or its intention
not to renew. Under these agreements, Mr. Harrington and Mr. Miller are
entitled to receive annual salaries of at least $103,000, plus such bonuses as
Jupiter National may determine. Each of the employment agreements provides
that if employment is terminated by Jupiter National without cause, the
employee will be paid all salary owing under the agreement for the remainder of
the contract term, plus a pro rated portion of the prior year's bonus and
continued benefits for one year.
In July 1995, Wellington Sears entered into employment agreements with L.
Allen Hinkle, Owen J. Hodges, III, Ralph R. Allen, A. Ray Jones and John D.
Lott which expire in May 1997, but will be automatically renewed for successive
one year terms thereafter unless the employee or Wellington Sears gives one
year's advance notice of his or its intention not to renew. Under these
agreements, Messrs. Hinkle, Hodges, Allen, Jones and Lott are entitled to
receive annual salaries of at least $200,000, $167,134, $155,610, $147,210 and
$124,635, respectively, plus such bonuses as Jupiter National may determine.
Each of the employment agreements provides that if employment is terminated by
Wellington Sears without cause, the employee will be paid all salary owing
under the agreement for the remainder of the contract term, plus a pro rated
portion of the prior year's bonus and continued benefits for one year. In
addition, each of these employment agreements contains provisions prohibiting
the employee from competing with Wellington Sears during the term of employment
and, in certain cases, for a period thereafter. These agreements replaced
prior Wellington Sears employment agreements entered into in 1992 with these
employees, without increasing such employees' current salaries. The prior
agreements could have been terminated in November 1996.
In connection with the execution of the Merger Agreement, Jupiter,
Wellington Sears and GWI entered into a termination agreement with Rainer H.
Bosselmann pursuant to which Mr. Bosselmann resigned, effective immediately, as
an officer and director of those companies, and Johnston entered into a
severance agreement whereby Mr. Bosselmann resigned, effective immediately, as
an officer and director of Johnston and its affiliates. Pursuant to the
termination agreement, Jupiter paid Mr. Bosselmann a lump sum severance payment
of $250,000. The termination agreement also provides that, upon consummation
of the Merger, any unexercised stock options held by Mr. Bosselmann will be
canceled in exchange for a cash payment equal to the excess of the Merger
Consideration over the option exercise price. In addition, under the
termination agreement, Mr. Bosselmann will continue to be employed by Jupiter
at an annual salary of $25,000 and will remain eligible for benefits for a
period for one year from the date of his resignation. Under the severance
agreement with Johnston and its affiliates, Mr. Bosselmann received a lump sum
severance payment of $75,000, and agreed to various standstill provisions for a
period of eighteen months following the agreement.
25
<PAGE> 28
Item 12. Security Ownership of Certain Beneficial Owners and Management
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of September 25, 1995, certain
information with respect to each person (other than directors and executive
officers) who, to the knowledge of the Company, may be deemed the beneficial
owner of more than 5% of the shares of Company's outstanding common stock (the
"Johnston Shares"), its only class of equity securities:
<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Number of Shares Beneficially Owned Percent of Class
------------------------------------ ----------------------------------- ----------------
<S> <C> <C> <C>
Redlaw Industries, Inc. (1) 4,264,368 40.4%
174 Stanley Street
Brantford, Ontario
Canada N3S 7S3
Dimensional Fund Advisors, Inc. (2) 661,573 6.3%
1299 Ocean Avenue
Santa Monica, California 90401
</TABLE>
(1) These Johnston Shares are owned by GRM Industries, Inc., a Tennessee
corporation and wholly-owned subsidiary of. Redlaw is a holding company
incorporated in Ontario, Canada, and its stock is traded on the American
Stock Exchange. Galtaco, a holding company incorporated in Ontario,
Canada, owns approximately 8.9% of the outstanding shares of common
stock of Redlaw (32.7% if Galtaco were to exercise its warrants to
acquire Redlaw shares). Galtaco's stock is traded on the Toronto Stock
Exchange. David L. Chandler, Chairman and Chief Executive Officer of
the Company, owns approximately 42.1% of the outstanding stock of Redlaw
and may be deemed to be the beneficial owner of the Shares owned by
Redlaw.
(2) As of December 31, 1994, based upon information contained in Schedule 13G
filed by Dimensional Fund Advisors, Inc.
26
<PAGE> 29
The following table sets forth, as of September 25, 1995, with respect to
the beneficial ownership of shares of common stock of the Company and shares of
common stock of Jupiter National (the "Jupiter National Shares") by each
director of the Company, by each executive officer of the Company identified in
the Summary Compensation Table on page 7 below, and by all directors and
officers of the Company as a group.
<TABLE>
<CAPTION>
JOHNSTON COMMON STOCK JUPITER NATIONAL COMMON STOCK
--------------------- -----------------------------
NUMBER OF SHARES NUMBER OF SHARES
NAME OWNED BENEFICALLY (1) PERCENT OF CLASS OWNED BENEFICIALLY(1) PERCENT OF CLASS
---- --------------------- ---------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Gerald B. Andrews 225,325(2) 02.1% -- --
J. Reid Bingham 10,500 * 1,000 *
David L. Chandler 4,762,943(3) 43.4% 1,203,398(4) 58.3%
Larry L. Galbraith 72,738 * -- --
Roger J. Gilmartin 92,450(5) * -- --
William J. Hart 18,007 * 1,349 *
Gaines R. Jeffcoat 26,434 * -- --
John W. Johnston -- -- -- --
C.J. Kjorlien 56,625(6) * -- --
All directors and officers 5,411,232(7) 49.3% 1,205,684(8) 58.4%
as a group (12 Persons)
</TABLE>
(1) Less than 1%.
(2) Of the Johnston Shares held by Mr. Andrews 150,000 Shares are subject to
stock options.
(3) Includes Johnston Shares owned by Redlaw and its wholly owned subsidiary
GRM Industries, Inc., as set forth in the preceding table. Mr. Chandler
may be deemed to be a beneficial owner of those Shares by virtue of his
relationship with Redlaw as set forth in Note 1 of the preceding table.
Of the Johnston Shares held by Mr. Chandler, 180,000 Shares are subject
to stock options.
(4) Includes Jupiter National Shares owned by the Company (1,051,354 Shares
of common stock). Mr. Chandler may be deemed a beneficial owner of
those Shares by virtue of his relationship with the Company. This also
includes 7,600 Jupiter National Shares held in the account of Mr.
Chandler's daughter, Allyn P. Chandler, with regard to which Mr. Chandler
may be deemed to have shared beneficial ownership. Of the Jupiter
National Shares held by Mr. Chandler, 144,444 Shares are subject to
stock options.
(5) Of the Johnston Shares held by Mr. Gilmartin, 63,760 Shares are subject
to stock options.
(6) Of the Johnston Shares held by Mr. Kjorlien, 22,500 Shares are subject to
stock options.
(7) Includes Johnston Shares subject to stock options as indicated for the
individuals, and an aggregate of 416,250 Shares are subject to stock
options for the group.
(8) Includes 144,444 Jupiter National Shares subject to stock options.
27
<PAGE> 30
Item 13. Certain Relationships and Related Transactions
Johnston and Jupiter National (or certain of their respective
subsidiaries) have entered into a number of joint arrangements and
transactions. Wellington Sears received approximately $715,000 and $220,000
from Johnston for finishing services rendered during fiscal 1995 and fiscal
1994, respectively. In addition, Wellington Sears paid approximately
$1,718,000 and $545,000 to Johnston in respect of products and services
purchased from Johnston during fiscal 1995 and fiscal 1994, respectively.
Trade receivables from Johnston were approximately $146,000 and $86,000,
respectively, at June 30, 1995 and June 30, 1994. Amounts payable to Johnston
at June 30, 1995 and June 30, 1994, were approximately $116,000 and $38,000,
respectively.
Redlaw acts as a Canadian Broker and/or distributor for a number of
subsidiaries of both Johnston and Jupiter National and, in that capacity,
earns commissions from the Company. Redlaw received approximately $80,010 and
$15,635 from commissions involving Southern Phenix Textiles during fiscal 1995
and fiscal 1994, respectively. In addition, with regard to other Johnston
subsidiaries, fiscal year 1995 commissions to Redlaw totaled approximately
$13,510 from Opp and Micolas Mills and some $6,225 from Tech Textiles USA.
Jupiter National's subsidiary Wellington Sears paid approximately $52,590 and
$4,750 to Redlaw as commissions on sales into Canada during fiscal 1995 and
fiscal 1994, respectively.
Mr. Kjorlien has an option expiring in 1996 which permits him to purchase
22,500 shares of the Company s Common Stock at a price of $3.22.
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements
The financial statements have been previously filed within
Exhibit 13(e) of the original Form 10-K filed by the Company on September 28,
1995, as provided in Item 8 hereof:
- Independent Auditors' Report.
28
<PAGE> 31
- Consolidated Balance Sheets as of June 30, 1995 and 1994.
- Consolidated Statements of Income for the fiscal years ended
June 30, 1995, 1994, and 1993.
- Consolidated Statements of Stockholders' Equity for the fiscal
years ended June 30, 1995, 1994, and 1993.
- Consolidated Statements of Cash Flows for the fiscal years
ended June 30, 1995, 1994, and 1993.
- Notes to Consolidated Financial Statements.
2. Financial Statement Schedules
The financial statement schedules have been previously filed
within Exhibit 13(e) of the original Form 10-K filed
by the Company on September 28, 1995, as provided in Item 8
hereof.
(b) Reports on Form 8-K
There were no reports on Form 8-K during the last quarter
of the fiscal year ended June 30, 1995.
(c) Exhibits
*3.1(a) - Certificate of Incorporation of Registrant.
*(b) - Certificate of Amendment of Registrant's
Certificate of Incorporation dated
December 20, 1993.
*3.2 - By-Laws of Registrant.
*10.2(a) - Third Amended and Restated Credit and
Security Agreement dated as of January
31, 1995 among Johnston Industries, Inc.,
Southern Phenix Textiles, Inc., Opp and
Micolas Mills, Inc., The Chase Manhattan
Bank, N. A., NationsBank of North
Carolina, N. A. and Comerica Bank,
Exhibit 10 to Registrant's Quarterly
Report on Form 10-Q for the quarter ended
March 31, 1995 is incorporated therein by
reference.
+*10.3(a) - Registrant's Executive Insurance Plan, as
amended and restated effective May 21,
1984.
+*(b) - Letter to Participants dated March 1,
1989 in Registrant's Executive Insurance
Plan setting forth revisions thereto.
29
<PAGE> 32
+*10.4 - Registrant's Salaried Employees Pension
Plan, as amended and restated effective
July 1, 1989. Exhibit 10.4 to
Registrant's Annual Report on Form 10-K
for the fiscal year ended June 30, 1991
is incorporated herein by reference.
+*10.5 (a) - Amended and Restated Stock Incentive Plan
for Key Employees of the Registrant and its
Subsidiaries.
+*10.5 (b) (i) Employee Stock Purchase Plan effective
October 15, 1990 (with 1991 and 1992
amendments). Exhibit 10.5(b)(i) to
Registrant's Annual Report Form 10-K for
the year ended June 30, 1992 is
incorporated by reference.
+*(b) (ii) - Amendment dated October 29, 1992 to
Employee Stock Purchase Plan. Exhibit
10.5(b)ii to Registrant's Annual Report
Form 10-K for the year ended June 30,
1993 is incorporated by reference.
+*(b) (iii) - Amendment dated December 17, 1993 to
Employee Stock Purchase Plan.
+*(b) (iv) - Amendment dated January 24, 1995 to
Employee Stock Purchase Plan.
+*10.6(a) - Employment Agreement with Gerald B.
Andrews dated as of October 17, 1992.
Exhibit 10.6(b) to Registrant's Annual
Report on Form 10-K for the fiscal year
ended June 30, 1993 is incorporated
herein by reference.
+*(b) (i) - Employment Agreement with David L.
Chandler effective as of January 1, 1990.
Exhibit 10.6(d)(1) to Registrant's Annual
Report on Form 10-K for the fiscal year
ended June 30, 1992 is incorporated
herein by reference.
+*(b) (ii) - Trust Agreement dated as of February 12,
1991, with Chemical Bank & Trust Company
and David L. Chandler. Exhibits
10.6(d)(2) to Registrant's Annual Report
on Form 10-K for the fiscal year ended
June 30, 1992 is incorporated herein by
reference.
+*(c) - Employment Agreement with Roger J.
Gilmartin dated April 22, 1993. Exhibit
10.6(d) to Registrant's Annual Report on
Form 10-K for the fiscal year ended June
30, 1993 is incorporated herein by
reference.
30
<PAGE> 33
+*(d) - Employment Agreement with Larry L.
Galbraith dated June 1, 1989. Exhibit
10.6(g) to Registrant's Annual Report on
Form 10-K for the fiscal year ended June
30, 1990 is incorporated herein by
reference.
+*(e) - Employment Agreement with W. I. Henry
dated as of January 1, 1993. Exhibit
10.6(f) to Registrant's Annual Report on
Form 10-K for the fiscal year ended
December 31, 1993 is incorporated herein
by reference.
+*(f) - Employment Agreement with John W. Johnson
dated January 27, 1993. Exhibit 10.6(g)
to Registrant's Annual Report on Form
10-K for the fiscal year ended December
31, 1993 is incorporated herein by
reference.
+*10.7 - Johnston Industries, Inc. Deferred
Payment Plan Trust Agreement dated as of
October 17, 1992 with First Alabama Bank
& Trust Company. Exhibit 10.7 to
Registrant's Annual Report on Form 10-K
for the fiscal year ended December 31,
1993 is incorporated herein by reference.
*11. - Statement of Computation of Per Share
Earnings for the years ended June 30,
1995, 1994 and 1993.
*13. (a) - Quarterly Price Range of Common Stock for
the years ended June 30, 1995 and 1994 is
incorporated from Johnston Industries,
Inc., 1995 Annual Report to the
Stockholders.
*(b) - Financial Highlights for the fiscal years
1995 and 1994 is incorporated from
Johnston Industries, Inc., 1995 Annual
Report to the Stockholders.
*(c) - Management Discussion and Analysis of
Financial Condition and Results of
Operations is incorporated from Johnston
Industries, Inc., 1995 Annual Report to
the Stockholders.
*(d) - Supplementary Data captioned "Quarterly
Information" is incorporated from the
Johnston Industries, Inc., 1995 Annual
Report to the Stockholders.
*(e) - Financial Statements for the year ended
June 30, 1995 and 1994 and for each of
the years in the three-year period ended
June 30, 1995, notes and schedules
thereto and Independent Auditors' Report
is incorporated from the Johnston
Industries, Inc., 1995 Annual Report to
the Stockholders.
31
<PAGE> 34
*21. - List of Subsidiaries of Registrant.
*23. - Consent of Deloitte & Touche LLP.
*27. - Financial Data Schedule (for SEC use only)
- ------------------------------------------------------------------------------
* Previously filed. Each of these exhibits was attached to the original Form
10-K filed by the Company on September 28, 1995, and is incorporated herein by
reference.
+ Management contract or compensatory plan or arrangement required to be filed
as an exhibit to Form 10-K pursuant to Item 14(c).
32
<PAGE> 35
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JOHNSTON INDUSTRIES, INC.
Date: October 27, 1995 By: /s/ David L. Chandler
---------------------
David L. Chandler
Chairman and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Gerald B. Andrews President and Chief October 27, 1995
- ---------------------- Operating Officer and
Gerald B. Andrews Director
/s/ John W. Johnson Chief Financial October 30, 1995
- ---------------------- Officer (Principal
John W. Johnson Accounting Officer)
/s/ David L. Chandler Chairman of the Board October 27, 1995
- ---------------------- and Chief Executive
David L. Chandler Officer (principal
executive officer)
and Director
/s/ J. Reid Bingham Director October 27, 1995
- ----------------------
J. Reid Bingham
/s/ William J. Hart Director October 27, 1995
- ----------------------
William J. Hart
/s/ Gaines R. Jeffcoat Director and October 27, 1995
- ---------------------- Retired Vice President
Gaines R. Jeffcoat
/s/ C. J. Kjorlien Director October 27, 1995
- ----------------------
C. J. Kjorlien
</TABLE>
33
