<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended January 3, 1997
OR
[ ] 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 0-18655
THE FAILURE GROUP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 77-0218904
-------- ----------
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
149 Commonwealth Drive, Menlo Park, California 94025
- ----------------------------------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (415) 326-9400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.001 par value
-----------------------------
(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 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 statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant (based on the closing sale price of the Common Stock as reported on
the Nasdaq National Market February 28, 1997, was approximately $15,755,311.
For purposes of this determination, shares of Common Stock held by each officer
and director and by each person who owns 5% or more of the outstanding Common
Stock have been excluded in that such persons may be deemed to be affiliates.
This determination of affiliate status is not necessarily a conclusive
determination for other purposes.
The number of shares of the issuer's Common Stock outstanding as of February 28,
1997 was 6,805,837.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Stockholders for its fiscal
year ended January 3, 1997, are incorporated by reference in Parts II and
IV of this Form 10-K to the extent stated herein.
1
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EXPLANATORY NOTE
This Annual Report on ("Form 10-K/A") is being filed as Amendment No.1
to the Registrant's Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 30, 1997 ("Form 10-K") for the purpose of
amending Items 10, 11, 12 and 13 of Part III of the Registrant's Form 10-K.
2
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PART III
Item 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS
<TABLE>
<CAPTION>
Director
Name Age Positions Held or Principal Occupation Since
---- --- -------------------------------------- --------
<S> <C> <C> <C>
Michael R. Gaulke................. 51 President and Chief Executive Officer 1994
of the Company
Roger L. McCarthy, Ph.D........... 48 Chief Technical Officer of the Company 1989
Edward J. Keith(1)................ 62 Chairman of the Board of the Company 1989
and Private Investor
Samuel H. Armacost(1)............. 58 General Partner of Weiss, Peck & Greer, 1989
L.L.C.
Alexander D. Cross, Ph.D. (1)..... 65 Chairman, President, Chief Executive 1989
Officer, and Chief Financial Officer of
Cytopharm, Inc.
Elmer W. Johnson (1).............. 64 Partner of Kirkland & Ellis 1989
Subbaiah V. Malladi, Ph.D......... 51 Corporate Vice President of the Company 1995
George T. Van Gilder(1)........... 53 Independent Businessman and Board Member 1995
of Risk Management Solutions
____________
</TABLE>
(1) Member of the Human Resources Committee, Audit Committee and Nominating
Committee of the Board of Directors of the Company.
Except as set forth below, each of the directors has been engaged in his
principal occupation set forth above during the past five years. There is no
family relationship among any of the directors and executive officers of the
Company.
Michael R. Gaulke joined the Company in September 1992 as Executive Vice
President and Chief Financial Officer, became President in March 1993 and was
appointed as a member of the Board of Directors of the Company in January 1994.
In June of 1996, Mr. Gaulke was named Chief Executive Officer of both the
Company and the Company's principal operating subsidiary, Failure Analysis
Associates, Inc. ("FaAA"). He has been a member of the Board of Directors of
FaAA since September 1993. From November 1988 to September 1992, Mr. Gaulke
served as Executive Vice President and Chief Financial Officer at Raynet
Corporation, a subsidiary of Raychem Corporation. Prior to joining Raychem, Mr.
Gaulke was employed from 1979 to 1988 by Spectra-Physics, Inc., where he was
Executive Vice President and Chief Financial Officer. From 1972 to 1979 he was a
management consultant with McKinsey & Company, Inc. He received an M.B.A. (1972)
from Stanford University Graduate School of Business and a B.S. (1968) in
Electrical Engineering from Oregon State University. Mr. Gaulke is a member of
the Board of Directors of RockShox, Inc. and serves on the Board of Trustees of
the Palo Alto Medical Foundation.
3
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Roger L. McCarthy, Ph.D. was named Chief Technical Officer of the
Company and Chairman of the Board of FaAA in June of 1996. Prior to that change
he was Chief Executive Officer of both the Company and FaAA. He has been a
director of the Company since 1989 and a director of FaAA since 1980, and was
Chief Executive Officer of the Company since 1989 and Chief Executive Officer of
FaAA since 1982. Additionally, he was Chairman and President of the Company from
1989 to March 1993, Chairman of FaAA from 1988 to March 1993, and President of
FaAA from 1982 to March 1993. He joined the Company in August 1978. Dr. McCarthy
received his Ph.D. (1977), Mech.E. (1975) and S.M. (1973) from Massachusetts
Institute of Technology and his B.S.E. (1972) in Mechanical Engineering and A.B.
in Philosophy (1972) from the University of Michigan. Dr. McCarthy is a
Registered Professional Engineer in the states of California and Arizona and a
member of the following professional organizations: American Society of Metals;
American Society of Mechanical Engineers; Society of Automotive Engineers;
American Society for Testing and Materials; Human Factors and Ergonomics
Society; National Society of Professional Engineers; American Society of
Heating, Refrigeration and Air-Conditioning Engineers; National Fire Protection
Association; American Welding Society; National Safety Council; Society for Risk
Analysis; and the American Statistical Association.
Edward J. Keith has been Chairman of the Board of Directors of the
Company and FaAA since March 1993 and has been a member of the Board of
Directors of the Company since 1989 and a member of the Board of Directors of
FaAA since 1987. He has been an advisor to FaAA since 1986. Mr. Keith received
his M.S. (1964) in Earthquake Engineering and his B.S. (1961) from the
University of California, Berkeley. Mr. Keith has been a private investor since
1985. He was a co-founder and a past director of Impell Corporation, an
engineering services company. Mr. Keith is a licensed civil and structural
engineer. From January 1990 until August 1994, Mr. Keith was a director of
Inlex, Inc., a company which provides computer hardware, software and services
in connection with automation of public and private library systems. In January
1994, Mr. Keith was elected a director of Vectra Technologies, a company
providing engineering services and fuel storage to nuclear power plant owners.
In June 1995, Mr. Keith was elected as Chairman of the Board of Directors of
Vectra Technologies.
Samuel H. Armacost has been a member of the Board of Directors of the
Company since 1989. Mr. Armacost received his M.B.A. (1964) from Stanford
University Graduate School of Business and his B.A. (1961) from Denison
University. Mr. Armacost has been a Principal of Weiss, Peck & Greer, L.L.C., an
investment firm, since September 1990. He was a Managing Director of Merrill
Lynch Capital Markets, of Merrill, Lynch, Pierce, Fenner & Smith Incorporated,
from 1987 to August 1990, and was President, Director and Chief Executive
Officer of BankAmerica Corporation from 1981 to 1986. Mr. Armacost is also a
member of the Board of Directors of Chevron Corporation, Scios-Nova Inc., and
SRI International.
Alexander D. Cross has been a member of the Board of Directors of the
Company since 1989. Dr. Cross received his D.Sc. (1966), Ph.D. (1955) and B.Sc.
(1952) from the University of Nottingham, England and is a Fellow of the Royal
Society of Chemists. He was a Fulbright Scholar and a National Science
Foundation Fellow. From 1981 through 1985, Dr. Cross served as President of
Zoecon Corporation, a company active in human and animal health and hygiene.
Thereafter, he has practiced as an independent consultant. Dr. Cross served as
the Chairman of the Board and Chief Executive Officer of Pharmetrix Corporation,
a company developing drug delivery systems, from 1987 until July 1992. Since
1988, he has served as Chairman, President, Chief Executive Officer and Chief
Financial Officer of Cytopharm, Inc., an entrepreneurial pharmaceutical research
company. From 1968 to 1990, Dr. Cross served as a director of Finnigan
Corporation, a leading manufacturer and marketer of mass spectrometers. Dr.
Cross is also a member of the Board of Directors of Biosys, Inc. and Ligand
Pharmaceutical Corporation.
4
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Elmer W. Johnson has been a member of the Board of Directors of the
Company since 1989. Mr. Johnson received his J.D. (1957) from the University of
Chicago and his B.A. (1954) from Yale University. In 1983, he left his law
practice as a senior partner with the Chicago law firm of Kirkland & Ellis to
become Vice President, Group Executive and General Counsel of General Motors
Corporation, becoming Executive Vice President and a member of the Board of
Directors in 1987. In July 1988, Mr. Johnson retired from General Motors and
resumed the full-time practice of law at Kirkland & Ellis, specializing in
corporate and securities law. Mr. Johnson is also a member of the Board of
Directors of Kaiser Steel Resources, Inc. and Amtech Corporation.
Subbaiah V. Malladi, Ph.D., joined FaAA in 1982 as a Senior Engineer,
becoming a Senior Vice President in January of 1988 and a Corporate Vice
President of FaAA in September of 1993. Dr. Malladi was a member of the Board of
Directors of the Company from March 1991 through September 1993, and was re-
elected to the Board in April of 1996. He received a Ph.D. (1980) in Mechanical
Engineering from the California Institute of Technology, M.Tech (1972) in
Mechanical Engineering from the Indian Institute of Technology, B.E. (1970) in
Mechanical Engineering from SRI Venkateswara University, India and B.S. (1966)
in Physics, Chemistry and Mathematics from Osmania University, India. Dr.
Malladi is a Registered Professional Mechanical Engineer in the State of
California, and a member of the following professional organizations: American
Institute of Aeronautics and Astronautics; American Association for the
Advancement of Science; Combustion Institute; and National Fire Protection
Association.
George T. Van Gilder received his bachelor's degree from the University
of Pennsylvania in 1966, after which he served five years in the United States
Navy. He then began his twenty-four year career at Chubb and Son, Inc., a
subsidiary of Chubb Insurance, where he was responsible for a wide variety of
underwriting functions within the company, including designing and providing
coverages for financial institutions, as well as a variety of commercial and
personal clients. Mr. Van Gilder attained the position of Chief Underwriting
Officer of the company's worldwide property-casualty area before leaving in 1995
to join Risk Management Solutions (RMS) as Chairman of the Board of Directors, a
position which he held until April 1997. Mr. Van Gilder remains a member of the
Board of Directors of RMS and continues his career as an independent
businessman. RMS provides software licensing and consulting to insurance
companies, reinsurance companies, lenders and governmental agencies. In
addition, since April 1995, Mr. Van Gilder has been a consultant to Morgan
Stanley & Co. Incorporated, in the area of the insurance industry. He has
published articles on a variety of industry subjects in Best's Review and other
publications, and has served on the American Management Association Insurance
Council since 1992. Additionally, Mr. Van Gilder was a member of the American
Insurance Association Disaster Task Force and is a frequent speaker before such
groups as the Risk and Insurance Management Society (RIMS) and the Society of
Chartered Property and Casualty Underwriters (CPCU).
EXECUTIVE OFFICERS
The information required by this item concerning the executive officers
of the Company is incorporated by reference to the information set forth in the
section entitled "Executive Officers and Key Employees of the Registrant" at the
end of Part I of this form 10-K.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's executive officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with
the SEC and the National Association of Securities Dealers, Inc. Such executive
officers, directors and ten-percent stockholders are also required by SEC rules
to furnish the Company with copies of all such forms that they file.
5
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Based solely on its review of the copies of such forms received by the
Company, or written representations from certain reporting persons that no Forms
5 were required for such persons, the Company believes that, during fiscal 1996,
its executive officers, directors and ten-percent stockholders complied with all
applicable Section 16(a) filing requirements.
Item 11: EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION TABLE
The following table shows, as to the Chief Executive Officer and each of
the four most highly compensated executive officers of the Company (the "Named
Officers"), information concerning compensation paid for services to the Company
in all capacities for 1996, 1995, and 1994:
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
---------------------------- ---------------
Securities
Underlying All Other
Salary Bonus Options Compensation
Name and Principal Position Year ($) ($)(1) (#) ($)(2)
- --------------------------- ------ -------- -------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Roger L. McCarthy 1996 $493,746 $90,000 0 $18,779
Chief Technical Officer and 1995 $475,010 $90,000 0 $19,182
Director of the Company 1994 $450,341 $45,000 0 $18,974
Subbaiah V. Malladi 1996 $468,759 $70,000 0 $20,221
Corporate Vice President and 1995 $437,507 $70,000 0 $20,351
Director of the Company 1994 $387,541 $45,000 16,000 $19,985
Michael R. Gaulke 1996 $387,504 $60,000 50,000 $17,775
President, Chief Executive 1995 $338,465 $60,000 25,000 $18,181
Officer and Director of the 1994 $303,392 $35,000 35,000 $19,784
Company
Robert A. Kadlec 1996 $364,993 $50,000 0 $20,431
Corporate Vice President of 1995 $342,503 $50,000 0 $20,294
the Company 1994 $303,392 $30,000 43,000 $21,807
Alexander Kusko 1996 $362,550 $ 0 0 $ 0
Corporate Vice President of 1995 $368,775 $ 0 0 $ 0
the Company 1994 $378,150 $ 0 0 $ 0
____________
</TABLE>
(1) Includes bonuses earned or accrued with respect to services rendered in the
fiscal year or period indicated, whether or not such bonus was actually
paid during such fiscal year.
(2) Represents contributions to the Company's defined contribution pension plan
and insurance premiums, respectively, as follows: R.L. McCarthy, $12,000
and $6,779; S. V. Malladi, $12,000 and $8,221; M. R. Gaulke, $12,000 and
$5,775; and R. A. Kadlec, $12,000 and $8,431.
6
<PAGE>
OPTION GRANTS IN FISCAL 1996
The following table shows, as to the Named Officers, information
concerning stock options granted during the fiscal year ended January 3, 1997.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term(3)
-------------------------------------------------------------------------- -----------------------
Percent of Total
Options Options Granted Exercise
Granted Employees in Price Expiration
Name (#) (1) Fiscal Year (2) ($/Sh) Date 5%($) 10%($)
- ---- ---------- ------------------ ---------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roger L. McCarthy..... 0 -- -- -- -- --
Subbaiah V. Malladi... 0 -- -- -- -- --
Michael R. Gaulke..... 50,000 29% $5.50 02/23/06 $172,946 $438,279
Robert A. Kadlec...... 0 -- -- -- -- --
Alexander Kusko....... 0 -- -- -- -- --
____________
</TABLE>
(1) All options in this table were granted under the 1990 Stock Option and
Rights Plan and have exercise prices equal to the fair market value on the
date of grant. The options generally become exercisable over a period of
four years at a rate of 25% per year and expire 10 years from the date of
grant.
(2) In fiscal 1996, the Company granted options to employees to purchase
173,000 shares of common stock.
(3) Potential realizable value assumes that the stock price increases from the
date of grant until the end of the option term (10 years) at the annual
rate specified (5% and 10%). Annual compounding results in total
appreciation of 63% (at 5% per year) and 159% (at 10% per year). If the
price of the Company's Common Stock, on the date Mr. Gaulke was granted
options, were to increase at such rates from the price at the time of grant
($5.50) over the next 10 years, the resulting stock price at 5% and 10%
appreciation would be $8.96 and $14.27, respectively. The assumed annual
rates of appreciation are specified in SEC rules and do not represent the
Company's estimate or projection of future stock price growth. The Company
does not necessarily agree that this method can properly determine the
value of an option.
7
<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table shows, as to the Named Officers, information
concerning the number of shares subject to both exercisable and unexercisable
stock options as of January 3, 1997. Also reported are values for "in-the-money"
options that represent the positive spread between the respective exercise
prices of outstanding stock options and the fair market value of the Company's
Common Stock as of January 3, 1997. The Named Officers did not exercise any
options during 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at January 3, 1997 January 3, 1997(1)
---------------------------------------- ---------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Roger L. McCarthy 0 0 $ 0 $ 0
Subbaiah V. Malladi 201,668 8,000 $114,458 $ 10,000
Michael R. Gaulke 123,749 86,251 $ 27,343 $ 63,282
Robert A. Kadlec 48,847 21,500 $ 26,875 $ 26,875
Alexander Kusko 7,500 2,500 $ 0 $ 0
____________
</TABLE>
(1) Market value of underlying securities based on the closing price of
Company's Common Stock on January 3, 1997 (the last trading day of the
Period) on the Nasdaq National Market of $6.00 minus the exercise price of
the options.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for their services as directors of the Company. However,
nonemployee members of the Board of Directors receive an annual cash retainer of
$24,000, attendance fees of $2,000 for each meeting of the Board of Directors,
and annual committee membership fees of $5,000 for service on the Human
Resources Committee, $5,000 for service on the Audit Committee and $1,000 for
service on the Nominating Committee. Furthermore, Ed Keith received an
additional retainer of $10,500 for his duties associated with chairmanship of
the Board of Directors. Additionally, under the Company's Restricted Stock
Plan, each nonemployee director was entitled to receive an annual award of up to
$75,000 worth of restricted Common Stock, not to exceed 5,000 shares, which
shares vest over a four-year period; but the plan was terminated by the Board of
Directors in June 1996. Board members are reimbursed for their expenses for
each meeting attended. Mr. Johnson, Mr. Keith, and Dr. Cross were reimbursed
for certain expenses related to travel and incidentals.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, Messrs. Armacost, Cross, Johnson, Keith and Van Gilder (as
of June 1996) served as members of the Human Resources Committee. No member of
the Human Resources Committee is or was formerly an officer or an employee of
the Company or any of its subsidiaries.
No interlocking relationship exists between the Company's Board of
Directors or Human Resources Committee and the board of directors or
compensation committee of any other company, nor has any such interlocking
relationship existed in the past.
8
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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 15, 1997 by the
following individuals or entities: (a) each director; (b) each of the Named
Officers; (c) all directors and executive officers as a group; and (d) each
person known to the Company who beneficially owns 5% or more of the outstanding
shares of its Common Stock. A total of 6,814,420 shares of the Company's Common
Stock were issued and outstanding as of April 15, 1997.
Name Number of Shares (1) Percent of Total
---- -------------------- ----------------
Roger L. McCarthy(2)........... 1,109,919 16.3%
c/o The Failure Group, Inc.
149 Commonwealth Drive
Menlo Park, CA 94025
Palo Alto Investors(3)......... 562,300 8.3%
431 Florence Street, Suite 200
Palo Alto, CA 94301
Subbaiah V. Malladi(4)......... 489,684 7.0%
c/o The Failure Group, Inc.
149 Commonwealth Drive
Menlo Park, CA 94025
The TCW Group, Inc. (3)........ 449,800 6.6%
865 South Figueroa Street
Los Angeles, CA 90017
Dimensional Fund Advisors Inc.(3,13) 449,300 6.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Bernard Ross(5)................ 400,055 5.9%
c/o The Failure Group, Inc.
149 Commonwealth Drive
Menlo Park, CA 94025
Charles A. Rau, Jr. (6)........ 341,871 5.0%
c/o The Failure Group, Inc.
149 Commonwealth Drive
Menlo Park, CA 94025
Robert A. Kadlec(7)............ 162,727 2.4%
Michael R. Gaulke(8)........... 153,797 2.2%
Samuel H. Armacost(9).......... 69,906 1.0%
Edward J. Keith(10)............ 66,940 1.0%
Elmer W. Johnson(9)............ 66,210 1.0%
Alexander D. Cross(10)......... 61,885 1.0%
Alexander Kusko(11)............ 17,826 *
All directors and executive
officers as a group
(19 persons)(12).............. 3,062,535 45%
____________
* Represents less than one percent of the outstanding Common Stock of the
Company.
(1) The number and percentage of shares beneficially owned is determined under
rules of the Securities and Exchange Commission (the "SEC"), and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment
power and also any shares which the individual has the right to acquire
within sixty days of April 15, 1997 through the exercise of any stock
option or other right. Unless otherwise indicated in the footnotes, each
person has sole voting and investment power (or shares such powers with his
or her spouse) with respect to the shares shown as beneficially owned.
9
<PAGE>
(2) Includes 1,076,779 shares of Common Stock held by Roger L. and Gail E.
McCarthy as trustees of a revocable trust established for the benefit of
Roger L. and Gail E. McCarthy and 33,140 shares of Common Stock held in
trusts for the benefit of the McCarthys' children.
(3) As indicated on a Form 13G filed with the SEC.
(4) Includes 201,668 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(5) Includes 9,170 shares of Common Stock subject to options exercisable within
sixty days of April 15, 1997. The remaining 390,885 shares are held by
Bernard and Shelley Ross as trustees of a revocable trust established for
the benefit of Bernard and Shelley Ross.
(6) Includes 7,044 shares of Common Stock subject to options exercisable within
sixty days of April 15, 1997.
(7) Includes 48,847 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(8) Includes 142,499 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(9) Includes 24,000 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(10) Includes 18,000 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(11) Includes 10,000 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(12) Includes 576,553 shares of Common Stock subject to options exercisable
within sixty days of April 15, 1997.
(13) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 449,300 shares of the
Company's Common Stock as of December 31, 1996, all of which shares are
held in portfolios of DFA Investment Dimensions Group Inc., a registered
open-end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participation Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. service as
investment manager. Dimensional disclaims beneficial ownership of all such
shares.
Item 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Elmer W. Johnson, a director of the Company, is a senior partner in the
law firm of Kirkland & Ellis. During fiscal 1996, Kirkland & Ellis engaged the
Company on a number of projects pursuant to which the Company received an
aggregate of $801,464 in revenues. Mr. Johnson was not personally involved in
any of such engagements.
Samuel H. Armacost, a director of the Company, is a partner of Weiss,
Peck & Greer, an investment firm. During the period, Weiss, Peck & Greer was
engaged by the Company to provide short-term investment services, for which the
Company paid Weiss, Peck & Greer an aggregate of $32,100.
10
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 on
Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: April 30, 1997 THE FAILURE GROUP, INC.
/s/ Michael R. Gaulke
-----------------------------------
(Michael R. Gaulke, Director,
and President and Chief Executive
Officer)
11
