SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
AMENDMENT No. 1 TO ANNUAL REPORT
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR FISCAL YEAR ENDED DECEMBER 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
COMMISSION FILE NUMBER 0-14567
ACC CORP.
400 West Avenue
Rochester, New York 14611
716-987-3000
Incorporated under the Laws of the State of Delaware
Employer Identification Number 16-1175232
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Class: Common Stock, par value $.015 per share
Indicate by check mark whether the Company (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 Company
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 checkmark 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 the Company'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. [ ]
Aggregate market value of all Common Stock held by non-affiliates as of March
10, 1995 = $106,964,000.
6,926,012 shares of $.015 par value Common Stock were issued and outstanding
as of March 10, 1995
The purpose of this Amendment is to file certain information under Part
III of this Form, as required by General Instruction G(3) to this Report, that
was not included in the Company's Report as filed, and to amend Part IV in the
previously filed Report to include the financial statements for the Company's
Employee Stock Purchase Plan that would otherwise be required to be filed on a
Form 11-K, but which are permitted by Exchange Act Rule 15d-21 to be filed as
an amendment to this Report.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
As permitted by General Instruction G(3), information regarding the
executive officers of the Company is found in Part I of this Report, under the
heading "Executive Officers of the Company." The following sets forth
information concerning the principal occupations and business experience of
the current Directors of the Company:
Richard T. Aab, 46, is a co-founder of the Company who has served as
Chairman of the Board since March, 1983, as Chief Executive Officer since
August, 1983, and as a Director since October, 1982. Mr. Aab also served as
Chairman of the Board of the Company's ACC TelEnterprises Ltd. subsidiary from
April, 1993 through February, 1994.
Hugh F. Bennett, 38, has been a Director of the Company since June,
1988. Since March, 1990, Mr. Bennett has been a Vice President, Director and
Secretary-Treasurer of the Boston, Massachusetts investment banking firm of
Gagan, Bennett & Co., Inc.
Arunas A. Chesonis, 32, was elected the Company's President and Chief
Operating Officer in October, 1994. He previously served as President of the
Company and of its Domestic Group from February, 1994 through October, 1994,
and as President of its ACC Long Distance Corp. subsidiary from January, 1989
through February, 1994. From August, 1990 through March, 1991, Mr. Chesonis
also served as President of the Company's ACC TelEnterprises Ltd. subsidiary.
Mr. Chesonis was elected a Director of the Company in October, 1994.
The Hon. Willard Z. Estey, C.C., Q.C., 74, is Counsel to the Toronto,
Ontario law firm of McCarthy, Tetrault. After serving as Chief Justice of
Ontario, Mr. Estey was a Justice of the Supreme Court of Canada from 1977
through 1988. From 1988 through 1990, Mr. Estey was Deputy Chairman of
Central Capital Corporation, Toronto, Ontario. Mr. Estey has also served as a
Director of the Company's ACC TelEnterprises Ltd. subsidiary since May, 1993.
Mr. Estey was elected a Director of the Company in October, 1994.
David K. Laniak, 59, has been a Director of the Company since February,
1989. Mr. Laniak is Executive Vice President and Chief Operating Officer of
Rochester Gas and Electric Corporation, Rochester, New York. Mr. Laniak has
worked in a variety of positions for Rochester Gas and Electric Corporation
for more than 30 years. Mr. Laniak is a Director of Rochester Gas and
Electric Corporation, and served as a Director of the Company's ACC
TelEnterprises Ltd. subsidiary from May, 1993 through July, 1994.
Robert F. Sykes, 71, has been a Director of the Company since August,
1988. Mr. Sykes is a general partner of Sykes Associates, an investment
partnership. Previously, for a number of years before his retirement, he
served as Chairman and Chief Executive Officer of Sykes Datatronics, Inc., a
manufacturer and marketer of computerized telephone cost management systems.
Mr. Sykes served as a Director of the Company's ACC TelEnterprises Ltd.
subsidiary from June, 1993 through November, 1994, and currently serves as a
Director of Everflow Management Corp., an oil and gas production company.
Daniel D. Tessoni, 47, has been a Director of the Company since May,
1987. Mr. Tessoni is an Associate Professor of Accounting at the College of
Business of the Rochester Institute of Technology, where he has taught since
1977. He holds a Ph.D. degree, is a Certified Public Accountant, and is
Treasurer of several privately-held business concerns.
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, Directors and other persons who own more than
ten percent of the Company's Common Stock (collectively, "reporting persons")
to file reports of their ownership of and changes in ownership in their
Company shareholdings with both the Securities and Exchange Commission ("SEC")
and the National Association of Securities Dealers, Inc. ("NASD") and to
furnish the Company with copies of all such forms (known as Forms 3, 4 and 5)
filed.
Based solely on its review of the copies of such forms it received or on
written representations received from certain reporting persons that they were
not required to file a Form 5 report with respect to 1994, the Company
believes that with respect to transactions occurring in 1994, all Form 3, 4
and 5 filing requirements applicable to its reporting persons were complied
with, except that Mr. Sykes was late in filing one Form 4 with respect to one
transaction involving the Company's shares, and Felicity Guest, Anthony M.
Marion, S. Patrick Martin, George H. Murray, Jr. and Daniel J. Venuti took
longer than the ten days allowed under SEC rules to file their respective Form
3 Reports following their being named officers of the Company for Section 16
purposes in November, 1994.
Item 11. EXECUTIVE COMPENSATION.
The following table sets forth information concerning the compensation
and benefits paid by the Company for all services rendered during 1994, 1993
and 1992 to five individuals: Richard T. Aab, who is and was, at December 31,
1994, serving as the Company's Chairman and Chief Executive Officer, and
Richard E. Sayers, Arunas A. Chesonis, Michael R. Daley and Christopher
Bantoft, who were, as of December 31, 1994, the other four most highly
compensated executive officers of the Company whose 1994 salary and bonus
exceeded $100,000 in amount (individually, a "Named Executive" and
collectively, the "Named Executives"):
<PAGE>
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Name and Annual
Principal Position Year Salary($) Bonus($) Compensation
<S> <C> <C> <C> <C>
Richard T. Aab, 1994 $315,962 $ 62,000 -- (2)
Chairman and Chief 1993 $304,241 $330,000 (4) -- (2)
Executive Officer 1992 $253,290 $ -0- (5) $27,283 (6)
(1)
Richard E. Sayers, 1994 $166,539 $ 32,000 -- (2)
Vice Chairman (7) 1993 $184,471 $123,000 (10) -- (2)
1992 $134,183 $ -0- (5) $14,425 (12)
Arunas A. Chesonis, 1994 $160,192 $ 32,000 -- (2)
President and Chief 1993 $134,250 $ 44,000 -- (2)
Operating Officer 1992 $128,815 $ 40,000 -- (2)
(7)
Michael R. Daley, 1994 $135,288 $ 27,000 -- (2)
Executive Vice 1993 $112,596 $ 65,000 (19) -- (2)
President and Chief 1992 $ 87,750 $ -0- (5) -- (2)
Financial Officer
(7)
Christopher Bantoft,1994 $134,430 $ 20,400 -- (2)
Managing Director, 1993 NA NA NA
ACC Long Distance 1992 NA NA NA
UK Ltd.
SUMMARY COMPENSATION TABLE: CONTINUED:
</TABLE>
<TABLE>
Long Term Compensation
Awards
Name and Securities Underlying All Other
Principal Position Year Options (#) Compensation ($)
<S> <C> <C> <C>
Richard T. Aab, 1994 -0- $ 6,985 (3)
Chairman and Chief 1993 -0- $ 9,305 (3)
Executive Officer 1992 -0- $ 4,115 (3)
(1)
Richard E. Sayers, 1994 50,000 (8) $183,679 (9)
Vice Chairman (7) 1993 -0- $268,048 (11)
1992 -0- $ 2,277 (13)
Arunas A. Chesonis, 1994 50,000 (14) $ 5,073 (15)
President and Chief 1993 30,000 (16) $ 4,283 (15)
Operating Officer 1992 -0- $ 983 (15)
(7)
Michael R. Daley, 1994 50,000 (17) $ 4,312 (18)
Executive Vice 1993 10,000 (20) $ 3,597 (18)
President and Chief 1992 7,500 (21) $ 663 (18)
Financial Officer
(7)
Christopher Bantoft,1994 50,000 (22) $ 9,017 (23)
Managing Director, 1993 NA NA
ACC Long Distance 1992 NA NA
UK Ltd.
______________________________
NA Indicates Not Applicable, because the particular Named Executive was not
an executive officer of the Company during the year indicated.
(1) The Company has entered into a Severance Agreement with Mr. Aab that
provides that if he is ever terminated without cause or as the result of a
change in control of the Company as defined in the agreement, then he shall be
entitled to receive his then current salary and benefits for two years
following such termination. In addition, should Mr. Aab ever be terminated
without cause while he is disabled, or in the event he dies during the term of
the agreement, any unexercised stock options that he may hold on the date of
either such event shall automatically become fully exercisable for one year
following such date, subject to the original term of the relevant option
grant(s). This agreement expires on February 8, 1999, at which time it will
automatically renew for successive five-year terms if not terminated by the
Company giving at least 24 months' advance notice of its intent to terminate
this agreement at the end of its current or any renewal term.
(2) Under applicable SEC rules, the value of any perquisites or other
personal benefits provided by the Company to any of the Named Executives need
not be separately detailed and described if their aggregate value does not
exceed the lesser of $50,000 or 10% of that executive's total salary and bonus
for the year shown. For the year indicated, the value of such personal
benefits, if any, provided by the Company to this Named Executive did not
exceed such thresholds.
(3) The amounts shown represent the Company's contributions under its 401(k)
Deferred Compensation and Retirement Savings Plan ("401(k) Plan") in the
amount of: $ 4,601 for 1994; $4,497 for 1993; and $973 for 1992; as well as
taxable group term and single policy life insurance premiums paid on Mr. Aab's
behalf in the amount of: $2,384 in 1994; $4,808 in 1993; and $3,142 in 1992.
(4) Of this total, $155,000 represents Mr. Aab's bonus paid in 1994 for
services rendered in 1993, and $175,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as more
fully described in Note (5) below.
(5) In early 1993, the Executive Compensation Committee of the Board of
Directors determined that certain Company executives, including this Named
Executive, were eligible to receive a special one-time award in 1993
contingent upon the execution of a definitive agreement to sell the cellular
assets of the Company's Danbury Cellular Telephone Co. subsidiary. This award
was paid in lieu of any bonus for services rendered during 1992.
(6) Of this total: $12,671 represents country club dues and miscellaneous
business-related reimbursements paid to Mr. Aab; $3,946 represents
supplemental disability insurance premiums paid on Mr. Aab's behalf; $5,630
represents reimbursements to Mr. Aab under the Company's legal, medical and
financial planning reimbursement plan for its senior executives; and $5,036
represents the value of Mr. Aab's personal use of his Company-provided car.
(7) The Company has entered into Employment Continuation Incentive
Agreements with Mr. Sayers, Mr. Chesonis, Mr. Daley and certain other U.S.
executive officers and key personnel, which agreements provide that if such
employee is ever terminated without cause or as the result of a change in
control of the Company as defined in the agreement, then the employee shall be
entitled to receive his/her then current salary and benefits for up to one
year following such termination. In addition, should such employee be
terminated without cause while he/she is disabled, or in the event the
employee dies during the term of the agreement, any unexercised stock options
that he/she may hold on the date of either such event shall automatically
become fully exercisable for one year following such date, subject to the
original term of the relevant option grant(s). The current term of these
agreements expires on September 30, 1995, at which time they will
automatically renew for successive one-year terms if not terminated by the
Company giving at least twelve months' advance notice of its intent to
terminate these agreements at the end of their current or any renewal term.
(8) On February 8, 1994, Mr. Sayers was awarded Incentive Stock Options
("ISOs") to purchase 50,000 shares of the Company's Common Stock at an
exercise price of $19.25 per share, exercisable over a ten-year term, under
the Company's Employee Stock Option Plan (the "Stock Option Plan"). This
award was cancelled and regranted on August 11, 1994 at an option exercise
price of $14.25 per share, as described further under the heading "Report on
the Repricing of Options by the Executive Compensation Committee" below.
(9) This total is the sum of four items: (i) $5,088 represents the amount
of the Company's 1994 contribution to Mr. Sayers' 401(k) Plan account; (ii)
$3,226 represents the amount of taxable group term life insurance premiums
paid by the Company on Mr. Sayers' behalf in 1994; and (iii) $175,365
represents the amount of incentive compensation vested for Mr. Sayers' benefit
and withdrawn by him during 1994 pursuant to the Incentive Compensation
Agreement between the Company and Mr. Sayers with respect to the sale of the
Company's cellular operations. Pursuant to this Agreement, Mr. Sayers was
entitled to receive as incentive compensation an amount equal to 10% of the
increase in value of the Company's cellular telephone operations known as
Kentucky Rural Service Areas ("RSAs") #5 and #8 as measured by the "per POP"
sale price received on any such disposition allocable to Kentucky RSAs #5 and
#8 less: the purchase price the Company paid to acquire these RSAs; the cost
of all capital investments made by the Company to construct and bring these
cellular telephone systems "on line"; and any sales commissions and corporate
taxes payable by the Company in any such transaction. As previously
disclosed, the Company sold its cellular operations in 1993, and as a result
determined that Mr. Sayers was entitled to receive a total of $596,000 in
compensation pursuant to the terms of this Agreement. The Company placed this
amount in a trust account for Mr. Sayers' benefit. This compensation was to
vest on a pro-rata basis from the date this transaction closed to July 1,
1996. Mr. Sayers was entitled to draw against the pro-rata amount of
principal and interest vested at any time, with all remaining principal and
accrued interest being payable in full on July 1, 1996, provided that he was
still an employee of the Company on that date. The Agreement also provided
for earlier vesting and payment of this compensation in the event of Mr.
Sayers' death or termination without cause prior to July 1, 1996. If he was
terminated for cause prior to July 1, 1996, he was to be paid the amount of
such compensation vested at such termination date. If he voluntarily left the
Company's employ prior to July 1, 1996, he was to have forfeited all such
compensation, whether or not vested. In January, 1995, the Company and Mr.
Sayers amended the terms of this Agreement to repay the Company out of these
escrowed funds the amount of $236,951.35, which represented the outstanding
principal amount of a $225,000 loan that the Company advanced him in 1994,
which is further described under "Certain Transactions" below, plus all
accrued interest on that loan, and to remit the balance of these escrowed
funds, totalling approximately $196,452, to Mr. Sayers in full satisfaction of
the Company's obligations under this Agreement, which was thereby terminated.
(10) Of this total, $63,000 represents Mr. Sayers' bonus paid in 1994 for
services rendered in 1993, and $60,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as more
fully described in Note (5) above.
(11) This total is the sum of four items: (i) $4,497 represents the amount
of the Company's 1993 contribution to Mr. Sayers' 401(k) Plan account; (ii)
$2,530 represents the amount of taxable group term life insurance premiums
paid by the Company on Mr. Sayers' behalf in 1993; (iii) $112,021 represents
personal loans totalling $100,000 in principal amount, together with all
accrued interest, that were extended by the Company to Mr. Sayers in 1991 and
1992 and forgiven in 1993; and (iv) $149,000 represents the amount of the
incentive compensation vested for Mr. Sayers' benefit during 1993 pursuant to
the Incentive Compensation Agreement between the Company and Mr. Sayers with
respect to the sale of the Company's cellular operations, discussed in Note
(9) above.
(12) Of this total: $3,120 represents country club dues and miscellaneous
business-related expense reimbursements paid to Mr. Sayers; $1,975 represents
supplemental disability insurance premiums paid on Mr. Sayers' behalf; $3,830
represents reimbursements paid to Mr. Sayers under the Company's legal,
medical and financial planning reimbursement plan for its senior executives;
and $5,500 represents the value of Mr. Sayers' personal use of his Company-
provided car.
(13) The amounts shown represent taxable group term life insurance premiums
paid by the Company during 1992 on behalf of Mr. Sayers.
(14) On February 8, 1994, Mr. Chesonis was awarded ISOs to purchase 50,000
shares of the Company's Common Stock at an exercise price of $19.25 per share,
exercisable over a ten-year term, under the Stock Option Plan. This award was
cancelled and regranted on August 11, 1994 at an option exercise price of
$14.25 per share, as described further under the heading "Report on the
Repricing of Options by the Executive Compensation Committee" below.
(15) The amounts shown represent the Company's contributions under its 401(k)
Plan in the amount of: $4,806 for 1994; $4,132 for 1993; and $805 for 1992;
as well as additional group term life insurance premiums paid on Mr.
Chesonis's behalf in the amount of: $267 in 1994; $151 in 1993; and $178 in
1992.
(16) On September 7, 1993, Mr. Chesonis was awarded ISOs to purchase 30,000
shares of the Company's Common Stock at an exercise price of $15.00 per share,
exercisable over a ten-year term, under the Stock Option Plan.
(17) On February 8, 1994, Mr. Daley was awarded ISOs to purchase 50,000
shares of the Company's Common Stock at an exercise price of $19.25 per share,
exercisable over a ten-year term, under the Stock Option Plan. This award was
cancelled and regranted on August 11, 1994 at an option exercise price of
$14.25 per share, as described further under the heading "Report on the
Repricing of Options by the Executive Compensation Committee" below.
(18) The amounts shown represent the Company's contributions under its 401(k)
Plan in the amount of: $4,086 for 1994; $3,490 for 1993; and $556 for 1992;
as well as additional group term life insurance premiums paid on Mr. Daley's
behalf in the amount of: $226 in 1994; $107 in 1993; and $107 in 1992.
(19) Of this total, $35,000 represents Mr. Daley's bonus paid in 1994 for
services rendered in 1993, and $30,000 represents the one-time award he was
paid in connection with the sale of the Company's cellular operations, as more
fully described in Note (5) above.
(20) On September 7, 1993, Mr. Daley was awarded ISOs to purchase 10,000
shares of the Company's Common Stock at an exercise price of $15.00 per share,
exercisable over a ten-year term, under the Stock Option Plan.
(21) On November 10, 1992, Mr. Daley was awarded ISOs to purchase 7,500
shares of the Company's Common Stock at an exercise price of $11.33 per share,
exercisable over a ten-year term, under the Stock Option Plan.
(22) On January 4, 1994, Mr. Bantoft was awarded ISOs to purchase 10,000
shares of the Company's Common Stock at an exercise price of $18.75 per share,
on August 11, 1994, he was awarded ISOs to purchase 15,000 shares of the
Company's Common Stock at an exercise price of $14.25 per share, and on
November 15, 1994, he was awarded ISOs to purchase 25,000 shares of the
Company's Common Stock at an exercise price of $17.25 per share, each tranche
exercisable over a ten-year term, under the Stock Option Plan.
(23) This amount represents U.K. pension payments made on Mr. Bantoft's
behalf during 1994.
Compensation Pursuant to Plans
Employee Stock Option Plan. The Company has an Employee Stock Option
Plan (the "Stock Option Plan" or "Plan"), which it instituted in February,
1982, to provide long-term incentive benefits to key Company employees as
determined by the Executive Compensation Committee of the Board of Directors
(the "Committee"). This Plan is administered by the Committee. Options
granted under this Plan are either intended to qualify as "incentive stock
options" ("ISOs") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended, or are non-qualified stock options ("NQSOs").
Options granted under this Plan represent rights to purchase shares of the
Company's Common Stock within a fixed period of time and at a cash price per
share ("exercise price") specified by the Committee on the date of grant. The
exercise price cannot be less than the fair market value of a share of Common
Stock on the date of award. Payment of the exercise price may be made in cash
or, with the Committee's approval, with shares of the Company's Common Stock
already owned by the optionee and valued at their fair market value as of the
exercise date. Options are exercisable during the period fixed by the
Committee, except that no ISO may be exercised more than ten years from the
date of grant, and no NQSO may be exercised more than ten years and one day
from the date of the grant.
The following table shows information concerning options granted under
this Plan during 1994 to the five Named Executives:
</TABLE>
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
Number of Percent of
Securities Total Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted (#) Fiscal Year ($/Share) Date
<S> <C> <C> <C> <C>
Richard T. Aab -0- -- $-0- --
Richard E.
Sayers 50,000 (2) 11.6 $14.75 8/11/04
Arunas A.
Chesonis 50,000 (2) 11.6 $14.75 8/11/04
Michael R.
Daley 50,000 (2) 11.6 $14.75 8/11/04
Christopher 10,000 (3) 2.3 $18.75 1/4/04
Bantoft 15,000 (4) 3.5 $14.25 8/9/04
25,000 (5) 5.8 $17.25 11/15/04
OPTION GRANTS IN LAST FISCAL YEAR TABLE: CONTINUED
</TABLE>
<TABLE>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
For Option Term (1)
Name 0% ($) 5% ($) 10% ($)
<S> <C> <C> <C>
Richard T. Aab $ -0- $ -0- $ -0-
Richard E. Sayers $ -0- $463,810 $1,175,385
Arunas A. Chesonis $ -0- $463,810 $1,175,385
Michael R. Daley $ -0- $463,810 $1,175,385
Christopher Bantoft $ -0- $117,918 $ 298,827
$ -0- $134,426 $ 340,662
$ -0- $271,211 $ 687,301
(1) These calculations show the potential gain that would be realized if the
options shown were not exercised until the end of their full ten-year term,
assuming the compound annual rate of appreciation of the exercise prices
indicated (0%, 5%, and 10%) over the ten-year terms of the ISOs shown, net of
the exercise prices paid.
(2) These ISOs were granted on August 11, 1994, for a term of ten years, 25%
of which first become exercisable on August 11, 1995, and an additional 25% of
which become exercisable on the second, third and fourth anniversaries of the
grant date. These ISOs are further described below under the heading "Report
on the Repricing of Options by the Executive Compensation Committee."
(3) These ISOs were granted on January 4, 1994, for a term of ten years, 25%
of which first become exercisable on January 4, 1995, and an additional 25% of
which become exercisable on the second, third and fourth anniversaries of the
grant date.
(4) These ISOs were granted on August 9, 1994, for a term of ten years, 25%
of which first become exercisable on August 9, 1995, and an additional 25% of
which become exercisable on the second, third and fourth anniversaries of the
grant date.
(5) These ISOs were granted on November 15, 1994, for a term of ten years,
25% of which first become exercisable on November 15, 1995, and an additional
25% of which become exercisable on the second, third and fourth anniversaries
of the grant date.
The following table reflects information concerning option exercises
under this Plan by the Named Executives during 1994, together with information
concerning the number and value of all unexercised options held by each of the
Named Executives at year end 1994 under this Plan:
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Shares Options at Options at
Acquired Value FY-End (#) FY-End ($) (2)
on Exercise Realized Exercisable/ Exercisable/
Name (#) ($) (1) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Richard T.
Aab 99,000 $1,628,550 -0-/-0- -0-/-0-
Richard E.
Sayers -0- $ -0- 70,000/50,000 $618,100/$-0-
Arunas A.
Chesonis -0- $ -0- 38,000/80,000 $294,035/$66,225
(3)
Michael R.
Daley -0- $ -0- 14,875/63,125 $98,254/$29,381
(4)
Christopher
Bantoft -0- $ -0- -0-/50,000 $ -0-/$11,250 (5)
_______________________________
(1) Value realized is determined by subtracting the per share option
exercise price from the closing price of the Company's Common Stock on the
date of exercise, then multiplying that figure by the number of options
exercised.
(2) For each Named Executive, these values are calculated by subtracting the
per share option exercise price for each block of options held on December 31,
1994 from the closing price of the Company's Common Stock on that date ($14.75
on December 30, 1994), then multiplying that figure by the number of options
in that block, then aggregating the resulting subtotals.
(3) As of December 31, 1994, the ISOs to purchase 30,000 shares that were
granted to Mr. Chesonis on September 7, 1993 were not in-the-money, as their
exercise price per share ($15.00) exceeded the closing price for the Company's
Common Stock on December 30, 1994 ($14.75); consequently these options are not
included in these calculations.
(4) As of December 31, 1994, the ISOs to purchase 10,000 shares that were
granted to Mr. Daley on September 7, 1993 were not in-the-money, as their
exercise price per share ($15.00) exceeded the closing price for the Company's
Common Stock on December 30, 1994 ($14.75); consequently these options are not
included in these calculations.
(5) As of December 31, 1994, the ISOs to purchase 10,000 shares that were
granted to Mr. Bantoft on January 4, 1994 and the options to purchase 25,000
shares that were granted to him on November 15, 1994 were not in-the-money, as
their respective exercise prices per share ($18.75 and $17.25) exceeded the
closing price for the Company's Common Stock on December 30, 1994 ($14.75);
consequently none of these options are included in these calculations.
As of December 31, 1994, 302,302 shares of the Company's Common Stock
were available for grants under this Plan. As of that date, there were
785,250 options outstanding, with an average exercise price of $13.53 per
share. The expiration dates of these option grants range from May 22, 1999
through November 15, 2004.
Report on the Repricing of Options by the Executive Compensation
Committee. On February 8, 1994, at a regularly scheduled meeting to discuss,
among other matters, whether to award ISOs in 1994 to key Company managers,
this Committee awarded certain executive officers of the Company ISOs to
purchase shares at an exercise price of $19.25 per share. Approximately six
months later, on August 11, 1994, the Committee cancelled those option grants
and regranted the same number of ISOs to each such executive officer but at
the then-current exercise price of $14.75 per share. After reviewing several
matters, including the volatility in the Company's stock price caused by its
discussions with LDDS Communications, Inc. with respect to a possible merger
which commenced in earnest in mid-March, 1994 and terminated in mid-May, 1994,
but also the need to motivate management, the Committee determined that these
February, 1994 option grants might remain "underwater" for some period of
time, thus negating much of the long-term incentive element of this form of
compensation to the executives who received these grants. As required by
relevant SEC rules, the specific information regarding these option repricing
grants appears in the following table:
<PAGE>
</TABLE>
<TABLE>
TEN YEAR OPTION REPRICINGS TABLE
Number of Market Length of
Securities Price of Exercise Original
Underlying Stock at Price at Option Term
Options Time of Time of Remaining
Repriced Repricing Repricing at Date of
or Amended or or New Repricing
Amendment Amendment Exercise or
Name Date (#) ($) ($) Price ($) Amendment
<S> <C> <C> <C> <C> <C> <C>
R. Sayers 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
A. Chesonis 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
M. Daley 8/11/94 50,000 $14.75 $19.25 $14.75 9.5 years
F. Coleman 8/11/94 25,000 $14.75 $19.25 $14.75 9.5 years
T. Ganatra 8/11/94 25,000 $14.75 $19.25 $14.75 9.5 years
This report was prepared by the members of this Committee: Hugh F.
Bennett, Chairman, David K. Laniak, Robert F. Sykes and Daniel D. Tessoni.
401(k) Deferred Compensation and Retirement Savings Plan. The Company
has a 401(k) Deferred Compensation and Retirement Savings Plan in which
employees with a minimum of six months continuous service are eligible to
participate. Contributions to a participating employee's 401(k) account are
made in accordance with the regulations set forth under Section 401 of the
Internal Revenue Code of 1986, as amended. Under this Plan, the Company may
make matching contributions to the account of a participating employee up to
an annual maximum of 50% of the annual salary contributed in that year by that
employee, up to a maximum of 3% of that employee's salary. The Company makes
such contributions on a quarterly basis, based upon its profitability for that
quarter. The Company's contributions vest at the rate of 20% per year after
one year's participation in the Plan and become fully vested after six years.
Employee Stock Purchase Plan. The Company has an Employee Stock
Purchase Plan ("Stock Purchase Plan"), which the shareholders approved at
their 1994 Annual Meeting, in which all employees who work 20 or more hours
per week are eligible to participate. Under this Plan, employees electing to
participate can, through payroll deductions, purchase shares of the Company's
Common Stock at 85% of market value on the date on which the annual offering
period under this Plan begins or on the last business day of each calendar
quarter in which shares are automatically purchased for a participant during
an offering period, whichever is lower. Participants cannot defer more than
15% of their base pay into this Plan, nor purchase more than $25,000 per year
of the Company's Common Stock through this Plan. As of December 31, 1994,
participants had purchased a total of 12,754 shares through this Plan during
1994, at an average price of $11.89 per share, leaving a total of 487,246
shares available for future purchases under the Plan.
Other Compensation Plans. The Company provides additional group term
life and supplemental disability insurance coverage to its officers. The
additional group term life insurance provides additional life insurance
protection to an officer in the amount of two and one-half times his/her
current salary. The supplemental disability insurance provides additional
disability insurance protection to an officer in an amount selected by the
executive, not to exceed, when combined with the coverage provided by the
Company's basic disability insurance provided to all of its employees, 70% of
his/her current annual salary.
The Company also has a legal, medical and financial planning
reimbursement plan for its senior executives pursuant to which it will
reimburse each of them generally up to $4,000 per year (up to $8,000 per year
for Mr. Aab) for legal, accounting, financial planning and uninsured medical
expenses incurred by the executive.
Compensation of Directors
Directors who are not also employees of the Company are paid an annual
retainer of $6,000, plus a fee of $500 for each Board meeting attended.
Additionally, outside Directors who serve on committees of the Board receive
$300 per committee meeting attended.
During 1994, in connection with the Company's merger discussions with
LDDS Communications, Inc., the Board retained the investment banking firm of
Gagan, Bennett & Co., Inc., in which Hugh F. Bennett, a Director of the
Company, is a principal, to act as the Company's advisor with respect to this
matter, for which services Gagan, Bennett & Co., Inc. was paid a retainer of
$25,000.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Securities Owned by Company Management
The following table sets forth, as of April 14, 1995, the number and
percentage of outstanding shares of Common Stock beneficially owned by each
Director or nominee for Director of the Company, by each of the four Named
Executives (in addition to Mr. Aab) named in the compensation tables that
appear hereafter in this Proxy Statement, and by all Directors, nominees for
Director and executive officers of the Company as a group. The Company
believes that each individual in this group has sole investment and voting
power with respect to his or her shares except as otherwise noted:
Name of Nominee for Director Shares Beneficially Owned
or Executive Officer Number Percentage
<S> <C> <C>
Richard T. Aab 965,582 (1) 12.5
Hugh F. Bennett 3,000 (2) *
Arunas A. Chesonis 53,842 (3) *
Willard Z. Estey -0- *
David K. Laniak 2,700 *
Robert F. Sykes 85,144 (4) 1.1
Daniel D. Tessoni 22,500 (5) *
Richard E. Sayers 74,093 (6) *
Michael R. Daley 19,053 (7) *
Christopher Bantoft 2,500 (8) *
All Directors and Executive Officers
as a Group ( 15 persons, including
those named above) 1,245,222 15.7
(1) (2)
(3) (4)
(5) (6)
(7) (8)
(9)
__________________________________
* Indicates less than 1% of the Company's issued and outstanding shares.
(1) This number excludes 15,000 shares directly owned by Mr. Aab's wife and
1,500 shares that she controls as Custodian for their minor children, as to
all of which shares Mr. Aab disclaims beneficial ownership.
(2) Mr. Bennett shares investment and voting power with his wife with
respect to 1,500 of these shares.
(3) Includes 177 shares owned by Mr. Chesonis's spouse, options to purchase
45,500 shares that are currently exercisable by Mr. Chesonis and options to
purchase 6,650 shares that are currently exercisable by Mr. Chesonis's spouse.
(4) Of these shares, 81,144 shares are owned by Sykes Associates, a
partnership of which Mr. Sykes is a general partner, and 4,000 shares are
owned by Ontario, Inc., a privately-held company of which Sykes Associates is
a shareholder and Mr. Sykes is a Director.
(5) Mr. Tessoni and his wife share investment and voting power with respect
to all shares which he beneficially owns.
(6) Includes options to purchase 70,000 shares that are currently
exercisable by Mr. Sayers.
(7) Includes options to purchase 16,750 shares that are currently
exercisable by Mr. Daley.
(8) Includes options to purchase 2,500 shares that are currently exercisable
by Mr. Bantoft.
(9) Includes options to purchase a total of 17,000 shares that are or will
become exercisable by four executive officers of the Company, in addition to
those named above, within the next 60 days.
Principal Holders of Common Stock
The following table reflects the security ownership of those persons who
are known to the Company to have been the beneficial owners of more than 5%
(387,810 shares) of the Company's outstanding Common Stock as of April 14,
1995:
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
Richard T. Aab 965,582 (1) 12.5
400 West Avenue
Rochester, New York 14611
(1) This number excludes 15,000 shares directly owned by Mr. Aab's wife and
1,500 shares that she controls as Custodian for their minor children, as to
all of which shares Mr. Aab disclaims beneficial ownership.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
To accommodate its need for increased space, in June, 1994, the Company
moved its principal executive offices to an industrial complex located at 400
West Avenue, Rochester, New York, which is owned by a real estate partnership
in which Richard T. Aab, the Company's Chairman and Chief Executive Officer,
is a general partner. For 1994, the Company paid a total of approximately
$200,000 in rent for this space to this partnership, which the Company
believes is comparable to or below the market rate for similar office space in
the Rochester area.
During 1994, the Board of Directors authorized the Company to enter into
a computer software development contract with AMBIX Systems Corp., in which
company Richard T. Aab, the Company's Chairman and Chief Executive Officer, is
the majority shareholder. Under this agreement, AMBIX is to develop certain
customized telecommunications software to be licensed to the Company at a cost
of approximately $328,000. Through December 31, 1994, the Company had paid
approximately $100,000 of this total under this agreement.
During 1994, the Company made a personal loan of $225,000 to Richard E.
Sayers, the Company's Vice Chairman, at a per annum interest rate of 1% over
the prime rate, with the loan payable on demand and no later than December 31,
1994. As discussed in Note (9) to the Summary Compensation Table in Item 11
above, in January, 1995, Mr. Sayers repaid this loan in full with all accrued
interest.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) Financial Statements and Exhibits.
(1) Financial Statements for ACC Corp. Employee Stock Purchase Plan
for Plan year ended December 31, 1994:
Report of Independent Public Accountants
Statement of Net Assets
Statement of Changes in Net Assets
Notes to Financial Statements
(d) Financial Statements for ACC Corp. Employee Stock Purchase Plan
for Plan year ended December 31, 1994:
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator of the ACC Corp. Employee Stock Purchase Plan:
We have audited the accompanying statement of net assets of the ACC Corp.
Employee Stock Purchase Plan as of December 31, 1994 and the related statement
of changes in net assets for the period from adoption (February 8, 1994) to
December 31, 1994. These financial statements are the responsibility of the
Company s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets of the ACC Corp. Employee Stock Purchase
Plan as of December 31, 1994, and the changes in its net assets for the period
from adoption (February 8, 1994) to December 31, 1994, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
Rochester, New York
March 30, 1995
<PAGE>
ACC Corp.
Employee Stock Purchase Plan
Statement of Net Assets
December 31, 1994
ASSETS:
Receivable from ACC Corp. $557
TOTAL ASSETS $557
LIABILITIES AND PARTICIPANTS' EQUITY:
Participants' equity $557
TOTAL LIABILITIES AND PARTICIPANTS' EQUITY $557
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
ACC Corp.
Employee Stock Purchase Plan
Statement of Changes in Net Assets
For the Period from Adoption (February 8, 1994) to December 31, 1994
ADDITIONS:
Employee contributions $155,651
DEDUCTIONS:
Stock purchased 151,600
Employee withdrawals 3,494
Total deductions 155,094
NET INCREASE IN PARTICIPANTS' EQUITY 557
PARTICIPANTS' EQUITY, BEGINNING OF PERIOD ---
PARTICIPANTS' EQUITY, END OF PERIOD $557
The accompanying notes to financial statements are an integral part of this
statement.
<PAGE>
ACC Corp.
Employee Stock Purchase Plan
Notes to Financial Statements
1. PLAN DESCRIPTION:
The ACC Corp. Employee Stock Purchase Plan (the "Plan") was adopted by
the Board of Directors on February 8, 1994 and was ratified by the
shareholders on October 13, 1994. The first offering period began July 1,
1994. Officers did not participate until the ratification by the shareholders
occurred. The Plan was established to provide employees with increased
employment and performance incentives and to enhance ACC Corp.'s (the
"Company") efforts to attract and retain employees of outstanding ability.
The Plan permits eligible Company employees to make periodic purchases of
shares of the Company's common stock through payroll deductions at prices
below then-prevailing market prices. As of December 31, 1994, 500,000 shares
of the Company's common stock (which may be treasury shares, authorized and
unissued shares, or a combination thereof at the Company's discretion) are
reserved for issuance under the Plan. The Plan is administered by the
Executive Compensation Committee of the Board of Directors of ACC Corp. (the
"Committee"). None of the members of the Committee is eligible to participate
in the Plan. Reference should be made to the Plan for more complete
information.
Any employee of the Company or any of its subsidiaries who is employed
at least 20 hours per week is eligible to participate in the Plan.
Participants may enroll in the Plan prior to an offering
commencement date. Employees may authorize payroll deductions of up to 15% of
their then-current straight-time earnings during the term of an offering,
which will be applied to the purchase of shares under the Plan. These payroll
deductions will begin on that offering commencement date and will end on the
last purchase date applicable to any offering in which he/she holds any
options to purchase shares of the Company's common stock, or if sooner, on the
effective date of his/her termination of participation in the Plan. Newly
hired employees hired subsequent to an offering commencement date may begin
participation in the Plan at the beginning of the next calendar quarter
following their date of hire.
Payroll deductions will be held by the Company as part of its general
funds for the credit of the participants and will not accrue interest pending
the periodic purchase of shares under the Plan. On the last business day of
each calendar quarter during the term of an offering, a participant will
automatically be deemed to have exercised his/her options to purchase, at the
applicable purchase price, the maximum number of full shares that can be
purchased with the amounts deducted from the participant's pay during that
quarter, together with any excess funds from preceding quarters. The
purchase price at which shares may be purchased under the Plan is 85% of the
closing price of the Company's common stock in NASDAQ trading on either a) the
offering commencement date (or, in the case of interim participation by newly
hired employees, the date on which they are permitted to begin participation
in that offering) or b) the date on which shares are purchased through the
automatic exercise of an option to purchase shares under the Plan, whichever
is lower. The maximum number of shares that a participant will be permitted
to purchase in any single offering is subject to certain limitations, as set
forth in the plan document.
A participant may, at any time and for any reason, withdraw from further
participation in any offering or from the Plan by giving written notice. In
such event, the participant's payroll deductions which have been credited to
his/her plan account and not already expended to purchase shares under the
Plan will be refunded without interest. No further payroll deductions will be
made from his/her pay during the term of that offering. No withdrawing
participant will be permitted to re-commence his/her participation in an
offering, however, termination of participation in an offering or in the Plan
will not have any effect upon subsequent eligibility to participate in the
Plan. A participant's retirement, death or other termination of employment
will be treated as a permanent withdrawal from participation. In the event of
a participant's death, his/her estate or designated beneficiary shall have the
right to elect, no later than 60 days following his/her date of death, to
receive either the accumulated payroll deductions in the deceased
participant's plan account or to exercise, on the next subsequent purchase
date, the deceased participant's options to purchase the number of full shares
of common stock that can be purchased with the balance in the decedent's plan
account as of his/her date of death, together with the return of any excess
cash, without interest.
The Plan will expire on the first to occur of the following: (1) the
date as of which participants purchase a number of shares equal to or greater
than the number of shares authorized for issuance under the Plan; or (2) the
date as of which the Board of Directors of the Company or the Committee
terminates the Plan. In either case, all funds accumulated in each
participant's plan account but not yet expended to purchase shares will be
refunded without interest. If the Plan is terminated by reason of the
exercise of rights to purchase a greater number of shares than are authorized
for issuance under the Plan, all remaining shares available for issuance will
be allocated to participants on a pro-rata basis.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The financial statements are prepared using the accrual basis of
accounting. The Company pays all of the Plan's administrative expenses.
3. INCOME TAX STATUS:
The Plan is intended to qualify as an employee stock purchase plan under
Section 423 of the Internal Revenue Code. In order for favorable tax
treatment to be available to the participant, the participant cannot dispose
of any shares acquired under the Plan within two years following the date the
option to purchase was granted, nor within one year following the date the
shares were actually purchased.
4. STOCK PURCHASES:
Stock purchases by offering period are as follows:
Purchase price Number of
Offering Period Valuation Date per share shares purchased
July 1, 1994 - July 1, 1994 $13.625 8,681
December 31, 1994 December 31, 1994* $14.750 4,073
*For those employees who began participation on October 1, 1994, the midpoint
of the offering period.
The valuation date is the date during the offering period on which the
stock price was the lowest, therefore becoming the base for the calculation of
shares to be purchased.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized.
ACC CORP.
Dated: April 27, 1995 By: /s/ John J. Zimmer
John J. Zimmer,
Vice President-Finance
</TABLE>
