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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] Amendment No. 1 to Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1994
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
1994 Commission file number 0-15414
For the transition period from ______ to _____
ALOETTE COSMETICS, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2056003
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1301 Wright's Lane East, West Chester, PA 19380
(Address of principal executive office) (Zip Code)
(610) - 692-0600
(Registrant's telephone number, including area code)
NONE
(Securities registered pursuant to Section 12(b) of the Act)
Common Stock, no par value
(Securities registered pursuant to Section 12(g) of the Act)
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 disclosure of delinquent filers
pursuant to Item 405, of Regulations S-B 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-KSB or any amendment to this Form 10-KSB. [X].
The undersigned Registrant hereby amends Part III of its Annual Report
on Form 10-KSB, dated March 29, 1995, for the fiscal year ended December 31,
1994 as set forth in the pages attached hereto.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors
Set forth below, with respect to each Director is the name, age, the
time period, if any, during which he or she has served as a Director of Aloette
Cosmetics, Inc. (the "Company") and his or her principal occupation or
employment and business affiliations at present and during the past five years.
The current term of office of those Directors in Class III expires in 1995; the
term of those Directors in Class I expires in 1996; and the term of those
Directors in Class II expires in 1997.
Principal Occupations Director
Name Age For Past Five Years Class Since
- ---- --- ------------------- ----- -----
Patricia J. Defibaugh 48 Chairman of the Board since III 1978
May, 1978; President and Chief
Operating Officer of the Company
since February, 1995; Chief
Executive Officer of the Company
since January, 1986; Treasurer
of the Company since March, 1986;
Secretary of the Company since
April, 1991.
Arlene Goldwater 43 Vice President of the Company III 1986
since March, 1986; President of
Aloette Cosmetics of Canada, Inc.,
a subsidiary of the Company since
September, 1982.
Arnold Koffler 77 Secretary and Sales Manager, I 1986
Penn Bottle Supply Company
(bottle and packaging company),
Philadelphia, Pennsylvania
since 1970.
<PAGE>
Dr. E. Robert Becker 48 President, Environex, Inc., I 1990
Since August, 1990; President
Environmental Catalyst Consultants,
Inc.,(environmental consultants)
Spring House, PA, from 1989 to
August, 1990; Dr. Becker also
served in the following capacities
for Johnson Matthey, Catalytic
Systems Division, Spring House, PA;
Technical Manager, Environmental
Products, from 1988 to 1989;
Engineered Products and New
Products Development Manager,
from 1986 to 1988.
Robert B. Throm 63 Vice President of the Company II 1985
from January, 1982, to March 1990.
G. Kenneth Macrae 66 President and Director of Keystone II 1988
Venture Capital Management Company
since February, 1984; General
Partner of Keystone Venture
I., L.P., Keystone Venture II., L.P.,
Butcher/Venture Partners III., L.P.
and Keystone Venture Partners IV,
L.P.; Director, AM Communications,
Inc. (telecommunications equipment)
since April, 1985. Director of
Royal International Optical
(manufacturer of optical eye wear),
Dallas, Texas since June, 1988.
Executive Officers
In addition to Ms. Defibaugh and Ms. Goldwater, Jean M. Lewis, Vice
President of Finance and Assistant Secretary is an executive officer of the
Company. Ms. Lewis, age 33, joined the Company in April, 1986 as Corporate
Controller and became Vice President of Finance in August, 1989. Ms. Lewis is
a certified public accountant.
<PAGE>
Item 10. Executive Compensation
The following table sets forth the compensation paid by the Company for
services rendered in all capacities to the Company and its subsidiaries during
1994 to the Chief Executive Officer of the Company and each executive officer
whose individual compensation exceeds $100,000.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
(f)
Restricted (i)
(a) (c) (d) Stock (g) All other
Name & Principal (b) Salary Bonus Award(s) Options/ Compensation
Position Year ($) ($) ($) SARs (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Patricia J. Defibaugh 1994 $225,000 0 0 150,000 $3,929 (1)
Chairman of the Board and 1993 226,408 0 0 0 11,361 (1)
Chief Executive Officer 1992 224,001 10,000 0 0 10,065 (1)
John H. Teaford (2) 1994 200,000 0 0 150,000 (3) 1,705 (4)
President and 1993 136,000 0 0 37,500 (3) 0 (4)
Chief Operating Officer
Arlene Goldwater 1994 111,530 0 0 0 11,991 (5)
Vice President and Director, 1993 131,369 0 0 0 8,239 (5)
President of Aloette 1992 140,068 0 0 0 11,169 (5)
Cosmetics of Canada, Inc.
</TABLE>
_______________________________________
(1) Represents the Company's contributions to its Profit Sharing/401(k)
Plan for the benefit of Ms. Defibaugh.
(2) Mr. Teaford resigned as President and Chief Operating Officer on
February 3, 1995.
(3) Options were canceled on February 3, 1995 as a result of Mr. Teaford's
resignation.
(4) Represents the Company's contribution to its Profit Sharing/401(k)
Plan for the benefit of Mr. Teaford.
(5) Represents the Company's contribution to a pension plan for benefit
of Ms. Goldwater.
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
---------------------------------------
(Individual Grants)
<TABLE>
<CAPTION>
(c)
(b) Percent of
Number of Securities Total Options/
Underlying SARS to d) (e)
(a) Options/SARS Employees in Exercise Price Expiration
Name Granted (#) Fiscal Year ($/share) Date
<S> <C> <C> <C> <C>
Patricia J. Defibaugh 150,000 34% $3.375 2004
John H. Teaford 150,000 34% $3.375 1995 (1)
</TABLE>
(1) All of such options were canceled on February 3, 1995 as a result of
Mr. Teaford's resignation.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
----------------------------------------------------
(b)
Number of Securities
Underlying Unexercised
Option/s
(a) at FY-End (#)
Name Exercisable/Unexercisable
Patricia J. Defibaugh 150,000
37,501/112,499
John H. Teaford 187,500 (1)
0/187,500 (1)
(1) All of such options were canceled on February 3, 1995 as a result of
Mr. Teaford's resignation.
Remuneration of Directors
- -------------------------
For the 1994 fiscal year, members of the Board of Directors of the
Company who were not also officers or employees of the Company received an
annual fee of $7,500. In lieu of payment of cash fees for individual meetings,
the Company grants warrants subject to vesting to purchase Common Stock to each
outside Director, in accordance with the Company's Amended and Restated
Directors' Stock Warrant Plan. Warrants were granted to such Directors in 1993
subject to a five year vesting schedule with annual increments of 1,000 options.
Members of the Board of Directors who are officers of the Company receive no
additional remuneration beyond their shares as officers for serving as
Directors.
<PAGE>
Employment Agreements and Arrangements
- --------------------------------------
Patricia J. Defibaugh
- ---------------------
On April 1, 1993, the Company entered into an employment agreement with
Ms. Defibaugh with a five-year term. Under this agreement, Ms. Defibaugh is to
receive a base salary of $225,000 per annum, subject to annual adjustment in the
discretion of the Compensation Committee of the Board of Directors, a
discretionary bonus, and incentive compensation equal to 2.5% of the increase,
if any, in the Company's pre-tax income for fiscal year during the term of this
agreement. In addition, Ms. Defibaugh is to receive an automobile stipend and
the Company is to provide her with disability insurance. In the event of
termination (other than for cause) not involving a "change of control" of the
Company (as defined below), Ms. Defibaugh will be entitled to receive a
severance payment equal to her current year base salary. She will also be
subject to a two-year restrictive covenant.
The employment agreement provides Ms. Defibaugh with severance
arrangements which will be payable in the event of a significant change in the
beneficial ownership of the Company's Common Stock or a significant change in
the composition of the Company's Board of Directors or the adoption of
a plan of the liquidation of the Company (a "change in control") not approved by
the Board of Directors of the Company as then constituted, and the subsequent
termination or resignation of Ms. Defibaugh. Such severance arrangements provide
for a lump sum cash payment equal to Ms. Defibaugh's current year annual salary,
including incentive compensation as described above for the last completed
fiscal year prior to termination or resignation, multiplied by a factor of
three, as well as full benefits provided under her agreement for a period of
three years (or the cash payment value thereof) after the date of such
termination or resignation.
John H. Teaford
- ---------------
Under Mr. Teaford's employment arrangement with the Company, he received
an annual salary of $200,000. Mr. Teaford was also entitled to an automobile
stipend and as an employee of the Company, he was entitled to participate in the
Company's Profit Sharing/401(k) Plan. Mr. Teaford resigned as President and
Chief Operating Officer in February, 1995. He is entitled to receive an
aggregate of $65,000 over the next six months. He is subject to a two year
restrictive covenant.
Arlene Goldwater
- ----------------
Upon expiration of a five-year employment agreement in January, 1991,
Ms. Goldwater's employment has continued on a month-to-month basis under terms
substantially similar to those provided for in her prior agreement. She is
entitled to receive an amount equal to one-quarter of one percent of the
aggregate worldwide retail sales of the Company's products. She is also
entitled to a monthly automobile allowance and a term life insurance policy
paid for by the Company. In addition, Ms. Goldwater is entitled to receive
$7,500 per annum and certain disability benefits. Ms. Goldwater is also
entitled to receive severance pay equal to six months of her then monthly
salary draw and shall be subject to a five-year restrictive covenant upon
termination of her employment.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
On April 26, 1995, there were outstanding and entitled to vote 2,157,253
shares of Common Stock. The following table sets forth information concerning,
as of April 26, 1995, the number of shares beneficially owned by each director
owning shares, each executive officer named in the "Summary Compensation Table"
set forth above, and offices and directors as a group, and the percentage of
outstanding shares of Common Stock (based on a total of 2,157,253 shares
outstanding as of April 26, 1995) so owned, as determined in accordance with
Rule 13d-3 under the Securities Exchange Act of 1934, as amended ("Rule 13d-3").
The address for each such person named below is 1301 Wright's Lane East, West
Chester, Pennsylvania 19380.
Name of Number of Shares Percent of
Beneficial Owner Owned (1) Class (2)
- ---------------- --------- ---------
Patricia J. Defibaugh 785,787 (3) 35.8%
Arlene Goldwater 77,767 3.6%
Robert B. Throm 35,588 (4) 1.6%
Arnold Koffler 6,000 (4) .3%
Dr. Robert E. Becker 5,000 (4) .2%
G. Kenneth Macrae 11,000 (4) .5%
Jean M. Lewis 46,144 (5) 2.1%
-------
All officers and directors 967,287 43.0%
as a group (7 persons) -------
_____________________________
(1) Unless otherwise indicated, each Director and executive officer has sole
voting and investment power with respect to the shares indicated as
beneficially owned by such Director or executive officers.
(2) All percentages are rounded to the nearest tenth of a percent.
(3) Includes 37,501 Plan Options, which are immediately exercisable, and 804
shares of Common Stock granted pursuant to, and vested under, the Company's
Employee Stock Ownership Plan.
(4) Includes 5,000 immediately exercisable Warrants issued pursuant to the
Company's Directors' Warrant Plan.
(5) Includes 37,501 Plan Options, which are immediately exercisable, and 7,443
shares of Common Stock granted pursuant to, and vested under, the Company's
Employee Stock Ownership Plan.
The following table sets forth information concerning, as of April 26, 1995,
each person known to the Company to be the beneficial owner of more than five
percent (5%) of the Company's Common Stock as determined in accordance with
Rule 13d-3. Certain of the information set forth below is derived, without
independent investigation on the part of the Company, from filings made by such
beneficial owners pursuant to Rule 13d-3.
<TABLE>
<CAPTION>
Name and Business Address of Beneficial Owner Number of Shares Owned Percent of Class
- --------------------------------------------- ---------------------- ----------------
<S> <C> <C>
Dimensional Fund Advisors, Inc. 113,900 5.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
</TABLE>
<PAGE>
Item 12. Certain Relationship and Related Transactions
---------------------------------------------
John E. Defibaugh, the husband of the Chairman of the Board, resigned as
an officer and director of the Company effective April 22, 1991. On April 26,
1991, the Company consummated the repurchase of 777,881 shares of the Company's
Common Stock owned by Mr. Defibaugh, at a price per share of $10.8458, for
aggregate consideration of $8,436,741.75. Of the purchase price, $3.0 million of
such amount was paid upon consummation with the balance to be paid over a ten
year period. The Company made payments totaling approximately $670,000 in 1994.
In February, 1992, the Company entered into a franchise and license
agreement with a limited liability company of the Federal Republic of Germany,
Alover Cosmetics GmbH ("Alover") for exclusive right to use the tradename,
trademarks and marketing and product now-how of the Company in certain eastern
European countries. Mr. Defibaugh beneficially owns one-third of the shares of
outstanding stock of Alover.
Mr. Koffler, a director of the Company, is also the Secretary and Sales
Manager of Penn Bottle Supply Company. The Company purchased approximately
$309,000 in products in 1994 from Penn Bottle Supply Company. Management
believes that the terms of these sales are at least as favorable as could be
obtained from unaffiliated third parties.
<PAGE>
SIGNATURES
- ----------
Pursuant to the requirements 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.
___________________________________
(Registrant)
___________________________________
Jean M. Lewis
Vice President of Finance
Chief Financial Officer
Date:
