SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
Amendment No. 1 to
Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1997 Commission File No.0-8358
MICRO GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-2621545
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
14711 Bentley Circle
Tustin, California 92780
(Address of principal executive offices)(Zip Code)
Registrant's Telephone Number, Including Area Code: (714) 731-0557
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.05 par value
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 ]
As of December 31, 1997, the aggregate market value of the voting stock
held by non-affiliates of the registrant was $985,052. As of December 31,
1997, the registrant had 1,949,666 shares of common stock, $.05 par value
outstanding.
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for
the fiscal year ended December 31, 1997, as set forth in the pages attached
hereto:
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
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
be signed on its behalf by the undersigned thereunto duly authorized.
Dated: April 27, 1998 MICRO GENERAL CORPORATION
By: /s/ Linda Morton
--------------------------
Linda Morton, Corporate Secretary
<PAGE>
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ELECTION OF DIRECTORS
Proposal 1
As of December 31, 1997, the Company's Board of Directors consisted
of Messrs. Cahill, Foley, Olenik, Pickup, Pistilli, and Strunk. Certain
information concerning the current Board of Directors is set forth
below.
<TABLE>
<CAPTION>
Director Principal Occupation Age
-------- -------------------- ---
<S> <C> <C>
John J. Cahill Independent Consultant 65
William P. Foley, II Chairman of the Board and 53
Chief Executive Officer
of Fidelity National Financial, Inc.
George E. Olenik President and Chief Executive 66
Officer of Pick Systems
Richard H. Pickup Senior Vice President 62
Wedbush Morgan Securities
Thomas E. Pistilli President, Chief Executive Officer, 55
Chief Financial Officer and Director
of the Company
Carl A. Strunk Executive Vice President, 60
Chief Financial Officer
of CKE Restaurants, Inc.
</TABLE>
JOHN J. CAHILL
Mr. Cahill has served as a director of the Company since February
1995. He served as President and CEO of Rockaway Corporation (a New
York Stock Exchange company prior to its acquisition by Ascom/Hasler)
from 1974 to 1989. On April 1, 1998, Mr. Cahill resigned from the Board
of Directors.
WILLIAM P. FOLEY, II
Mr. Foley has served as a director of the Company since June 1994. He
is the Chairman of the Board and Chief Executive Officer of Fidelity
National Financial, Inc. and has been since its formation in 1984. He
was President of Fidelity National Title Insurance Company ("Fidelity
Title") 1984 through December 1994. Mr. Foley is also currently serving
as the Chairman of the Board and Chief Executive Officer of CKE
Restaurants, Inc., Rally's Hamburgers, Inc., Star Buffet, Inc., GB Foods,
and Checkers Drive-In Restaurants Inc. Mr. Foley is also currently
serving as a director at Dataworks Corporation.
GEORGE E. OLENIK
Mr. Olenik has served as a director of the Company since December
1989. Mr. Olenik is currently the CEO of Pick Systems Inc., Irvine,
California. Prior to joining Pick Systems Inc. he served as an analyst
consultant for Inco Venture Capital Management. He formerly served as
President and board member of Micro Five Corp., Costa Mesa, California.
RICHARD H. PICKUP
Mr. Pickup was appointed to the board in December 1996. Mr. Pickup is
currently a Senior Vice President of the New York Stock Exchange Member
Firm of Wedbush Morgan Securities. For the past 35 years, he has been
involved with major ownership of numerous public companies.
THOMAS E. PISTILLI
Mr. Pistilli has served as the President, Chief Executive Officer,
Chief Financial Officer, and Director since November 1994. Prior to
joining the Company Mr. Pistilli served as a management consultant to
the Company for approximately two years. Mr. Pistilli is the former
President and CEO of International Mailing Systems, Inc. (Ascom/Hasler),
Shelton Connecticut, where he served in that capacity for 11 years. Mr.
Pistilli, a Certified Public Accountant, was previously employed by KPMG
Peat Marwick LLP for 7 years.
CARL A. STRUNK
Mr. Strunk has served as a director of the Company since June 1994.
Since February 1997, Mr. Strunk has been Executive Vice-President and
Chief Financial Officer of CKE Restaurants, Inc. Mr. Strunk joined
Fidelity National Financial, Inc. In February 1992 as Executive Vice-
President. He was named Executive Vice-President and Chief Financial
Officer of Fidelity National Financial, Inc. in March 1992 and served in
this capacity until September 1997 when he became Executive Vice
President-Finance. Prior to his employment with Fidelity National
Financial, Inc., Mr. Strunk was President of Land Resources Corporation
from 1986 to 1991. Mr. Strunk is a Certified Public Accountant.
Structure and Function of the Board of Directors
During the last fiscal year, the Company's Board of Directors held a
total of 4 regular meetings or otherwise took action by written consent.
The Board of Directors has no separate nominating or compensation
committees, but does have Audit and Stock Option Committees. The Audit
Committee consults with the Company's independent auditors concerning
their engagement and audit plan, and thereafter concerning the auditor's
report and management letter. The Audit Committee, with the assistance
of the independent auditors, also monitors the adequacy of the Company's
internal accounting controls. Messrs. Cahill, Foley, Olenik, Pickup and
Strunk, none of whom is an employee of the Company, were members of the
Audit Committee during fiscal 1997. During the last fiscal year, the Audit
Committee held 1 meeting. The Stock Option Committee is appointed by
the Board of Directors. During the last fiscal year, five of the
directors attended in excess of 75% of each of the meetings of the Board
and each committee, if any, of which he was a member.
Key Employees
In addition to Mr. Pistilli, the Company has 3 additional key
employees Robert F. Baker, John J. Horbal and Linda I. Morton.
Mr. Baker joined the Company as Vice President of Sales and Marketing
in January 1997. Prior to joining the Company, Mr. Baker was a Vice-
President with Better Homes and Garden Real Estate since 1989. Before
taking the position with Better Homes and Gardens Real Estate, Mr. Baker
also served in various senior sales management positions with
Ascom/Hasler, Scriptomatic, and Pitney Bowes.
Mr. Horbal joined the Company as Vice President-Research & Development
in January 1995. In June 1995, Mr. Horbal was named Vice President of
Engineering. Prior to joining the Company, Mr. Horbal was with
Ascom/Hasler and Better Packages, Shelton, Connecticut, for 25 years
serving as Director of Engineering, Director of Research and
Development, and Chief Engineer.
Ms. Morton was elected Corporate Secretary in June 1991. She joined
the Company in September 1983 and has served in various management
accounting positions. She is currently serving as Controller of the
Company.
<PAGE>
Item 11. Executive Compensation
REPORT OF THE BOARD OF DIRECTORS ON ANNUAL COMPENSATION
The Board of Directors is composed of outside directors, with the
exception of the CEO, and is responsible for setting and administering
the policies which govern both annual compensation and stock ownership
programs.
The annual compensation programs of the Company are based on
performance. Micro General's employee annual compensation is comprised
of a base salary coupled with a management bonus and stock options the
amounts of which are determined based on the achievement of specific
goals.
The Company adopted a management bonus plan for fiscal year 1997 which
provided for bonuses in the form of cash to be paid to officers and
other key employees of the Company based upon the fiscal year 1997
performance of the Company and each participant's individual
performance. The Board determined that no management bonuses were to be
paid for fiscal 1997.
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
Cash Compensation
The following table sets forth certain information concerning the cash
renumeration paid by the Company to the CEO for services rendered during
the three most recent fiscal years. No other executive officers of the
Company received cash compensation in excess of $100,000 during fiscal
year 1997.
<TABLE>
<CAPTION>
Name and
Principal Fiscal Other
Position Year Salary Bonuses Compensation Total
- ---------------- ------ ---------- ------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Thomas E. Pistilli 1997 $ 150,000 -0- $ 7,800 $ 157,800
President & 1996 150,000 -0- 7,800 157,800
Chief Executive 1995 146,539 -0- 7,000 146,539
Officer
</TABLE>
- -------------
The Company during 1997 paid fees of $3,000 per meeting to all non-
employee directors for attending board meetings. With the first meeting
in 1998, fees of $1,500 per meeting will be paid to all non-employee
directors for attending board meetings.
<PAGE>
Stock Performance
Pursuant to recent SEC regulations, listed below is the performance of
the cumulative total return to shareholders (stock price appreciation)
during the previous 5 years in comparison to returns on the NASDAQ Stock
market index and Nasdaq Computer Manufacturers Stock index.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS
AMONG MICRO GENERAL CORPORATION, NASDAQ STOCK MARKET (U.S. COMPANIES) AND
NASDAQ COMPUTER MANUFACTURERS STOCKS
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
NASDAQ
Measurment Period MICRO NASDAQ STOCK COMPUTER
(Fiscal Year Covered) GENERAL MARKET (U.S. MANUFACTURERS
Peer Group CORPORATION COMPANIES) ST0CKS
- -------------------- ----------- ------------ -------------
<S> <C> <C> <C>
Measurement Pt-12/31/92 $100.0 $100.0 $100.0
FYE 12/31/93 124.4 114.8 94.8
FYE 12/31/94 151.1 112.2 104.1
FYE 12/31/95 106.7 158.6 195.2
FYE 12/31/96 124.4 195.2 220.0
FYE 12/31/97 102.6 239.6 266.3
</TABLE>
NOTES:
A. The lines represent annual index levels.
B. The index level for all series was set to $100.0 on 12/31/92.
<PAGE>
Stock Option Plans
In October 1981, the Company established its Incentive Stock Option
Plan (the "ISO Plan"), which was approved by the Company's shareholders
at the July 7, 1982 annual meeting of shareholders and amended and
restated by the Company's shareholders at the August 23, 1983, May 22,
1986, June 18, 1992 and May 8, 1995 annual meetings of shareholders.
The ISO Plan provides for the granting of "incentive stock options"
(within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended) to employees of the Company and is administered by the
Stock Option Committee (the "Option Committee"), which is appointed by
the Board. The purpose of the ISO Plan is to provide employees with
additional incentive by offering them a greater interest in the
continued success of the Company through increased stock ownership. The
1991 Stock Plan ("1991 Plan")consists of 220,000 authorized shares of
Common Stock of the Company and will terminate on October 7, 2001 by its
terms and the 1995 Stock Option Plan ("1995 Plan") consists of 200,000
authorized shares of Common Stock of the Company and will terminate on
February 9, 2005. Each option terminates on the fifth anniversary of
its grant or at such earlier time as the Option Committee may determine.
The Option Committee makes recommendations to the Board, for its
approval, as to whom options are granted, the number of shares covered
by each option, the time or times at which such options are granted and
exercisable and the purchase price of Common Stock covered by the option
(which is not less than the fair market value of such stock on the date
of grant of such option). The option holder must remain in the
continuous employ of the Company from the date of the grant to and
including the date of exercise or all or a portion of the options
granted, and no option is exercisable more than three months after
termination of an optionee's employment with the Company unless
termination of employment occurs by reason of disability or death.
As of March 31, 1998, there were options outstanding under the 1991
and 1995 Plan in respect to an aggregate of 208,000 shares of Common
Stock with an average exercise price per share of $1.95 and there were
20 participants in the ISO Plan.
STOCK OPTION SUMMARY REPORT
<TABLE>
<S> <C>
Total Number of Common Shares Outstanding at March 31, 1996.......... 1,949,666
Total Number of Common Shares Authorized to be Granted as Options.... 420,000
Percentage of Total Common Shares Outstanding Authorized............. 21.5%
Total Number of Options Granted to Date Under Current Authorization.. 208,000
Percentage of Total Authorized....................................... 49.52%
Total Number of Options Granted in Fiscal 1997....................... 78,000
Total Number of Options Granted to Thomas Pistilli, CEO in Fiscal 1996 5,000
Percentage of Total Number of Options Granted to CEO in Fiscal 1996... 6.41%
</TABLE>
OPTION GRANT TABLE
Options Granted in Calendar Year 1997
<TABLE>
<CAPTION>
Potential Realized
Value at Assumed
Annual Rates of
Stock Price
Appreciation
|---------------Individual Grants-----------------------------| |---for Option Term--|
(a) (b) (c) (d) (e) (f) (g)
% OF TOTAL EXERCISE
OPTIONS OPTIONS GRANTED OR BASE
GRANTED(#) TO EMPLOYEES IN PRICE EXPIRATION
NAME (A)(B)(C) CALENDAR YEAR ($/SH) DATE 5%($) 10%($)
- -------------- ---------- --------------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
T. Pistilli 5,000 6.41% $1.31 8/26/2001 $1.38 $1.44
</TABLE>
(A) All shares were granted under the Company's 1991 Incentive Stock Option
Plan which is administered by the Company's Stock Option Committee.
(B) Options are exercisable starting 12 months after the grant date with
1/3 of the shares covered thereby becoming exercisable at that time and
with an additional 1/3 of the option shares becoming exercisable on
each successive anniversary date, with full vesting occurring on the
occurring on the third anniversary date. Any unaccrued options
terminate when the grantee's relationship with the Company is terminated
for any reason.
(C) The options have an exercise term of 4 years, subject to earlier
termination in certain events related to termination of employment.
OPTION EXERCISES AND YEAR-END VALUE TABLE
Aggregate Option Exercises in CALENDAR Year 1997
and CALENDAR Year-End Option Value
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY
ACQUIRED ON VALUE 12/31/97 OPTIONS AT 12/31/97
EXERCISE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($)(A) UNEXERCISABLE UNEXERCIABLE
- ------------------ ----------- --------- ------------- --------------------
<S> <C> <C> <C> <C>
Thomas E. Pistilli -0- -0- 38,000/24,000 ($36,625)/($17,488)
</TABLE>
(A) Market Value of shares acquired at exercise date minus the exercise price
of options.
<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of March 20, 1998,
by (i) each of the current directors of the Company, (ii) by each person
known to the Company to be the beneficial owner of more than 5% of the
outstanding Common Stock, and (iii) all current directors and executive
officers of the Company as a group. Except as may be indicated in the
footnotes to the table, each of such persons has the sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them, subject to applicable community property
laws.
<TABLE>
<CAPTION>
Amount and
Nature of Percent of
Beneficial Outstanding
Name and Address Ownership of Common
of Beneficial Owner Common Stock (1) Stock (2)
- ------------------------- ---------------- -------------
<S> <C> <C>
Mr. Thomas E. Pistilli 60,334(1) 3.1
14711 Bentley Circle
Tustin, CA 92780
Fidelity National Financial, Inc. 751,216(2)(4) 38.5
3916 State St., 3rd floor
Santa Barbara, CA 93105
Mr. William P. Foley, II. 741,216(2)(4) 38.0
3916 State St., 3rd floor
Santa Barbara, CA 93105
Mr Carl A. Strunk. 741,216(2)(4) 38.0
3916 State St., 3rd floor
Santa Barbara, CA 93105
Richard H. Pickup 325,760(3)(4) 16.7
500 Newport Center Dr #550
Newport Beach, CA 92660
Dito Devcar Corporation 189,500(3) 9.7
3735 Howard Hughes Parkway #200
Las Vegas, NV 89109
Pickup Pension Plan 42,500(3) 2.2
500 Newport Center Dr. #550
Newport Beach, CA 92660
Dito Devcar L.P. 65,000(3) 3.3
3735 Howard Hughes Parkway #200
Las Vegas, NV 89109
John J. Cahill 11,000(5) 0.1
1040 Gulf Blvd.
Belleair Shore, FL 33786
George E. Olenik 10,000(6) 0.1
2138 Port Durness
Newport Beach, CA 92660
All Officers and Directors 1,414,650(7) 72.6
as a Group (9 persons)
</TABLE>
(1) Represents 3,334 shares held of record and the right to acquire
57,000 shares pursuant to presently exercisable options .
(2) Represents 731,216 shares held of record by Fidelity National
Financial, Inc. Messrs. Foley and Strunk are the Chief Executive
Officer and Executive Vice President-Finance respectively of
Fidelity National Financial Inc and Messrs. Foley and Strunk each
have the right to acquire 10,000 shares pursuant to presently
exercisable options.
(3) Represents 197,800 shares held of record by Mr. Pickup.
Additionally, 114,500 shares held of record by Dito Devcar
Corporation, 42,300 shares held by Pickup Pension Plan, and
65,000 shares held by Dito Devcar LLP. Mr. Pickup is affiliated
or has direct control of the shares listed.
(4) CalWest Service Corporation, a wholly owned subsidiary of
Fidelity National Financial, and Dito Caree L.P.,a family
charitable remainder trust controlled by Mr. Pickup, have the
right, but not the obligation to purchase and/or convert an
aggregate of 448,146 and 896,292 shares respectively. This right
is defined in a Convertible Note Purchase agreement executed by
both parties with the Company.
(5) Represents 1,000 shares held of record and the right to acquire
10,000 shares pursuant to presently exercisable options .
(6) Represents the right to acquire 10,000 shares pursuant to
presently exercisable options .
(7) Includes an aggregate of 125,000 shares which are not outstanding
but which may be acquired on exercise of options held by officers
and directors of the Company. Does not include an aggregate of
59,000 additional shares covered by stock options which are not
currently, and within sixty days, will not be exercisable.
<PAGE>
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Micro General Corporation announced April 3, 1998 that its Board of
Directors had approved a plan to acquire ACS Systems, Inc. a
subsidiary of Fidelity National Financial, Inc. (NYSE:FNF). The
transaction is valued at $6.9 million and will involve the issuance of
approximately 4.6 million Micro General common shares, subject to a
fairness opinion with respect to the value of such shares. The
transaction is also subject to a definitive agreement expected to be
signed by early May 1998 and subsequent Micro General shareholder approval.
