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
...............................................................June 30, 1997
[ ] 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
JACO ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
11-1978958
(I.R.S. Employer Identification No.)
145 Oser Avenue, Hauppauge, New York 11788
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(Address of principal executive offices) (Zip Code)
Company'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: ______
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]
The aggregate market value of Common Stock held by non-affiliates of
the Company, computed by reference to the closing price on September 22, 1997
was $25,140,827.
Number of shares outstanding of each class of Common Stock, as of
September 22, 1997: 3,888,221 shares (excluding 87,500 shares of treasury
stock).
DOCUMENTS INCORPORATED BY REFERENCE:
None.
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<TABLE>
<CAPTION>
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.
Name Age Title
<S> <C> <C>
Joel H. Girsky 58 Chairman of the Board, President, Treasurer,
and Director
Charles B. Girsky 63 Executive Vice President and Director of the
Company
Stephen A. Cohen 60 Director
Edward M. Frankel 59 Director
Joseph F. Hickey, Jr 39 Director
Jeffrey D. Gash 44 Vice President, Finance of the Company
Herbert Entenberg 63 Vice President of Management and Information
Systems and Secretary
</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 1988.
Since April, 1984, he has been President of Distel, Inc., a wholly-owned
subsidiary of the Company since August, 1985. 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.
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.
Edward M. Frankel became a Director of the Company in May,
1984. For more than five years, he has been President of Vitaquest
International, Inc., a distributor of vitamins and health and beauty products,
and its predecessor entities.
Joseph F. Hickey, Jr. became a Director of the Company on May 28, 1997.
Since February 1, 1991, he has been a managing director of Cleary Gull Reiland
and McDervitt Inc., an investment banking firm located in Milwaukee, Wisconsin.
<PAGE>
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.
Herbert Entenberg has served as Vice President of Management
and Information Systems and Secretary since 1988. Mr. Entenberg oversees
management information systems and operations of the Company 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 a former key employee of the
Company, other than the President, whose aggregate annual salary and bonus for
the Company's last fiscal year exceeded $100,000:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Other
Princpal Annual
Position Year Salary($) Bonus($)Compensation($)
<S> <C> <C> <C> <C>
Joel H. Girsky, 1995 300,000 193,000 --
Chairman of the Board 1996 325,000 387,000 --
President, and Treasurer(1) 1997 325,000 210,000 --
Charles B. Girsky, 1995 206,720 42,073 --
Executive Vice President 1996 225,000 96,535 --
1997 225,000 73,475 --
Jeffrey D. Gash, 1995 96,347 10,000 --
Vice President, Finance 1996 96,000 42,595 --
1997 104,808 25,000 --
Herbert Entenberg
Vice President of 1995 102,816 16,155 --
Management and 1996 102,560 20,188 --
Information Systems, 1997 102,560 10,481 --
and Secretary
Denis Haggerty* 1995 90,348 36,964 --
Vice President, Marketing 1996 90,000 58,389 27,651(3)
1997 71,539 40,510 --
SUMMARY COMPENSATION TABLE
Long-Term Compensation
Awards Payouts
Name and Restricted All Other
Principal Stock Options/ LTIP Compensation
Position Year Awards($) SARs(#) Payouts($) ($)(2)
<S> <C> <C> <C> <C> <C>
Joel H. Girsky, 1995 -- -- -- 72,100
Chairman of the Board 1996 -- -- -- 84,301
President, and Treasurer(1) 1997 150,000** 15,399 -- 73,924
Charles B. Girsky, 1995 -- -- -- 3,947
Executive Vice President 1996 -- 15,000 -- 5,608
1997 150,000** 25,000 -- 4,976
Jeffrey D. Gash, 1995 -- -- -- 1,806
Vice President, Finance 1996 -- 5,000 -- 1,841
1997 60,000** 10,000 -- 2,004
Herbert Entenberg
Vice President of 1995 -- -- -- 3,538
Management and 1996 -- 2,500 -- 3,197
Information Systems, 1997 30,000** 5,000 -- 3,343
and Secretary
Denis Haggerty* 1995 -- -- -- 11,029
Vice President, Marketing 1996 -- 5,000 -- 11,302
1997 -- -- -- 5,881
</TABLE>
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(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 received
a base salary of $250,000 for the fiscal year ended June 30, 1994,
$300,000 for the fiscal year ended June 30, 1995, and $325,000 for the
fiscal years ended June 30, 1996 and June 30, 1997. In addition, he was
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 were in excess of $2,500,000. Mr. Girsky or his estate, as the
case may be, was entitled to receive a payment of $500,000 if he dies or
becomes permanently disabled during the term of the employment agreement.
The 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 was
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 was to receive deferred compensation
which accrued at the rate of $50,000 per year, and became 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 would have received
between $450,000 and $600,000, depending on the date of termination. Mr.
Joel Girsky and the Company intend to enter into a new employment
agreement during the fiscal year ending June 30, 1998.
(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 1997 for the
Named Executives were as follows: Mr. Joel Girsky -- $16,871, Mr. Charles
Girsky -- $3,322, Mr. Gash -- $624, Mr. Entenberg -- $2,154 and Mr.
Haggerty -- $4,800. 401(k) matching contributions for fiscal 1997 for the
Named Executives were as follows: Mr. Joel Girsky -- $1,000, Mr. Charles
Girsky -- $952, Mr. Gash -- $1,298, Mr. Entenberg -- $950 and Mr. Haggerty
-- $519. Premiums paid on group term life insurance for fiscal 1997 for
the Named Executives were as follows: Mr. Joel Girsky -- $450, Mr. Charles
Girsky $702, Mr. Gash -- $82, Mr. Entenberg -- $239 and Mr. Haggerty --
$562. The taxable portion of split dollar life insurance policies for Mr.
Joel Girsky was $5,603 for fiscal 1997. $50,000 deferred compensation was
accrued in fiscal 1997 in connection with Mr. Joel Girsky's employment
agreement with the Company.
(3) Includes information regarding value realized (market value on date of
exercise less exercise price) on stock options previously granted under
the Company's option plans and exercised during fiscal 1996 by Mr.
Haggerty.
* Effective December 31, 1996, Mr. Haggerty ceased serving as an officer of
the Company.
** Subject to approval of the Restricted Stock Plan by the Company's
shareholders.
Stock Options
The following tables set forth information concerning the grant of
stock options made during Fiscal 1997 to each of the persons described in the
Summary Compensation Table on page 3 and the number and value of unexercised
options held by them at the fiscal year-end.
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<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants(1)
Percent of Potential Realizable Value
Total at Assumed Annual Rates
Options/SAR's of Stock Price Appreciation
Options/ Granted to For Option Term (2)
SARs Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
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<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky 15,399 11% $ 7.00 June 8, 2002 $29,781 $65,809
Charles B. Girsky 25,000 19% $ 7.00 June 8, 2002 $48,349 $106,839
Jeffrey D. Gash 10,000 7% $ 7.00 June 8, 2002 $19,340 $42,739
Herbert Entenberg 5,000 4% $ 7.00 June 8, 2002 $ 9,670 $21,368
Dennis Haggerty* -- -- -- -- -- --
</TABLE>
(1) The options in the table were granted on June 9, 1997 under the Company's
1993 Non-Qualified Stock Option Plan and have exercise prices equal to the fair
market value of the Common Stock on the date of grant. The options become
exercisable one year from the date of grant.
(2) The potential realizable value assumes that the stock price increases from
the date of grant until the end of the option term (5 years) at the annual rate
of 5% and 10%. The assumed annual rates of appreciation are computed in
accordance with the rules and regulations of the Securities and Exchange
Commission. No assurance can be given that the annual rates of appreciation
assumed for the purposes of the table will be achieved, and actual results may
be lower or higher.
* Effective December 31, 1996, Mr. Haggerty ceased serving as an officer of
the Company.
<TABLE>
<CAPTION>
AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
Value of Unexercised
Shares Number of Unexercised In-the-Money
Acquired Option/SARs at Option/SARs at
on Value FY-End (#) FY-End ($)(1)
Exercise(#) Realized($) -------------------------- ----------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Joel H. Girsky -- -- 81,400 15,399 189,662 2,926
Charles B. Girsky -- -- 15,000 25,000 -- 4,750
Jeffrey D. Gash -- -- 9,033 10,000 9,397 1,900
Herbert Entenberg -- -- 6,167 5,000 8,874 950
Dennis Haggerty* -- -- 5,000 -- -- --
</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, 1997 on
the NASDAQ National Market System was $7.19.
* Effective December 31, 1996, Mr. Haggerty ceased serving as an
officer of the Company.
<PAGE>
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.
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 3 of this Form 10-K/A,
Amendment No.1.
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 23,466 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.
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 14, 1997; (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 a former key employee named in the
Summary Compensation Table, and (iv) all of the Company's directors, executive
officers and such former key employee, 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 547,540(3) 13.6%
Charles B. Girsky
Executive Vice President and
Director of the Company 287,274(4) 7.2%
Stephen A. Cohen
Director 28,255(5) **
Edward M. Frankel
Director 23,466(5) **
Joseph F. Hickey, Jr 18,500(6) **
Director
Jeffrey D. Gash
Vice President, Finance 19,565(7) **
Herbert Entenberg
Vice President of Management
and Information Systems,
and Secretary 11,167(8) **
Denis Haggerty
Vice President of Marketing 5,000(9) **
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, MD 21202 350,000(10) 9.0%
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, WI 53202 590,700(11) 15.2%
Liberty Investment Management, Inc.
2502 Rocky Point Drive, Suite 500
Tampa, Fl 33607 203,300(12) 5.2%
State Retirement and Pension System
of Maryland
301 West Preston Street, Room 901A
Baltimore, MD 21201 195,000(13) 5.0%
Wellington Trust Company, NA
75 State Street
Boston, MA 02109 195,000(14) 5.0%
Wellington Management Company, LLP
75 State Street
Boston, MA 02109 384,000(15) 9.9%
All Directors, executive officers
and former key employee
as a group (9 persons) 940,767(16) 22.8%
</TABLE>
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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. Also includes shares of
Common Stock awarded under the Jaco Electronics, Inc. Restricted Stock
Plan ("Restricted Stock Plan") which are subject to approval of the
Restricted Stock Plan by the Company's shareholders.
2 Based upon (i) 3,888,221 shares of Common Stock issued and outstanding
(excluding 87,500 shares of treasury stock), plus, if appropriate, (ii)
65,000 shares of Common Stock awarded under the Restricted Stock Plan,
and/or (iii) 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 and 25,000 shares of Common Stock awarded under the Restricted
Stock Plan (which are subject to approval of the Restricted Stock Plan
by the Company's shareholders).
4 Includes 243,577 shares of Common Stock owned by the Girsky Family Trust,
15,000 shares of Common Stock acquirable under the exercise of options
granted under the Company's 1993 Non-Qualified Stock Option Plan and
25,000 shares of Common Stock awarded under the Restricted Stock Plan
(which are subject to approval of the Restricted Stock Plan
by the Company's shareholders).
5 Includes 23,466 shares of Common Stock acquirable pursuant to the exercise
of options granted under the Company's 1993 Stock Option Plan For Outside
Directors.
6 Includes 1,000 shares of Common Stock and 17,500 shares of Common Stock
acquirable by Cleary Gull Reiland and McDevitt Inc. pursuant to warrants
granted to it by the Company. The reporting person disclaims beneficial
ownership of the shares of Common Stock acquirable upon the exercise of the
warrants, except to the extent of his pecuniary interest therein.
7 Includes of 9,033 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan and 10,000 shares of Common Stock awarded under the Restricted
Stock Plan (which are subject to approval of the Restricted Stock Plan
by the Company's shareholders).
8 Consists of 6,167 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan and 5,000 shares of Common Stock awarded under the Restricted
Stock Plan (which are subject to approval of the Restricted Stock Plan
by the Company's shareholders).
9 Consists of 5,000 shares of Common Stock acquirable pursuant to the
exercise of options granted under the Company's 1993 Non-Qualified Stock
Option Plan. Effective December 31, 1996, Mr. Haggerty ceased to serve as
an officer of the Company.
10 These securities are owned by T. Rowe Price New Horizons Fund, Inc. for
which T. Rowe Price Associates, Inc. ("Price Associates") serves as
investment advisor. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
Based upon Amendment No. 1 to the Schedule 13G dated February 14, 1997.
11 These securities are held in investment advisory accounts of Heartland
Advisors, Inc. Based upon Amendment No. 2 to Schedule 13G dated October 7,
1997.
12 Based upon a Schedule 13G dated February 15, 1997.
13 Based upon a Schedule 13G dated February 11, 1997.
14 Based upon a Schedule 13G dated January 27, 1997.
15 Based upon a Schedule 13G dated January 24, 1997.
16 Includes 181,032 shares of Common Stock acquirable pursuant to
the exercise of options and 65,000 shares of Common Stock awarded
under the Restricted Stock Plan (which are subject to approval of
the Restricted Stock Plan by the Company's shareholders).
Item 13. Certain Relationships and Related Transactions
During the fiscal year ended June 30, 1997, the Company
incurred approximately $602,000 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 was renewed on
January 1, 1996 and expires on December 31, 2003. The current rental rate is
lower than the rate paid under the prior lease.
During Fiscal 1996, 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 $313,808 during such fiscal year. 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."
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JACO ELECTRONICS, INC.
Date: October 28, 1997 By: /s/ Jeffrey D. Gash
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Jeffrey D. Gash, Vice President-Finance
