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 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No 0-631
ROSE'S HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 56-2043000
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 East 52nd Street
21st Floor
New York, NY 10022
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (212) 813-1500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, No Par Value
Stock Warrants (to purchase Common Stock)
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. ( )
(continued on following page)
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APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
As of January 31, 1998, of the 10,000,000 shares of common stock delivered
to First Union National Bank of North Carolina ("FUNB"), as Escrow Agent,
pursuant to the Modified and Restated First Amended Joint Plan of Reorganiza-
tion, 1,367,659 shares have been returned to the Company and canceled, and
8,620,391 shares are outstanding. The remaining 19,680 shares held in escrow
will be distributed by FUNB in satisfaction of disputed Class 3 claims as and
when such claims are resolved. To the extent that escrowed shares of common
stock are not used to satisfy claims, they will revert to the Company and will
be retired or held in the treasury of the Company.
As of April 7, 1998, the aggregate market value of common stock held by non-
affiliates of the Company (assuming all pending claims are resolved adversely
to the Company) was approximately $9,089,484.
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The Registrant's Form 10-K for the fiscal year ended January 31, 1998 is
hereby amended to include the following items:
Item 10. Directors and Executive Officers of the Registrant.
Set forth below is certain information concerning the directors of the
Corporation as of May 1, 1998.
<TABLE>
<CAPTION>
Name and Age Occupation and Other Directorships
<S> <C>
Jack L. Howard (36) Mr. Howard has served as a director of the
(term expires 1999) Corporation since 1996 and Vice President,
Secretary and Treasurer of the Corporation since
December 1997. Mr. Howard has been a registered
principal of Mutual Securities, Inc., a stock
brokerage firm, since prior to 1993. He is a
director of Gateway Industries, Inc. and Scientific
Software Intercomp, Inc.
Warren G. Lichtenstein (32) Mr. Lichtenstein has served as a director of the
(term expires 1998) Corporation since 1996 and President and Chief
Executive Officer of the Corporation since December
1997. Mr. Lichtenstein has been Chief Executive
of the General Partner of Steel Partners II, LP,
a private investment firm, since 1993 and Chairman
of Steel Partners Services, Ltd., a private
investment firm, since 1993. Mr. Lichtenstein was
Executive Vice President of Alpha Technologies
Group, Inc., a manufacturer of electronic
components, from September 1994 through September
1995. Mr. Lichtenstein is a director of Saratoga
Spring Water Corporation, Inc. and Gateway
Industries, Inc. ("Gateway"). Gateway was the sole
stockholder of Marsel Mirror and Glass Products,
Inc. ("Marsel") from November 1995 to December
1996. Mr. Lichtenstein served as President of
Marsel from its formation as an acquisition
subsidiary until the acquisition was consummated.
Thereafter, Marsel appointed a President who had
no prior affiliation with Gateway. Mr. Lichtenstein
served as Marsel's sole director until Gateway
disposed of its interest in Marsel. Marsel filed
for protection under Chapter 11 of the Bankruptcy
Code shortly following Gateway's disposition of
Marsel.
Earle C. May (80) Mr. May was elected a director of the Corporation
(term expires 1998) by the Board of Directors on July 22,1997. Mr.
May has been Chairman and Chief Executive Officer
of May Management, Inc., an investment management
firm, since prior to 1993.
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Joseph L. Mullen (52) Mr. Mullen has served as a director of the
(term expires 1998) Corporation since 1995. Since January 1994, Mr.
Mullen has served as Managing Partner of Li Moran
International, a management consulting company and
has functioned as a senior officer overseeing the
merchandise and marketing departments for such
companies as Leewards Creative Crafts Inc., Office
Depot of Warsaw, Poland and Rose's Stores, Inc.
From January 1994 to July 1994, Mr. Mullen served
as Senior Vice President for Leewards Creative
Crafts Inc., a national retail chain specializing
in crafts. Prior to January 1994, Mr. Mullen was
employed by Hills Department Stores, Inc. ("Hills")
for approximately 23 years and held a variety of
positions, including Vice President Hardlines.
Hills filed for protection under Chapter 11, Title
11 of the United States Code on February 4, 1991,
while Mr. Mullen was employed by Hills.
J. David Rosenberg (49) Mr. Rosenberg has served as a director of the
(term expires 2000) Corporation since 1995. Mr. Rosenberg has been
a partner of Keating, Muething & Klekamp, a law
firm, since prior to 1993.
Harold Smith (74) Mr. Smith has served as a director of the
(term expires 1999) Corporation since 1995. Since 1990, Mr. Smith
has been President of Funding & Merchandising
Resources Corp., a retail consulting firm, and was
formerly President and Chief Operating Officer of
Woolco, a division of F. W. Woolworth and President
and Chief Executive Officer of Goldblatt's.
N. Hunter Wyche, Jr. (46) Mr. Wyche has served as a director of the
(term expires 1999) Corporation since 1995. Mr. Wyche is a founding
partner of Wyche & Story, a law firm.
</TABLE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Under the Securities Exchange Act of 1934 (the "Exchange Act"), the
Corporation's directors, executive officers and any persons holding more than
10% of any class of the Corporation's equity securities registered pursuant to
Section 12 of the Exchange Act are required to report their ownership of such
equity securities and any changes in that ownership, on a timely basis to the
Securities and Exchange Commission. The Corporation believes that all such
reports required to be filed during the fiscal year ended January 31, 1998
("Fiscal 1997") were filed on a timely basis except for Messrs. Howard,
Lichtenstein, May and Rosenberg who inadvertently did not file a report on a
timely basis relating to stock options or stock granted in lieu of cash payment
of director fees. Upon discovery, the reports were filed. The Corporation's
belief is based solely on its review of Forms 3, 4 and 5 and amendments thereto
furnished to the Corporation during, and with respect to, Fiscal 1997 by persons
known to be subject to Section 16 of the Exchange Act.
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Item 11. Executive Compensation.
Cash and Other Compensation
The following table sets forth all the cash compensation paid or to be paid
by the Corporation, as well as certain other compensation paid or accrued,
during the fiscal years indicated, to the Chief Executive Officer and the four
other highest paid executive officers of the Corporation (collectively, the
"Named Executives") for Fiscal 1997 in all capacities in which they served:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other
Name and Annual Restricted Options/ All Other
Principal Salary Bonus Compen- Stock SARs LTIP Compen-
Position Year ($) ($)(1) sation (2) Awards ($) (#)(3) Payouts($) sation(4)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
R. Edward 1997 375,962 88,600 8,956 - - - 1,005,464
Anderson 1996 424,523 - 5,094 - - - 6,198
President and 1995 407,692 - 4,518 - 137,500 - 6,198
Chief Executive
Officer
Bobby L. Sasser 1997 180,000 - 13,342 - - - 6,089
Senior Vice 1996 15,385(5) 20,000 - - - - -
President 1995 - - - - - - -
Merchandising
& Marketing
Robert 1997 144,615 15,000 7,485 - - - 5,345
Greenwald 1996 - - 1,641 - - - 5,528
Vice President 1995 - - 2,097 - 50,000 - 5,528
GMM Softlines
Jeanette 1997 141,539 19,931 7,345 - - - 4,884
Peters 1996 159,575 - 1,641 - - - 5,528
Senior Vice 1995 156,346 - 2,097 - 50,000 - 5,528
President,
Chief Financial
Officer and Treasurer
Barry L. 1997 123,846 10,000 2,258 - - - 4,530
Gouge 1996 7,692(6) - - - - - -
Vice President 1995 - - - - - - -
GMM Hardlines
_____________
(1) 1997 bonuses for Mr. Anderson and Ms. Peters represent the value of Common Stock awarded
upon the successful emergence from the Corporation's Chapter 11 reorganization in 1995.
All restrictions on the use and enjoyment of the stock lapsed during 1997.
(2) "Other Annual Compensation" consists of tax gross-ups on medical and moving expense
reimbursements.
(3) All of the above named officers resigned their positions with the Corporation effective
December 2, 1997 upon sale of the Corporation's subsidiary and all Options/SARs listed in
column (g) expired on such date.
(4) "All Other Compensation" consists of automobile allowance and severance payments ($1,000,100
in the case of Mr. Anderson, and $100 in the case of each of the other officers) relating to
their resignation of the Corporation upon the sale by the Corporation of its subsidiary,
Rose's Stores, Inc., on December 2, 1997.
(5) Represents Mr. Sasser's compensation from December 16, 1996, the date of commencement of
his employment with the Corporation.
(6) Represents Mr. Gouge's compensation from January 16, 1997, the date of commencement of his
employment with the Corporation.
</TABLE>
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Stock Options Granted During Fiscal Year
During Fiscal 1997, no options were granted to any of the Named
Executives.
Stock Options Exercised During Fiscal Year and Year End Values of Unexercised
Options
None of the Named Executives owns any stock options or stock appreciation
rights or, during Fiscal 1997, exercised any options.
Employment Agreements, Termination of Employment and Change-In-Control
Arrangements
Effective May 27, 1995, the Board of Directors approved a new employment
agreement with R. Edward Anderson, President and Chief Executive Officer of the
Corporation, which provided for his employment for an initial three-year term.
In contemplation of the sale of the Corporation's subsidiary, and in order to
facilitate the sale, Mr. Anderson agreed to amendments to the employment
agreement at the request of the Board of Directors. Under the terms of the
agreement as amended, Mr. Anderson received a base salary of $425,000 and was
further entitled to participate in all bonus, incentive and equity plans and
all pension, health, insurance and fringe benefit plans, as well as perquisites,
established by the Corporation. The agreement as amended also included a change
of control allowance under which Mr. Anderson had the right to terminate the
employment agreement and to be paid a severance payment of $1.0 million. Upon
the consummation of the sale of Rose's Stores, Inc. to Variety Wholesalers, Inc.
on December 2, 1997, Mr. Anderson terminated the agreement and his employment
with the Corporation and resigned from the Board of Directors of the Corpora-
tion, and the Corporation paid Mr. Anderson such $1.0 million severance payment.
Prior to consummation of the sale of Rose's Stores, Inc. to Variety
Wholesalers, Inc. on December 2, 1997, the Corporation maintained a severance
program for employees of Rose's Stores, Inc. providing for the payment of cer-
tain benefits upon the cessation of employment of the executive officers of the
Corporation, including the Named Executives other than the Chief Executive
Officer. By reason of the sale of all of the outstanding stock of Rose's Stores,
Inc. to Variety Wholesalers, Inc., the Corporation's obligations under the
severance program were terminated. No benefits were paid under the severance
program prior to or incident to the sale of Rose's Stores, Inc. to Variety
Wholesalers, Inc.
Director Compensation
Effective July 22, 1997, the compensation of the Directors of the
Corporation was reduced by the Board of Directors by twenty-five percent to pro-
vide for an annual retainer fee (the "Retainer Fee") of $18,000 per year, plus
a meeting fee (a "Meeting Fee") for each meeting (i) of the Board of Directors
(in the amount of $1,125 per meeting for attendance in person or $562.50 for
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attendance by telephone), (ii) of a committee of the Board of Directors that
does not meet on the same day as a meeting of the Board of Directors (in the
amount of $1,125 per meeting), and (iii) of a committee of the Board of Direc-
tors that meets on the same day as the Board of Directors (in the amount of $375
per meeting). Pursuant to the 1997 Long-Term Incentive Stock Plan, approved by
the stockholders at the 1997 annual meeting, beginning with the 1997 Fiscal Year
the Retainer Fee and Meeting Fees were payable, at the election of each direc-
tor, in the form of cash, grants ("Stock Awards") of shares of the Corporation's
common stock, no par value ("Common Stock"), and options to purchase Common
Stock ("Options"), provided that a director electing to receive Stock Awards or
Options had to elect to receive his Retainer Fee in such forms and could elect
to receive his Meeting Fees in such forms.
On January 15, 1998, the compensation of the Directors of the Corporation
for Fiscal 1998 was set as follows: a Retainer Fee of $24,000 per year which
is paid in the form of Options pursuant to the 1997 Long-Term Incentive Stock
Plan; plus Meeting Fees, in the form of cash, for each meeting (i) of the Board
of Directors (in the amount of $1,125 per meeting), (ii) of a committee of the
Board of Directors that does not meet on the same day as a meeting of the Board
of Directors (in the amount of $1,125 per meeting), and (iii) of a committee of
the Board of Directors that meets on the same day as the Board of Directors (in
the amount of $375 per meeting). Directors are reimbursed for their actual
travel and other expenses.
Pursuant to the 1997 Long-Term Incentive Stock Plan, (i) Options are
valued using the Black-Scholes option pricing model and such assumptions as the
Corporation, in its sole discretion, deems reasonable; (ii) the exercise price
of the Options will be, and Stock Awards will be valued using, the closing price
of the Common Stock on the date of grant or issuance or deemed date of grant or
issuance; (iii) a director's entitlement to receive Options will vest, and will
be granted or issued, or deemed to be issued or granted, on the first day of the
quarter as to which the Retainer Fee is payable; and (iv) options will terminate
on the fifth anniversary of the date of issuance and will survive termination
of membership on the Board of Directors of the Corporation.
Compensation Committee Interlocks and Insider Participation
During Fiscal 1997, the Compensation Committee consisted of Messrs. Wyche
(Chairman), Howard, Rosenberg and Smith. None of such members were officers or
employees of the Corporation during the 1997 Fiscal Year or in prior fiscal
years. None of the executive officers of the Corporation served as a member of
the board of directors of another entity or as a member of the compensation
committee of another entity during Fiscal 1997.
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Item 12. Security Ownership of Certain Beneficial Owners and Management.
Principal Stockholders
The only persons known by the Corporation to be the beneficial owner of
more than five percent of the outstanding shares of Common Stock as of May 1,
1998, are shown below:
Amount and
Nature of
Beneficial
Name and Address Ownership Percent of Class
Warren G. Lichtenstein 2,021,479(1) 23.2%
150 East 52nd Street, 21st Floor
New York, New York 10022
Steel Partners II, L.P. 1,961,559(2) 22.7%
150 East 52nd Street, 21st Floor
New York, New York 10022
Earle C. May 1,464,991(3) 17.0%
4550 Kruse Way #345
Lake Oswego, Oregon 97035
May Management, Inc. 1,430,975 16.6%
4550 Kruse Way #345
Lake Oswego, Oregon 97035
____________
(1) Includes: (a) 5,000 shares of Common Stock owned by Mr. Lichtenstein; (b)
54,920 shares of Common Stock issuable upon the exercise of options owned by Mr.
Lichtenstein; (c) 1,918,190 shares of Common Stock owned by Steel Partners II,
L.P. and (d) 43,369 shares of Common Stock issuable upon the exercise of war-
rants owned by Steel Partners II, L.P. Mr. Lichtenstein is Chief Executive
Officer of the general partner of Steel Partners II, L.P. Mr. Lichtenstein dis-
claims beneficial ownership of the shares of Common Stock owned by Steel Part-
ners II, L.P. except to the extent of his pecuniary interest in such shares of
Common Stock, which is less than the amount disclosed.
(2) Represents 1,918,190 shares of Common Stock and 43,369 shares of Common
Stock issuable upon exercise of warrants.
(3) Includes: (a) 11,730 shares of Common Stock owned by Mr. May; (b) 22,291
shares of Common Stock issuable upon the exercise of options owned by Mr. May;
(c) 100,595 shares owned by May Management, Inc.; and (d) 1,330,375 shares of
Common Stock held in customer accounts as to which May Management, Inc. has
shared dispositive power. Mr. May is Chief Executive Officer and a principal
stockholder of May Management, Inc. and may be deemed to be the beneficial owner
of shares owned by May Management, Inc. or as to which May Management, Inc. has
shared dispositive power.
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Beneficial Ownership of Directors and Management
Set forth below is certain information concerning the beneficial ownership
of Common Stock as of May 1, 1998 by (a) the Corporation's directors, (b) the
executive officers named in the Summary Compensation Table in Item 11 above and
(c) all directors and executive officers as a group.
Amount and
Name of Nature of
Beneficial Beneficial
Owner Ownership (1) Percent of Class
R. Edward Anderson 67,284 *
Jack L. Howard 114,368 1.3%
Warren G. Lichtenstein 2,021,479(2) 23.2%
Earle C. May 1,464,991(3) 17.0%
Joseph L. Mullen 22,291 *
J. David Rosenberg 147,274 1.7%
Harold Smith 22,291 *
N. Hunter Wyche, Jr. 22,291 *
Barry L. Gouge 0 *
Jeanette Peters 13,865 *
Robert Greenwald 0 *
Bobby L. Sasser 0 *
All directors and executive 3,814,985(4) 42.5%
officers as a group
(seven persons)
* Less than 1% of the outstanding Common Stock
(1) Includes shares subject to warrants and options that are exercisable within
60 days as follows: Mr. Howard - 57,068 shares; Mr. Lichtenstein - 54,920
shares; Mr. May - 22,291 shares; Mr. Mullen - 22,291 shares; Mr. Rosenberg -
111,774 shares; Mr. Smith - 22,291 shares; Mr. Wyche - 22,291 shares; and all
directors and executive officers as a group - 312,926 shares.
(2) Includes 1,918,190 shares of Common Stock and 43,369 shares subject to
warrants that are exercisable within 60 days that are owned by Steel Partners
II, L.P. Mr. Lichtenstein is Chief Executive Officer of the General Partner of
Steel Partners II, L.P. Mr. Lichtenstein disclaims beneficial ownership of the
shares of Common Stock by Steel Partners II, L.P., except to the extent of his
pecuniary interest in such shares of Common Stock, which is less than the amount
disclosed.
(3) Includes 100,595 shares of Common Stock owned by May Management, Inc. and
1,330,375 shares of Common Stock held in customer accounts as to which May
Management, Inc. has shared dispositive power. Mr. May is Chief Executive
Officer and a principal stockholder of May Management, Inc. and may be deemed
to be the beneficial owner of shares owned by May Management, Inc. or as to
which May Management, Inc. has shared dispositive power.
(4) Mr. Anderson, Mr. Gouge, Mr. Greenwald, Ms. Peters and Mr. Sasser resigned
on December 2, 1997 upon the sale by the Corporation of its subsidiary. The
shares owned by such officers are, accordingly, not included in the aggregate
number for all directors and executive officers as a group.
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Item 13. Certain Relationships and Related Transactions
As of March 31, 1998, the Corporation sub-sub-leased from Gateway
Industries, Inc. office space on a non-exclusive basis for use as corporate
headquarters or for other corporate uses. Under terms of this sub-sub-lease,
the Corporation is obligated to pay one-third of all amounts payable, as billed
to Gateway under the Master Sub-Lease. Gateway Industries, Inc.'s sub-lease for
the space is with Steel Partners II, L.P. as sub-landlord. Warren Lichtenstein,
a director and the President and Chief Executive Officer of the Corporation,
beneficially owns more than 10% of the outstanding voting stock of Gateway
Industries, Inc. and is the chief executive officer of the general partner of
Steel Partners II, L.P. The rent payable by the Corporation is approximately
$2,700 per month. The sub-lease runs through March 30, 2001, but may be
terminated by either party on 30 days' notice.
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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.
ROSE'S HOLDINGS, INC.
Date: May 26, 1998 /s/ Jack L. Howard
Jack L. Howard
Vice President
