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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended June 30, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No fee required)
For the transition period from ______ to ______
Commission file number 1-10324
THE INTERGROUP CORPORATION
(Name of small business issuer in its charter)
DELAWARE 13-3293645
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2121 Avenue of the Stars, Suite 2020 Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (310)556-1999
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock - Par Value $.01 Per Share
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 __
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure
will 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-KSB or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $15,663,727
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The aggregate market value of the voting stock held by non-affiliates of
the registrant at July 30, 1997, was $17,101,000 (based on the price at
which the stock closed on such date). Solely for purposes of this
calculation affiliates of the registrant have been deemed to include
only directors, executive officers and the Employee Stock Ownership Plan
and Trust of the registrant.
The number of shares outstanding of the issuer's Common Stock, $.01 par
value, as of August 29, 1997, was 953,649 shares.
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PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
The Company's Certificate of Incorporation provides that the Board of
Directors shall consist of not more than nine nor less than five
members. The exact number of Directors is fixed by the Board prior to
each year's annual meeting of shareholders and as of June 30, 1997
consisted of five. The Board is divided into three staggered classes,
each class having not less than one nor more than three members. Each
Director is elected to serve for a three-year term, and until the
election and qualification of his or her successor. When vacancies on
the Board occur, due to resignation or otherwise, the Directors then in
office may continue to exercise the powers of the Directors and a
majority of such directors may select a new Director to fill the
vacancy. Any Director may resign at any time. Any Director may be
removed by the vote of, or written consent of, the holders of a majority
of the shares of Common Stock outstanding at a special meeting called
for the purpose of removal or to ratify the recommendation of a majority
of the Directors that such Director be removed.
The Directors will not be individually liable for the debts of the
Company. Each Director is indemnified by the Company against any loss,
expense, or liability arising out of or in connection with the affairs
of the Company unless such arises out of his acts which constitute
willful misfeasance, bad faith, gross negligence, or reckless disregard
of his or her duties.
The following table sets forth certain information with respect to the
Directors and Executive Officers of the Company as of June 30, 1997:
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Position with
Name the Corporation Age Term to Expire
Class A Directors
John V. Winfield Chairman of the 50 1997 Annual Meeting
(1)(2)(3)(4) Board; President
and Chief Executive
Officer;
Josef Grunwald Director 49 1997 Annual Meeting
(1)(3)(4)
Class B Director
Howard A. Jaffe Vice Chairman; 55 (6)
(1)(3)(4)(5) Chief Operating
Officer; Secretary;
and Director
William J. Nance(5) Treasurer; Director 53 1998 Annual Meeting
Class C Director
Mildred Bond Director 70 1999 Annual Meeting
Roxborough(1)(2)
Other Executive
Officer
Gregory C. McPherson Executive Vice 38 N/A
President;
Assistant Secretary
and Assistant
Treasurer
_____________
(1) Member of the Executive Committee
(2) Member of the Administrative and Compensation Committee
(3) Member of the Audit and Finance Committee
(4) Member of the Real Estate Investment Committee
(5) Member of the Nominating Committee
(6) Mr. Howard A. Jaffe was Chief Operating Officer, Secretary of the
Company and Vice Chairman of the Board during the 1997 Fiscal
Year. Mr. Jaffe resigned in July 1997 from all offices held (see
Note 12 to the Consolidated Financial Statements on Form 10-KSB
at June 30, 1997).
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Business Experience:
The principal occupation and business experience during the last five
years for each of the Directors and Executive Officers of the Company
are as follows:
John V. Winfield -- Mr. Winfield was first appointed to the Board in
1982. He currently serves as the Company's Chairman of the Board,
President and Chief Executive Officer, having first been appointed as
such in 1987. Mr. Winfield also serves as President, Chairman and Chief
Executive Officer of Santa Fe Financial Corporation and Portsmouth
Square, Inc.; Director of Healthy Planet Products, Inc., and as Director
for Orckit Communications, Ltd.
Josef A. Grunwald -- Mr. Grunwald is an industrial, commercial and
residential real estate developer. He serves as Chairman of PDG N.V.
(Belgium), a hotel management company, and President of I.B.E. Services
S.A. (Belgium), an international trading company. Mr. Grunwald was
first elected to the Board in 1987. Mr. Grunwald also serves as Director
of Portsmouth Square, Inc.
Howard A. Jaffe -- Mr. Jaffe joined the Company in June 1994 as Chief
Operating Officer. Mr. Jaffe was a partner in the law firm of Dorsey &
Whitney from January 1988 to May 1994. Prior to that, he was a partner
in the law firm Delson & Gordon. Mr. Jaffe was first elected to the
Board in 1987 and was elected Vice Chairman of the Board in 1994. He
also served as Secretary of the Company from 1987. Mr. Jaffe resigned
in July 1997, as Vice Chairman of the Board, Chief Operating Officer and
Secretary.
William J. Nance -- Mr. Nance is a certified public accountant and
private consultant to the real estate and banking industries. He also
serves as President of Century Plaza Printer, Inc. Mr. Nance was first
elected to the Board in 1984. He was appointed Treasurer, Chief
Operating Officer and Chief Financial Officer in 1987. Mr. Nance
resigned as Chief Operating Officer and Chief Financial Officer in
January 1990 but continues to serve as Treasurer. Mr. Nance is also
Vice President and Director of Santa Fe Financial Corporation and Vice
President, Secretary and Director of Portsmouth Square, Inc.
Mildred Bond Roxborough -- Ms. Roxborough has been Director of
Development and Special Programs of the National Association for the
Advancement of Colored People (NAACP) since 1986. Her responsibilities
include planning and implementing fundraising programs to support the
Association's national programs and developing and overseeing Special
Programs on national issues. She also serves as Vice Chairman of the
Board of Directors of America's Charities Federation, Chairman of its
Membership and Personnel Committees and member of its Long Range
Planning Committee; and Member of the Board of Directors of Morningside
Health and Retirement Service, Member of Personnel Committee of
Morningside Heights Housing Corporation. Ms. Roxborough was first
appointed to the Company's Board in 1984 and served as Vice Chairman
from 1987 through 1994.
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Gregory C. McPherson -- Mr. McPherson joined the Company in March 1993.
Mr. McPherson was a private financial and strategic advisor from January
1992 to March 1993 to companies in various industries. From July 1989
to December 1991, Mr. McPherson served as Vice President in the
Investment Banking and Corporate Finance Department of Kemper Securities
Group, Inc. From September 1987 to June 1989, Mr. McPherson attended
the Harvard Business School where he received his M.B.A. and during that
time was with Prudential Bache Capital Funding in their Mergers &
Acquisitions and Financial Restructuring Group. For the seven years
prior to attending the Harvard Business School, Mr. McPherson was a
manager at the public accounting firm of Price Waterhouse LLP. Mr.
McPherson is a Certified Public Accountant.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the Securities Exchange Act of 1934 and the rules of the
Securities and Exchange Commission, Directors and Executive Officers of
the Company, as well as persons holding more than 10% of the Company's
Common Stock, are required to file reports showing their initial
ownership of the Company's Common Stock and any subsequent changes in
that ownership with the Securities and Exchange Commission and all the
exchanges on which the Company's securities are registered by certain
specified due dates. Based solely on the Company's review of copies of
such reports furnished to the Company and written representations that
no other reports were required to be filed during the 1997 Fiscal Year,
all such reports that were required were filed on a timely basis.
Item 10. Executive Compensation.
The following table sets forth on an accrual basis all direct
remuneration paid by the Company to the Executive Officers of the
Company for the 1997 Fiscal Year, the 1996 Fiscal Year and the 1995
Fiscal Year, whose aggregate direct remuneration exceeded $100,000.
Estimated annual benefits upon retirement will include allocations under
the ESOP (defined below). Such benefits are not currently determinable
because the plan is voluntary and employee contributions and allocations
under the plan are discretionary. There are currently no employment
contracts with the Executive Officers. No Long-Term Compensation Award
or Payouts were made, and no Options or Stock Appreciation Rights
("SARs") were granted during the 1997 Fiscal Year, 1996 Fiscal Year or
1995 Fiscal Year.
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Name and Principal Other Annual
Position Year Salary Bonus Compensation
John V. Winfield 1997 $102,078(1)
Chairman; President 1996 $195,650 $36,622(2)
and Chief Executive 1995 $204,156 $56,114(2)
Officer
Gregory C. McPherson 1997 $97,082(3)
Executive Vice President; 1996 $191,655
Assistant Secretary and 1995 $172,704 $50,000
Assistant Treasurer
Howard A. Jaffe (4) 1997 $300,000
Vice Chairman; Chief 1996 $300,000
Operating Officer and 1995 $300,000
Secretary
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(1) Mr. Winfield is the president and Chairman of the Board of Santa Fe
Financial Corporation and Portsmouth Square, Inc., and received $102,078
of compensation from those entities during the 1997 Fiscal Year.
(2) Amounts include an auto allowance and imputed interest on a note due
the Company. The amount of compensation relating to interest on the
note was approximately $24,000 for Fiscal Year 1996 and $43,000 for
Fiscal Year 1995. The note receivables in connection with the stock
options was paid in full in March 1996. The remaining amount is for the
auto allowance.
(3) Mr. McPherson is a consultant of Portsmouth Square, Inc., and
received consulting fees of $86,282 during the 1997 Fiscal Year.
(4) Mr. Jaffe resigned in July 1997.
Employee Stock Ownership Plan and Trust ("ESOP")
In April 1986, the Company established an Employee Stock Ownership Plan
and Trust ("ESOP" or the "Plan"), effective July 1985, which enabled
eligible employees to receive an ownership interest in stock of the
Company. The Company did not make ESOP contributions during Fiscal Year
1997, Fiscal Year 1996 or Fiscal Year 1995. The Company made no stock
distributions during Fiscal Year 1997, and made distributions of 7,233
shares during Fiscal Year 1996 and 11,197 shares during Fiscal Year 1995
to terminated employees.
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Phantom Stock Program
The Company maintains a "phantom" stock program which provides for the
issuance of 40,000 units with each unit being equivalent to one share of
Common Stock. Participating members of the program are credited with
the incremental value in shares of common stock and dividend equivalents
over a five-year period from the date of award. One-fifth of such
credits to participants' accounts will vest on the first anniversary
date of the award and an additional one-fifth vest on each of the next
four anniversary dates. No units were granted in the 1997 Fiscal Year,
1996 Fiscal Year or the 1995 Fiscal Year and, as of June 30, 1997, no
units were outstanding.
Stock Incentive Plan
In 1987, the Board approved a Stock Incentive Plan providing for the
issuance of up to 125,000 shares of the Company's Common Stock pursuant
to the exercise of the stock options granted under the plan. The Plan
also provided for the issuance of SARs which may be granted in
connection with or without relation to the stock options. The plan was
approved by the Company's shareholders in 1988. In conjunction with the
Stock Incentive Plan, the Board and shareholders approved the grant of
an option to the Company's president for the purchase of 125,000 shares
of Common Stock at an exercise price of $11.50. During the 1996 Fiscal
Year, the Company's president fully exercised his option. No additional
options or SARs were granted under this plan, and no options to purchase
shares of Common Stock remain outstanding.
Compensation of Directors
The Company's arrangements for compensation of Directors is as follows:
the Chairman of the Board of Directors is eligible to receive $9,000 per
annum; each Director is eligible to receive a fee of $4,000 per annum
and a fee of $300 for each Board or committee meeting attended; and each
Director who is a chairman of a committee of the Board of Directors is
eligible to receive $350 for each committee meeting which he or she
chairs. The Directors who are also Executive Officers do not receive
any fee for attending either meetings of the board or of any Board
committee.
Except for the foregoing, there are no other arrangements for
compensation of Directors and there are no employment contracts between
the Company and its Directors.
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Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of September 30, 1997, certain
information with respect to the beneficial ownership of Common Stock
owned by (i) those persons or groups known by the Company to own more
than five percent of the outstanding shares of Common Stock, (ii) each
Director and Executive Officer, and (iii) all Directors and Executive
Officers as a group:
Name and address of Amount and Nature
Beneficial Owner of Beneficial Owner(1) Percentage(2)
John V. Winfield 411,249 (3) 43.1%
2121 Avenue of the Stars
Los Angeles, CA 90067
Josef A. Grunwald 32,465 3.4%
2121 Avenue of the Stars
Los Angeles, CA 90067
William J. Nance 17,000 1.8%
2121 Avenue of the Stars
Los Angeles, CA 90067
Mildred Bond Roxborough 1,045 *
2121 Avenue of the Stars
Los Angeles, CA 90067
Gregory C. McPherson 3,703(4) *
2121 Avenue of the Stars
Los Angeles, CA 90067
All Directors and
Executive Officers as a
Group (5 persons) 473,551 48.8%
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* Ownership does not exceed 1%.
(1) Unless otherwise indicated and subject to applicable community
property laws, each person has sole voting and investment power with
respect to the shares beneficially owned.
(2) Percentages are calculated on the basis of 953,649 shares of Common
Stock outstanding at September 30, 1997.
(3) Includes 13,549 shares allocated to Mr. Winfield under the ESOP.
Does not include an additional 6,457 shares held by the ESOP with
respect to which Mr. Winfield, as trustee, would have the power to vote
if voting instructions are not provided by the participants on a timely
basis.
(4) Includes 1,303 shares allocated to Mr. McPherson under the ESOP.
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Item 12. Certain Relationships and Transactions.
In March 1996, the Company's president paid in full the $830,173
outstanding balance of the note relating to his 1986 exercise of stock
options.
In May 1996, the Company's president exercised an option to purchase
125,000 shares of Common Stock at a price of $11.50 per share through a
full recourse note due the Company on demand, but in no event later than
May 2001. The note bears interest floating at the lower of 10% or the
prime rate (8.50% at June 30, 1997) with interest payable quarterly.
During the 1997 Fiscal Year, the president of the Company made interest
payments of $134,170 in connection with the note relating to his 1996
exercise of stock options. The balance of the note receivable at June
30, 1997 was $1,437,500.
The Company's Chief Executive Officer directs the investment activity of
the Company in public and private markets pursuant to the authority
granted by the Board of Directors. The Chief Executive Officer and
members of his immediate family have at times invested in the same
companies in which the Company has invested. The Company encourages
such investments because it places personal resources of the Chief
Executive Officer and his family members at risk in connection with
investment decisions made on behalf of the Company. Following
allegations concerning the Chief Executive Officer made by a former
officer and director of the Company, the Board of Directors authorized
committees of the Board to conduct a thorough and independent review of
such matters, including the Company's practices in this regard. That
review has not been completed (see Report on Form 8-K dated August 4,
1997).
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by
the undersigned, thereunto duly authorized.
THE INTERGROUP CORPORATION
(Registrant)
/s/ John V. Winfield
By: John V. Winfield
President; Chairman of
the Board and Chief
Executive Officer
October 27, 1997
