SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
Form 10-K405/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, 1995
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 [x].
The aggregate market value of the voting stock held by nonaffiliates of
the registrant as of April 11, 1996 was $125,768,418. See Item 12.
The number of shares of Common Stock outstanding as of April 11, 1996
was 10,781,797. The number of shares of Special Common Stock
outstanding as of April 11, 1996 was 485,618.
DOCUMENTS INCORPORATED BY REFERENCE
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The Directors of the Company are:
Term Expiring at the Director
1996 Annual Meeting Principal Occupation Age Since
- ------------------- -------------------- --- --------
Dennis J. McGillicuddy Chairman and a director of 54 1990
Coaxial Communications of Central
Ohio, Inc., Coaxial
Communications of Southern Ohio,
Inc. (cable television services)
and related entities
D. Stevens McVoy Vice President and a director of 52 1993
Coaxial Communications of Central
Ohio, Inc., Coaxial
Communications of Southern Ohio,
Inc. (cable television services)
and related entities
Term Expiring at the
1997 Annual Meeting
- -------------------
Richard L. Bready Chairman, President and Chief 51 1976
Executive Officer of the Company
Barry Silverstein Principal owner and a director of 63 1992
Coaxial Communications of Central
Ohio, Inc., Coaxial Communications
of Southern Ohio, Inc. (cable
television services) and related
entities
Term Expiring at the
1998 Annual Meeting
- -------------------
Philip B. Brooks Retired, Certified Public 82 1981
Accountant
Richard J. Harris Vice President and Treasurer of 59 1984
the Company
J. Peter Lyons President of The J. Peter Lyons 61 1991
Companies (consulting services for
employee insurance benefits)
Mr. McGillicuddy has been Chairman or 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 has been Chairman and Chief Executive Officer of
the Company for more than five years. He is also a director of Lehigh Group,
Inc. and Initial Acquisition Corp. Mr. Silverstein, for more than the past
five years, has been the principal owner and a 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 November 1995) of CCX, Inc. a manufacturer of building
products. Messrs. McGillicuddy and McVoy are also directors of CCX, Inc. Mr.
Brooks is a certified public accountant who retired from active practice in
1967. 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 addition to Messrs. Bready and Harris, the executive officers of the
Company are:
Name Age Position
- ---- --- --------
Almon C. Hall 49 Vice President, Controller and
Chief Accounting Officer
Siegfried Molnar 55 Senior Vice President - Group Operations
Kenneth J. Ortman 60 Senior Vice President - Group Operations
Kevin W. Donnelly 41 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.
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 1993, 1994 and 1995 of those persons who were, at December 31, 1995, the
Chief Executive Officer and the other four most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
Long-
Term
Compen-
sation
Awards
Annual Compensation(1) Securities All Other
Name and Underlying Compen-
Principal Position Year Salary Bonus Options sation(2)
- ------------------ ---- ------ ----- ---------- ---------
Richard L. Bready 1995 $771,696 $220,150 -0- $4,623
Chairman, President, 1994 751,404 259,525 -0- 3,300
and Chief Executive 1993 731,649 2,450,000* 150,000 3,420
Officer(3)
Almon C. Hall 1995 236,250 140,000 -0- 1,338
Vice President, 1994 225,000 157,500 -0- 1,168
Controller and Chief 1993 210,000 100,000 40,000 9,288
Accounting Officer
Richard J. Harris 1995 210,000 125,000 -0- 877
Vice President and 1994 200,000 140,000 -0- 766
Treasurer 1993 175,000 100,000 40,000 793
Kenneth J. Ortman 1995 185,000 60,000 -0- -0-
Senior Vice President- 1994 175,000 70,000 -0- -0-
Group Operations 1993 150,000 75,000 15,000 -0-
Kevin W. Donnelly 1995 165,000 65,000 -0- -0-
Vice President, General 1994 150,000 60,000 -0- -0-
Counsel and Secretary 1993 140,000 50,000 25,000 -0-
______________________
* A cumulative bonus for 1991, 1992 and 1993
(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 each of the years 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) For certain executive officers, the Company provides additional amounts
of life insurance over those provided to other salaried employees. The
amounts shown for 1995 are the premiums paid for such coverage.
(3) 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 the Company'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. Donnelly, Hall, Harris and Ortman. 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, 1996, 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 $2,395,000. Mr. Ortman is entitled to a minimum of 15 months
severance pay if his employment is terminated without cause.
Stock Options
The following table contains information with respect to the value
realized (market value less exercise price) of options exercised in 1995 by
those executive officers listed in the Summary Compensation Table and the value
of their unexercised options at year-end. No options were granted to any
executive officer in 1995.
AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
Value of
Number of 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 - - 187,500(1) - $615,625 -
Almon C. Hall - - 38,000 10,000 161,000 $30,000
Richard J. Harris 4,900 $45,938 40,100 10,000 179,638 30,000
Kenneth J. Ortman 2,000 16,000 29,150 3,750 192,613 11,250
Kevin W. Donnelly 1,500 12,375 20,250 6,250 69,563 18,750
_______________________
(1) 37,500 shares are Special Common Stock; all other option information
relates to Common Stock.
Pension Plan
The following table shows the estimated annual retirement benefits payable
at age 65 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 (the "Pension Plan").
PENSION PLAN TABLE
Annual Average
Remuneration
(last 5 years Years of Service
Prior to Retirement) 10 20 25 30 and over
- -------------------- -- -- -- -----------
$ 200,000.................. $31,315 $62,630 $78,288 $93,946
225,000.................. 35,440 70,880 88,601 106,321
250,000.................. 39,565 79,130 98,913 118,696
300,000.................. 47,815 95,630 119,538 143,446
350,000.................. 56,065 112,130 140,163 168,196
400,000.................. 64,315 128,630 160,788 192,946
1,000,000.................. 163,315 326,630 408,288 489,946
1,500,000.................. 245,815 491,630 614,538 737,446
2,000,000.................. 328,315 656,630 820,788 984,946
__________________
The annual benefits shown in the above table have not been reduced to reflect
the limitations imposed by the Internal Revenue Code of 1986, as amended (the
"Code"), which limit benefits payable from qualified plans to any individual.
Annual earnings for the purpose of calculating benefits include all
compensation reported on the employee's Form W-2. Benefits are not subject
to deduction for Social Security or other offset amounts. All benefits are
vested.
As of December 31, 1995 the Company's Pension Plan was frozen and no
increases in benefits will occur as a result of increases in service or
compensation. In part to compensate certain officers for the effect of the
limitations under the Code and the freezing of the Pension Plan, the Company
adopted, effective January 1, 1996, the Supplemental Executive Retirement Plan,
a non-qualified plan. Under this plan, Messrs. Bready, Hall and Harris will be
entitled to receive, at age 65, annual supplemental pension payments equal to
fifty percent (50%) of their highest consecutive five-year average
compensation, less the amounts to which they are entitled under the Pension
Plan. Messrs. Ortman and Donnelly will be entitled to receive, at age 65 and
subject to the completion of 10 years of service, annual supplemental pension
payments equal to thirty percent (30%) of their highest consecutive five-year
average compensation, less the amounts to which they are entitled under the
Pension Plan. As of December 31, 1995, Messrs. Bready, Hall and Harris had 21,
19 and 23 years of service respectively for the purposes of the Pension Plan
and Messrs. Ortman and Donnelly had 6 and 8 years of service respectively for
purposes of both the Pension Plan and the Supplemental Executive Retirement
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 11, 1996
except for the number of shares held by Gabelli Funds, Inc. as to which the
date is April 4, 1996.
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).... 1,890,759 17.3 318,327 60.9
Philip B. Brooks........... 38,600 * 6,699 1.4
Kevin W. Donnelly.......... 23,684 * 10 *
Almon C. Hall.............. 46,956 * 2,078 *
Richard J. Harris(4)....... 304,976 3.8 50,106 10.3
J. Peter Lyons............. - -
Dennis J. McGillicuddy(3).. 1,503,959 13.9 234,564 48.3
D. Stevens McVoy(3)........ 1,503,959 13.9 234,564 48.3
Kenneth J. Ortman.......... 40,489 * -
Barry Silverstein(3)....... 1,503,959 13.9 234,564 48.3
All directors and execu-
tive officers as a
group(3)(4)(5)............ 2,138,664 19.3 330,957 62.5
Bready Associates(3)....... 1,503,959 13.9 234,564 48.3
Phoenix Associates III(3).. 1,503,959 13.9 234,564 48.3
Gabelli Funds, Inc.
One Corporate Center
Rye, NY 10580............. 2,048,800 19.0 17,965 3.7
______________
* 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 (150,000 shares of Common Stock and 37,500 shares of Special
Common Stock), Brooks (36,000 shares of Common Stock and 6,000 shares of
Special Common Stock), Hall (30,000 shares of Common Stock), Harris (40,100
shares of Common Stock), Ortman (29,150 shares of Common Stock) and
Donnelly (20,250 shares of Common Stock). Does not include future rights
to acquire shares upon the exercise of options in the case of Messrs. Hall
(10,000 shares of Common Stock), Harris (10,000 shares of Common Stock),
Ortman (3,750 shares of Common Stock) and Donnelly (6,250 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 11, 1996. 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 11, 1996 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 9.5% of the outstanding Special Common Stock at April 11, 1996.
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 305,500 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 30,000 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 11, 1996, beneficially owned more than 5% of the
shares of Common Stock or Special Common Stock of the Company outstanding
on that date.
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. (EEI) which is the general
partner of EEA. The Company has made an investment in EEA of $1,360,000
through March 1996 in the form of a note with interest accruing at 2% over
prime and compounded annually and is currently investing at the rate of $15,000
per month contingent on EEI matching such investment and subject to termination
at the discretion of management. The note, secured by a first lien on the
partnership assets, matures on January 8, 1998. The Company also receives, 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: April 25, 1996 By: /s/Richard L. Bready
-------------------------
Richard L. Bready
Chairman
