<PAGE> 1
FORM 10-K/A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
[x] Annual Report for the period from December 31, 1995 to December 28, 1996
[NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
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 OF 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 [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K [ ].
The aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the Registrant on March 14, 1997 was $41,615,807. The
aggregate market value was computed by reference to the closing price of the
stock on the New York Stock Exchange on such date.
<PAGE> 2
For purposes of this response, executive officers, directors and Redlaw
Industries, Inc. are deemed to be affiliates of the Registrant and the holdings
by non-affiliates was computed as 5,840,815 shares.
The number of shares outstanding of the Registrant's Common Stock as of April
15, 1997 was 10,381,174 shares.
DOCUMENTS INCORPORATED BY REFERENCE:
Parts I, II and IV of the Registrant's Annual Report on Form 10-K dated April
11, 1997 and exhibits thereto are incorporated by reference herein.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF JOHNSTON INDUSTRIES, INC.
The Directors of Johnston Industries, Inc. are as follows:
Gerald B. Andrews, age 60, has served as a director of Johnston
Industries, Inc. (the "Company") since 1993. Mr. Andrews has served as Chief
Executive Officer ("CEO") of the Company since December 2, 1995 and as
President since October 1992. Prior to that time, he held senior management
positions at WestPoint Stevens over a period of 38 years, most recently as
Executive Vice President of Merchandising. Mr. Andrews is a Director of Regions
Bank of Columbus, Georgia, the American Textile Manufacturers Institute, the
National Textile Center, and the Columbus, Georgia Chamber of Commerce and
Chattahoochee Valley Health Care Foundation. He also serves on the Board of
Trustees of the Atlanta Christian College. Mr. Andrews term of service on the
Board of Directors expires with the Company's 1997 Annual Meeting of
Stockholders.
J. Reid Bingham, age 51, has served as a Director since 1991. Mr. Bingham
has been General Counsel of Hamilton Bancorp, Inc. and Hamilton Bank, N.A.
since October 1993. Mr. Bingham has been associated with Hamilton Bank, N.A.
since October 1996. He previously was a partner from April 1994 to October
1996 of the law firm of Concepcion, Sexton, Bingham & Urdaneta (formerly
Bingham & Castilla). Prior to this time, he was a partner of the law firm of
Kirkpatrick & Lockhart from April 1989 to April 1994. Mr. Bingham's term of
service on the Board of Directors expires with the Company's 1997 Annual
Meeting of Stockholders.
David L. Chandler, age 70, has served as Chairman of the Board of
Directors of the Company since 1981. Mr. Chandler served as the Company's CEO
from January 1990 through December 2, 1995 and as its President from January
1990 to October 1992. Mr. Chandler was Chairman of the Board of Directors and
CEO of Jupiter National, Inc. ("Jupiter") from June 1990 and January 1991,
respectively, until March 28, 1996. Mr. Chandler has also served as Chairman of
the Board of Redlaw Industries Inc. ("Redlaw") a former manufacturer of
automotive and transportation products, and Redlaw's wholly owned subsidiary GRM
Industries, Inc. ("GRM"), a former manufacturer of ferrous casting products
each for more than five years. Mr. Chandler has been Chairman of the Board of
Directors of Galtaco, Inc. ("Galtaco") since 1959 and was President and CEO of
Galtaco from March 1991 to November 7, 1996. 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 (the "SEC") 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
(the "Exchange Act") and Rules 13d-1, 13d-2, 16a-2 and 16-a3 promulgated
thereunder. Mr. Chandler's term of service on the Board of Directors expires
with the Company's 1997 Annual Meeting of Stockholders.
John A. Friedman, age 61, has served as a Director since 1996. For the
past four years, Mr. Friedman has been engaged in the private practice of law.
Prior to entering private practice Mr. Friedman was a partner in the law firm
of Kaye, Scholer, Fierman, Hays and Handler for 20 years. Mr. Friedman's term
of service on the Board of Directors expires with the Company's 1997 Annual
Meeting of Stockholders.
William J. Hart, age 55, has served as a Director since 1981. Mr. Hart
has been a partner of the law firm of Husch & Eppenberger since January 1997.
From August 1970 to January 1997 he was a partner of the law firm of Farrington
& Curtis, which was merged into the firm of Husch & Eppenberger. Mr. Hart's
term of service on the Board of Directors expires with the Company's 1997
Annual Meeting of Stockholders.
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Gaines R. Jeffcoat, age 75, has served as a Director since 1986. Prior to
Mr. Jeffcoat's retirement on June 30, 1990, he 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. Mr. Jeffcoat was President of Opp for more than five years
prior to that time. Mr. Jeffcoat's term of service on the Board of Directors
expires with the Company's 1997 Annual Meeting of Stockholders.
C. J. Kjorlien, age 81, has served as a Director since 1989. Mr. Kjorlien
also serves as a director of Fieldcrest Cannon, Inc. From June 1974 to May
1989 Mr. Kjorlien was a director of WestPoint Stevens, Inc. (a textile
manufacturer), and from December 1981 until his retirement in December 1986, he
served as President and Chief Operating Officer of WestPoint Stevens. Mr.
Kjorlien's term of service on the Board of Directors expires with the Company's
1997 Annual Meeting of Stockholders.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and persons who beneficially own more than ten percent
of the Company's Common Stock, $.10 par value per share (the "Common Stock"), to
file initial reports of ownership and reports of changes in ownership with the
SEC. Persons subject to these reporting requirements are also required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of copies of the SEC reporting forms furnished
to the Company and written representations from the Company's executive
officers and directors, the Company believes that all required Section 16(a)
reports were timely filed during the fiscal year ended December 28, 1996
("fiscal 1996"), except for Mr. C. J. Kjorlien, a Director of the Company, who
inadvertently failed to report the sale of an aggregate 9,875 shares sold in
four transactions.
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ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND RELATED MATTERS
The following table sets forth the compensation paid by the Company for the
periods indicated to any individual serving as the Company's CEO during fiscal
1996 and to the Named Executive Officers, the four most highly compensated
executive officers (other than the CEO) who earned more than $100,000 during
fiscal 1996.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION (1) LONG TERM
-------------------------------- COMPENSATION
AWARDS
----------------
SECURITIES
UNDERLYING ALL OTHER
SALARY BONUS OTHER ANNUAL COMPEN- OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR(2) ($) (1) ($) SATIONS($) (#) ($) (3)
--------------------------- ------- ------- ----- -------------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
w
David L. Chandler 1996 470,792 22,061 58,731(4) 537,330(5) 88,431
Chairman of the Board 1995 -2 272,500 --- --- --- 100,856
1995 -1 467,600 213,000 46,138(4) 44,444 118,391
1994 390,000 176,788 47,296(4) --- 12,718
Gerald B. Andrews 1996 402,500 --- --- --- 27,173
President and CEO 1995 -2 185,000 --- --- --- 14,161
1995 -1 370,000 200,000 --- --- 15,306
1994 361,945 185,000 --- --- 3,321
Donald L. Massey 1996 187,917 --- --- 18,000 6,024
Vice President-Home 1995 -2 --- --- --- --- ---
Furnishings-Sales and Marketing 1995 -1 --- --- --- --- ---
(6) 1994 --- --- --- --- ---
L. Allen Hinkle 1996 218,750 --- --- 18,000 ---
Vice President-Industrial Fabrics- 1995 -2 100,000 27,528 --- --- ---
Sales and Marketing (6) 1995 -1 100,000 25,850 --- --- ---
1994 --- --- --- --- ---
Larry L. Galbraith 1996 245,000 --- --- 8,000 13,942
Vice President-Special Projects (7) 1995 -2 122,500 --- --- --- 9,496
1995 -1 245,000 35,648 --- --- 15,561
1994 235,000 55,695 --- --- 3,297
</TABLE>
(1) The amounts shown do not include indirect compensation, the value of
which for each executive officer did not exceed the lesser of $50,000
or 10% of the aggregate compensation for such officer.
(2) Compensation data is presented for fiscal 1996, the six-month fiscal
year ended December 31, 1995 ("1995-2"), and the twelve-month fiscal
years ended June 30, 1995 ("1995-1") and 1994.
(3) Except as described herein, all payments relate to the stock purchase
plan described below under the heading Stock Purchase Plan. "All
Other Compensation" for 1995-2 also includes $18,000 representing a
partial payment of premiums under a "split dollar" life insurance
program. Such program was terminated as of December 30, 1995.
(4) Present value of consulting payments in accordance with contractual
provisions which expired December 31, 1996. The payments shown in 1996
represent $23,486 for the period July 1, 1995-December 31, 1995 that
was paid not until August 26, 1996 in the Company's discretion. The
balance of $35,245 is payment for January 1, 1996-September 30, 1996.
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(5) Includes 510,330 ten-year options granted to Mr. Chandler in exchange for
options previously held by Mr. Chandler representing the right to purchase
shares of Jupiter stock. At issuance, these options were equivalent in
value to Mr. Chandler's Jupiter options. Such options were granted in
lieu of cash in conjunction with the Company's acquisition of Jupiter
National, Inc. (the "Jupiter Acquisition") on March 28, 1996.
(6) Messrs. Massey and Hinkle became executive officers of the Company in
April 1996 and January 1995, respectively. Accordingly, only
compensation information is reported for fiscal 1996 for Mr. Massey and
fiscal 1996, 1995-2 and 1995-1 for Mr. Hinkle.
(7) Effective February 1, 1997, Mr. Galbraith resigned from the Company
and his position as the Company's Vice President-Special Projects, the
position Mr. Galbraith held since April 1, 1996.
The following table sets forth certain information concerning options, all
of which are currently exercisable unless otherwise noted, which were granted
during fiscal 1996 to the CEO and the Company's Named Executive Officers.
<TABLE>
<CAPTION>
NAME OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
POTENTIAL VALUE AT
ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
FOR OPTION TERM
---------------
NUMBER OF % OF TOTAL EXERCISE EXPIRATION 0% 5%(2) 10%(2)
SECURITIES OPTIONS PRICE DATE $ $ $
UNDERLYING GRANTED TO ($/SH)(1) -------- --- --------- ---------
OPTIONS EMPLOYEES IN ---------
GRANTED (#) FISCAL YEAR
----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
David L. Chandler 99,816(3) 12.6% 2.50 03/28/06 0 3,058,362 4,127,392
287,360(3) 36.2% 1.98 03/28/06 0 6,933,997 9,419,661
123,154(3) 15.5% 3.62 04/11/06 0 5,438,481 7,369,535
15,000 1.9% 8.25 05/01/06 0 1,509,450 2,047,650
12,000 1.5% 7.50 12/13/07 0 1,098,360 1,489,080
Gerald B. Andrews -- -- -- -- -- -- --
Donald L. Massey 10,000 1.3% 8.25 05/01/06 0 1,006,300 1,365,100
8,000 1.0% 7.50 12/13/07 0 732,240 992,720
L. Allen Hinkle 10,000 1.3% 8.25 05/01/06 0 1,006,300 1,365,100
8,000 1.0% 7.50 12/13/07 0 732,240 992,720
Larry L. Galbraith 8,000 1.0% 8.25 05/01/06 0 805,040 1,092,080
</TABLE>
- ---------------
(1) Based on the closing price of the Common Stock on the date of grant.
(2) These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock and overall market conditions.
There can be no assurance that the amounts reflected in these columns
will be achieved or if achieved will exist at the time of any option
exercise. Option term is for ten years.
(3) Represents ten-year options granted to Mr. Chandler in exchange for
options previously held by Mr. Chandler representing the right to
purchase shares of Jupiter stock. At issuance, these options were
equivalent in value to Mr. Chandler's Jupiter options. Such options were
granted in lieu of cash in conjunction with the Jupiter Acquisition.
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The following table provides information concerning options exercised and
year-end option values for fiscal 1996 with respect to the Company's CEO and
the Named Executive Officers.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE ($) OF
UNEXERCISED UNEXERCISED
OPTIONS/SARS AT IN-THE-MONEY
YEAR-END OPTIONS/SARS AT
SHARES ACQUIRED ON VALUE EXERCISABLE/ YEAR-END EXERCISABLE/
NAME EXERCISE(#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE(1)
- ------------------ ------------------ ------------ -------------------- ---------------------
<S> <C> <C> <C> <C>
David L. Chandler 46,000 297,160 659,330/12,000 2,482,992/---
Gerald B. Andrews --- --- 150,000/--- 49,950/---
Donald L. Massey --- --- 10,000/8,000 ---/---
L. Allen Hinkle --- --- 10,000/8,000 ---/---
Larry L. Galbraith --- --- 8,000/--- ---/---
</TABLE>
(1) Based on the closing sales price for the Common Stock on the New York
Stock Exchange on December 27, 1996 of $7.25 per share.
STOCK INCENTIVE PLAN
GENERAL
The Company's Amended and Restated Stock Incentive Plan for Key Employees
(the "Stock Incentive Plan"), which was approved by the stockholders in
December 1988, authorizes the grant of awards in the form of Incentive Stock
Options ("ISOs") within the meaning of Section 422A of the Internal Revenue
Code of 1986 as amended (the "Code"), Non-Qualified Stock Options ("NQSOs"),
Stock Appreciation Rights ("SARs"), 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 Stock Incentive Plan is administered by the
Stock Option Committee of the Board of Directors (the "Stock Option
Committee"), whose members are not eligible to participate.
INCENTIVE STOCK OPTIONS
An ISO's exercise price may not be less than the fair market value of the
Common Stock 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 Code Section
422A. Additional restrictions apply to ISOs granted to a "10 percent
stockholder" (as such term is defined in Code Section 422A(b)(6)). 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,
except that if employment terminates due to the optionee's death or disability,
the ISO will remain exercisable until the earlier of 12 months after
termination or the ISO's expiration date.
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NON-QUALIFIED STOCK OPTIONS
NQSOs granted under the Stock Incentive Plan (a) may be for such number of
shares, purchase price and term (up to 10 years) as the Stock Option Committee,
in its sole discretion, may determine and (b) become exercisable six months
after date of grant (or later if such committee so determines). Unless the
committee in its sole discretion determines otherwise, an NQSO terminates upon
termination of the optionee's employment, except that if employment terminates
due to the optionee's retirement at or after age 65, disability, or death, the
NQSO will remain exercisable for three months after retirement or disability or
one year after death, unless the NQSO's expiration date occurs sooner.
STOCK APPRECIATION RIGHTS
SARs 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). SARs
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 Stock Incentive Plan provides that the Stock Option 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 Stock Option Committee and which
lapse or may be waived as determined by it.
STOCK PURCHASE PLAN
The Company's stock purchase plan (the "Purchase Plan") provides for the
Company to assist selected key employees and Directors of the Company and its
subsidiaries in purchasing shares of Common Stock; an aggregate of 723,050
shares are currently covered by the Purchase Plan. Shares purchased under the
Purchase Plan may consist of authorized but unissued shares, treasury shares,
or shares purchased in the open market on behalf of the participants under
arrangements approved by the committee. The Purchase Plan is administered by
the Stock Option Committee, whose members are not eligible to participate.
The Stock Option Committee determines the eligible key employees and
directors who will be granted participation in the Purchase 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 Purchase Plan participants to pay for their shares, any
provisions for the payment of cash bonuses to reimburse Purchase 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
Purchase Plan.
The Purchase Plan authorizes the Company to guarantee loans arranged by
the Stock Option Committee for the purchase of shares under the Purchase Plan
up to a maximum of $9,000,000 in aggregate outstanding principal amount of
loans.
The Company has furnished the Purchase Plan 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 lending bank's prime lending rate).
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The Stock Option Committee has also authorized the payment of additional
compensation to Purchase Plan participants who have purchased the 723,050
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 Purchase Plan participants and the Company, the Company's obligation to pay
such cash bonuses terminates upon the Purchase Plan participant's termination
of employment for any reason.
The Purchase Plan is neither qualified under Code Section 401(a) nor
subject to the provisions of the Employee Retirement Income Security Act of
1974.
The amount of any cash bonus received under the Purchase 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).
SALARIED EMPLOYEES' PENSION PLAN AND EXECUTIVE SUPPLEMENTAL
RETIREMENT PLAN
The Company's a non-contributory Salaried Employees' Pension Plan (the
"Pension Plan") covers substantially all salaried employees who have been
employed on a full-time basis for at least one year. Eligible employees 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 the Pension Plan vest proportionately at 20% per year after an
employee has been credited with three years of service under the Pension Plan.
Employees attain 100% 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 elects to receive his
or her distribution in the form of a single life annuity, the amount of his
annual benefit upon retirement will be the sum of (a) 36% (assuming 20 or more
years of service) of average annual earnings and (b) 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 $120,000 at normal
retirement date for participants whose normal retirement dates fall during the
plan year January 1, through December 31, 1996.
EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN
The Company also offers a retirement supplement for certain of its
executives through the Executive Supplemental Retirement Plan ("Executive
Plan") established effective July 1, 1995. Senior executives of the Company
who are selected by the Compensation Committee of the Board of Directors (the
"Compensation Committee") are eligible to participate in this plan. Current
eligible participants are Messrs. Andrews and Galbraith, as well as two other
officers of the Company. The Executive Plan replenishes a portion of benefits
lost due to restrictions placed by current law on the amount of earnings lost
due to restrictions placed by current law on the amount of earnings used to
determine benefits under the Salaried Plan. The amount of the supplement is
equal to (1) times (2), plus (3), where:
(1) is the "past service portion" - the pro forma Salaried Plan
benefit determined based on service as of June 30, 1995, and
earnings limited to $235,840 (indexed for plan years on and after
July 1, 1994) and annual benefits limited to $90,000 (indexed for
plan years on and after July 1, 1992), less the actual Salaried Plan
benefit (under then current Code limitations on earnings and
benefits) based on service as of June 30, 1995;
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(2) is the ratio of years of employment from July 1, 1995, to
termination date to years of employment from July 1, 1995, to Normal
Retirement Date; and
(3) is the "future service portion"-- the "total service portion"
less the "past service portion." The "total service portion" is the
pro forma Salaried Plan benefit as of the date of termination based
on service at date of termination and earnings and annual benefits
limited as described in (1) above, less the actual Salaried Plan
benefit (under then current Code limitations on earnings and annual
benefits) as of date of termination.
The benefit is payable upon termination of employment in the same form as
the benefit payable from the Salaried Plan or at the Company's discretion, in
another equivalent form. The Executive Plan also provides a death benefit of
the accumulated supplemental plan benefit to the executive's beneficiary in the
event of death prior to full payment of the plan's benefit. The Executive Plan
is unfunded.
Mr. Chandler does not participate in the Executive Plan but does have a
supplemental payment agreement to receive $8,333 per month for each month
worked from January 1, 1990, through termination of his employment agreement,
payable starting at termination date. The agreement is funded through a rabbi
trust.
The following table sets forth the estimated annual normal retirement
benefits payable under the Salaried Employees Pension Plan and Executive
Supplemental retirement Plan based on 1996 Plan limits upon (assuming Social
Security Average wages of $45,000 per year) for various combinations of
pre-retirement remuneration and years of benefit service:
<TABLE>
<CAPTION>
AVERAGE ANNUAL YEARS OF BENEFIT SERVICE
SALARY ------------------------
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
150,000 17,438 34,875 52,313 69,750 73,688 77,625 81,563
175,000 20,625 41,250 61,875 82,500 87,375 92,250 97,125
200,000 23,813 47,625 71,438 95,250 101,063 106,875 112,688
225,000 27,000 54,000 81,000 108,000 114,750 120,608 120,608
250,000 30,188 60,375 90,563 120,608 120,608 120,608 120,608
300,000 30,800 61,101 92,401 120,608 120,608 120,608 120,608
400,000 30,800 61,101 92,401 120,608 120,608 120,608 120,608
500,000 30,800 61,101 92,401 120,608 120,608 120,608 120,608
730,000 30,800 61,101 92,401 120,608 120,608 120,608 120,608
</TABLE>
- ------------------
The years of benefit service under the Pension Plan as of December 28,
1996 for Messrs. Chandler, Andrews, Galbraith, Massey and Hinkle were 24, 4,
25, 4 and 0, 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 employment; if employment
terminates later than normal retirement date, payments will be adjusted to
provide benefits 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
actuarially equivalent to the benefits to which he would be entitled if he had
elected the single life annuity method.
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EXECUTIVE INSURANCE PLAN
The Company's contributory Executive Insurance Plan (the "Insurance Plan")
covers selected executives of the Company and its subsidiaries. The Insurance
Plan is administered by an administrative committee consisting of the CEO, the
Vice President/Finance and the Secretary/Treasurer and provides life insurance
coverage for participants in an amount equal to approximately three times
annual compensation up to a maximum annual salary of $100,000.
The Insurance Plan provides for benefits to the executive or his
beneficiaries in the event of death before retirement, termination of
employment, disability, termination of the Insurance 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 Insurance 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 ten-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.
EMPLOYMENT AGREEMENTS
Mr. Chandler's employment agreement entitles him to receive a base salary
of not less than $390,000, as well as any bonuses and additional compensation
amounts as determined by the Compensation Committee. The agreement currently
in effect may be terminated by either Mr. Chandler or the Company upon 60 days'
prior written notice.
Mr. Andrews' employment agreement provided for his employment as President
of the Company for an initial period extending until October 1995 and
continuing thereafter from year to year at a base salary of not less than
$280,000, with payments to a deferred benefit trust of $70,000 minimum each
year and annual incentive compensation in accordance with the terms of an
incentive compensation plan, which could also be paid into the deferred benefit
trust.
Mr. Massey's employment agreement provided for his employment with the
Company for an initial period extending until December 31, 1994 and continuing
thereafter from year to year at a base salary of not less than $140,000.
On July 26, 1995, the Company's former Wellington Sears subsidiary entered
into an employment agreement with L. Allen Hinkle effective November 19, 1992.
The employment agreement, which has been assigned to the Company, provides for
an initial term of three years, a second term of 18 months, and successive
one-year terms thereafter. Mr. Hinkle's employment agreement provided for Mr.
Hinkle to receive an annual salary of at least $200,000 plus such bonuses as
the Company may determine.
Mr. Galbraith's employment agreement provided for his employment as
President and CEO of the Company's former Southern Phenix Textiles, Inc.
subsidiary until June 30, 1998 and entitled him to a base salary of not less
than $245,000 a year and such additional compensation as determined by the
Company's CEO. Upon Mr. Galbraith's resignation from employment with the
Company effective February 1, 1997, the Company agreed to continue to pay Mr.
Galbraith's benefits (excluding long-term disability coverage) through December
31, 1997. In addition, as of February 1, 1997, the Company agreed to pay Mr.
Galbraith an amount representing one-half of the salary to which Mr. Galbraith
would have been entitled to receive over the seventeen remaining months of the
employment agreement, with such amount to be paid to Mr. Galbraith ratably over
the remaining eleven months of 1997.
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DIRECTORS' COMPENSATION
Pursuant to the Company's director compensation policy, each Director who
is not an officer or employee of or consultant to the Company is paid an annual
Director's fee of $12,000 plus $1,000 for each meeting of the Board or any
committee thereof at which such Director is in attendance. All directors are
reimbursed for expenses incurred in attending Board and committee meetings.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Bingham, Friedman and Hart served on the Compensation Committee
during fiscal 1996; none of such Directors are employees or officers of the
Company, and there were no Compensation Committee interlocks.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL STOCKHOLDERS
The following table sets forth as of the Record Date certain information
concerning ownership of Common Stock by: (i) each person who is known by the
Company to own beneficially more than 5% of the Common Stock, (ii) each
Director individually, (iii) the Company's CEO and each of the Named Executive
Officers, and (iv) all directors and executive officers of the Company as a
group. The determinations of "beneficial ownership" of Common Stock are based
upon Rule 13d-3 under the Exchange Act. Such rule provides that shares will be
deemed "beneficially owned" where a person has, either solely or in conjunction
with others, the power to vote or to direct the voting of shares and/or the
power to dispose, or to direct the disposition of, shares or where a person has
the right to acquire any such power within 60 days after the date such
"beneficial ownership" is determined.
<TABLE>
<CAPTION>
AMOUNT OF PERCENT
BENEFICIAL OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER OR IDENTITY OF GROUP OWNERSHIP(1) SHARES
--------------------------------------------------------- ------------ --------------
<S> <C> <C>
Gerald B. Andrews(2)(3) .................................... 234,525 2.3%
J. Reid Bingham(4) ......................................... 10,500 *
David L. Chandler(3)(5) .................................... 4,785,448 46.1%
John A. Friedman(6) ........................................ 1,000 *
Larry L. Galbraith(3)(7) ................................... 68,113 *
William J. Hart(8) ......................................... 18,007 *
L. Allen Hinkle(3) ......................................... 18,550 *
Gaines R. Jeffcoat(9) ...................................... 26,434 *
C.J. Kjorlien(10) .......................................... 2,000 *
Donald L. Massey(3) ........................................ 35,850 *
All directors and officers as a group (14 persons) (11) .... 5,413,389 52.1%
Redlaw Industries, Inc.(12) ................................ 3,781,829 36.4%
Dimensional Fund Advisors, Inc.(13) ........................ 785,798 7.6%
</TABLE>
__________
* Less than 1%.
(1) Unless otherwise indicated, the named individual or entity has sole
voting and investment power with respect to all shares shown as
beneficially owned by such person. For each
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beneficial owner, the number of shares outstanding and the percentage
of stock ownership includes the number of common and common
equivalent shares (including options and warrants exercisable within
60 days) owned by such individual or entity.
(2) Includes 150,000 shares issuable pursuant to stock options that are
currently exercisable.
(3) The address of Messrs. Andrews, Chandler, Galbraith, Hinkle and
Massey is 105 Thirteenth Street, Columbus, Georgia 31901.
(4) The address of Mr. Bingham is 3750 NW 87th Avenue, 6th Floor, Miami,
Florida 33178.
(5) Includes 3,781,829 shares owned by Redlaw Industries, Inc. ("Redlaw")
and its wholly owned subsidiary GRM Industries, Inc. ("GRM"), of which
Mr. Chandler may be deemed to be a beneficial owner of those shares by
virtue of his relationship with Redlaw as set forth in footnote 11
below, 671,330 shares issuable pursuant to stock options which are
currently exercisable or exercisable within 60 days.
(6) The address of Mr. Friedman is 430 Park Avenue, 4th Floor, New York,
New York 10022.
(7) Effective February 1, 1997, Mr. Galbraith resigned from the Company
and his position as the Company's Vice President-Special Projects, the
position Mr. Galbraith held April 1, 1996.
(8) The address of Mr. Hart is 750 N. Jefferson, Springfield, Missouri
65802.
(9) The address of Mr. Jeffcoat is 819 Brookside Drive, Opp, Alabama
36467.
(10) The address of Mr. Kjorlien is 86 Gomez Road, Hobe Sound, Florida
33455.
(11) Includes an aggregate of 1,078,330 shares issuable pursuant to stock
options which are currently exercisable or exercisable within 60 days.
(12) Redlaw Industries, Inc. ("Redlaw") reports its address as 174 Stanley
Street, Brantford, Ontario, Canada N3S7S3. These shares are owned by
GRM Industries, Inc., a Tennessee corporation and wholly-owned
subsidiary of Redlaw. Redlaw is a holding company incorporated in
Ontario, Canada, and its stock is traded on the American Stock
Exchange. David L. Chandler, Chairman of the Company, owns
approximately 55.4% of the outstanding stock of Redlaw and may be
deemed to be the beneficial owner of the shares owned by Redlaw. Mr.
Chandler is Chairman of the Board, President and Chief Executive
Officer of both Redlaw and GRM.
(13) Dimensional Fund Advisors, Inc. ("Dimensional") reports its address
as 1299 Ocean Avenue, Santa Monica, California 90401. Dimensional
reports sole voting power with respect to 491,886 shares and sole
dispositive power with respect to all 785,798 shares. Dimensional
reports that its officers also serve as officers of DFA Investment
Dimensions Group, Inc. (the "Fund") and The DFA Investment Trust
Company (the "Trust"), which are each open-end management investment
companies registered under the Investment Company Act of 1940. In
their capacities as officers of the Fund and the Trust, these persons
vote the 207,987 shares owned by the Fund and the 85,925 shares owned
by the Trust. The foregoing information is based on a Schedule 13G
dated February 12, 1997.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
David L. Chandler was Chairman of the Board and CEO of Jupiter National,
Inc. ("Jupiter") from June 1990 and January 1991 respectively, until March 28,
1996. Mr. Chandler has also served as Chairman of the Board of Redlaw and GRM
Industries, Inc. each for more than five years. Mr. Chandler has been Chairman
of the Board of Directors of Galtaco, since 1959 and was President and CEO of
Galtaco from March 1991 to November 7, 1996.
In May 1994, Redlaw, a stockholder, became the commissioned sales agent in
Canada for sales of textile products manufactured by the Company. The Company
paid Redlaw approximately $172,000, $76,000, $152,000 related to Redlaw's
commissioned sales business for the year ended December 28, 1996, the six
months ended December 30, 1995, and the fiscal year ended June 30, 1995
respectively. At December 28, 1996 and December 30, 1995, accounts receivable
from Redlaw were $318,000 and $13,000 respectively and consigned inventory
placed with Redlaw in Canada was $426,000 and $0 repsectively.
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<PAGE> 14
JOHNSTON INDUSTRIES, INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the undersigned has duly caused this report to be filed on its behalf by the
undersigned hereto duly authorized.
JOHNSTON INDUSTRIES, INC.
Dated: April 25, 1997 By: /s/John W. Johnson
------------------------------
John W. Johnson
Vice President
Chief Financial Officer
By: /s/John W. Johnson
------------------------------
John W. Johnson
(Principal Accounting Officer)
14
