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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________
FORM 10-K/A
_____________________
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, 1998
______________________________
Commission File No. 0-22065
RADIANT SYSTEMS, INC.
A Georgia Corporation
(IRS Employer Identification No. 11-2749765)
3925 Brookside Parkway
Alpharetta, Georgia 30022
(770) 576-6000
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934:
NONE
----------------------------
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
Common Stock, no par value
--------------------------
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 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.[ ]
The aggregate market value of the common stock of the registrant held by
nonaffiliates of the registrant (9,091,768 shares) on March 17, 1999 was
approximately $85,803,561 based on the closing price of the registrant's common
stock as reported on the Nasdaq National Market on that date. For the purposes
of this response, officers, directors and holders of 10% or more of the
registrant's common stock are considered the affiliates of the registrant at
that date.
The number of shares outstanding of the registrant's common stock, as of March
15, 1999: 16,131,150 shares of no par value common stock.
DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------
None.
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The following Items are amended hereby:
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Item 13. Certain Relationships and Related Transactions.
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Item 10. Directors and Executive Officers of the Registrant.
- -------- ---------------------------------------------------
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position Held
- ------------------------- --- -------------------------------------
<S> <C> <C>
Erez Goren 34 Co-Chairman of the Board and Chief
Executive Officer
Alon Goren 33 Co-Chairman of the Board and Chief
Technology Officer
Eric B. Hinkle 39 President and Chief Operating Officer
John H. Heyman 37 Executive Vice President and Chief
Financial Officer
Andrew S. Heyman 35 Executive Vice President - Global
Solutions
Carlyle M. Taylor 45 Executive Vice President - Operations
James S. Balloun 60 Director
Evan O. Grossman 34 Director
</TABLE>
Executive officers are appointed by the Board of Directors of the Company
and hold office at the pleasure of the Board. Executive officers devote their
full time to the affairs of the Company.
Erez Goren has served as Co-Chairman of the Board and Chief Executive
Officer of the Company since its inception in 1985 and as its President from
1985 to October 1996. Mr. Goren attended State University of New York at Stony
Brook prior to devoting his full time and energy to the Company. He is the
brother of Alon Goren.
Alon Goren has served as Co-Chairman of the Board and Chief Technology
Officer of the Company since its inception in 1985. Mr. Goren has a B.S. in
Computer Systems Engineering from Rensselaer Polytechnic Institute. He is the
brother of Erez Goren.
Eric B. Hinkle has served as President, Chief Operating Officer and a
director of the Company since October 1996. Mr. Hinkle served in various
capacities with the Avionics Divisions of AlliedSignal Corporation from January
1994 to October 1996, including most recently as Vice President of
Communications and Navigation Products. From 1989 to January 1994, Mr. Hinkle
was employed by McKinsey & Co., a consulting firm, including most recently as
Senior Engagement Manager. Mr. Hinkle has an M.B.A. from Harvard Business
School, a M.S. degree in Electrical Engineering from Stanford University, and a
B.S. degree in Computer Engineering from Brown University.
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John H. Heyman has served as Executive Vice President and Chief Financial
Officer of the Company since September 1995 and as a director of the Company
since June 1996. Mr. Heyman served as Vice President and Chief Financial
Officer of Phoenix Communications, Inc., a commercial printer, from March 1991
to August 1995. From 1989 to 1991, Mr. Heyman served as Vice President,
Acquisitions of Forsch Corporation, a diversified manufacturing company. From
1983 to 1987, Mr. Heyman served in a variety of capacities with Arthur Andersen
LLP, where he worked primarily with middle market companies and technology
firms. Mr. Heyman has an M.B.A. from Harvard Business School and a B.B.A.
degree in Accounting from the University of Georgia. He is the brother of
Andrew S. Heyman.
Andrew S. Heyman has served as Executive Vice President - Global Solutions
of the Company since April 1998 and as Vice President--Convenience Store
Division and Managing Director of the Radiant Solutions Group of the Company
from January 1996 to April 1998. Mr. Heyman served as a senior manager with
Andersen Consulting from 1987 to December 1995. He holds a M.S. degree in
Computer Information Systems from Georgia State University and a B.B.A. in
Finance from the University of Georgia. He is the brother of John H. Heyman.
Caryle M. Taylor has served as Executive Vice President--Operations of the
Company since April 1998 and as Vice President--Integration and Support of the
Company from September 1995 to April 1998. Mr. Taylor served in various
capacities with NCR Corporation (formerly AT&T Global Information Solutions) in
the retail information systems area from 1978 to September 1995, including most
recently as Assistant Vice President of the scanner business unit. Mr. Taylor
received a B.S. degree in Mathematics from North Carolina Wesleyan College.
James S. Balloun has served as Chairman of the Board and Chief Executive
Officer of National Service Industries, Inc., a diversified service and
manufacturing company, since February 1996, and as its President since October
1996. He was previously affiliated with the management consulting firm of
McKinsey & Company, Inc., which he served as a Director from June 1976 until
January 1996. Mr. Balloun has been a director of the Company since April 1997.
Mr. Balloun is a director of Wachovia Corporation.
Evan O. Grossman has served as President of Willow Associates, a strategic
consulting and research firm, since November 1997. Mr. Grossman served as
President and Chief Operating Officer of Share Group, Inc., a teleservices
company, from August 1993 to November 1997. Mr. Grossman was previously
affiliated with the management consulting firm of McKinsey & Company, Inc. from
October 1990 to July 1993. Mr. Grossman has been a director of the Company
since May 1997.
Board of Directors
The Board of Directors of the Company consists of six (6) directors, divided
into three classes, with members of each class of directors serving for
staggered three-year terms. The Company's Board of Directors has three (3)
standing committees -- the Audit Committee, the Compensation Committee and the
Stock Option Committee.
The Audit Committee presently consists of James S. Balloun and Evan O.
Grossman. The Audit Committee has been assigned the principal function of
reviewing the internal and external financial reporting of the Company,
reviewing the scope of the independent audit and considering comments by the
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auditors regarding internal controls and accounting procedures and management's
response to these comments.
The Compensation Committee presently consists of Erez Goren, James S.
Balloun and Evan O. Grossman. The Compensation Committee has been assigned the
functions of approving and monitoring the remuneration arrangements for senior
management.
The Stock Option Committee presently consists of James S. Balloun and Evan
O. Grossman. The Stock Option Committee has been assigned the functions of
administering the Company's stock option plans and granting options thereunder.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
shareholders are also required to furnish the Company with copies of all forms
they file under this regulation. To the Company's knowledge, based solely on a
review of the copies of such reports furnished to the Company and
representations that no other reports were required, during the year ended
December 31, 1998, all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10% shareholders were complied with, except
that James S. Balloun and Evan O. Grossman each failed to file on a timely basis
one report relating to the automatic grant of stock options to non-employee
directors.
Although it is not the Company's obligation to make filings pursuant to
Section 16 of the Securities Exchange Act of 1934, the Company has adopted a
policy requiring all Section 16 reporting persons to report monthly to the
Controller of the Company as to whether any transactions in the Company's Common
Stock occurred during the previous month.
5
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Item 11. Executive Compensation.
- -------- -----------------------
The following table presents certain information for the fiscal years ended
December 31, 1998, 1997 and 1996 concerning compensation earned for services
rendered in all capacities by the Company's Chief Executive Officer and the
other executive officers of the Company whose total annual salary and bonus
exceeded $100,000 during fiscal 1998 (the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Awards
Annual Compensation ---------------------
Name and --------------------- Securities Underlying
Principal Position Year Salary($) Bonus($) Options
------------------ ---- --------- -------- ---------------------
<S> <C> <C> <C> <C>
Erez Goren 1998 $ 90,000 $ -- --
Co-Chairman and Chief Executive 1997 92,769 -- --
Officer 1996 80,769 11,197 --
Eric B. Hinkle 1998 $100,592 $ -- --
President and Chief Operating Officer 1997 103,077 100,000 --
1996/(1)/ 15,385 -- 375,000
John H. Heyman 1998 $ 99,950 $ -- --
Executive Vice President and Chief 1997 103,026 50,000 --
Financial Officer 1996 99,731 -- --
Andrew S. Heyman 1998 $100,000 $ 13,990 36,000
Executive Vice President- 1997 81,462 35,559 10,000
Global Solutions 1996 62,314 -- --
Carlyle M. Taylor 1998 $100,000 $ 8,000 --
Executive Vice President-Operations 1997 82,462 28,000 --
1996 80,000 28,000 --
</TABLE>
_____________________
(1) Mr. Hinkle joined the Company on October 21, 1996.
Directors' Fees
The Company's present policy is not to pay any cash compensation to its
directors. Each non-employee director of the Company receives an automatic
grant of options to purchase 5,000 shares of Common Stock on the last business
day of each fiscal year of the Company. Each non-employee director of the
Company is also reimbursed for travel and other expenses incurred in connection
with the performance of their duties.
In addition, all new non-employee directors of the Company receive a one-
time grant of an option to purchase 15,000 shares of Common Stock at an exercise
price equal to the fair market value of such stock on the date of grant, which
options vest over a period of three years. All such options expire, unless
previously exercised or terminated, ten years from the date of grant.
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Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is currently comprised
of Erez Goren, James S. Balloun and Evan O. Grossman. With the exception of
Erez Goren, who serves as Co-Chairman of the Board and Chief Executive Officer
of the Company, none of the members of the Compensation Committee served as an
officer or employee of the Company or any of its subsidiaries during fiscal
1998. There were no material transactions between the Company and any of the
members of the Compensation Committee during fiscal 1998.
Agreements with Employees
All employees of the Company, including executive officers, are required to
sign a confidentiality and noncompete agreement with the Company restricting the
ability of the employee to compete with the Company during his or her employment
and for a period ranging from six months to two years thereafter, restricting
solicitation of customers and employees following employment with the Company,
and providing for ownership and assignment of intellectual property rights to
the Company. The agreements have an indefinite term, but the employee may
terminate employment with the Company at any time.
401(k) Profit Sharing Plan
The Company maintains a 401(k) Profit Sharing Plan (the "401(k) Plan") which
is intended to be a tax-qualified defined contribution plan under Section 401(k)
of the Internal Revenue Code of 1986, as amended (the "Code"). In general, all
employees of the Company who have completed six months of service and have
attained age 21 are eligible to participate. The 401(k) Plan includes a salary
deferral arrangement pursuant to which participants may contribute, subject to
certain Code limitations, a minimum of 1.0% and a maximum of 15.0% of their
salary on a pre-tax basis (up to $9,500 per year). Subject to certain Code
limitations, the Company may make both matching and additional contributions at
the discretion of the Board of Directors of the Company each year. To date, no
contributions have been made by the Company to the 401(k) Plan. A separate
account is maintained for each participant in the 401(k) Plan. The portion of a
participant's account attributable to his or her own contributions is 100.0%
vested. Distributions from the 401(k) Plan may be made in the form of a lump-sum
cash payment or in installment payments.
Stock Option Plans
1995 Stock Option Plan. On December 20, 1995, the Company's directors and
shareholders adopted the 1995 Stock Option Plan (the "Plan") for employees who
are contributing significantly to the business of the Company or its
subsidiaries as determined by the Company's Board of Directors or the committee
administering the Plan. The Plan currently provides for the grant of incentive
and non-qualified stock options to purchase up to 6,000,000 shares of Common
Stock at the discretion of the Board of Directors of the Company or a committee
designated by the Board of Directors to administer the Plan. The option
exercise price of incentive stock options must be at least 100.0% (110.0% in the
case of a holder of 10.0% or more of the Common Stock) of the fair market value
of the stock on the date the option is granted and the options are exercisable
by the holder thereof in full at any time prior to their expiration in
accordance with the terms of the Plan. Incentive stock options granted pursuant
to the Plan will expire on or before (1) the date which is the tenth anniversary
of the date the option is granted, or (2) the date which is the fifth
anniversary of the date the option is granted in the event that the option is
granted to a
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key employee who owns more than 10.0% of the total combined voting power of all
classes of stock of the Company or any subsidiary of the Company. Options
granted under the Plan typically vest over a period of four to five years. As of
April 1, 1999, options to purchase 2.8 million shares of Common Stock were
outstanding pursuant to the Plan. In addition, non-qualified options to purchase
590,690 shares of Common Stock have been granted by the Company outside of the
Plan and remain outstanding.
Directors Plan. The Company's directors and shareholders have adopted the
Non-Management Directors' Stock Option Plan (the "Directors Plan"). The purpose
of the Directors Plan is to secure for the Company the benefits of the
additional incentive inherent in the ownership of Common Stock by non-employee
directors of the Company and to help the Company secure and retain the services
of such non-employee directors. The Directors Plan is intended to be a self-
governing formula plan. To this end, the Directors Plan requires minimal
discretionary action by any administrative body with regard to any transaction
under the Directors Plan. Eligible persons under the Directors Plan are
directors of the Company who are not employees of the Company or any affiliate
of the Company ("Outside Directors"). A maximum of 100,000 shares of Common
Stock has been reserved by the Company for issuance pursuant to options under
the Directors Plan, which number is subject to adjustment in certain
circumstances in order to prevent dilution or enlargement. Each Outside
Director is granted an option to purchase 15,000 shares of Common Stock upon
joining the Board of Directors of the Company. Thereafter, each person who is an
Outside Director as of the last business day of each fiscal year during the term
of the Directors Plan shall receive an option to purchase 5,000 shares of Common
Stock as of such date.
The following table provides certain information concerning individual
grants of stock options under the Company's 1995 Stock Option Plan made during
the year ended December 31, 1998 to the Named Executive Officers:
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
------------------------------------------
Potential Realizable Value
% of Total at
Options Exercise Assumed Annual Rates of
Granted to or Base Stock Price Appreciation for
Options Employees in Price Option Term/(1)/
Granted Fiscal ($ Per Expiration -----------------------------
Name (#) Year Share) Date 5% 10%
- ------------------- ----------- ------------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Erez Goren -- -- -- -- -- --
Eric B. Hinkle -- -- -- -- -- --
John H. Heyman -- -- -- -- -- --
Andrew S. Heyman 6,000/(2)/ 1.4 17.88 2/17/08 67,468 170,977
30,000/(3)/ 6.8 6.38 7/15/08 120,370 305,042
Carlyle M. Taylor -- -- -- -- -- --
</TABLE>
___________________________________
/(1)/ The dollar amounts under these columns represent the potential realizable
value of each grant of option assuming that the market price of the
Company's Common Stock appreciates in value from the date of grant at the
5% and 10% annual rates prescribed by the SEC and therefore are not
intended to forecast possible future appreciation, if any, of the price of
the Company's Common Stock.
/(2)/ Option vests in increments of 1,500 shares per year, commencing on
February 17, 2000 and on each February 17/th/ thereafter until fully
vested.
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/(3)/ Option vests as follows: 2,236 shares on July 15, 1999; 6,382 shares on
each of July 15, 2000 and 2001; and 7,500 shares on each of July 15, 2002
and 2003
The following table provides certain information concerning options
exercised during fiscal 1998 and the value of unexercised options held by the
Named Executive Officers as of December 31, 1998.
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Unexercised the-Money Options at
Shares Options at Fiscal Year End Fiscal Year End /(1)/
Acquired on Value ---------------------------- ----------------------------
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
Erez Goren -- -- -- -- -- --
Eric B. Hinkle 19,200 191,413 189,800 160,000 545,675 460,000
John H. Heyman -- -- 190,000 75,000 1,211,250 478,125
Andrew S. Heyman 23,750 605,625 -- 112,250 -- 486,094
Carlyle M. Taylor 66,667 1,758,342 -- 133,333 -- 850,000
</TABLE>
- --------------
(1) Dollar values were calculated by determining the difference between the
closing price of $7.375 per share of Common Stock, as reported by The Nasdaq
Stock Market on December 31, 1998, and the exercise price of the options.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- -------- ---------------------------------------------------------------
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 1, 1999 by (i) each person
known by the Company to be the beneficial owner of more than five percent (5%)
of the outstanding Common Stock; (ii) each director of the Company; (iii) each
Named Executive Officer (as defined herein); and (iv) all directors and
executive officers of the Company as a group.
Shares
Name of Beneficially Percent
Beneficial Owner Owned /(1)/ of Class
- ---------------- --------------- ---------
Erez Goren/(2)/ 3,255,000 20.2%
Alon Goren/(2)/ 3,255,000 20.2
Eric B. Hinkle 181,900/(3)/ 1.1
John H. Heyman 341,455 2.1
Andrew S. Heyman 32,764/(4)/ *
Carlyle M. Taylor 123,334 *
James S. Balloun 30,000/(5)/ *
Evan O. Grossman 16,200/(5)/ *
Warburg Pincus Asset Management, Inc. 1,404,200 /(6)/ 8.7
First Union Corporation 910,900 /(7)/ 5.6
All directors and executive officers
as a group (8 persons) 7,235,653/(8)/ 44.2
_______________________
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* Less than 1% of outstanding shares.
/(1)/ "Beneficial Ownership" includes shares for which an individual, directly
or indirectly, has or shares voting or investment power or both and also
includes options which are exercisable within sixty days of the date of
this Report. All of the listed persons have sole voting and investment
power over the shares listed opposite their names. Beneficial ownership as
reported in the above table has been determined in accordance with Rule
13d-3 of the Securities Exchange Act of 1934. Pursuant to the Rules of the
Commission, certain shares of the Company's Common Stock that a beneficial
owner has the right to acquire within 60 days pursuant to the exercise of
stock options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such owner but are not deemed
outstanding for the purpose of computing the percentage ownership of any
other person.
/(2)/ The business address of Erez Goren and Alon Goren is 3925 Brookside
Parkway, Alpharetta, Georgia 30022.
/(3)/ Represents shares of Common Stock subject to stock options exercisable
within the next 60 days.
/(4)/ Includes 1,250 shares of Common Stock subject to stock options exercisable
within the next 60 days.
/(5)/ Includes 15,000 shares of Common Stock subject to stock options
exercisable within the next 60 days.
/(6)/ Based on a Schedule 13G filed with the Commission on February 11, 1999 by
First Union Corporation. The Company makes no representation as to the
accuracy or completeness of the information reported. The address of First
Union is One First Union Center, 301 South College Street, Charlotte,
North Carolina 28288-0137.
/(7)/ Based on a Schedule 13G filed with the Commission on January 13, 1999 by
Warburg Pincus Asset Management, Inc. Includes (i) 858,100 shares with
respect to which Warburg Pincus has the sole power to vote or dispose and
(ii) 529,900 shares with respect to which Warburg Pincus has shared power
to vote or dispose. The Company makes no representation as to the accuracy
or completeness of the information reported. The address of Warburg Pincus
is 466 Lexington Avenue, New York, New York 10017.
/(8)/ Includes 213,150 shares of Common Stock subject to stock options
exercisable within the next 60 days.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
In September 1998, the Company loaned $33,000 to Andrew S. Heyman, the
Company's Executive Vice President - Global Solutions. An additional $148,750
was loaned to Mr. Heyman during the first quarter of 1999. As of April 15,
1999, an aggregate of $181,750 was owed by Mr. Heyman to the Company, which
amount represents the largest aggregate amount of indebtedness outstanding since
the beginning of 1998. These loans are secured by 31,564 shares of common stock
of the Company, bear interest at an annual rate of 5 1/2%, and are due upon sale
of the underlying securities by Mr. Heyman. These loans were made to Mr. Heyman
to fund certain of his personal expenses.
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SIGNATURES
In accordance with the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this Amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
RADIANT SYSTEMS, INC.
Date: April 29, 1999 By: /s/ Erez Goren
---------------------------------
Erez Goren
Chief Executive Officer
Date: April 29, 1999 By: /s/ John H. Heyman
---------------------------------
John H. Heyman
Executive Vice President and
Chief Financial Officer
11
