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FORM 10-K/A
AMENDMENT NO. 2
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 .........................................June 30, 1995
/ / 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 0-5896
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JACO ELECTRONICS, INC.
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(Exact name of registrant as specified in its charter)
New York 11-1978958
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
145 Oser Avenue, Hauppauge, New York 11788
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 273-5500
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.10 per share
(Title of Class)
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:
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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 Common Stock held by non-affiliates of
the Registrant, computed by reference to the average of the highest bid and
lowest asked price on September 8, 1995 was $19,015,800.
Number of shares outstanding of each class of common stock, as of
September 14, 1995: 1,848,280
DOCUMENTS INCORPORATED BY REFERENCE:
None
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The directors and executive officers of the Company, their ages, and
their positions and terms of office with the Company are set forth below.
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Joel H. Girsky 56 Chairman of the Board, President, Treasurer, and Director
Charles B. Girsky 61 Executive Vice President and Director of the Company
Jeffrey D. Gash 42 Vice President of Finance of the Company
Stephen A. Cohen 58 Director
Edward M. Frankel 57 Director
</TABLE>
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Joel H. Girsky has been a Director and executive officer of the
Company since it was founded in 1961. He also is a Director of Nastech
Pharmaceutical Company, Inc. of Hauppauge, New York, and Frequency Electronics,
Inc. of Uniondale, New York. Messrs. Joel H. Girsky and Charles B. Girsky are
brothers.
Charles B. Girsky became an executive officer of the Company on
August 2, 1985 and has been its Executive Vice President since January 1983.
Since April, 1984, he has been President of Distel, Inc., a wholly-owned
subsidiary of the Company ("Distel"). He was a founder, Director, and the
President of the Company from 1961 through January, 1983, and was elected a
Director of the Company again in 1986. Messrs. Charles B. Girsky and Joel H.
Girsky are brothers.
Jeffrey D. Gash became Vice President of Finance of the Company
in January, 1989, and was Controller of the Company for more than five years
prior thereto. He has also served in similar capacities with the Company's
subsidiaries.
Stephen A. Cohen has been a Director of the Company since 1970.
Since August, 1989, he has practiced law as a member of Morrison Cohen Singer &
Weinstein, LLP general counsel to the Company. For more than five years prior
thereto, he was engaged in the practice of law as a member of the firm of
Friedlander, Gaines, Cohen & Rosenberg, former general counsel to the Company.
2
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Edward M. Frankel became a Director of the Company in May,
1984. For more than five years, he has been President of both Garden State
Nutritionals, Inc. and Windmill Marketing Services, Inc., each a regional
distributor of vitamins and health and beauty products.
Other Key Employees
The Company also considers the following individuals to be key
to its operations:
Denis Haggerty, Vice President of Marketing -- Passives. Mr.
Haggerty, who is 62 years old, oversees marketing of passive components and has
been employed by the Company for approximately 30 years.
Morton J. Denson, Vice President of Marketing -- Actives. Mr.
Denson, who is 61 years old, oversees marketing of active components and has
been employed by the Company for over 8 years.
Herbert Entenberg, Vice President of Management and Information
Systems and Secretary. Mr. Entenberg has been employed by the Company for over
15 years. Mr. Entenberg, who is 61 years old, oversees management information
systems and operations and is responsible for developing and implementing the
Company's inventory control system.
Item 11. Executive Compensation.
The following table sets forth, for the Company's three most recently
ended fiscal years, the compensation paid or accrued to the President of the
Company and to the executive officers and other key employees of the Company,
other than the President, whose aggregate annual salary and bonus for the
Company's last fiscal year exceeded $100,000:
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------------------------
Annual Compensation Awards Payouts
----------------------------------- -------------------- -------
Name and Other Restricted All Other
Principal Annual Stock Options/ LTIP Compensation
Position Year Salary($) Bonus($) Compensation($) Awards($) SARs (#) Payouts($) ($)(2)
- -------- ---- --------- -------- --------------- --------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joel H. Girsky, 1993 225,000 87,000 -- -- -- -- 55,087
Chairman of the Board 1994 250,000 76,000 -- -- 81,400 -- 62,519
President, and Treasurer(1) 1995 300,000 193,000 -- -- -- -- 72,100
Charles B. Girsky, 1993 168,269 40,037 -- -- -- -- 3,762
Executive Vice President 1994 181,000 17,997 -- -- -- -- 3,783
1995 206,720 42,073 -- -- -- -- 3,947
Jeffrey D. Gash, 1993 86,160 9,000 -- -- -- -- 1,513
Vice President of Finance 1994 96,000 10,000 -- -- 4,033 -- 1,663
1995 96,347 10,000 -- -- -- -- 1,806
Denis Haggerty 1993 76,096 33,368 -- -- -- -- 10,814
Vice President of 1994 90,000 31,377 -- -- 3,667 -- 11,165
Marketing 1995 90,348 36,964 -- -- -- -- 11,029
Morton J. Denson 1993 114,306 16,173 -- -- -- -- 8,762
Vice President of 1994 114,998 19,887 -- -- -- -- 8,891
Marketing 1995 115,440 37,955 -- -- -- -- 8,957
Herbert Entenberg 1993 102,560 -- -- -- -- -- 3,369
Vice President of 1994 102,560 4,363 -- -- 3,667 -- 3,436
Management and 1995 102,816 16,155 -- -- -- -- 3,538
Information Systems,
and Secretary
</TABLE>
----------------------
(1) Mr. Joel Girsky entered into a four-year employment agreement with the
Company, effective as of July 1, 1993, to serve as the Company's
Chairman, President and Treasurer. Pursuant to the agreement, Mr.
Girsky shall receive a base salary of $250,000 for the fiscal year
ended 1994, $300,000 for the fiscal year ended June 30, 1995, and
$325,000 for each of the fiscal years ended June 30, 1996 and June 30,
1997. In addition, he is entitled to receive a cash bonus equal to four
percent (4%) of the Company's earnings before income taxes for each
year in which such earnings are in excess of $1,000,000, and six
percent (6%) of the Company's earnings before income taxes for each
year in which such earnings are in excess of $2,500,000. Mr. Girsky or
his estate, as the case may be, is entitled to receive a payment of
$500,000 if he dies or becomes permanently disabled during the term of
the employment agreement. This death and disability benefit is funded
by a "key-man" life insurance policy maintained by the Company. In the
event of Mr. Girsky's cessation of employment with the Company, upon
his request, the Company is obligated to transfer such policy to Mr.
Girsky. Thereafter, the Company would have no further liability for the
payment of such benefit or the premiums on such policy. In addition,
pursuant to the terms of the employment agreement, Mr. Girsky is to
receive deferred compensation which accrues at the rate of $50,000 per
year and becomes payable in a lump sum at the later of (i) Mr. Girsky's
attainment of age 60, or (ii) his cessation of employment, with or
without cause, by the Company at any time after July 1, 1993. In the
event of a change in control resulting in termination of Mr. Girsky's
employment, Mr. Girsky will receive between $450,000 and $600,000
depending on the date of termination.
(2) Includes auto expenses, 401(k) matching contributions by the Company,
premiums paid on group term life insurance, taxable portion of split
dollar life insurance policies and deferred compensation accrued in
connection with Mr. Joel Girsky's employment agreement with the
Company, as described in footnote (1) above. Auto expenses for fiscal
1995 for the Named Executive were as follows: Mr. Joel Girsky --
$12,031, Mr. Charles Girsky -- $2,110, Mr. Gash -- $724, Mr. Entenberg
-- $2,354, Mr. Haggerty - $9,600 and Mr. Denson - $7,200. 401(k)
matching contributions for fiscal 1995 for the Named Executives were as
follows: Mr. Joel Girsky -- $1,009, Mr. Charles Girsky -- $1,162, Mr.
Gash -- $1,000, Mr. Haggerty -- $1,078, Mr. Denson -- $1,055 and Mr.
Entenberg -- $1,031. Premiums paid on group term life insurance for
fiscal 1995 for the Named Executives were as follows: Mr. Joel Girsky
-- $1,008, Mr. Charles Girsky -- $675, Mr. Gash -- $82, Mr. Haggerty --
$351, Mr. Denson -- $702 and Mr. Entenberg -- $153. The taxable portion
of split dollar life insurance policies for Mr. Joel Girsky was $8,052
for fiscal 1995. $50,000 of deferred compensation was accrued in fiscal
1995 in connection with Mr. Joel Girsky's employment agreement with the
Company.
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STOCK OPTION
There were no grants of stock options made to any of the persons described
in the Summary Compensation Table on page 4 during fiscal 1995.
The following table sets forth information concerning the exercise of
stock options during fiscal 1995 by each of the persons described in the Summary
Compensation Table on page 4 and the number and value of unexercised options
held by them at the fiscal year-end.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Shares Options/SARs at Options/SARs at
Acquired on Value FY-End (#) FY-End ($)(1)
------------------------------ ---------------------------
Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky . . . . . 0 0 81,400 0 123,728 0
Charles B. Girsky . . . . 36,667 92,188 0 0 0 0
Jeffrey D. Gash . . . . . 0 0 4,033 0 6,130 0
Denis Haggerty . . . . . 0 0 3,667 0 5,877 0
Morton J. Denson . . . . 4,400 10,875 0 0 0 0
Herbert Entenberg . . . . 0 0 3,667 0 5,877 0
</TABLE>
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(1) Based on the fair market value per share of the Common Stock at year
end, minus the exercise or base price on "in-the-money" options. The
closing sale price for the Company's Common Stock as of June 30, 1995
on The NASDAQ National Market was $6.38.
COMPENSATION OF DIRECTORS
Pursuant to the Company's 1993 Stock Option Plan for Outside Directors
(the "Outside Directors' Plan"), the Company's outside directors (directors who
are not employees of the Company) were each granted options on December 31, 1993
to purchase 14,667 shares of Common Stock. In addition, the Outside Directors'
Plan provides that each outside director shall also be granted on each December
31 subsequent to December 31, 1993 stock options to purchase 2,933 shares of
Common Stock. All options granted under the Outside Directors' Plan are
immediately exercisable, and the exercise price per share of each option is
equal to the fair market value of the shares of Common Stock on the date of
grant.
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EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
The Company's employment agreement with Mr. Joel Girsky is described in
the footnotes to the Summary Compensation Table on page 4.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Stephen A. Cohen, a Director of the Company, is a member of Morrison
Cohen Singer & Weinstein, LLP, general counsel to the Company. Mr. Cohen
currently owns 4,789 shares of Common Stock and options to purchase an
additional 17,600 shares of Common Stock. Mr. Cohen is one of the two members of
the Company's Compensation Committee, the committee responsible for determining
and administering the Company's compensation policies for the remuneration of
the Company's senior management.
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Item 12. Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth the number and percentage of shares of
Common Stock owned as of October 27, 1995 (i) by each director of the Company,
(ii) all persons who, to the knowledge of the Company, are the beneficial
owners of more than 5% of the outstanding shares of Common Stock, (iii) each of
the executive officers and other key employees named in the Summary
Compensation Table, and (iv) all of the Company's directors, executive officers
and such other key employees, as a group. Each person named in the table has
sole investment power and sole voting power with respect to the shares of
Common Stock set forth opposite such person's name, except as otherwise
indicated.
<TABLE>
<CAPTION>
Percentage of
Number of Shares Common Stock
Name of Beneficial Owner Beneficially Owned(1) Outstanding(2)
- ------------------------ --------------------- --------------
<S> <C> <C>
Joel H. Girsky
President, Treasurer
and Director 529,040(3) 13.7%
Charles B. Girsky
Executive Vice President
and Director 252,274 6.7%
Stephen A. Cohen
Director 22,389(4) *
Edward M. Frankel
Director 17,600(4) *
Jeffrey D. Gash
Vice President of Finance 4,565(5) *
Denis Haggerty
Vice President of Marketing 3,667(6) *
Morton J. Denson
Vice President of Marketing 4,400 *
Herbert Entenberg
Vice President of Management
and Information Systems,
and Secretary 3,667(6) *
All Directors, executive officers
and other key employees
as a group (8 persons) 837,602(7) 21.4%
</TABLE>
7
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* Less than 1%.
1 Includes shares of Common Stock issuable pursuant to options exercisable
within sixty (60) days from the date hereof.
2 Based upon (i) 3,789,384 shares of Common Stock issued and outstanding,
plus, if appropriate, (ii) the number of shares of Common Stock which may
be acquired by the named person or by all persons included in the group
pursuant to the exercise of options exercisable within sixty (60) days from
the date hereof.
3 Includes 81,400 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
4 Includes 17,600 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Stock Option Plan for Outside
Directors.
5 Includes 4,033 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
6 Includes 3,667 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Non- Qualified Stock Option
Plan.
7 Includes 127,967 shares of Common Stock acquirable pursuant to the exercise
of options.
8
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Item 13. Certain Relationships and Related Transactions.
During the year ended 1995, the Company incurred approximately
$654,000 of rental expenses in connection with its main headquarters and
centralized inventory distribution facility, located in Hauppauge, New York,
which was paid to Bemar Realty Company ("Bemar"), the owner of such premises.
Bemar is a partnership consisting of Messrs. Joel Girsky and Charles Girsky,
both of whom are officers, directors and principal shareholders of the Company.
The lease on the property, which is net of all expenses, including taxes,
utilities, insurance, maintenance and repairs, expires on December 31, 1995. The
Company is in the process of negotiating a renewal of such lease at a rental
rate comparable to the rates currently being charged to rent similar properties
in the area. It is anticipated that the new rental rate will be slightly lower
than the current rate.
During fiscal 1995, Joel H. Girsky, the Chairman, President and
Treasurer of the Company, was indebted to the Company under demand loans bearing
interest at a rate of 9 3/4% per annum, the greatest amount of which
indebtedness was $641,425 during such fiscal year. At June 30, 1995, the amount
of such indebtedness was $309,808. Such indebtedness was repaid in full on
October 27, 1995.
In September 1995, the Company's Board of Directors adopted a policy
prohibiting the Company from making any loan or advance of money or property to,
or guaranteeing the obligation of, any non-employee director of the Company and
limiting the Company's ability to make such loans, advances or guarantees to
employee directors and executive officers of the Company or its subsidiaries
unless a majority of independent disinterested outside directors determine that
such loan, advance or guarantee may reasonably be expected to benefit the
Company. See also "Executive Compensation -- Compensation Committee Interlocks
and Insider Participation."
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JACO ELECTRONICS, INC.
Date: October 30, 1995 By: /s/ Jeffrey D. Gash
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Jeffrey D. Gash, Vice President Finance
