SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------
FORM 10-K/A (FIRST)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO ________
COMMISSION FILE NUMBER 0-15194
SOUND ADVICE, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 59-1520531
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1901 TIGERTAIL BOULEVARD, DANIA, FLORIDA 33004
- ---------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (954) 922-4434
------------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
TITLE OF CLASS
------------------------------
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 _______ NO X
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO
ITEM 405 OF REGULATION S-K (17CFR 229.405) 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 [ ]
The aggregate market value of the registrant's voting stock held by
non- affiliates of the registrant on September 19, 1995, based upon the closing
market price of the registrant's voting stock on the NASDAQ National Market
System on September 19, 1995, as reported in THE WALL STREET JOURNAL, was
approximately $7,219,000.
The registrant had 3,728,894 shares of common stock, $.01 par value,
outstanding as of September 19, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
Items 10, 11, 12 and 13 of Part III of the Annual Report on Form 10-K
for the fiscal year ended June 30, 1995 (the "Report") of Sound Advice, Inc.
(the "Registrant") previously filed with the Securities and Exchange Commission
are hereby amended and restated in their entirety as follows:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
REGISTRANT'S DIRECTORS
The following table sets forth certain information as of the date of
this report regarding the current directors of the Registrant:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE POSITION(S) WITH THE REGISTRANT SINCE
- ---- --- ------------------------------- --------
<S> <C> <C> <C>
Peter Beshouri 41 Chairman of the Board, President 1982
and Chief Executive Officer
Michael Blumberg 47 Director, Senior Vice President, 1974
and Secretary
Gregory Sturgis(2) 43 Director 1974
Joseph Piccirilli(1)(2) 46 Director 1974
G. Kay Griffith(1) 50 Director, Executive Vice President 1992
and Chief Administrative Officer
Richard W. McEwen(1)(2) 75 Director 1994
<FN>
(1) Member of the Audit Committee of the Registrant's Board of
Directors.
(2) Member of the Stock Option Committee of the Registrant's
Board of Directors.
</FN>
</TABLE>
The Registrant's directors hold office until the next annual meeting of
shareholders and until their respective successors have been duly elected and
qualified.
PETER BESHOURI, who has been an employee of the Registrant since 1974,
has served as Chairman of the Board and Chief Executive Officer of the
Registrant since August 1982. Prior thereto he was the general sales manager of
the Registrant, as well as having served as a showroom manager and district
manager. He was elected President of the Registrant in May 1985. Mr. Beshouri
currently
2
<PAGE>
serves as a director of Progressive Retailers Organization. In August 1995, Mr.
Beshouri, together with the Registrant and a former chief financial officer of
the Registrant, voluntarily agreed with the SEC, without admitting or denying
any wrongdoing, to the entry of a cease and desist order by the SEC concerning
the Registrant's Form 10-K for fiscal year 1991 and Forms 10-Q for the quarters
ended September 30 and December 31, 1991. See "ITEM 3. LEGAL PROCEEDINGS."
MICHAEL BLUMBERG, a founder and a director of the Registrant, was
elected a Vice President in August 1982, Vice President - Purchasing and Finance
in May 1986, Vice President - Purchasing and Marketing in December 1987, and
Senior Vice President in May 1989. From the Registrant's inception until
February 1995, Mr. Blumberg served as Treasurer of the Registrant and, since
October 13, 1989, he has also been serving as Secretary of the Registrant. His
responsibilities include overall supervision of all purchasing and selecting new
product categories and lines for the Registrant, as well as consulting with
certain of the Registrant's manufacturers in connection with product design.
GREGORY STURGIS, a founder of the Registrant, had been an executive
officer of the Registrant from its inception until June 30, 1989, including
holding the position of Vice President-Planning and Development. Effective June
30, 1989, he resigned as an officer and employee of the Registrant, but is
continuing as a director. Mr. Sturgis is currently self-employed providing
consulting services to companies in the marine industry, as well as performing
consulting services for the Registrant. See "ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS."
JOSEPH PICCIRILLI, a founder of the Registrant, had been an executive
officer of the Registrant from its inception until October 13, 1989, including
holding the positions of Vice President-Advertising and Marketing, Vice
President-Public Relations and Personnel and Vice President-Home Audio
Purchasing. Effective October 13, 1989, he resigned as an officer and employee
of the Registrant, but is continuing as a director. Mr. Piccirilli is currently
self-employed providing general business consulting services to companies,
including, upon the request of the Registrant's management from time to time, to
the Registrant.
G. KAY GRIFFITH, joined the Registrant as an employee in May 1993 and
was formally elected Executive Vice President and Chief Administrative Officer
in September 1993. Ms. Griffith had previously been elected a director of the
Registrant and a member of the Audit Committee of its Board of Directors in July
1992. From March 1992 until joining the Registrant as an employee, she was
President and Chief Executive Officer of Admiralty Bank, headquartered in Palm
Beach Gardens, Florida. From June 1991 to March 1992, Ms. Griffith was a senior
partner of GKG Management Services, a firm providing consulting services to
banks and
3
<PAGE>
businesses who require assistance with their banking relationships. From
September 1983 to June 1991, she held a variety of officer positions with NCNB
National Bank of Florida, N.A. (now known as NationsBank of Florida, N.A.), the
last of which was Senior Vice President/Regional Banking Executive. Ms.
Griffith's principal role at the Registrant is to oversee, supervise and
coordinate all aspects of human resources/benefits and employee recruiting and
training.
RICHARD W. MCEWEN was elected a director of the Registrant at its
annual meeting of shareholders held in January 1994 and was also appointed a
member of the Audit Committee and Stock Option Committee of its Board of
Directors at such time. From 1977 until his retirement in 1984, he was Chairman
of the Board of Burdines, a chain of Florida department stores then owned by
Federated Stores, Inc. He is currently a director of Lennar Corporation, a
Florida based home builder, having served as such since 1987. He also currently
serves as a director of two other privately held companies. For approximately
eight years until 1993, he was a director of Pueblo International, Inc., a
supermarket company.
The Board of Directors has an Audit Committee comprised of a majority
of directors who are not officers or employees of the Registrant. The Board of
Directors does not currently have a nominating committee or a compensation
committee or committees performing similar functions.
REGISTRANT'S EXECUTIVE OFFICERS
The information regarding the Registrant's executive officers called
for by Item 401(b) of Regulation S-K has been included in ITEM 4.1 of Part I of
the Report.
DIRECTOR AND OFFICER SECURITIES REPORTS
Section 16(a) of the Securities Exchange Act of 1934 requires the
Registrant's officers and directors, and persons who own more than ten percent
of a registered class of the Registrant's equity securities, to file reports of
ownership and changes in ownership with the U.S. Securities and Exchange
Commission ("SEC") and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Registrant with copies of all Section 16(a) forms
they file.
Based solely on review of the copies of such forms furnished to the
Registrant and written representations that no Form 5's were required when
applicable, the Registrant believes that during the fiscal year ended June 30,
1995, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial owners were complied with
except that Richard W. McEwen, a director of the Registrant, inadvertently
4
<PAGE>
failed to file a Form 4 reflecting his acquisition on May 22, 1995, of 1,000
shares of Common Stock of the Registrant. Mr. McEwen is in the process of filing
such form.
ITEM 11. EXECUTIVE COMPENSATION.
EXECUTIVE COMPENSATION TABLES
The following tables provide information about executive compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information about the compensation of
the Registrant's Chief Executive Officer ("CEO") and each of the other four most
highly compensated executive officers of the Registrant during the fiscal year
ended June 30, 1995 for services in all capacities.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION (1) LONG TERM COMPENSATION
-------------------------------------- ----------------------
NAME AND PRINCIPAL FISCAL ALL OTHER
POSITION YEAR SALARY ($) BONUS ($)(2) STOCK OPTIONS (#)(3) COMPENSATION ($)(4)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Peter Beshouri 1995 324,008 0 0 0
Chairman, President 1994 324,008 48,000 0 0
and CEO 1993 322,672 0 0 0
Michael Blumberg 1995 294,008 0 0 0
Senior Vice 1994 294,008 23,000 0 0
President 1993 292,672 0 0 0
G. Kay Griffith 1995 160,000 0 15,000 0
Executive Vice President 1994 160,000 23,000 20,000 0
and Chief Administrative 1993 20,000(5) 0 0 0
Officer
Christopher O'Neil 1995 150,000 0 15,000 8,268(6)
Executive Vice 1994 150,000 23,000 11,000 8,268(6)
President and Chief 1993 150,000 0 0 8,268(6)
Operating Officer
Kenneth L. Danielson 1995 160,000 0 15,000 0
Chief Financial 1994 133,333(7) 23,000 20,000 0
and Accounting 1993 - - - -
Officer
<FN>
- -----------------
(1) Does not include any amounts for perquisites and other personal
benefits, securities or property extended to such executive officers of
the Registrant, such as life insurance and disability insurance,
because the Registrant does not believe that in any individual case the
dollar value of such other annual compensation would equal or exceed
the lesser of either $50,000 or 10% of such individual's total annual
compensation shown above.
(2) The bonuses accrued by the Registrant during the fiscal year ended June
30, 1994, were part of a performance bonus pool established by the
Registrant for its senior executives and corporate department heads.
The percentage of the accrued performance bonus pool that was
5
<PAGE>
actually paid out was based upon the achievement of a certain level of
pre-tax earnings by the Registrant in fiscal year 1994. The bonuses
were awarded and paid to such executive officers in September 1994. In
December 1994, the Board of Directors of the Registrant adopted an
annual incentive bonus plan for four categories of the Registrant's
employees (two of which categories were the CEO and other executive
officers) based upon the annual operating performance of the
Registrant. The percentage of the targeted bonus award to be earned by
the different employee categories is directly tied to a percentage of
the Registrant's projected operating performance (after taking into
account accruals for the annual incentive bonus plan) to be approved
each year by the Registrant's Board of Directors. Achievement of 100%
of the projected operating performance would result in the award of a
targeted bonus ranging from approximately 10% to up to 25% of base
salary (with the CEO at 25% and other executive officers at 20%), with
the percentage of the targeted bonus award earned increasing or
decreasing based upon the percentage (ranging from 70% to 130%) of
projected operating performance achieved. In fiscal year 1995 no
bonuses were earned under such plan.
(3) These currently represent immediately exercisable incentive stock
options issued pursuant to the Registrant's 1986 Stock Option Plan
adopted in May 1986 as subsequently amended and restated (the "Option
Plan"). See footnote (8) to the table in "ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."
(4) The Registrant has an Employee Stock Ownership Plan ("ESOP") for all of
its employees. In fiscal year ended June 30, 1993, the Registrant
contributed $12,000 in cash to the ESOP, which was primarily used to
pay out vested interests of former employees of the Registrant. With
respect to the fiscal year ended June 30, 1993, as a result of
reallocations to employee accounts of the ESOP caused by employee
terminations and pay outs of vested interests of former employees, Mr.
Beshouri was allocated 49.752 additional shares, Mr. Blumberg was
allocated 49.753 additional shares and Mr. O'Neil was allocated 32.504
additional shares of Common Stock held by the ESOP. In fiscal year
ended June 30, 1994, the Registrant contributed $50,000 in cash to the
ESOP, although no additional shares of Common Stock have been purchased
by the ESOP with such funds. With respect to the fiscal year ended June
30, 1994, as a result of reallocation to employee accounts of the ESOP
caused by employee terminations and pay outs of vested interests of
former employees, Mr. Beshouri was allocated 29.210 additional shares,
Mr. Blumberg was allocated 29.211 additional shares and Mr. O'Neil was
allocated 18.604 additional shares. The Registrant made no contribution
to the ESOP
6
<PAGE>
during the fiscal year ended June 30, 1995. See footnote (5) to the
table in "ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT." for the number of vested shares of the ESOP owned by each
of such individuals based upon the latest available annual report of
the ESOP.
(5) Represents salary paid to G. Kay Griffith from the commencement of her
employment by the Registrant in May 1993 to the end of fiscal year
1993. Ms. Griffith was formally elected Executive Vice President and
Chief Administrative Officer of the Registrant in September 1993. Prior
to the commencement of her employment, Ms. Griffith also received in
fiscal year 1993 director's fees and related expense reimbursements in
the aggregate amount of $12,140.
(6) This sum represents the aggregate amount of a monthly automobile
allowance paid during fiscal years 1993, 1994 and 1995.
(7) Represents salary paid to Kenneth L. Danielson from September 1, 1993
(the commencement date of his employment), although Mr. Danielson was
elected to succeed the former Chief Financial and Accounting Officer of
the Registrant effective as of October 1, 1993. Mr. Danielson's salary
for fiscal year 1994 would have been $160,000 on an annualized basis.
</FN>
</TABLE>
OPTION GRANTS IN 1995 FISCAL YEAR
The following table shows all grants of options to the named executive
officers of the Registrant during the fiscal year ended June 30, 1995. Pursuant
to SEC rules, the table also shows the value of the options granted at the end
of the option terms (five years) if the price of the Registrant's stock was to
appreciate annually by 5% and 10%, respectively. There is no assurance that such
stock price will appreciate at the rates shown in the table. The table also
indicates that, if the stock price does not appreciate, there will be no
increase in the potential realizable value of the options granted above the
difference (if any) between the market price of the Registrant's Common Stock as
of the date of grant and the exercise price per share. All of the options set
forth in the table are incentive stock options issued pursuant to the
Registrant's Option Plan. The Registrant does not have a plan whereby tandem
stock appreciation rights ("SARS") are granted.
7
<PAGE>
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED
ANNUAL RATES OF STOCK APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ---------------------------------------------------------------------------------------- --------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS CLOSING MARKET
UNDERLYING GRANTED TO EXERCISE PRICE ON DATE
OPTIONS EMPLOYEES PRICE OF GRANT EXPIRATION
NAME GRANTED (#) IN FISCAL YEAR ($/SHARE) ($/SHARE)(1) DATE 0% ($)(1) 5%($) 10%($)
- ---- ----------- -------------- --------- -------------- ---------- --------- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter Beshouri 0 N/A 0.00 N/A N/A 0 0 0
Michael Blumberg 0 N/A 0.00 N/A N/A 0 0 0
G. Kay Griffith 15,000 33.3% 5.96 5.75 12/13/99 0 20,679.28 49,506.49
Christopher O'Neil 15,000 33.3% 5.96 5.75 12/13/99 0 20,679.28 49,506.49
Kenneth L. Danielson 15,000 33.3% 5.96 5.75 12/13/99 0 20,679.28 49,506.49
<FN>
(1) For purposes of the Option Plan, "fair market value" on the date of
grant of any option is the average of the "market price" of a share of
Common Stock for each of the seven (7) consecutive business days
preceding such day. The "market price" on each such day is the closing
sales price on the NASDAQ National Market on such day. The Stock Option
Committee of the Registrant believes this calculation more accurately
reflects "fair market value" of the Registrant's Common Stock on any
given day as compared to simply using the closing market price on the
date of grant. As a result, the closing market price on the date of
grant at times may be different than the exercise price per share.
AGGREGATE OPTION EXERCISES IN 1995 FISCAL YEAR
AND 1995 FISCAL YEAR END OPTION VALUES
The following table provides information as to options exercised by
each of the named executives of the Registrant during the fiscal year ended June
30, 1995, and the value of options held by such executive officers at the
Registrant's fiscal year-end measured in terms of the closing market price of
the Registrant's stock on June 30, 1995.
</TABLE>
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Name Shares Acquired Underlying Unexercised In-the-Money Options
on Exercise (#) Value Realized ($) Options at FY-End (#)(1) at FY-End ($)(1)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Peter Beshouri 0 0 0 0
Michael Blumberg 0 0 0 0
G. Kay Griffith 0 0 31,000 0
Christopher O'Neil 0 0 35,000 0
Kenneth L. Danielson 0 0 35,000 0
<FN>
- ------------------------
8
<PAGE>
(1) All of the unexercised options held by such individuals were
immediately exercisable.
(2) Based on the closing market price ($3.25) of the Registrant's Common
Stock on the NASDAQ National Market on June 30, 1995 (the Registrant's
fiscal year-end), none of the unexercised options were in-the-money.
EMPLOYMENT AGREEMENTS
During the 1995 fiscal year Peter Beshouri and Michael Blumberg each
had an employment agreement with the Registrant which provided for an annual
base salary for fiscal year 1995 of $320,650 for Peter Beshouri and $290,400 for
Michael Blumberg. The term of each such employment agreement was originally for
a three year period expiring June 30, 1992, and had been extended each fiscal
year thereafter for an additional one year period. Effective as of July 1, 1995,
such employment agreements were again extended for an additional one year term
(currently until June 30, 1996) on the same terms and conditions as in effect
under their respective employment agreements during the previous fiscal year,
including, without limitation, that the annual base salary payable to each of
them for the Registrant's current fiscal year will be the same as they were
entitled to receive for the fiscal year ended June 30, 1995. Under the latest
one-year extension of the employment agreements, each of Messrs. Beshouri and
Blumberg will be entitled to participate in the Registrant's annual incentive
bonus plan and long term incentive stock option program. The Registrant is also
required to furnish each of Messrs. Beshouri and Blumberg with, among other
things, family health, life and disability insurance coverage.
Such employment agreements with Messrs. Beshouri and Blumberg also
provide that, in the event of a change in control of the Registrant, each of
them can terminate his full-time employment thereunder. A change in control
occurs when Messrs. Beshouri and Blumberg and/or other individuals or designees
voted for or approved by them no longer collectively comprise at least a
majority of the members of the Board of Directors of the Registrant or if one of
them is forced by a merger, consolidation, reorganization or otherwise by
operation of law or other form of transaction to sell his shares of voting
capital stock in the Registrant or if 50% or more of the consolidated assets,
properties and businesses of the Registrant is sold or otherwise transferred to
a third-party or if an individual (other than either Messrs. Beshouri and
Blumberg) or another company or entity or a group acting in concert becomes the
beneficial owner of 25% or more of the outstanding voting capital stock of the
Registrant as a result of acquisitions made from other than Messrs. Beshouri
and/or
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<PAGE>
Blumberg or the Registrant, assuming such acquisitions from the Registrant were
approved by Messrs. Beshouri and Blumberg. In the event such change in control
was resisted by either Messrs. Beshouri or Blumberg as evidenced by his failure
to approve of such change in control either in his capacity as a director or
shareholder of the Registrant, unless (i) he accepts a new employment agreement
with the Registrant or any successor or (ii) such change in control was
supported by the Board of Directors of the Registrant at a time when Messrs.
Beshouri and Blumberg and/or other individuals or designees voted for or
approved by them collectively comprise at least a majority of the members of the
Board of Directors of the Registrant and he was offered a new contract at least
as favorable as his current employment agreement, he would be entitled to his
compensation (both annual salary and any bonus) and the other benefits provided
for in his employment agreement for the greater of three years or the remaining
term of his employment agreement. The Registrant is not aware of any
contemplated change in control.
In September 1993 pursuant to the Registrant's Option Plan, the Stock
Option Committee of the Board of Directors (then comprised of Messrs. Beshouri,
Blumberg, Piccirilli and Sturgis) authorized the granting of certain incentive
stock options to three executive officers of the Registrant, in two cases as
part of the consideration for and inducement to such individuals to become
executive officers of the Registrant and in one case to reward individual
achievement as well as in all three cases to seek to retain such qualified
executives and gives them incentive for future performance. As a result of such
issuance, each of Kenneth L. Danielson (the Chief Financial and Accounting
Officer) and G. Kay Griffith (the Executive Vice President and Chief
Administrative Officer) received incentive stock options covering 20,000 shares
of Common Stock of the Registrant at an exercise price of $6.29 per share and
Christopher O'Neil (the Executive Vice President and Chief Operating Officer)
received incentive stock options covering 11,000 shares of Common Stock of the
Registrant at an exercise price of $6.29, all of which incentive stock options
expire no later than September 21, 1998. In addition and for the same reasons
described above for the issuances in September 1993, although none of such
executive officers have an employment agreement with the Registrant and each of
their employment is terminable at will by the Registrant, the Stock Option
Committee at the time of the foregoing issuances contemplated issuing each of
such three executive officers additional stock options covering 15,000 shares of
Common Stock approximately about the time of each of the first and second
anniversary dates of the foregoing issuances (or an aggregate of stock options
covering 30,000 shares of Common Stock to each of them) at the then fair market
value of the Registrant's Common Stock at the time of each issuance thereof,
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<PAGE>
which stock options were at such time contemplated to be exercisable for a
period of up to five years from their respective issuance dates. Accordingly,
the Stock Option Committee (currently comprised of Messrs. McEwen, Piccirilli
and Sturgis) authorized in December 1994 the granting to each of Messrs.
Danielson and O'Neil and Ms. Griffith the first installment of such additional
incentive stock options covering 15,000 shares of Common Stock at an exercise
price of $5.96 per share, all of which incentive stock options expire no later
than December 13, 1999. See "OPTIONS GRANTED IN 1995 FISCAL YEAR" hereinabove
and footnote (8) to the table in "ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."
DIRECTORS COMPENSATION
Directors who are also officers or employees of the Registrant are not
paid additional compensation for acting as a director of the Registrant.
Commencing after the 1993 annual meeting of shareholders of the Registrant a
standard arrangement was established by the Registrant for compensating
directors who are not officers or employees of the Registrant for any services
provided in such person's capacity as a director. Each such outside director
receives a fee of $1,500 on a quarterly basis for serving as a director of the
Registrant plus an additional fee of $500 for each meeting of the Board of
Directors or any committee thereof such director attends, as well as
reimbursement of any out- of-pocket expenses incurred for travel, lodging and
meals in connection with attendance at any such meeting. See also "ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since during the fiscal year ended June 30, 1995, the Registrant did
not have a compensation committee of its Board of Directors (or Board committee
performing equivalent functions), Peter Beshouri, Michael Blumberg and G. Kay
Griffith, in their capacities as members of the Registrant's Board of Directors,
participated in deliberations of the Board concerning the authorization of the
one-year renewals of the employment agreements of Messrs. Beshouri and Blumberg
on the terms as discussed in "Employment Agreements" hereinabove. In addition,
they participated in their capacities as directors in the adoption by the Board
of Directors during fiscal year 1995 of the Registrant's annual incentive bonus
plan. See footnote (2) to "SUMMARY COMPENSATION TABLE" in "Executive
Compensation Tables" hereinabove.
11
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth certain information regarding the
beneficial ownership of the Registrant's Common Stock, as of October 23, 1995,
by (i) each person who is known by the Registrant to own beneficially more than
5% of the Registrant's Common Stock; (ii) each of the Registrant's directors and
nominees for director who own shares of the Registrant's Common Stock; (iii) the
Registrant's CEO and its four most highly compensated executive officers other
than the CEO who were serving as executive officers at the end of fiscal year
1995; and (iv) all directors and executive officers of the Registrant as a
group. Except as noted in the footnotes to the table, the persons named in the
table have sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them.
</TABLE>
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY OWNED
OF -------------------------
BENEFICIAL OWNER NUMBER PERCENTAGE
---------------- ------ ----------
<S> <C> <C>
FMR Corp. (1)(2) .............................. 392,035.0 (2) 10.45% (2)
Peter Beshouri (3) ............................ 341,005.8 (4)(5) 9.14% (4)(5)
Michael Blumberg (3) .......................... 341,005.8 (4)(5) 9.14% (4)(5)
U.S. Bancorp (1)(6) ........................... 326,100.0 (6) 8.75% (6)
Dimensional Fund Advisors
Inc. (1)(7) .................................. 210,800.0 (7) 5.65% (7)
Joseph Piccirilli (3) ......................... 210,467.5 (4) 5.64% (4)
Gregory Sturgis (3) ........................... 150,467.5 (4) 4.04% (4)
Kenneth L. Danielson (3) ...................... 57,000.0 (8) 1.51% (8)
Christopher O'Neil (3)......................... 35,838.06 (5)(8) .95% (5)(8)
G. Kay Griffith (1)............................ 35,000.0 (8) .93% (8)
Richard W. McEwen (9).......................... 3,000.0 .08%
All directors and executive officers
as a group (eight persons including
certain of those listed above) (4)(5)(8)...... 1,172,784.7 30.62%
<FN>
- --------------------------
(1) The information set forth herein with respect to each such person(s) is
based solely upon a Schedule(s) 13G (and any amendments thereto) filed
with the SEC by such person(s) with respect to the calendar year ended
December 31, 1994 and, accordingly, may not reflect their respective
holdings as of the date of this report.
(2) FMR Corp., 82 Devonshire Street, Boston, Massachusetts 02109, through
the ownership of its wholly-owned subsidiary, Fidelity Management &
Research Company, a registered investment advisor located at the same
address as FMR Corp., is deemed to be the
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<PAGE>
beneficial owner of 392,035 shares of Common Stock, with respect to
which shares it has sole dispositive power, as a result of acting as an
investment advisor to several registered investment companies. The
number of shares of Common Stock owned by such investment companies
includes 21,135 shares resulting from the assumed conversion of certain
of the Registrant's warrants. In addition, Edward C. Johnson 3d, the
Chairman of FMR Corp. and who with various Johnson family members and
trusts for the benefit of Johnson family members form a control group
with respect to FMR Corp., indirectly would also be deemed the
beneficial owner of such 392,035 shares by reasoning of having sole
dispositive power over such shares. Fidelity Low-Priced Stock Fund, one
of the registered investment companies as to which Fidelity Management
& Research Company acts as an investment advisor, may also be deemed a
beneficial owner of 382,105 of such 392,035 shares as a result of its
right to receive or the power to direct the receipt of dividends from,
or the proceeds from the sale of, such 382,105 shares.
(3) The address of each such person is care of the Registrant, 1901
Tigertail Boulevard, Dania, Florida 33004. Messrs. Beshouri, Blumberg,
Piccirilli and Sturgis collectively are herein referred to as the
"Principal Shareholders."
(4) As a result of the retirement as an officer and employee of the
Registrant of each of Gregory Sturgis effective June 30, 1989 and
Joseph Piccirilli effective October 13, 1989, Peter Beshouri and
Michael Blumberg, the two remaining Principal Shareholders, each
currently has the right to vote one-half of the shares of Common Stock
beneficially owned by each of Messrs. Sturgis and Piccirilli. As a
result thereof, each of the two remaining Principal Shareholders
currently has the right to vote approximately 521,444, or 13.98%, of
the outstanding shares of Common Stock of the Registrant. See "Right of
First Refusal and Voting Trust Agreement" hereinbelow.
(5) Includes such person's or members' of the group vested interest (if
any) in shares of Common Stock of the Registrant resulting from such
person's or members' of the group participation in the Registrant's
Employee Stock Ownership Plan ("ESOP") based upon the latest available
annual report of the ESOP for the fiscal year ended June 30, 1994.
Based on such annual report, Mr. Beshouri had 538.307 vested shares,
Mr. Blumberg had 538.309 vested shares and Mr. O'Neil had 338.059
vested shares, and all current directors and executive officers as a
group had 1,414.68 vested shares.
(6) U.S. Bancorp, 111 S.W. Fifth Avenue, Portland, Oregon, 97204, as a
result of the Trust Group of the United States National Bank of Oregon
(a national banking association located at the
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same address and owned by U.S. Bancorp) holding the sole voting power
over 162,600 shares of Common Stock, is deemed, together with United
States National Bank of Oregon, to be the beneficial owner of such
162,600 shares. In addition, Qualivest Capital Management, Inc. (a
registered investment adviser located at the same address and owned by
United States National Bank of Oregon) holds the sole voting power over
163,500 shares of Common Stock and is deemed the beneficial owner of
such additional 163,500 shares, as a result of acting as an investment
adviser to The Qualivest Funds, a registered investment company.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), 1299 Ocean Avenue, 11th
Floor, Santa Monica, California 90401, which is a registered investment
advisor, is deemed to have beneficial ownership of 210,800 shares of
Common Stock, with respect to which shares it has sole voting power
over 130,800 and sole dispositive power over 210,800. All of such
shares are held in portfolios of DFA Investment Dimensions Group Inc.,
a registered open-end management investment company, or in series of
The DFA Investment Trust Company, a registered open- end management
investment company, or The DFA Group Trust and DFA Participating Group
Trust, investment vehicles for qualified employee benefit plans, with
respect to all of which Dimensional serves as investment manager. In
addition, persons who are officers of Dimensional also serve as
officers of DFA Investment Dimensions Group Inc. and The DFA Investment
Trust Company and, in their capacity as officers of DFA Investment
Dimensions Group Inc. and The DFA Investment Trust Company, such
persons have sole voting power over the balance (80,000 shares) of the
210,800 shares not voted by Dimensional. Dimensional disclaims
beneficial ownership of such shares.
(8) Includes (as applicable) immediately exercisable incentive stock
options held by: (i) Mr. O'Neil for 3,000 shares of Common Stock at an
exercise price of $7.27 per share, for 2,000 shares at an exercise
price of $5.45 per share, for 11,000 shares at an exercise price of
$6.29 per share and for 15,000 shares at an exercise price of $5.96 per
share; and (ii) each of Mr. Danielson and Ms. Griffith for 20,000
shares of Common Stock at an exercise price of $6.29 per share and for
15,000 shares at an exercise price of $5.96 per share. See "ITEM 11.
EXECUTIVE COMPENSATION. - Executive Compensation Tables" and
"Employment Agreements."
(9) The address of Richard W. McEwen is 3752 Bobbin Brook West,
Tallahassee, Florida 32312.
</FN>
</TABLE>
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RIGHT OF FIRST REFUSAL AND VOTING TRUST AGREEMENT
On June 30, 1986, the Principal Shareholders entered into a right of
first refusal and voting trust agreement. Pursuant to such agreement, each
Principal Shareholder, for himself and on behalf of his heirs, beneficiaries,
legal representatives and permitted assigns, has agreed not to sell, transfer,
assign, pledge, encumber or otherwise dispose of any of his shares of Common
Stock except (a) by will or the laws of intestate succession, (b) to a trust in
which such Principal Shareholder or his immediate family are the sole
beneficiaries, (c) with the written consent of all of the other Principal
Shareholders or (d) pursuant to the right of first refusal granted to the other
Principal Shareholders. Under such right of first refusal, in the event a
Principal Shareholder or his heirs, beneficiaries, legal representative or
permitted assigns desires to sell any shares of Common Stock pursuant to a bona
fide offer or otherwise, such other Principal Shareholders shall have the right
and option to purchase such shares at a price equal to the bona fide offer price
per share (if any) or the average of the closing bid and ask prices for the
Common Stock over the four full weeks preceding the date the notice of intent to
sell is given.
In addition, the Principal Shareholders have agreed that at any time a
Principal Shareholder is no longer an employee of the Registrant for any reason
whatsoever (other than in the event of termination of his employment by the
Registrant without cause), voting rights arising from the ownership of the
shares of Common Stock owned by such Principal Shareholder or by his heirs,
beneficiaries, legal representatives or permitted assigns shall be exercised and
controlled until June 30, 1996, unless the agreement is earlier terminated in
accordance with its terms, by the Principal Shareholders who are still employees
of the Registrant at the time that such voting rights have to be exercised
(collectively the "Trustees"). The Trustees will vote such shares in accordance
with their respective individual ownership of shares of Common Stock. The right
to exercise such voting control by the Trustees shall terminate upon the arm's
length bona fide sale by such Principal Shareholder to a third party of such
shares so long as the other Principal Shareholders have been given an
opportunity to purchase such shares pursuant to the right of first refusal
described above. As a result of the retirement of each of Messrs. Sturgis and
Piccirilli as an officer and employee of the Registrant, Messrs. Beshouri and
Blumberg are the only Trustees. See footnote (4) to the beneficial ownership
table set forth above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
In January 1993, the Registrant entered into a one year consulting
arrangement with Gregory Sturgis, a director of the Registrant and one of the
Principal Shareholders, pursuant to which Mr. Sturgis provided his consulting
services to the Registrant for
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up to 35 full days during such calendar year. The term of such arrangement has
been previously extended through calendar year 1995. For providing such
services, Mr. Sturgis receives an annual fee of $25,000, payable in twelve equal
monthly installments on the first day of each month, and reimbursement for
out-of-pocket expenses incurred by him for travel, lodging and meals in
connection with the performance of his consulting services. See also "ITEM 11.
EXECUTIVE COMPENSATION. - Directors Compensation".
Jacob E. Farkas (who resigned as a director of the Corporation in
December 1993) had a one-year arrangement, commencing as of November 1, 1993,
with the Registrant whereby Mr. Farkas received $5,000 per month for his
consulting services, plus reimbursement for related out-of-pocket expenses. In
consideration of the services rendered during the Registrant's fiscal year ended
June 30, 1995, the Registrant paid to Mr. Farkas and his wholly-owned consulting
corporation fees aggregating $15,000, in addition to the reimbursement of his
out-of-pocket expenses. Such consulting arrangement expired on October 31, 1994.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Amendment to the Report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 30th day of
October, 1995.
Sound Advice, Inc.
By: \s\ PETER BESHOURI
---------------------------
Peter Beshouri, Chairman of
the Board, President and
Chief Executive Officer
17
