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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. __)
Executone Information Systems, Inc.
(Name of Issuer)
Common Stock
- ---------------------------------------------------------------------------
(Title of Class of Securities)
301607107
(CUSIP Number)
Andrew E. Shapiro, Manager Christopher J. Rupright, Esq.
Lawndale Capital Management, LLC Shartsis Friese & Ginsburg
One Sansome Street, Suite 3900 One Maritime Plaza, 18th Floor
San Francisco, CA 94104 San Francisco, CA 94111
(415) 288-2330 (415) 421-6500
- ---------------------------------------------------------------------------
June 3, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following
box / /.
`
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are
to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
Potential persons who are to respond to the collection of information
contained in this form are not required to respond unless the form displays
a currently valid OMB control number.
SEC 1746 (10-97)
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CUSIP No. 301607107 Page 2 of 12 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Lawndale Capital Management, LLC
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / X /
(b) / /
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ---------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 2,877,804
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,877,804
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,877,804
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
OO and IA
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CUSIP No. 301607107 Page 3 of 12 pages
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1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Andrew E. Shapiro
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- ---------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 9,875
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 2,877,804
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 9,875
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,877,804
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,887,679
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.8
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN<PAGE>
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CUSIP No. 301607107 Page 4 of 12 pages
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Diamond A Partners, L.P.
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ---------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 2,448,704
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,448,704
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,448,704
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.9
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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CUSIP No. 301607107 Page 5 of 12 pages
- ---------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
SS OR IRS IDENTIFICATION NO. OF ABOVE PERSON
Diamond A Investors, L.P.
- ---------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X /
(b) / /
- ---------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- ---------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(E) / /
- ---------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
California
- ---------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES -0-
BENEFICIALLY --------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 429,100
REPORTING --------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
429,100
- ---------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
429,100
- ---------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
- ---------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.9
- ---------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
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CUSIP No. 301607107 Page 6 of 12 pages
ITEM 1. SECURITY AND ISSUER.
This statement relates to Common Stock (the "Stock") of Executone Information
Systems, Inc. ("XTON"). The principal executive office of XTON is located at
478 Wheelers Farms Road, Milford, CT 06460.
ITEM 2. IDENTITY AND BACKGROUND.
The persons filing this statement and the persons enumerated in Instruction
C of Schedule 13D and, where applicable, their respective places of
organization, general partners, directors, executive officers and controlling
persons, and the information regarding them, are as follows:
(a) Lawndale Capital Management, LLC, a California limited liability company
("LCM"); Diamond A Partners, L.P., a California limited partnership
("DAP"); Diamond A Investors, L.P., a California limited partnership
("DAI"); and Andrew E. Shapiro ("Shapiro").
(b) The business address of LCM, DAP, DAI and Shapiro is One Sansome Street,
Suite 3900, San Francisco, California 94104.
(c) LCM is the investment adviser to and general partner of DAP and DAI,
which are investment limited partnerships. Shapiro is the sole manager
of LCM.
(d) During the last five years, none of such persons has been convicted in
a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, none of such persons was a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state
securities laws or finding any violation with respect to such laws.
(f) Shapiro is a citizen of the United States of America.
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CUSIP No. 301607107 Page 7 of 12 pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The source and amount of funds used in purchasing the Stock were as follows:
Purchaser Source of Funds Amount
LCM Funds Under Management(1) $6,551,523.82
DAP Working Capital $5,583,045.12
DAI Working Capital $ 968,478.70
Shapiro Personal Funds $ 24,045.63
(1) Includes funds of DAP and DAI invested in Stock.
ITEM 4. PURPOSE OF TRANSACTION.
XTON Restructuring to Realize Value.
On January 8, 1998, XTON announced it had retained Furman Selz LLC to advise
it as to corporate restructuring options that could increase shareholder
value and more fully develop its three primary business units: computer
telephony, healthcare communications and its UniStar subsidiary, which is
engaged in the management of telephone and Internet-based national lotteries.
Furman Selz LLC's engagement was to include the determination of how these
values may be better recognized and whether each of XTON's primary business
units should remain a part of the consolidated entity, become a standalone
company or be sold to a third party.
According to this same press release, XTON stated it believed that the market
price of XTON's common stock did not fairly recognize the potential of its
computer telephony and healthcare communications businesses or the growth
potential of UniStar. The closing price of XTON's stock the day before this
announcement was $2.125/share.
The Reporting Persons ("Lawndale") acquired the Stock solely for investment
purposes because it too believes that the value of the Stock in the public
market does not adequately reflect the value of XTON's underlying businesses
and assets.
Unistar Spinoff is Not Enough.
On April 15, 1998, XTON announced that its Board of Directors, based on the
advice of Furman Selz LLC, decided to pursue the separation of XTON's UniStar
subsidiary from its core computer telephony and healthcare communications
businesses through a distribution later this year. XTON also stated it was
continuing to "explore" other options for restructuring its remaining
computer telephony and healthcare communications businesses.
Lawndale believes that, to preserve and maximize shareholder value, XTON's
Board must take other actions in addition to "spinning off" the UniStar
subsidiary to shareholders. In this regard, Lawndale has been in contact
with management and members of the Board of Directors of XTON to discuss the
restructuring alternatives XTON plans to employ to maximize shareholder
value.<PAGE>
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CUSIP No. 301607107 Page 8 of 12 pages
Board Should Consider Additional Transactions.
On June 8, 1998, XTON received an unsolicited acquisition proposal from a
third party to acquire its computer telephony division for $50 million. The
next day XTON rejected this offer as not in the best interests of
shareholders. Lawndale agrees with XTON's decision to reject such an obvious
"low-ball" offer for its telephony business with annual revenues
approximating $120 million.
Lawndale believes, however, that it is incumbent on the Board of Directors,
in the proper exercise of its fiduciary duties to shareholders, to negotiate
in good faith with any party, (including that which has bid for the telephony
division), when and if such bidder(s) present bona-fide offers for all or any
part of XTON's operations within the range of values determined by XTON's
recent restructuring analysis.
Telephony Division Improvement.
While XTON's computer telephony division has a large installed base and
distribution network, recently introduced award-winning products, brand-name
recognition, recurring service contract revenue and a federal/national direct
sales force, Lawndale believes this division does not currently generate
enough revenues to earn an adequate return for shareholders.
On May 6, 1998, XTON announced, effective April 1, 1998, the termination of
geographic exclusivity previously granted to its largest distributor,
Claricom. While Lawndale believes that this termination may allow XTON to
more rapidly grow revenues in Claricom's territories, further restructuring
of the computer telephony unit is required to preserve and grow shareholder
value.
Lawndale believes that XTON's Board of Directors should aggressively pursue
a transaction or transactions that would generate additional stable computer
telephony revenue leveraging XTON's fixed overhead costs thereby increasing
operating cash flows. Transactions accomplishing the above-mentioned goal
could include, but are not limited to, strategic alliances or joint ventures
combining XTON telephony operations with synergistic industry participants
that might also provide additional management with experience and
demonstrated success in the telephony arena.
Lawndale has introduced XTON management to prospective customers and
transaction partners for both its computer telephony and healthcare
communications businesses.
Lawndale has also been in contact with other significant shareholders of XTON
regarding all the above-mentioned matters. Lawndale may continue such
activities. Lawndale did not at the time of the purchase of the Stock, and
does not presently, have any plan to acquire control of XTON. Lawndale may
buy or sell additional shares of Stock in the open market from time to time.
<PAGE>
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CUSIP No. 301607107 Page 9 of 12 pages
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The beneficial ownership of the Stock of the persons named in Item 2 of this
statement is as follows at the date hereof:
Aggregate
Beneficially
Owned Voting Power Dispositive Power
Name Number Percent Sole Shared Sole Shared
LCM 2,877,804 5.8 -0- 2,877,804 -0- 2,877,804
Shapiro 2,887,679 5.8 9,875 2,877,804 9,875 2,877,804
DAP 2,448,704 4.9 -0- 2,448,704 -0- 2,448,704
DAI 429,100 0.9 -0- 429,100 -0- 429,100
The persons filing this statement effected the following transactions in the
Stock on the dates indicated, and such transactions are the only transactions
in the Stock by the persons filing this statement since April 3, 1998:
Purchase Number Price
Name or Sale Date of Shares Per Share
DAP P 04-06-98 3,000 $2.208
DAP P 04-07-98 5,000 $2.219
DAP P 04-07-98 5,000 $2.250
DAP P 04-08-98 13,200 $2.175
DAP P 04-09-98 18,004 $2.164
DAP S 04-09-98 1,500 $2.219
DAI S 04-09-98 1,000 $2.219
DAP P 04-13-98 28,700 $2.157
DAI P 04-13-98 3,300 $2.157
DAP P 04-16-98 26,600 $2.155
DAI P 04-16-98 3,400 $2.155
DAP P 04-17-98 5,100 $2.250
DAI P 04-17-98 900 $2.250
DAP P 04-20-98 51,000 $2.250
DAI P 04-20-98 9,000 $2.250
DAP S 04-21-98 7,000 $2.613
DAI S 04-21-98 1,000 $2.613
DAP P 04-22-98 2,000 $2.547
DAP S 04-22-98 7,500 $2.831
DAI S 04-22-98 1,000 $2.831
DAP P 04-23-98 3,400 $2.406
DAI P 04-23-98 600 $2.406
DAP P 04-27-98 16,800 $2.339
DAI P 04-27-98 3,200 $2.339
DAP P 04-28-98 1,900 $2.313
DAI P 04-28-98 600 $2.313
DAP P 05-12-98 3,500 $2.375
(table continued on page 10)<PAGE>
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CUSIP No. 301607107 Page 10 of 12 pages
DAP P 05-13-98 9,300 $2.298
DAI P 05-13-98 1,700 $2.298
DAP P 05-14-98 46,800 $2.159
DAI P 05-14-98 8,200 $2.159
DAP P 05-15-98 2,100 $2.156
DAI P 05-15-98 400 $2.156
DAP P 05-18-98 8,700 $2.188
DAI P 05-18-98 1,300 $2.188
DAP P 05-26-98 1,000 $2.125
DAP P 05-26-98 25,000 $2.156
DAI P 05-26-98 4,000 $2.125
DAP P 05-27-98 10,000 $2.125
DAP P 05-27-98 25,000 $2.156
DAP P 05-27-98 28,800 $2.168
DAI P 05-27-98 11,200 $2.168
DAP P 05-28-98 23,900 $2.125
DAI P 05-28-98 4,100 $2.125
DAP P 05-29-98 35,300 $2.147
DAP P 05-29-98 2,000 $2.156
DAI P 05-29-98 6,600 $2.147
DAP P 06-01-98 17,000 $2.125
DAI P 06-01-98 3,000 $2.125
DAP P 06-02-98 1,000 $1.750
DAP S 06-02-98 1,000 $1.813
DAP P 06-02-98 8,800 $2.016
DAI P 06-02-98 1,200 $2.016
DAP P 06-03-98 20,500 $1.832
DAI P 06-03-98 3,900 $1.832
DAP P 06-04-98 6,500 $1.896
DAI P 06-04-98 1,100 $1.896
DAP P 06-05-98 35,700 $1.999
DAI P 06-05-98 6,300 $1.999
DAP P 06-08-98 90,000 $2.063
DAI P 06-08-98 16,000 $2.063
DAP P 06-09-98 21,300 $2.031
DAI P 06-09-98 3,700 $2.031
DAP P 06-10-98 19,500 $2.000
DAI P 06-10-98 3,500 $2.000
DAP P 06-11-98 42,600 $1.969
DAI P 06-11-98 7,400 $1.969
DAP P 06-12-98 100,000 $1.906
DAP P 06-12-98 6,300 $1.906
DAI P 06-12-98 18,700 $1.906
All transactions were executed through the Nasdaq National Market System.
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CUSIP No. 301607107 Page 11 of 12 pages
ITEM. 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
LCM is the general partner of DAP and DAI pursuant to limited partnership
agreements providing to LCM the authority, among other things, to invest the
funds of DAP and DAI in Stock, to vote and dispose of Stock and to file this
statement on behalf of DAP and DAI. Pursuant to such limited partnership
agreements, the general partner of DAP and DAI is entitled to allocations
based on assets under management and realized and unrealized gains.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
A. Agreement Regarding Joint Filing of Statement on Schedule 13D or 13G.
SIGNATURES
After reasonable inquiry and to the best of my knowledge, I certify that
the information set forth in this statement is true, complete and correct.
DATED: June 15, 1998.
DIAMOND A PARTNERS, L.P. DIAMOND A INVESTORS, L.P.
By: Lawndale Capital Management, LLC By: Lawndale Capital Management, LLC
General Partner General Partner
By: /s/ Andrew E. Shapiro By: /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager Manager
LAWNDALE CAPITAL MANAGEMENT, LLC
By: /s/ Andrew E. Shapiro /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager
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CUSIP No. 301607107 Page 12 of 12 pages
EXHIBIT A
AGREEMENT REGARDING JOINT FILING
OF STATEMENT ON SCHEDULE 13D OR 13G
The undersigned agree to file jointly with the Securities and Exchange
Commission (the "SEC") any and all statements on Schedule 13D or Schedule 13G
(and any amendments or supplements thereto) required under section 13(d) of
the Securities Exchange Act of 1934, as amended, in connection with purchases
by the undersigned of Common Stock of Executone Information Systems, Inc.
For that purpose, the undersigned hereby constitute and appoint Lawndale
Capital Management, LLC, a California limited liability company, as their
true and lawful agent and attorney-in-fact, with full power and authority for
and on behalf of the undersigned to prepare or cause to be prepared, sign,
file with the SEC and furnish to any other person all certificates,
instruments, agreements and documents necessary to comply with section 13(d)
and section 16(a) of the Securities Exchange Act of 1934, as amended, in
connection with said purchases, and to do and perform every act necessary and
proper to be done incident to the exercise of the foregoing power, as fully
as the undersigned might or could do if personally present.
DATED: June 15, 1998.
DIAMOND A PARTNERS, L.P. DIAMOND A INVESTORS, L.P.
By: Lawndale Capital Management, LLC By: Lawndale Capital Management, LLC
General Partner General Partner
By: /s/ Andrew E. Shapiro By: /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager Manager
LAWNDALE CAPITAL MANAGEMENT, LLC
By: /s/ Andrew E. Shapiro /s/ Andrew E. Shapiro
Andrew E. Shapiro Andrew E. Shapiro
Manager
