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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-K/A-1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 28, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-9031
SUNBELT NURSERY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-1932993
(State of incorporation) (I.R.S. Employer Identification No.)
500 Terminal Road, Fort Worth, Texas 76106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 817 / 624-7253
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.01 par value American Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Based on the closing sales price on May 9, 1996, the aggregate market value
of the voting stock held by nonaffiliates of the registrant was $13,812,500.
The number of shares of the registrant's Common Stock, $0.01 par value per
share, outstanding as of May 9, 1996, was 8,500,000.
Indicate by check mark whether the 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 the 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. [ ]
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
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DIRECTORS
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The current directors of the Company, their respective ages, tenure with the
Company as directors, and business experience are listed below. Each current
director intends to stand for re-election to the Company's Board of Directors at
the next annual meeting of stockholders.
RUDY BOSCHWITZ, age 64, has served as a director of the Company since October
31, 1994. Mr. Boschwitz serves as Chairman of the Board of Directors of Home
Valu, Inc., a retailer of home improvement products headquartered in
Minneapolis, Minnesota. Mr. Boschwitz also serves as a member of the Boards of
Directors of Chicago Mercantile Exchange and TCF Bank. Mr. Boschwitz served as
United States Senator from the State of Minnesota from 1978 to 1990, and is
presently a candidate for the United States Senate.
RODNEY P. BURWELL, age 57, has served as a director of the Company since
October 31, 1994. Mr. Burwell also serves as the Chairman of the Board of
Directors of Xerxes Corporation, a manufacturer of underground storage
containers located in Minneapolis, Minnesota, and has served as its Chief
Executive Officer since 1969. Mr. Burwell is also a member of the Boards of
Directors of Children's Broadcasting Corporation and Vaughn Communications.
TIMOTHY R. DUOOS, age 40, has served as the Chairman of the Board of the
Company since October 31, 1994, and Chief Executive Officer of the Company since
November 18, 1994. Mr. Duoos is also the principal stockholder of Lyndale
Garden Center, Inc., a regional retailer of lawn and garden products, located in
Minneapolis, Minnesota, and has served as the Chairman of the Board of Directors
of Lyndale Garden Center, Inc. since October 1986.
RICHARD R. DWYER, age 41, has served as a director of the Company since
October 31, 1994, and President of the Company since November 18, 1994. Prior
to joining the Company, Mr. Dwyer served as President of Lyndale Garden Center,
Inc. from December 1990 to October 1994. From April 1985 through September
1990, Mr. Dwyer was a partner with the accounting firm of Ernst & Young.
KENNETH A. MACKE, age 57, has served as a director of the Company since April
11, 1995. Mr. Macke served as the Chairman of the Board and Chief Executive
Officer of Dayton Hudson Corporation, a national retailing company, from July
1984 to April 1994. Mr. Macke currently is a general partner of Macke Partners,
a private venture capital and investment company located in Golden Valley,
Minnesota. Mr. Macke also serves on the Boards of Directors of General Mills,
Inc., Unisys Corporation and First Bank System, Inc.
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COMPENSATION OF DIRECTORS
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Directors Fees. Directors of the Company who are not employees of the Company
receive $300 for each Board of Directors or committee meeting attended, whether
by teleconference or in person, plus reasonable expenses incurred in the
performance of their duties.
Stock Options. Pursuant to the 1991 Stock Option Plan (the "Stock Option
Plan") each non-employee director is automatically granted, on the day following
the annual meeting of stockholders, non-qualified stock options to purchase
3,000 shares of the Company's Common Stock. The exercise price for such options
is the fair market value on the date the option is granted. Each option becomes
fully exercisable six months after the date of grant. No options were granted
to the non-employee directors of the Company under the 1991 Stock Option Plan
during the last fiscal year. By resolution of the Board of Directors adopted at
a meeting of the Board held on March 6, 1995, and thereafter approved by the
Company's stockholders on November 9, 1995, the Stock Option Plan was suspended
with respect to the provisions for non-employee directors until the day
following the annual meeting of stockholders held during the 1998 calendar year,
or until such earlier date, if any, as the Board of Directors may reinstate the
Stock Option Plan for all or some of its non-employee directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
- --------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires executive
officers and directors, and persons who beneficially own more than ten percent
(10%) of the Company's Common Stock, to file initial reports of ownership and
reports of changes in ownership with the Securities and Exchange Commission and
the applicable national stock exchange. Executive officers, directors and
beneficial owners in excess of ten percent (10%) of the Company's Common Stock
are required by Securities and Exchange Commission regulations to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to the Company,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and beneficial owners in excess of ten percent
(10%) were complied with, except that Mr. Boschwitz failed, on a single
occasion, to timely file a notice of change in his ownership of Common Stock
(Form 4) with respect to a transaction in the Common Stock occurring in November
1995.
EXECUTIVE OFFICERS
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The current executive officers of the Company, their respective ages,
positions held and tenure as officers are as follows:
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<TABLE>
<CAPTION>
Officer of
Position(s) Held the Company
Name Age with the Company Since
---- --- ---------------- -----------
<S> <C> <C> <C>
Timothy R. Duoos 40 Chief Executive Officer and November 1994
Chairman of the Board of
Directors
Richard R. Dwyer 41 President November 1994
Walter M. Kulas 49 Vice President January 1993
</TABLE>
BUSINESS EXPERIENCE
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Information concerning the business experience of Messrs. Duoos and Dwyer is
provided under the section entitled " Directors" immediately above.
Walter M. Kulas has served as Vice President of the Company since January
1993. Mr. Kulas served as Vice President of Wolfe Nursery and Director of
Sunbelt Operations from January 1992 to January 1993 and in various management
positions for the Company from December 1988 to January 1992.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors historically has
established the compensation of the executive officers of the Company. Prior to
the change in control described herein, the Compensation Committee consisted of
Robert Ench, Chairman, Harris Ashton and Robert Lovejoy. Since October 31,
1994, the Compensation Committee has consisted of Rodney P. Burwell, Chairman,
and Timothy R. Duoos. Mr. Burwell is not an employee of the Company. Mr. Duoos
is the Chief Executive Officer of the Company.
Compensation of executive officers has historically consisted of salary,
annual bonus and long-term compensation in the form of stock options. The
Company strives to establish levels of compensation that attract, retain and
motivate executives and that are designed to reward strong financial performance
of the Company and enhance stockholder value through awards of stock-based
plans. Compensation of executive officers during the 1996 fiscal year consisted
solely of salary. The Company will consider bonus and long-term compensation
plans in the future, depending upon the Company's return to profitability and
improvements in financial condition.
The salary of the Chief Executive Officer and other executive officers for the
past fiscal year was based upon a review of past corporate and individual
performance. In evaluating corporate performance for the 1996 fiscal year,
consideration was given to the Company's losses, factors (such as weather) that
affected the Company's operating results, but were beyond the control of
management, and actions that have been taken that are intended to enable the
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Company to achieve improved financial performance in the future. In addition to
corporate performance, consideration was given to individual efforts and
achievements and the level of individual contribution to the overall performance
of the Company. Based on these factors, but most specifically the Company's
financial performance in fiscal 1996, salaries of all executive officers were
maintained during the 1996 fiscal year. Mr. Duoos abstained from the vote
approving his salary as the Company's Chief Executive Officer.
Long-term incentives for the Company's executive officers are provided through
awards under the Stock Option Plan. Awards under the 1991 Stock Option Plan are
designed to increase stockholder value by providing value to executives only
when there is an increase in value to all stockholders. Specific formulae have
not been used for the determination of option grants, but consideration is given
to the number of stock options outstanding at the time of awards. Due to the
Company's financial performance, no stock options were awarded to the Company's
executives in fiscal 1996.
Timothy R. Duoos
Rodney P. Burwell, Chairman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Timothy R. Duoos, the Company's Chief Executive Officer, is also a member
of the Compensation Committee of the Board of Directors. In connection with the
Company's loan agreement with American National Bank and Trust Company, Chicago,
Illinois (the "Bank") dated October 1994, Mr. Duoos agreed to personally
guarantee the repayment of all amounts borrowed by the Company from the Bank
pursuant to the Company's revolving line of credit. In consideration therefore,
the Company agreed to pay Mr. Duoos an annual loan guarantee fee of $60,000. As
of January 28, 1996, the outstanding balance due the Bank by the Company was
approximately $8,300,000.
COMPANY COMMON STOCK PERFORMANCE GRAPH
Set forth below is a line graph comparing the cumulative total stockholder
return on the Common Stock from the date of its initial public offering on
October 4, 1991 to January 31, 1996, with the cumulative total return over the
same period of the S&P 500 Index and the S&P 500 Retail-Specialty Index. As
required by applicable rules of the Securities and Exchange Commission, the
graph was prepared assuming (i) that $100 was invested on October 4, 1991 in
each of the Common Stock, the S&P 500 Index and the S&P 500 Retail-Specialty
Index and (ii) all dividends were reinvested on the ex-dividend dates.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SUNBELT NURSERY GROUP, INC.,
S&P 500 INDEX AND S&P RETAIL STORES INDEX
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Sunbelt Nursery Group, Inc. 100 81 70 36 24 28
S & P 500 100 106 118 133 133 185
S & P Retail Stores 100 102 134 131 130 121
</TABLE>
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SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the compensation paid to the
Company's Chief Executive Officer(s) and the other executive officers whose
total cash compensation during fiscal 1996 exceeded $100,000 ("Named Executive
Officers") for services rendered by such persons to the Company and its
subsidiaries in all capacities, during the past three fiscal years.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK
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<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
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Name and Principal Position Fiscal Other Annual Securities Underlying All Other
- --------------------------- Year Salary Bonus Compensation(1) Options Compensation
------ ------ ----- --------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
TIMOTHY R. DUOOS 1996 110,923 0 -- 0 0
Chairman of the 1995 40,000 0 -- 0 0
Board and Chief
Executive
Officer
RICHARD R. DWYER 1996 180,000 0 14,489(2) 0 0
President 1995 45,962 0 0 50,000 0
WALTER M. KULAS 1996 123,356 0 -- 0 0
Vice President 1995 109,241 0 -- 6,000 3,414
1994 118,850 0 -- 0 3,895
</TABLE>
(1) "Other Annual Compensation" is intended to cover forms of annual
compensation that are not otherwise categorized as salary or bonus, such as
perquisites. Except as otherwise stated, to the present knowledge of the
Company, no Named Executive Officer received "Other Annual Compensation" in
any of the past three fiscal years exceeding the threshold level for
disclosure purposes, being the lesser of either $50,000 or 10% of the total
annual salary and bonus reported for the Named Executive Officer for such
fiscal year.
(2) Represents reimbursement of moving expenses for Mr. Dwyer.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information, with respect to individual grants
under the Company's Stock Option Plan, or otherwise, to the Named Executive
Officers during the last fiscal year.
<TABLE>
<CAPTION>
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Percent of Potential Realizable
Number of Securities Total Options/ Value at Assumed
Underlying SARs Granted Exercise of Annual Rates of Stock
Options/SARs to Employees Base Price Expiration Price Appreciation for
Name and Position Granted in Fiscal Year ($/Sh) Date Option Term
----------------- -------------------- -------------- ----------- ---------- ----------------------
5% 10%
<S> <C> <C> <C> <C> <C> <C>
Timothy R. Duoos -0- -- -- -- -- --
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Richard R. Dwyer -0- -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Walter M. Kulas -0- -- -- -- -- --
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</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR END OPTION VALUES
The following table provides information with respect to the exercise of
options by the Named Executive Officers during the last fiscal year and the
value of unexercised stock options held as of the end of the fiscal year.
<TABLE>
<CAPTION>
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Number of Securities Value ($) of Unexercised
Shares Value ($) Underlying Unexercised In-the-Money Options at
Acquired on Realized Upon Options at 1-28-96 1-28-96 Exercisable/
Name Exercise Exercise Exercisable/Unexercisable Unexercisable(1)
---- ---------- ------------- ------------------------- ------------------------
<S> <C> <C> <C> <C>
Timothy R. Duoos -0- -0- None -0-
- ------------------------------------------------------------------------------------------------------------------
Richard R. Dwyer -0- -0- 12,000/-0- N/A
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Walter M. Kulas -0- -0- 20,000/-0- N/A
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</TABLE>
(1) Value realized is calculated by determining the difference between the fair
market value of the securities underlying the options and the exercise price
of the options. Because the market price of the Company's Common Stock on
January 28, 1996 was less than the option exercise price, none of the
exercisable options listed herein were "in-the-money."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
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The following table sets forth information with respect to the shares of
Common Stock owned of record and beneficially by (i) all persons who own of
record or are known by the Company to beneficially own more than 5% of the
outstanding shares of the Company's Common Stock, (ii) each director of the
Company and each executive officer named in the
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Summary Compensation Table, and (iii) all directors and present executive
officers of the Company as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) OF CLASS
------------------- ----------------------- ---------
<S> <C> <C>
Timothy R. Duoos 4,200,500(2) 49.4%
6412 Lyndale Avenue South
Richfield, Minnesota 55423
Rudy Boschwitz 55,000(3) *
Rodney P. Burwell 123,966(3)(4) 1.5%
Richard R. Dwyer 70,000(5) *
Kenneth A. Macke 25,000(3) *
Walter M. Kulas 23,087(6) *
All present executive 4,497,553 52.25%
officers and directors as a
group (6 persons)
</TABLE>
*Less than one percent (1%)
(1) Shares are deemed to be "beneficially owned" by a person if such person,
directly or indirectly, has or shares (i) the voting power thereof,
including the power to vote or to direct the voting of such shares, or (ii)
the investment power with respect thereto, including the power to dispose
or direct the disposition of such shares. In addition, a person is deemed
to beneficially own any shares of which such person has the right to
acquire beneficial ownership within 60 days. Except as otherwise stated,
each person has sole voting and investment control with respect to the
shares listed, and the information set forth with respect to the ownership
of the Common Stock of the persons named in the table is as of May 1, 1996.
(2) Mr. Duoos has pledged all 4,200,500 shares to secure the Company's
obligations under its loan agreement with a commercial bank providing for a
revolving line of credit.
(3) Includes 25,000 shares that may be acquired upon exercise of certain non-
qualified stock options.
(4) Includes 19,766 shares owned by trusts for the benefit of Mr. Burwell's
children. Mr. Burwell disclaims beneficial ownership of these shares.
(5) Includes 12,000 shares that may be acquired upon exercise of options. Mr.
Dwyer has pledged 58,000 shares to secure the Company's obligations under
its loan agreement with a commercial bank providing for a revolving line of
credit.
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(6) Includes 20,000 shares that may be acquired upon exercise of options.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
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During the 1996 fiscal year, the Company paid approximately $93,000 to
two travel service companies located in Minneapolis, Minnesota, for
transportation services provided to the Company's employees. Mr. Duoos, the
Company's Chairman of the Board and Chief Executive Officer, is an owner in such
travel service companies.
In September 1995, Mr. Duoos loaned the Company $600,000 to be repaid on or
before October 31, 1995. The interest charged under the loan was 10.25%, the
same interest rate paid by the Company under its revolving line of credit. On
October 27, 1995, the loan and accrued interest of $7,000 was repaid by the
Company to Mr. Duoos.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: May 24, 1996 SUNBELT NURSERY GROUP, INC.
By /s/Richard R. Dwyer
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Richard R. Dwyer
President
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