<PAGE> 1
FORM 10-K/A
(AMENDMENT NO. 1)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED FEBRUARY 29, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______________ to _______________
Commission file number: 0-2572
STEEL CITY PRODUCTS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 55-0437067
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1001 SANTERRE DRIVE
GRAND PRAIRIE, TEXAS 75050
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (214) 660-4499
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Name of each exchange on which registered
- - ------------------- -----------------------------------------
COMMON STOCK, $0.01
PAR VALUE PER SHARE 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. [X]
Aggregate value at May 1, 1996 of the voting stock held by non-affiliates of
the registrant: $157,586
At May 1, 1996, the registrant had 3,238,061 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
Page No. 1 of 10
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The by-laws of the Company currently provide for such number of directors (but
no less than five) as is determined from time to time by the Board of
Directors. Certain vacancies arose in December 1995 and July 1996, and the
Board of Directors elected to set the number of directors at six. The
following table lists the names and ages of the directors, and the year in
which each was first elected a director of the Company or its predecessor.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
- - ---- --- ---------
<S> <C> <C>
Bernard H. Frank 75 1993
John D. Abernathy 58 1996
Terrance W. Allan 42 1993
Mark Auerbach 58 1996
Robert M. Davies 45 1989
Joel S. Lever 44 1996
</TABLE>
BUSINESS HISTORY OF DIRECTORS
Messrs. Frank and Allan have been executives of the Company for more than the
last five years. Mr. Frank is a founder of the business and has been
associated with it for approximately 46 years. For more than the last five
years, Mr. Frank has been Chief Executive Officer and In May 1994, he was
elected Executive Vice President and Chief Operating Officer of the Company's
parent, Oakhurst Company, Inc. ("Oakhurst"). Mr. Allan has been with the
Company since 1987 and was elected Executive Vice President in January 1993.
Mr. Abernathy. Mr. Abernathy has been Executive Director of Patton Boggs,
L.L.P., a Washington DC law firm, since January 1995. From March 1991 to
February 1994 he was the Managing Director of Summit, Solomon & Feldesman, a
New York City law firm, and from July 1983 until June 1990, Mr. Abernathy was
Chairman and Chief Executive Partner of BDO Seidman, a public accounting firm.
Mr. Abernathy is a director of Barringer Technologies, Inc. a manufacturer of
high sensitivity analytical instruments for chemical sensing, and Wahlco
Environmental Systems, Inc., an environmental equipment and services company,
and also serves as a director of Oakhurst.
Mr. Auerbach. Mr. Auerbach has been Chairman, President and Chief Executive
Officer of Oakhurst and Chief Financial Officer of the Company since December
1995. He was elected a director in July 1996. He has also been Senior Vice
President and Chief Financial Officer since April 1993 of Central Lewmar, L.P.,
a fine paper merchant. From September 1992 until April 1993, he was a partner
of Marron Capital, L.P., an investment banking company. Prior to that, he was
President, Chief Executive Officer and Chairman of the Board of Implant
Technology, Inc., a manufacturer of artificial hip systems, from 1990 to 1992.
He is a director of Pharmaceutical Resources, Inc., a generic drug
manufacturer. Mr. Auerbach is a certified public accountant.
Mr. Davies. Mr. Davies is also a director of Oakhurst. Mr. Davies has been a
Vice President of Wexford Capital Corporation, which acts as the investment
manager to several private investment funds since 1994. Since November 1,
1995, Mr. Davies has also served as Executive Vice President of Wexford
Management LLC, a private investment management company. From September 1993
to May 1994 he was a Managing Director of Steinhardt Enterprises, Inc., an
investment banking company, and from 1987 to August 1993, he was Executive Vice
President of The Hallwood Group Incorporated, a merchant banking firm. Mr.
Davies is a director of Wahlco Environmental Systems, Inc., an environmental
equipment and services company.
Mr. Lever. Mr. Lever is also a director of Oakhurst. Mr. Lever has been
associated with the law firm of Kurzman & Eisenberg or its predecessor since
1980, and became a member of the firm in 1984. Mr. Lever specializes in
transactional business matters with particular emphasis on fine arts
publishing, distribution and investment, and the sale and acquisition of
commercial real estate entities. Prior to 1980, Mr. Lever was an Assistant
District Attorney for Kings County, New York.
- 2 -
<PAGE> 3
SECTION 16(a) REPORTS.
Based solely on its review of copies of reports filed by reporting persons of
the Company pursuant to Section 16(a) of the Securities Exchange Act of 1934,
or a written representation from certain reporting persons that no Form 5
filing was required for such person, the Company believes that all filings
required to be made by reporting persons of the Company were timely made in
accordance with the requirements of that Act.
ITEM 11. EXECUTIVE COMPENSATION.
This item contains information about compensation, stock options grants and
employment arrangements and other information concerning certain of the
executive officers and the directors of the Company.
SUMMARY COMPENSATION TABLE
The following table sets forth the compensation the Company paid or accrued for
services rendered in the Company's 1996, 1995 and 1994 fiscal years by the
Chief Executive Officer and the only other executive officer of the Company
whose compensation exceeded $100,000 in fiscal 1996 and who was serving at the
end of the 1996 fiscal year.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation Awards
---------------------------------------- -----------------------------
Other
Annual Securities All
Compen- Underlying Other
Name and Principal Salary Bonus sation Options** Compensation
Position Year ($) ($) ($)* (#) ($)
- - ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bernard H. Frank (1) 1996 82,775 -- -- 19,151(2)
Chairman & Chief Executive 1995 100,100 55,779 -- 27,500 21,029
Officer 1994 80,340 51,000 -- -- 23,212
Terrance W. Allan 1996 106,160 -- -- 5,000 4,797(3)
Executive Vice President 1995 110,855 21,746 -- 6,000 6,498
1994 109,913 19,600 -- -- 7,067
</TABLE>
- - ---------------
* Excludes perquisites and other personal benefits if the aggregate
amount of such items of compensation was less than the lesser of
either $50,000 or 10% of the total annual salary and bonus of the
named executive officer.
** These options relate to shares of Oakhurst, not the Company.
(1) Mr. Frank, who is also Executive Vice President and Chief Operating
Officer of Oakhurst, and Mr. Allan are compensated only by the Company
except with respect to stock options and stock awards.
(2) This amount consists of (i) $5,243 paid by the Company into its 401(k)
plan for the account of Mr. Frank, an amount equal to 25% of his
contributions until such contribution was discontinued in October,
1995; and (ii) $6,504, $5,508 and $1,896 that Mr. Frank received under
three substantially identical agreements amended in 1987 in
consideration of the waiver by Mr. Frank of his bankruptcy claims for
annuity rights in the Company's predecessor's bankruptcy.
(3) This amount represents a contribution by the Company to its 401(k)
plan for the account of this executive, an amount equal to 25% of his
contributions until such contribution was discontinued in October,
1995.
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<PAGE> 4
COMPENSATION AGREEMENTS
Mr. Frank and Mr. Allan. The Company has three-year employment agreements
with each of Messrs. Frank and Allan (sometimes hereinafter referred to as the
"executive") commencing September 1, 1993 that provide for base salaries of
$100,000 (Mr. Frank) and $96,200 increasing to $115,050 (Mr. Allan). The
agreements provide for the payment of annual management bonuses based upon the
defined profits of the Company's operating division, with Mr. Frank entitled to
a minimum bonus of fifteen percent of base salary. The aggregate amount of
such management bonuses payable each year to the executives and to all other
executives is not to exceed 8% of such defined profits and the allocation
thereof is made by the Compensation Committee of the Company based on
recommendations of Mr. Frank as Chief Executive Officer. Mr. Allan is also
entitled to an executive bonus calculated as a percentage of defined annual
profits of the Company that exceed $2,000,000.
In the event of non-renewal of the agreements, the executive is entitled to an
aliquot portion of the bonuses he would have earned during the year of
non-renewal, since the contract year does not coincide with the fiscal year of
the Company. The agreements also provide that if the executive's employment
terminates by reason of his death or disability, he is entitled to the greater
of two years' salary (one year for Mr. Allan) or the salary for the balance of
the term of the agreement and the minimum bonus for such period in the case of
Mr. Frank and the management bonus that would otherwise have been paid in the
case of Mr. Allan. If the executive's employment is otherwise terminated
without cause, he is entitled to his salary and bonuses for the greater of one
year or the balance of the term of the agreement.
The agreements provide for car allowances, and the executives are eligible to
participate in all defined contribution plans, survivor and supplemental
benefits, short and long-term disability benefits, and all other benefit plans
and perquisites available now or in the future to the senior executives of the
Company.
The agreements also provide for certain termination rights in the event of a
change in control of the Company. Change in control is defined to include
certain changes in the make-up of the Company's board of directors or a sale
of the Company's assets or business. Each executive has the right to terminate
his employment within a defined period (ranging up to one year) following a
change in control and (i) to be paid his base salary for a period of up to 24
months following such termination; (ii) to continue to receive for a like
period the benefits that he is entitled to receive under his agreement and
(iii) to be paid 25% of base salary in lieu of all bonus entitlement. The
agreements also provide for substantially the same payments and benefits in the
event the executive's employment is terminated by the Company without cause as
a result of a change in control. In the event of any termination other than
for cause, or voluntary resignation in the absence of a change in control, the
executive's options become fully exercisable for a period of seven months
following termination. If a change in control had occurred on June 1, 1996,
and if each of Messrs. Frank and Allan had exercised his rights of termination,
payments by the Company would have been approximately $550,000 in the
aggregate.
Mr. Frank. Mr. Frank also receives compensation of $13,908 per year, in the
aggregate, under three substantially identical agreements amended in 1987 in
consideration of the waiver by Mr. Frank of his bankruptcy claims for annuity
rights in the Company's predecessor's bankruptcy. The amended agreements
provide for payments to be made for a period of fifteen years subsequent to
January 1988 of $6,504, $5,508 and $1,896 per year for the three agreements,
respectively.
STOCK OPTION GRANTS. During fiscal 1996, no option grants relating to the
Company's shares were made to any of the named executives officers. Oakhurst
made an option grant to Mr. Allan covering 5,000 shares of Oakhurst common
stock at an exercise price of $1.25 per share.
--------------------------
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<PAGE> 5
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
During fiscal 1996, no option grants were made to, and there were no option
exercises by, any of the named executive officers.
The following table sets forth certain information at February 29, 1996, the
Company's fiscal year end, based upon (i) the average of the bid and asked
price per share of the Company's common stock ($0.06) on that date, and (ii)
the closing price per share of Oakhurst's common stock, ($1.187) on that date,
as they relate to stock options held at that date by each of the individuals
named in the Summary Compensation Table. The "value" of unexercised
in-the-money options is the difference between the market value of the common
stock subject to the options at February 29, 1996 and the exercise (purchase)
price of the option shares, assuming the options were exercised and the shares
sold on that date for such market value. None of the options relating to the
Company's common stock were in the money at February 29, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options at
Options at Fiscal Year End Fiscal Year End
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
THE COMPANY'S COMMON STOCK
Bernard H. Frank 23,141 -- -- --
Terrance W. Allan 9,257 -- -- --
OAKHURST COMMON STOCK
Bernard H. Frank 48,327 -- -- --
Terrance W. Allan 13,415 5,916 -- --
</TABLE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION FOR THE FISCAL
YEAR ENDED FEBRUARY 29, 1996
This report has been prepared by the Compensation Committee of the Board of
Directors of the Company and addresses the Company's compensation policies with
respect to the Chief Executive Officer and executive officers of the Company in
general for the 1996 fiscal year. Except for Mr. Frank, each member of the
Committee is a non-employee director.
COMPENSATION POLICY
The overall intent of the Committee in respect of executive officers is to
establish levels of compensation that provide appropriate incentives in order
to command high levels of individual performance and thereby increase the
value of the Company to its stockholders, and that are sufficiently competitive
to retain and attract the skills required for the success and profitability of
the Company. The principal components of executive compensation are salary,
bonus and stock options.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
The chief executive officer's salary was determined in the same manner as Mr.
Allan's, described below.
OTHER EXECUTIVE OFFICERS
Each executive is compensated under a written employment agreement that was
negotiated between the executive and the chief executive officer of Oakhurst
Company, Inc., the Company's parent ("Oakhurst"). The agreement was reviewed
by Oakhurst's Compensation Committee and approved by the Company's Compensation
Committee with Mr. Frank abstaining from voting on his own agreement.
MESSRS. FRANK AND ALLAN
Salary. Both executives are long term employees of the Company and its
predecessor, and Mr. Frank is a founder of the original business. Accordingly,
the salary of each executive was based on the level of his prior salary and
- 5 -
<PAGE> 6
the subjective judgement of the members of the Committee as to the value of the
executive's past contribution and potential future contribution to the
profitability of the business.
Bonuses. No bonuses were paid in or on account of services performed in fiscal
1996.
Stock Options. No stock options relating to the Company's common stock were
granted to the executive officers during or on account of individual or Company
performance in fiscal 1996. The Committee believes that it is important in
aligning management's and stockholders' interests in the enhancement of
stockholder value over the long term. Accordingly, the Stock Plans Committee
of Oakhurst granted options to Mr. Allan in fiscal 1996. The exercise price of
stock options granted by Oakhurst is equal to the market price of the Common
Stock on the date of grant. The stock option grants were made to Mr. Allan in
1996 in recognition of his services to the Company during the year and prior
years and were in amounts deemed in the subjective judgement of Oakhurst's
Stock Plans Committee to be appropriate.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code (enacted in 1993) generally disallows a tax deduction to
public companies for compensation over $1 million paid to its chief executive
officer and its four other most highly compensated executives. The Company's
compensation payable to any one executive officer (including potential income
from outstanding stock options) is currently and for the foreseeable future
unlikely to reach that threshold. In addition, because of the significant net
operating loss carryforwards of the Company, the deductibility of compensation
payments is not currently an issue. However, should circumstances change, the
Compensation Committee will study the matter and make recommendations to the
Board of Directors.
The Compensation Committee: Robert M. Davies; Bernard H. Frank
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Frank is a director, executive officer and employee of the Company and a
director and executive officer of Oakhurst. Messrs. Abernathy, Auerbach,
Davies and Lever also serve as directors of Oakhurst.
DIRECTORS' COMPENSATION
No fees are paid to directors for attendance at board or committee meetings.
However, board members are entitled to reimbursement of out-of-pocket expenses
incurred in attending such meetings.
The Performance Graph and the Report of the Compensation Committee on Executive
Compensation in this Item 11 are not and shall not be deemed incorporated by
reference into any filings of the Company with the Securities and Exchange
Commission by implication or by any reference in any such filings to this Proxy
Statement.
----------------------
- 6 -
<PAGE> 7
PERFORMANCE GRAPH
The following graph assumes an investment of $100 on February 29, 1992 and
compares annual changes thereafter in the market price of the Company's Common
Stock with (i) the Dow Jones Equity Market Index (a broad market index), and
(ii) the Dow Jones Retailers - Other Specialty Index, a group of companies
whose marketing strategy is focused on a limited product line, such as
automotive parts. Both indices are published in the Wall Street Journal.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996
<S> <C> <C> <C> <C> <C>
Steel City Products, Inc. 100.00 83.33 66.67 25.33 16.00
Dow Jones Equity 100.00 111.11 119.86 101.29 133.18
Dow Jones Retailers - Other 100.00 120.29 117.14 105.39 102.71
</TABLE>
- 7 -
<PAGE> 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT.
The following table sets forth certain information regarding beneficial
ownership of the Common Stock at May 1, 1996 by (i) each person known by the
Company to own beneficially 5% or more of the outstanding Common Stock; (ii)
each of the directors of the Company; (iii) the executive officers named in the
Summary Compensation Table, in Item 11, above; and (iv) all directors and
executive officers as a group. Except as otherwise indicated in the footnotes,
the Company believes that the beneficial owners of the Common Stock listed
below, based on information furnished by such owners, have sole investment and
voting power with respect to the shares of Common Stock shown as beneficially
owned by them.
<TABLE>
<CAPTION>
Name and Address Number of Shares of Percentage of
of Beneficial Owner Series A Preferred Stock Class
- - ------------------- ------------------------ -------------
<S> <C> <C>
Oakhurst Company, Inc. 1,938,526 100%
1001 Santerre Drive
Grand Prairie, Texas 75050
</TABLE>
<TABLE>
<CAPTION>
Name and Address Number of Shares of Percentage of
of Beneficial Owner Common Stock Class
- - ------------------- ------------ -------------
<S> <C> <C>
Oakhurst Company, Inc. 286,955 10.0%
1001 Santerre Drive
Grand Prairie, Texas 75050
Special Situations 200,000 6.2%
Fund, L.P. (1)
625 Madison Avenue
New York, New York 10022
</TABLE>
- - ---------------
(1) By agreement with the Company dated June 25, 1990, as amended, Special
Situations Fund, LLP agreed not to increase its beneficial ownership of the
Common Stock of the Company or Oakhurst above 8.2% of the then outstanding
shares except in transactions to which the Company or Oakhurst, as the case
may be, is a party or under certain other circumstances.
------------------------
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<PAGE> 9
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial ownership of
the Company's Common Stock (including Common Stock issuable upon exercise of
outstanding options) by each director, each executive officer named in the
"Summary Compensation Table," below, and by all directors and executive
officers of the Company as a group. The information has been furnished by the
directors and officers of the Company themselves. No director or officer owns
any shares of Preferred Stock of the Company.
<TABLE>
<CAPTION>
Name and Address Number of Shares Percentage of
of Beneficial Owner of Common Stock Class
- - ------------------- ---------------- -------------
<S> <C> <C>
Bernard H. Frank . . . . . . . . . . . . . . . . . . 23,141 (1) *
Terrance W. Allan . . . . . . . . . . . . . . . . . . 9,257 (1) *
Mark Auerbach . . . . . . . . . . . . . . . . . . . -0- --
Joel S. Lever . . . . . . . . . . . . . . . . . . . 40,819 19.3%
Robert M. Davies . . . . . . . . . . . . . . . . . . -0- --
All directors and
executive officers as a group, 6 persons . . . . . . 211,389 (1) 6.9%
</TABLE>
- - ---------------
* Less than 1%
(1) These shares are purchasable under outstanding stock options, exercisable
at $0.625 per share.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Reference is made to "Compensation of Directors" and "Compensation Committee
Interlocks and Insider Participation" in Item 11, above.
---------------------------------------
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<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment No. 1 to the Annual
Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto
duly authorized.
STEEL CITY PRODUCTS, INC.
/s/ Bernard H. Frank
-----------------------------------
Bernard H. Frank
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report on Form 10-K/A has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
<S> <C> <C>
Chairman of the Board
Chief Executive Officer
/s/ Bernard H. Frank (principal executive officer) August 26, 1996
- - ----------------------------- Director
BERNARD H. FRANK
Chief Financial Officer
(principal financial and
/s/ Mark Auerbach accounting officer) August 26, 1996
- - -----------------------------
MARK AUERBACH
Executive Vice President
* Director August 26, 1996
- - -----------------------------
TERRANCE W. ALLAN
* Director August 26, 1996
- - -----------------------------
ROBERT M. DAVIES
*By: /s/ Roger M. Barzun
-------------------------
Roger M. Barzun
Attorney-in-Fact
</TABLE>
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