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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 10-K/A
Amendment No. 1
(Mark One) ------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1993
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: 1-6112
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Nortek, Inc.
(exact name of Registrant as specified in its charter)
Delaware 05-0314991
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
50 Kennedy Plaza 02903-2360
Providence, Rhode Island (zip code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(401) 751-1600
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, $1.00 par value New York Stock Exchange
Preference Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of Class
Special Common Stock, $1.00 par value
Indicate by check mark whether 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 [ ].
The aggregate market value of the voting stock held by
nonaffiliates of the registrant as of March 15, 1994 was
$88,952,237. See Item 12.
The number of shares of Common Stock outstanding as of March 15,
1994 was 11,981,179. The number of shares of Special Common
Stock outstanding as of March 15, 1994 was 560,768.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART III
Item 10. Directors and Executive Officers of the Registrant.
The Directors of the Company are:
Term Expiring at Director
1994 Annual Meeting Principal Occupation Age Since
Dennis J. McGillicuddy President and Director of Coaxial 52 1990
Communications of Central Ohio,
Inc., Coaxial Communications of
Southern Ohio, Inc. (cable
television services) and related
entities
D. Stevens McVoy Vice President and Director of 51 1993
Coaxial Communications of Central
Ohio, Inc., Coaxial
Communications of Southern Ohio,
Inc. (cable television services)
and related entities
Term Expiring
at 1995 Annual Meeting
Richard L. Bready Chairman, President and Chief 49 1976
Executive Officer of the Company
Philip B. Brooks Retired, Certified Public 80 1981
Accountant
Barry Silverstein Principal owner and Director of 61 1992
Coaxial Communications of Central
Ohio, Inc., Coaxial Communications
of Southern Ohio, Inc. (cable
television services) and related
entities
Term Expiring at the
1996 Annual Meeting
Richard J. Harris Vice President and Treasurer of 57 1984
the Company
J. Peter Lyons President of The J. Peter Lyons 59 1991
Companies (consulting services for
employee insurance benefits)
Mr. McGillicuddy has been President and a director and Mr. McVoy has been
Vice President and a director, for more than the past five years, of the
Coaxial Communications Companies, which they founded along with Mr.
Silverstein. Mr. Bready became Chairman and Chief executive Officer of the
Company in 1990 after serving as President, Chief Operating Officer and Chief
Financial Officer of the Company for more than the past five years. Mr. Brooks
is a certified public accountant who retired from active practice in 1967. Mr.
Silverstein, for more than the past five years, has been the principal owner
and director of the Coaxial Communications Companies, which he founded along
with Messrs. McGillicuddy and McVoy. Mr. Silverstein has also been Chief
Executive Officer (June 1985 to May 1988 and February 1991 to May 1991),
Chairman of the Executive Committee (May 1988 to February 1991) and Chairman of
the Board (June 1986 to May 1988 and February 1991 to present) of CCX, Inc. a
manufacturer of building products. Messrs. Bready, McGillicuddy and McVoy are
also directors of CCX, Inc. Mr. Harris has been employed by the Company in his
present capacities for more than the past five years. Mr. Lyons, for more than
the past five years, has been President of The J. Peter Lyons Companies which
has designed benefit plans and provided insurance services to the Company.
In a civil injunction action filed March 12, 1990 in the federal court in
Washington, D.C., the Securities and Exchange Commission ("SEC") alleged that
the Company violated Sections 10(b) and 13(d) of the Securities Exchange Act of
1934 and Rules 10b-5 and 13d-1 thereunder in connection with reporting on a
Schedule 13D its purchases of stock of Rexham Corporation ("Rexham") in January
1987. The complaint also alleged that Messrs. Harris and Bready and Ralph R.
Papitto (former Chairman and Chief Executive Officer of the Company) aided and
abetted the Company's violations of Section 13(d) and Rule 13d-1. For purposes
of settling, each of the Company and Messrs. Papitto, Harris and Bready,
without admitting or denying the SEC allegations, agreed to an entry of a
permanent injunction enjoining them from future violations of the statutory
provisions and rules they were alleged to have violated and the Company agreed
to pay into a fund created by the Court $634,593 including interest, to
compensate persons who sold Rexham securities during the four-day period the
Company's Schedule 13D filing was allegedly delinquent.
In addition to Messrs. Bready and Harris, the executive officers of the
Company are:
Name Age Position
Almon C. Hall 47 Vice President, Controller and
Chief Accounting Officer
Siegfried Molnar 53 Senior Vice President - Group Operations
Kenneth J. Ortman 58 Senior Vice President - Group Operations
Kevin W. Donnelly 39 Vice President, General Counsel and
Secretary
The executive officers have served in the same or substantially similar
executive positions with the Company for at least the past five years, except
Mr. Molnar, who was President and Chief Operating Officer (1987-1990) of RB&W
Corporation prior to joining the Company in March 1990; and Mr. Ortman, who was
Vice President, Operations and later Senior Vice President and General Manager
of the Supply Division of the Wheelabrator Corporation division of
Wheelabrator Technologies (1984-1988) prior to joining the Company in
September, 1989.
Section 16(a) Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and beneficial owners of more than 10%
of its Common Stock or Special Common Stock to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission and the New York Stock Exchange and to furnish the Company with
copies of the reports they file. Messrs. McGillicuddy, McVoy and Silverstein,
directors and beneficial owners of more than 10% of the Company's Common Stock
failed to file Form 4 reports and an annual Form 5 report reflecting
acquisitions of Common Stock by Bready Associates, a partnership in which they
are partners. Form 5 reports regarding these acquisitions have been filed
late. In addition, Mr. McVoy has filed late a Form 4 report reflecting
acquisitions of Common Stock.
Item 11. Executive Compensation.
The following table sets forth, on an accrual basis, information
concerning the compensation for services to the Company and its subsidiaries
for 1991, 1992 and 1993 of those persons who were, at December 31, 1993, the
chief executive officer and the other four most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
Annual Compensation(1) Long- All Other
Term Compen-
Compen- sation(2)(3)
sation
Awards
Securities
Name and Underlying
Principal Position Year Salary Bonus Options
Richard L. Bready 1993 $731,649 $2,450,000 150,000 $3,420
Chairman, President, 1992 711,029 -0- -0- 3,780
and Chief Executive 1991 689,650 -0- -0-
Officer(4)
Almon C. Hall 1993 210,000 100,000 40,000 9,288
Vice President, 1992 210,000 75,000 -0- 1,338
Controller and Chief 1991 210,000 150,000 -0-
Accounting Officer
Richard J. Harris 1993 175,000 100,000 40,000 793
Vice President and 1992 175,000 75,000 -0- 877
Treasurer 1991 175,000 125,000 -0-
Siegfried Molnar 1993 200,000 30,000 -0- -0-
Senior Vice President- 1992 200,000 20,000 -0- -0-
Group Operations 1991 200,000 -0- -0-
Kenneth J. Ortman 1993 150,000 75,000 15,000 -0-
Senior Vice President- 1992 150,000 75,000 -0- -0-
Group Operations 1991 150,000 35,000 -0-
______________________
(1)The aggregate amount of any compensation in the form of perquisites and
other personal benefits (club dues, personal use of Company property, etc.)
paid in 1992 and 1993 based on the Company's incremental cost, did not
exceed the lesser of 10% of the executive officer's annual salary and bonus
or $50,000.
(2)No disclosure is made of All Other Compensation for 1991 as permitted by
the transition rules of the Securities and Exchange Commission.
(3)For certain executive officers, the Company provides additional amounts of
life insurance over those provided to other salaried employees. The
amounts shown for 1993 are the premiums paid for such coverage. In
addition $8,077 in accrued vacation pay for Mr. Hall is included for 1993.
(4)Mr. Bready's employment agreement with the Company provides for his
employment as President and Chief Executive Officer through December 31,
1998. As of November 1, 1990, his annual base salary was $650,000 with
adjustments based upon increases in the cost of living. The agreement also
provides for incentive compensation based upon Nortek's annual consolidated
pre-tax earnings as follows: 0.7% of the amount of such earnings up to
$10,000,000, plus 1.05% of the amount of such earnings in excess of
$10,000,000 and provides that discretionary bonuses may be awarded. In
1993 the Company awarded Mr. Bready a bonus covering the years 1991, 1992
and 1993 in the total amount of $2,450,000. The employment agreement may
be terminated at the election of Mr. Bready and in such event he is to be
retained by the Company for five years as a consultant at an annual rate of
60% of his then current annual salary, plus incentive compensation. The
Company may terminate the agreement at any time but in such event Mr.
Bready would receive severance pay in an amount equal to 60% of his then
current annual salary, plus incentive compensation, payable for five years
following termination. If there has been a Change in Control of the
Company (as defined in the agreement) within two years before or one year
after his termination, then Mr. Bready may elect to accelerate the receipt
of his severance pay. If he becomes disabled or dies while employed, the
Company will pay to Mr. Bready or his estate an amount equal to 60% of his
then current annual salary, plus incentive compensation for five years, or,
if he was performing consulting services at the time, an amount equal to
60% of the consulting fee plus incentive compensation for the remainder of
the consulting period. Mr. Bready is entitled to receive bonuses and to
participate in any of the Company's corporate incentive and other benefit
plans except for the Company's 401(k) plan in which no executive officers
are eligible to participate.
The Company has established a severance plan for certain of its executive
officers, including Messrs. Hall, Molnar, Ortman, and Harris. The plan
provides that in consideration of each such employee's agreement not to
voluntarily terminate his employment if there is an attempted Change in Control
(as that term is defined in the plan) of the Company, if such an employee is
terminated within the 24-month period following a Change in Control (including
termination by reason of a material adverse change in the terms of employment
as provided in the plan), such employee will be entitled to severance pay for a
period of 24 months following such termination at a rate equal to his base
salary plus bonus or incentive compensation (at the highest rate in the
previous three years) and to continued medical, life insurance and other
benefits for such 24-month period (or payment of an amount equal to the cost
of providing such benefits). If a Change in Control were to have occurred
as of March 1, 1994, and the named executive officers were terminated as of
such date, the officers covered under this plan would have been entitled to
receive, over the next succeeding 24-month period, an aggregate of
approximately $2,230,000. Mr. Ortman is entitled to a minimum of 15 months
severance pay if his employment is terminated without cause.
Stock Options
The following table provides information regarding stock options granted
to the named executive officers in 1993. In addition, hypothetical gains are
shown based on assumed rates of annual compound stock price appreciation of 5%
and 10% from the date the options were granted over the full option term.
Except for Mr. Bready the options are exercisable as to 25% on the date of
grant (December 30, 1993) and thereafter as to an additional 25% on each
anniversary date of the grant. Mr. Bready's options are exercisable two years
after the date of grant.
OPTION GRANTS IN 1993
% of
Total
Options
No. of Granted Potential Realizable
Shares to Value at Assumed
Under- Employ- Annual Rates of Stock
lying ee's Exer- Price Appreciation
Options in cise Expira- for Option Term
Name Granted 1993 Price tion Date 5% 10%
Richard L. Bready 150,000 53.6% $8.75 12/30/03 $825,000 $2,092,500
Almon C. Hall 40,000 14.3 8.75 12/30/03 220,000 558,000
Richard J. Harris 40,000 14.3 8.75 12/30/03 220,000 558,000
Kenneth J. Ortman 15,000 5.4 8.75 12/30/03 82,500 209,250
The following table contains information with respect to the value
realized (market value less exercise price) of options exercised in 1993 by
those executive officers listed in the Summary Compensation Table and the value
of their unexercised options at year-end.
AGGREGATED OPTION EXERCISES IN 1993 AND YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Year-End Year-End
Acquired Value
on Real- Exer- Unexer- Exer- Unexer-
Name Exercise ized cisable cisable cisable cisable
Richard L. Bready - - 37,500(1) 150,000 $62,500 $37,500
Almon C. Hall - - 18,000 30,000 51,500 7,500
Richard J. Harris - - 30,000 30,000 125,000 7,500
Siegfried Molnar - - 8,000 16,000 49,000 98,000
Kenneth J. Ortman 2,800 $13,650 25,950 11,250 136,913 2,813
_______________________
(1)Special Common Stock; all other option information relates to Common Stock.
Pension Plan
The following table shows the estimated annual retirement benefits payable
as a straight-life annuity to eligible employees of the Company, including
executive officers, under the Company's qualified pension plan for its
headquarters employees. Annual earnings for the purpose of calculating
benefits (includes all compensation reported on the employee's Form W-2) cannot
exceed certain limitations; the limit for 1993 was $235,840.
Annual Average
Remuneration
(last 5 years Years of Service
Prior to Retirement) 10 20 25 30 and over
$150,000.................. $23,273 $46,547 $58,184 $69,820
175,000.................. 27,398 54,797 68,496 82,195
200,000.................. 31,523 63,047 78,809 94,570
225,000.................. 35,648 71,297 89,121 106,945
235,840.................. 37,437 74,874 93,593 112,311
The maximum annual benefit payable by a qualified pension plan in the form
of a life annuity is limited to $115,641 plus adjustments for increases in the
cost of living after 1993. Benefits are not subject to deduction for Social
Security or other offset amounts.
As of March 1, 1994 Messrs. Bready, Hall, Harris, Molnar and Ortman had
19, 17, 21, 4 and 4 years of service, respectively for the purposes of the
plan.
The Company provides deferred compensation benefits for Messrs. Bready,
Hall and Harris. The agreements provide for 180 monthly payments beginning at
age 65, although in the Company's discretion, the employee may receive reduced
benefits upon retirement as early as age 60. Benefits are subject to
forfeiture (except in the case of Mr. Bready) in the event employment
terminates for any reason prior to age 60. Benefits are also subject to
forfeiture in the event that the employee engages in competitive activity.
Monthly payments to Messrs. Bready, Hall and Harris respectively, will,
assuming retirement at age 65, be $5,050, $1,833 and $1,833.
Directors who are not officers or employees of the Company or its
subsidiaries receive directors' fees from the Company. The fees currently paid
to such directors are $1,000 per month and $750 per meeting ($350 if a director
participates by telephone). In addition, members of committees of the Board of
Directors receive $350 per committee meeting.
Board of Directors Interlocks and Insider Participation
Mr. Bready, President and Chief Executive officer of the Company is
Chairman of the Board of Directors. Mr. Harris, Vice President and Treasurer
of the Company is also a director. As directors they participate in Board
deliberations regarding executive compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth the beneficial ownership of equity
securities of the Company by the Company's directors, by its executive officers
named in the Summary Compensation Table, by its directors and executive
officers as a group, and by these known by the Company to own beneficially more
than 5% of its Common Stock or Special Common Stock, all as of April 15, 1994
except for the number of shares held by Gabelli Funds, Inc. as to which the
date is November 2, 1992 and by UBS Asset Management (New York) Inc. as to
which the date is December 31, 1993.
Common Stock Special Common Stock
Amount and Amount and
Nature of Nature of
Beneficial Percent Beneficial Percent
Name(1) Ownership(2) of Class Ownership(2) of Class
Richard L. Bready(3)(4).... 1,740,759 14.5 318,327 53.6
Philip B. Brooks........... 38,600 * 6,699 1.2
Almon C. Hall.............. 28,613 * 2,078 *
Richard J. Harris(4)....... 287,376 2.4 50,106 9.0
J. Peter Lyons............. - -
Dennis J. McGillicuddy(3).. 1,503,959 12.5 234,564 42.2
D. Stevens McVoy(3)........ 1,503,959 12.5 234,564 42.2
Siegfried Molnar........... 22,000 * -
Kenneth J. Ortman.......... 32,989 * -
Barry Silverstein(3)....... 1,503,959 12.5 234,564 42.2
All directors and execu-
tive officers as a
group(3)(4)(5)............ 1,924,721 15.9 330,957 55.2
Bready Associates(3)....... 1,503,959 12.5 234,564 42.2
Phoenix Associates III(3).. 1,503,959 12.5 234,564 42.2
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580(6).......... 2,031,215 16.6 24,631 4.4
UBS Asset Management
(New York) Inc.
1211 Avenue of the
Americas, New York,
NY 10035(6)............... 977,400 8.2 -
______________
*Less than 1%
(1)The address of all such persons unless otherwise stated is c/o Nortek,
Inc., 50 Kennedy Plaza, Providence, Rhode Island 02903-2360. The address
of Mr. McVoy, Bready Associates and Phoenix Associates III is 3770 East
Livingston Avenue, Columbus, Ohio 43227. The address of Messrs.
McGillicuddy and Silverstein is 5111 Ocean Boulevard, Sarasota, Florida
34242. Certain of the shares shown in the table are shares as to which the
persons named in the table have the right to acquire beneficial ownership,
as specified in Rule 13d-3(d)(1) promulgated under the Securities Exchange
Act of 1934 as amended. Unless otherwise indicated, the persons or
entities identified in this table have sole voting and investment power
with respect to all shares shown as beneficially held by them, subject to
community property laws where applicable.
(2)Includes shares subject to currently exercisable options in the case of
Messrs. Bready (37,500 shares of Special Common Stock), Brooks (36,000
shares of Common Stock and 6,000 shares of Special Common Stock), Hall
(18,000 shares of Common Stock), Harris (30,000 shares of Common Stock),
Molnar (16,000 shares of Common Stock) and Ortman (25,950 shares of Common
Stock). Does not include future rights to acquire shares upon the exercise
of options in the case of Messrs. Bready (150,000 shares of Common Stock),
Hall (30,000 shares of Common Stock), Harris (30,000 shares of Common
Stock), Molnar (8,000 shares of Common Stock) and Ortman (11,250 shares of
Common Stock). Includes 200 shares of Common Stock and 33 shares of Special
Common Stock beneficially owned by Mr. McGillicuddy's wife, as to which Mr.
McGillicuddy disclaims beneficial ownership, and 2,869 shares of Common
Stock jointly owned by Mr. McVoy and his wife.
(3)Mr. Bready holds a 15% junior interest (1% senior interest), Mr.
McGillicuddy a 19% junior interest (22% senior interest), Mr. McVoy a 9%
junior interest (10% senior interest) and Mr. Silverstein a 57% junior
interest (67% senior interest) in Bready Associates, a partnership which
directly held 1,059,291 shares of Common Stock at April 15, 1994. Under
the terms of the partnership agreement of Bready Associates, the
partnership also exercises sole voting and dispositive power over shares of
Common and Special Common held by the partners and their affiliates.
Phoenix Associates III is a partnership whose general partners are Messrs.
McGillicuddy (a 22.5% interest), McVoy (a 10% interest) and Silverstein a
67.5% interest). As of April 15, 1994 Phoenix Associates III directly held
183,700 shares of Common Stock. Accordingly, all shares held by the
partnerships, the partners and their affiliates are included in the table
as being beneficially owned by Messrs. Bready, McGillicuddy, McVoy and
Silverstein and by the partnerships and are also included under shares held
by directors and executive officers as a group.
(4)Various defined benefit pension plans of the Company and certain of its
subsidiaries held approximately 2.2% of the outstanding Common Stock of the
Company and 8.3% of the outstanding Special Common Stock at April 15, 1994.
Under the provisions of the trust agreement governing the plans, the
Company may instruct the trustee regarding the acquisition and disposition
of plan assets and the voting of securities held by the trust.
Accordingly, although the directors and officers disclaim beneficial
ownership of such shares, the shares are included in the table as being
beneficially owned by Messrs. Bready and Harris and are also included under
shares held by directors and executive officers as a group.
(5)Includes 135,200 shares of Common Stock and 43,500 shares of Special Common
Stock that directors and executive officers as a group have a right to
acquire upon the exercise of currently exercisable options. Does not
include future rights of executive officers to acquire shares upon exercise
of options totalling 248,000 shares of Common Stock. Includes 200 shares
of Common Stock and 33 shares of Special Common Stock owned by Mr.
McGillicuddy's wife as to which Mr. McGillicuddy disclaims beneficial
ownership, and 2,869 shares of Common Stock jointly owned by Mr. McVoy and
his wife. Except as set forth in the above table, the Company knows of no
persons who at April 15, 1994, beneficially owned more than 5% of the
shares of Common Stock or Special Common Stock of the Company outstanding
on that date.
(6)The information is based on filings made with the Commission and for
Gabelli Funds, Inc. includes 234,915 shares of Common Stock which may be
acquired upon the exercise of conversion rights of the Company's 7 1/2%
Convertible Debentures due 2006 at $21.56 per share.
Item 13. Certain Relationships and Related Transactions.
Investment in Ecological Engineering Associates Limited Partnership.
Ecological Engineering Associates Limited Partnership (EEA) is engaged in the
design and operation of wastewater-treatment systems. Messrs. McGillicuddy,
Silverstein and McVoy, directors of the Company, are directors and sole
stockholders of Environmental Engineering Inc. which is the general partner of
EEA. The Company has made an investment in EEA of $970,000 through April 1994
in the form of a note with interest accruing at 2% over prime and compounded
annually and will continue to invest at the rate of $30,000 per month through
May 1994 at which time the matter will be reevaluated. The note, secured by a
first lien on the partnership assets, matures on January 8, 1998. The Company
has also received, in connection with its investment, warrants to acquire
limited partnership units proportionate to all debt and equity investments made
by other investors in EEA.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to its Annual Report on Form 10-K to
be signed on its behalf by the undersigned hereunto duly authorized.
NORTEK, INC.
Dated: May 2, 1994 By: /s/Richard J. Harris
Richard J. Harris
Vice President and Treasurer
