<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
(Amending Part III - Items 10, 11, 12 and 13)
(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 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 0-19998
WORLD ACCESS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 65-0044209
(State of Incorporation) (I.R.S. Employer Identification No.)
945 EAST PACES FERRY ROAD
SUITE 2240
ATLANTA, GEORGIA 30326
(Address of Principal Executive Offices) (Zip Code)
(404) 231-2025
(Registrant's Telephone Number)
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
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 amendments to
this Form 10-K. [ ]
As of April 13, 1998 there were 21,500,280 shares of Common Stock
outstanding. The aggregate market value of the voting Common Stock held by
non-affiliates of the Registrant as of April 13, 1998, as based on the average
closing bid and ask prices, was approximately $605,240,000.
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PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
BOARD OF DIRECTORS
The Board of Directors of World Access, Inc. (the "Company") is divided
into three classes. The directors in each class serve staggered three-year terms
expiring in 1998, 1999 and 2000, respectively. The number of directors has been
fixed at six, and there is currently one vacancy in the class with the term
expiring in 1999. William P. O'Reilly, who served as a director of the Company
since 1994, resigned effective as of April 22, 1998.
Set forth below is certain information, as of April 20, 1998, concerning
each of the directors of the Company.
DIRECTORS WHOSE TERMS EXPIRE IN 1998
Stephen J. Clearman. Mr. Clearman (age 47) has served as a director of the
Company since 1988. Mr. Clearman co-founded Geocapital Partners. Since 1984, he
has served as a general partner of four Geocapital venture capital partnerships.
Two of these partnerships (Geocapital Ventures and Geocapital II, L.P.) were
formerly principal stockholders of the Company. Mr. Clearman currently serves as
a director of Expert Software, Inc., MemberWorks Incorporated, SeaMED
Corporation and several private companies, all of which principally provide
computer software and/or information services.
Stephen E. Raville. Mr. Raville (age 50) has served as a director of the
Company since 1994. Mr. Raville has been Chairman of the Board and Chief
Executive Officer of Charter Communications International, Inc. ("Charter"), an
operator of international communications networks, since October 1996. Mr.
Raville is also President and controlling shareholder of First Southeastern
Corp., a private investment company he formed in 1992. In 1983, Mr. Raville
founded TA Communications ("TA"), a long-distance telephone company, and served
as its President. In 1985, in conjunction with a merger between TA and Advanced
Telecommunications Corporation ("ATC"), he became Chairman and Chief Executive
Officer of ATC until the merger of ATC into WorldCom, Inc. ("WorldCom") in late
1992. He currently serves on the board of advisors of First Union National Bank
of Atlanta and the board of directors of Eltrax Systems, Inc. and several
private companies.
DIRECTOR WHOSE TERM EXPIRE IN 1999
Hensley E. West. Mr. West (age 53) joined the Company in January 1996 as
President and Chief Operating Officer and was also elected a director in January
1996. From January 1994 to December 1995, he was Group Vice President for the
Access Systems Group of DSC Communications Corporation ("DSC"), a manufacturer
of digital switching, transmission and access telecommunications equipment.
During his nine year tenure with DSC, he held six sales and general management
positions, including Senior Vice President of North American Sales from July
1993 to December 1993, Vice President of Access Products Division from March
1992 to July 1993, Vice President of RBOC Sales from October 1991 to March 1992
and Vice President of Business Development from March 1990 to October 1991.
Prior to joining DSC, Mr. West held general, engineering and sales management
positions with California Microwave, Inc., ITT Telecommunications, Inc. and
Western Electric Co.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
Steven A. Odom. Mr. Odom (age 44) joined the Company's Board of Directors
in October 1994. In November 1994, he was appointed to the newly created
position of Chairman of the Board. In August 1995, he became Chairman and Chief
Executive Officer of the Company. From 1983 to 1987, he founded and served as
Chairman and Chief Executive Officer of Data Contract Company, Inc. ("DCC"), a
designer and manufacturer of intelligent data PBX systems, pay telephones and
diagnostic equipment. From 1987 to 1990, he was Vice President for the
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Public Communications Division of Execution Information Systems, Inc., a public
company that acquired DCC in 1987. Mr. Odom formerly served as a director for
Telematic Products, Inc., a manufacturer of telephone central office equipment
and Resurgens Communications Group, Inc. ("Resurgens"), a provider of long
distance operator services that later merged with LDDS Communications, Inc., now
known as WorldCom.
John D. Phillips. Mr. Phillips (age 55) has served as a director of the
Company since 1994. In October 1997, Mr. Phillips was named Chairman and Chief
Executive Officer of Cherry Communications Incorporated (d/b/a Resurgens
Communications Group) (see "Certain Relationships and Related Transactions"). He
was President, Chief Executive Officer and a director of Metromedia
International Group, Inc. ("Metromedia"), a global media, entertainment and
communications company, from November 1995 until December 1996. Metromedia was
formed in November 1995 through the merger of The Actava Group, Inc. ("Actava"),
Orion Pictures Corporation, MCEG Sterling Incorporated and Metromedia
International Telecommunications, Inc. Mr. Phillips served as President, Chief
Executive Officer and a director of Actava from April 1994 until November 1995.
In May 1989, he became Chief Executive Officer of Resurgens and served in this
capacity until September 1993 when Resurgens merged with Metromedia
Communications Corporation and WorldCom.
EXECUTIVE OFFICERS
The information with respect to the Company's executive officers is set
forth in Item 4.5 of Part I of this Report.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers, and
persons who own beneficially more than ten percent of a registered class of the
Company's equity securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of such securities of the Company.
Directors, executive officers and greater than ten-percent stockholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) reports they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and representations that no other reports were
required, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than ten-percent beneficial owners were complied
with during the 1997 fiscal year, except that Mr. Raville did not report his
acquisition of a warrant to acquire 50,000 shares of common stock in March 1997
until he filed his Form 4 in March 1998.
ITEM 11 - EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Non-employee directors of the Company receive no cash compensation from the
Company for their service as directors. Their compensation is in the form of
stock warrants as discussed below. The directors are reimbursed for
out-of-pocket travel and related expenses incurred in connection with their
attendance at meetings of the Board or its committees and at other Company
events to which they are invited.
In December 1994, in an effort to attract and retain experienced executives
to serve as outside directors for the Company, the Board adopted the World
Access, Inc. Outside Directors' Warrant Plan (the "Warrant Plan"). The
stockholders of the Company approved the Warrant Plan at the 1995 Annual Meeting
of Stockholders.
The purposes of the Warrant Plan are to attract and retain the best
available personnel for service as directors of the Company, to provide
additional incentive to the persons serving as directors of the Company, to
align
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director and stockholder long-term interests and to encourage continued service
on the Board. Warrants may be granted under the Warrant Plan only to directors
of the Company who are neither employees of the Company nor of any of its
affiliates. The aggregate number of shares of Company common stock authorized to
be issued pursuant to the Warrant Plan is 1,200,000, subject to adjustment in
certain instances as described below. The Warrant Plan provides that each
eligible non-employee director elected to serve as a director of the Company on
or after October 1, 1994 may be granted, in the discretion of the Board,
warrants to purchase no more than 450,000 shares of Company common stock in the
aggregate. The initial exercise price of the warrants will be not less than the
fair market value of the common stock subject to the warrant on the date of
grant.
In December 1994, three new outside directors of the Company, Messrs.
O'Reilly, Phillips and Raville, each received warrants entitling him to purchase
150,000 shares of common stock on or prior to December 15, 1999. These warrants,
now fully vested, are exercisable at a price of $1.50 per share with respect to
50,000 shares, $2.25 per share with respect to 50,000 shares and $4.00 per share
with respect to 50,000 shares. At the time these warrants were granted, the fair
market value of the common stock was $1.25 per share. During 1997, Mr. O'Reilly
and Mr. Phillips exercised 150,000 and 50,000 warrants, respectively, and Mr.
Phillips donated 32,660 warrants to charitable organizations.
Concurrent with the above initial grant, Mr. Clearman, the fourth outside
director of the Company, was awarded warrants to purchase 126,000 shares of
common stock. The terms of this grant were identical to those described above
except the number of shares exercisable at the $1.50 exercise price was set at
26,000 instead of 50,000.
During 1997, Mr. Clearman exercised all of these warrants.
In December 1994, the Board awarded Steven A. Odom, who joined the Board in
October 1994 and became Chairman in November 1994, warrants under the Warrant
Plan to purchase 450,000 shares of common stock. The warrants, now fully vested,
entitle Mr. Odom to purchase 450,000 shares of common stock on or prior to
December 15, 1999 at an exercise price of $1.50 per share with respect to
150,000 shares, $2.25 per share with respect to 150,000 shares and $4.00 per
share with respect to 150,000 shares. During 1997, Mr. Odom exercised 150,000 of
these warrants.
In December 1994, the Board also adopted the Directors' Warrant Incentive
Plan (the "Incentive Plan") pursuant to which the Board may grant, beginning in
February 1997, to each non-employee director on an annual basis warrants to
purchase up to 50,000 shares of Company common stock at an exercise price per
share equal to no less than 110% of the fair market value of the common stock at
the date of grant. No warrants may be granted under the Incentive Plan in a
given year unless the Company's common stock has appreciated by a compounded
annual average rate of return in excess of 35% for the four year period
preceding the year of grant. The aggregate number of shares of common stock
authorized to be issued pursuant to the Incentive Plan is 600,000 subject to
adjustment in certain instances as described below.
Warrants granted under the Warrant Plan and the Incentive Plan become
exercisable in one or more installments, as the Board may determine, six months
and one day after the date of the grant and expire on the fifth anniversary
following the date of grant, provided that if the Director has not attended at
least 75% of the meetings of the Board for the year in which an installment
first becomes exercisable, then such installment may not be exercised.
On March 26, 1997, the Board granted the four outside Directors of the
Company warrants to each purchase 50,000 shares of common stock with an exercise
price of $9.21. These warrants became fully vested and exercisable on December
31, 1997.
Notwithstanding the foregoing, the Warrant Plan and the Incentive Plan
provide that warrants awarded pursuant to these plans will become immediately
exercisable (i) if the Company is to be consolidated with or acquired by another
entity in a merger, (ii) upon the sale of substantially all of the Company's
assets or the sale of at least 90% of the outstanding Company common stock to a
third party, (iii) upon the merger or consolidation of the Company
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with or into any other corporation or the merger or consolidation of any
corporation with or into the Company (in which consolidation or merger the
stockholders of the Company receive distributions of cash or securities as a
result thereof), or (iv) upon the liquidation or dissolution of the Company.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation awarded
or paid by the Company for services rendered during each of the years in the
three year period ended December 31, 1997 to its Chief Executive Officer and
other executive officers whose compensation exceeded $100,000 ("Named
Executives").
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS (1)-(5) ALL OTHER
ANNUAL COMPENSATION SECURITIES UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) ($)(6)-(8)
- --------------------------- ---- --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Steven A. Odom.................. 1997 $143,000 $165,000 424,000 $4,273
Chairman and Chief 1996 200,000 100,000 105,000 --
Executive Officer 1995 -- -- 250,000 --
Hensley E. West................. 1997 125,125 142,500 320,000 10,100
President and Chief 1996 175,000 87,500 91,875 35,000
Operating Officer 1995 -- -- 443,750 --
Mark A. Gergel.................. 1997 97,500 115,000 216,000 28,013
Executive Vice 1996 110,000 110,000 37,500 780
President and 1995 90,000 35,000 74,000 495
Chief Financial Officer
Scott N. Madigan................ 1997 96,000 57,500 35,000 1,638
Executive Vice President 1996 81,500 30,000 110,000 20,000
of Business Development 1995 -- -- -- --
Hatch Graham.................... 1997 110,000 33,000 150,000 --
President, Transport and 1996 -- -- -- --
Access Systems Group 1995 -- -- -- --
</TABLE>
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(1) Long-Term Compensation Awards for 1997 include non-qualified stock options
granted in December 1997 from the Company's 1998 Incentive Compensation
Plan. The securities underlying options for 1997 under this grant include:
Mr. Odom - 400,000 shares; Mr. West -300,000 shares; Mr. Gergel - 200,000
shares; and Mr. Madigan - 25,000 shares. These options, which are subject
to stockholder approval, vest 25% on each of the first four anniversaries
from the date of grant and are exercisable at $19.00 per share, the market
price as of the date of grant.
In connection with voluntary salary reduction/incentive programs in 1996
and 1995, which were offered to all salaried employees of the Company, the
Named Executives elected to forego salary in exchange for options to
purchase shares of Common Stock at the then current market prices of $8.00
and $7.00 per share, respectively. The securities underlying options for
1996 for this program include: Mr. Odom - 55,000 shares; Mr. West - 48,125
shares; Mr. Gergel - 37,500 shares; and Mr. Madigan - 10,000 shares. The
securities underlying options for 1995 for this program include: Mr. Odom -
50,000 shares; Mr. West - 43,750 shares; Mr. Gergel - 24,000 shares; and
Mr. Madigan - 10,000 shares. Stock options issued in connection with these
programs are fully vested.
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(2) Mr. Odom joined the Company's Board of Directors in October 1994 and was
elected Chairman in November 1994. He was appointed Chairman and Chief
Executive Officer in August 1995. Mr. Odom elected to not receive a salary
in 1995. In December 1995, he was awarded non-qualified stock options to
acquire 200,000 shares of common stock at $7.00 per share, the then current
market price. These options vested 50% on each of the first two
anniversaries from the date of grant.
(3) Mr. West joined the Company in January 1996 as its new President and Chief
Operating Officer. In August 1995, in connection with his acceptance of the
Company's offer of employment, he was awarded non-qualified stock options
to acquire 400,000 shares of common stock at $3.78 per share, the then
current market price. These options vest 25% on each of the first four
anniversaries from his effective date of employment.
(4) Mr. Madigan joined the Company in March 1996 as its new Vice President of
Business Development. He was awarded non-qualified stock options to acquire
80,000 shares of common stock at $7.81 per share, the then current market
price. These options vest 25% on each of the first four anniversaries
from the date of grant.
(5) Mr. Graham joined the Company in March 1997 as its new President, Transport
and Access Systems Group. He was awarded non-qualified stock options to
acquire 150,000 shares of common stock at $8.06 per share, the then current
market price. These options vest 25% on each of the first four
anniversaries from the date of grant.
(6) During 1997, Mr. Gergel was paid a flat sum allowance of $25,000 and during
1996, Mr. West and Mr. Madigan were paid flat sum allowances of $35,000 and
$20,000, respectively, for the relocation of their households to Atlanta,
Georgia.
(7) During 1997, Mr. West was paid $7,000 for life insurance benefits provided
to him by the Company.
(8) Except as noted above, All Other Compensation represents matching
contributions by the Company under its 401(k) Plan.
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1997 AGGREGATE OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information concerning the value of director
warrants and employee options exercised by the Named Executives during 1997 and
the value at December 31, 1997 of unexercised warrants and options held by each
such officer. The value of unexercised warrants and options reflects the
increase in market value of Company common stock from the date of grant through
December 31, 1997, when the closing price was $23.88 per share.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY(2)
WARRANTS AND WARRANTS AND
NUMBER OF OPTIONS OPTIONS AT
SHARES AT 12-31-97 12-31-97
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED (1) UNEXERCISABLE UNEXERCISABLE
- ---- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Steven A. Odom (3)................. 150,000 $3,816,000 679,000/400,000 $12,208,625/1,950,000
Hensley E. West.................... 87,500 1,613,500 168,125/600,000 2,870,984/7,491,000
Mark A. Gergel..................... 60,250 1,331,069 128,875/223,875 2,021,297/1,442,047
Scott N. Madigan................... 17,500 279,170 25,000/102,500 398,680/1,343,238
Hatch Graham....................... -- -- --/150,000 --/2,372,250
</TABLE>
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(1) The "value realized" represents the difference between the exercise price
of the shares and the market price of the shares on the date the warrants
and options were exercised. The value realized was determined without
considering any taxes which may have been owed.
(2) "In-the-Money" warrants and options have an exercise price less than $23.88
per share, the closing price of common stock as of December 31, 1997.
(3) Includes securities underlying warrants issued to Mr. Odom pursuant to the
Warrant Plan.
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STOCK OPTION GRANT TABLE
The following table sets forth information regarding the grant of stock
options to the Named Executives during the year ended December 31, 1997.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE($) AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF STOCK
---------------------------------------------------------------- PRICE APPRECIATION FOR
% TOTAL OPTION TERM
NUMBER OF SECURITIES OPTIONS GRANTED EXERCISE ----------------------
UNDERLYING OPTIONS EMPLOYEES PRICE PER EXPIRATION 5% 10%
NAME GRANTED(1) IN FISCAL YEAR SHARE (2) DATE (3) (3)
- ---------------------- ---------------------- ------------------ ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Steven A. Odom........ 400,000 20.5% $19.00 12/29/02 $4,588,000 $7,780,000
24,000 1.2 19.00 12/29/02 275,280 466,800
Hensley E. West....... 300,000 15.3 19.00 12/29/02 3,441,000 5,835,000
20,000 1.0 19.00 12/29/02 229,400 389,000
Mark A. Gergel........ 200,000 10.2 19.00 12/29/02 2,294,000 3,890,000
16,000 0.8 19.00 12/29/02 183,520 311,200
Scott N. Madigan...... 25,000 1.3 19.00 12/29/02 286,750 486,250
10,000 0.5 9.75 04/30/02 207,200 287,000
Hatch Graham.......... 150,000 7.7 8.06 03/26/02 3,361,500 4,558,500
</TABLE>
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(1) Individual grants in 1997 include the following non-qualified stock options
issued in connection with the Company's 1998 Incentive Compensation Plan:
Mr. Odom -- 400,000; Mr. West -- 300,000; Mr. Gergel -- 200,000; and Mr.
Madigan -- 25,000. See "Summary Compensation Table, note (1)" for terms of
these options granted. The remainder of Mr. Odom's, Mr. West's and Mr.
Gergel's options were granted in December 1997 and vested immediately. Mr.
Madigan's remaining options and Mr. Graham's options vest at 25% each on
the first four anniversaries from the date of grant.
(2) The average exercise price represents the fair market value of the shares
at dates of grant.
(3) The 5% and 10% appreciation rates are set forth in the Securities and
Exchange Commission rules and no representation is made that the Company's
common stock will appreciate at these assumed rates or at all.
SEVERANCE PROTECTION AGREEMENTS
The Company entered into a Severance Protection Agreement with each of
Messrs. Odom, West and Gergel (each an "Executive") as of November 1, 1997 (the
"Severance Agreements"). Each Severance Agreement is effective for an initial
term of two years and is automatically renewed for additional consecutive
one-year terms unless timely notice of non-renewal is given by either the
Company or the Executive. Generally, each Severance Agreement provides that if
the Executive's employment is terminated within 12 months after a "change of
control" (as defined in the Severance Agreement) (i) by the Company other than
for "cause" (as defined in the Severence Agreement), or (ii) by the Executive
for "good reason" (as defined in the Severance Agreement), the Executive is
entitled to a lump sum payment equal to the sum of (a) accrued and unpaid
salary, expenses, vacation pay and bonuses, (b) two times the Executive's base
salary and bonus and (c) the excess of the actuarial equivalent of retirement
benefits to which the Executive would be entitled under the Company's
supplemental and other retirement plans had the Executive remained in the
employ of the Company for an additional two years of credited service over the
actual actuarial equivalent benefits to which the Executive is entitled under
such plans. In addition, upon any such termination the Company is obligated
to continue, at its expense, for a 24 month period the medical, disability and
life insurance benefits enjoyed by the Executive prior to termination and to
provide the Executive with outplacement services, reasonable office space and
secretarial assistance, and the restrictions on outstanding stock options and
similar incentive awards lapse and such options and awards become immediately
vested and exercisable to the extent that they would have been vested and
exercisable within two years of the date of the Executive's termination.
Payments under the Severance Agreements are subject to limitations to the
extent they would be subject to an excise tax imposed under the Internal
Revenue Code of 1986, as amended (the "Code"), or would not be deductible by
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee is comprised of Stephen J. Clearman.
William P. O'Reilly was also a member of the Compensation Committee until his
resignation effective as of April 22, 1998. There are no Compensation
Committee Interlocks.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial
ownership of Company common stock as of April 20, 1998, by (i) each person known
to the Company to be the beneficial owner of five percent or more of the common
stock, (ii) each of the directors and executive officers of the Company and
(iii) the directors and
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executive officers of the Company as a group. This table is based on information
provided by the Company's directors, executive officers and principal
stockholders.
<TABLE>
<CAPTION>
SHARES UNDER
EXERCISABLE OPTIONS TOTAL SHARES PERCENTAGE
NAME SHARES OWNED(1) AND WARRANTS(2) BENEFICIALLY OWNED OWNED
- ----------------------------------- --------------- ------------------- ------------------ ----------
<S> <C> <C> <C> <C>
Pilgrim Baxter &
Associates, Ltd.(3) .............. 1,843,640 -- 1,843,640 8.6%
Hambrecht & Quist
Group(4) ......................... 1,429,907 -- 1,429,907 6.7
Steven A. Odom+++(5)(6) ........... 267,410 679,000 946,410 4.3
Stephen E. Raville+ ............... 318,000 -- 318,000 1.5
William P. O'Reilly+ .............. 257,000 50,000 307,000 1.4
Stephen J. Clearman+(7) ........... 172,210 62,000 234,210 1.1
Hensley E. West+++(6) ............. 16,621 268,125 284,746 1.3
Mark A. Gergel++(6) ............... 76,953 115,000 191,953 *
John D. Phillips+ ................. -- 117,340 117,340 *
Scott N. Madigan++ ................ 2,143 47,500 49,643 *
Hatch Graham++ .................... -- 37,500 37,500 *
All directors and executive
officers as a group
(9) persons) .................... 1,110,337 1,376,465 2,486,802 10.9
</TABLE>
- --------------------
* Less than one percent
+ Director
++ Executive Officer
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act ("Rule 13d-3"). Unless otherwise noted, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially
owned by them.
(2) Includes shares which may be acquired by the exercise of stock options and
warrants granted by the Company and exercisable on or before June 20, 1998.
(3) Based upon a Schedule 13G filed on February 17, 1998, Pilgrim Baxter &
Associates, Ltd. ("Pilgrim Baxter") is an investment advisor registered
under section 203 of the Investment Advisors Act of 1940. Its principal
place of business is 825 Duportail Road, Wayne, Pennsylvania 19087. Of the
total shares of common stock beneficially owned by it, Pilgrim Baxter has
sole power to vote or to direct the vote of only 1,601,340 shares.
(4) Based on a Schedule 13G filed on March 9, 1998, Hambrecht & Quist Group
("H&Q Group") may be deemed to own the shares of common stock owned by
Hambrecht & Quist California ("H&Q California"), a wholly-owned subsidiary
of H&Q Group. H&Q Group's and H&Q California's principal place of business
is One Bush Street, San Francisco, California 94104.
(5) Includes 18,000 shares held in the aggregate by two minor children of Mr.
Odom.
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(6) Includes the following number of shares acquired through voluntary employee
contributions to the Company's Profit Sharing and Retirement Savings Plan
(the "401(k) Plan") and contributed to the 401(k) Plan by the Company under
a matching contribution feature offered to substantially all employees of
the Company: Mr. Odom-800 shares; Mr. West-621 shares; Mr. Gergel-2,828
shares and Mr. Madigan-143 shares.
(7) Includes an aggregate of 126,000 shares owned by Geocapital II, L.P. and
Geocapital Ventures, of which Mr. Clearman may be deemed a beneficial owner
under Rule 13d-3 of the Exchange Act because he has shared investment and
voting power.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In October 1997, John D. Phillips, a director of the Company, entered into
a series of agreements whereby, among other things, he became the new Chairman
and Chief Executive Officer of Cherry Communications Incorporated (d/b/a
Resurgens Communications Group) ("Resurgens"), a facilities-based provider of
international network access commonly referred to as a carriers' carrier.
Resurgens was shortly thereafter placed into bankruptcy under Chapter 11 of the
United States Bankruptcy Code. WorldCom, Inc. ("WorldCom"), a major customer and
vendor of Resurgens, has subsequently agreed to provide Resurgens up to $28
million in financing in the form of a debtor in possession facility and other
credits.
During the fourth quarter of 1997, the Company shipped switching equipment
to Resurgens. The cost of this equipment was approximately $3.8 million. On
February 12, 1998, the Company executed a letter of intent to acquire Resurgens.
The equipment shipped to Resurgens is included in the Company's inventory at
December 31, 1997 (see Note C to the Company's Consolidated Financial
Statements).
The Resurgens acquisition is subject to, among other things, the
satisfactory completion by the Company of its due diligence investigation of
Resurgens, the preparation and execution of a definitive merger agreement, the
receipt of the requisite corporate and regulatory approvals and the confirmation
of Resurgens' Plan of Reorganization.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WORLD ACCESS, INC.
By: /s/ Mark A. Gergel
--------------------------------------
Mark A. Gergel
Executive Vice President and
Chief Financial Officer
Dated April 27, 1998
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