UNITED STATES 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 At of 1934
For the Fiscal Year Ended December 31, 1999
----------------------------------------------------------
Commission file number 0-22696
DISC GRAPHICS, INC.
(Exact Name of Registrant as specified in its charter)
Delaware 13-3678012
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
10 Gilpin Avenue, Hauppauge, New York 11788
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (631) 234-1400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 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/A or any
amendment to this Form 10-K/A [ ]
At March 1, 2000, the aggregate market value of the voting and
non-voting stock held by non-affiliates of Registrant was approximately $11.2
million, based on the closing price of the Common Stock on the Nasdaq Stock
Market on that date.
At March 1, 2000, the Registrant had outstanding 5,518,352 shares of
Common Stock, $.01 par value per share.
This Amendment is being filed to include the information required by Part III of
Form 10-K. The Registrant excluded the information required by Part III of Form
10-K because the Registrant intended to incorporate that information by
reference to its proxy statement to be filed in connection with the 2000 Annual
Meeting of its stockholders. However, the Registrant does not expect to file its
definitive proxy statement within the required 120 days of the end of its fiscal
year end, and therefore its required to file this Amendment.
<PAGE>
PART III.
ITEM 10. Directors and Executive Officers of the Registrant.
The executives officers and directors of the Company are as follows:
Name of Age Principal Occupation Director
Director Since
Donald Sinkin(1)(4) 52 Donald Sinkin has been Chairman of 1986
the Board, President and Chief
Executive 1986 Officer of the
Company since 1986. Mr. Sinkin was
elected at the 1998 Annual Meeting
of Stockholders for a three-year
term that will expire at the 2001
Annual Meeting. He also serves as a
director and the President and
Chief Executive Officer of Disc
Graphics Label Group, Inc. and Four
Seasons Litho, Inc. and is a
director and the President and
Chief Executive Officer of Cosmetic
Sampling Technologies, Inc. These
entities are subsidiaries of the
Company. Mr. Sinkin joined the
Company as Pre-Press Supervisor in
1977 and became Plant Manager in
1982. Prior to joining the Company,
he helped found and manage Rutgers
Packaging, a division of Queens
Group, Inc. d/b/a Queens Litho. Mr.
Sinkin also serves as a director
and the President of Horizon
Equities, Inc., a New York
corporation controlled by him
("Horizon Equities"), and is the
managing member of Spring Hollow
Holding, LLC, a New York limited
liability company.
Stephen Frey(1) 46 Stephen Frey has been the Senior 1986
Vice President of Operations of the
1986 Company since August 1998, the
Secretary of the Company and Old
Disc since 1988, and a director of
the Company and Old Disc since
1986. Mr. Frey was elected at the
1997 Annual Meeting for a
three-year term that expires at the
2000 Annual Meeting. Between 1986
and August 1998, Mr. Frey was the
Vice President of Operations of the
Company and Old Disc. Mr. Frey also
serves as a director, Vice
President and Secretary of Disc
Graphics Label Group, Inc., a
director and the Vice President and
Secretary of Four Seasons Litho,
Inc., and a director and the Vice
President of Operations of Cosmetic
Sampling Technologies, Inc., each
of which is a wholly-owned
subsidiary of the Company. Mr. Frey
joined the Company in its Pre-Press
Department in 1978, became the
Supervisor of that department in
1983, and established the
Production and Planning Department
in 1985. Mr. Frey served as Chief
Operating Officer from 1991 to
1995. Prior to joining the Company,
<PAGE>
Mr. Frey held various management
positions with Kordet Color
Corporation and Terrace Litho. Mr.
Frey also serves on the Board of
Directors of the Association of
Graphic Communication, a trade
organization, and is a director and
the Secretary of Horizon Equities
and the managing member of Stephen
Ashley, LLC, a New York limited
liability company.
John Rebecchi(2) 45 John Rebecchi has been the Senior 1995
Vice President of Sales and
Marketing of 1995 the Company since
August 1998 and a director since
October 1995. Mr. Rebecchi was
elected at the 1997 Annual Meeting
for a three-year term that expires
at the 2000 Annual Meeting. Between
October 1995 and August 1998, Mr.
Rebecchi was the Company's Vice
President of Sales. Between October
1995 and January 1996, he also
served as the Company's Chief
Financial Officer. Between 1988 and
October 1995, Mr. Rebecchi was Vice
President of Marketing and Chief
Financial Officer of Old Disc. He
also serves as Vice President and a
director of Disc Graphics Label
Group, Inc.; Vice President and a
director of Four Seasons Litho,
Inc.; and Vice President of Sales
and a director of Cosmetic Sampling
Technologies, Inc., each of which
is a wholly-owned subsidiary of the
Company. Mr. Rebecchi joined Old
Disc in its accounting department
and in 1983 became the Controller
of Old Disc. He took a brief leave
of absence between 1985 and 1988,
when he rejoined Old Disc. He also
serves as a director and the Vice
President and Treasurer of Horizon
Equities, the managing member of
Tin Box Holding, LLC, a New York
limited liability company, and a
director and the President of 92-37
Metro Corp., a New York corporation
formed for the purpose of acquiring
real estate.
Daniel A.
Levinson(2)(3)(4) 39 Daniel A. Levinson has been a 1991
director of the Company and RCL
since October 1991 1991. Mr.
Levinson was elected at the 1998
Annual Meeting of Stockholders for
a three-year term that will expire
at the 2001 Annual Meeting. He is
also a director of two of the
Company's subsidiaries, Disc
Graphics Label Group, Inc. and
Cosmetic Sampling Technologies,
Inc. In 1998, Mr. Levinson founded
Colt Capital Group, a niche
provider of investment capital,
resources and support to small and
mid-size growing companies. Between
1988 and 1998, Mr. Levinson was a
group executive of Holding Capital
Management Corp., a stockholder of
the Company engaging in activities
similar to those of Colt Capital
Group. See "Security Ownership of
Certain Beneficial Owners and
Management," below.
<PAGE>
Seymour W. Zises(1)(4) 47 Seymour W. Zises has been a 1992
director of the Company since
August 1992, and 1992 was a Vice
President and Treasurer from August
1992 until October 1995. Mr. Zises
was elected at the 1999 Annual
Meeting of Stockholders for a
three-year term that will expire at
the 2002 Annual Meeting. He is
currently President and Chief
Executive Officer of Family
Management Corporation, a
registered investment advisory firm
in New York City, which he
established in 1989. Additionally,
Mr. Zises is the President and
Chief Executive Officer of Family
Management Securities, LLC, a
registered broker-dealer.
Mark L. Friedman(2)(3) 52 Mark L. Friedman has been a 1996
director of the Company since April
1996 and 1996 was a Vice President,
Secretary and director of RCL from
August 1992 until October 1995. Mr.
Friedman was elected at the 1999
Annual Meeting of Stockholders for
a three-year term that will expire
at the 2002 Annual Meeting. He has
been a Senior Managing Director of
Millennium Capital Group, Ltd., an
investment and merchant banking
firm, since April 1999. From
February 1995 to April 1999 he was
counsel to the law firm of Baer
Marks & Upham LLP. From January
1993 through January 1995 he was
counsel to the law firm of
Proskauer Rose LLP. From 1982
through January 1993 he was
(individually or through a
professional corporation) a partner
of the law firm of Shea & Gould.
From July 1996 to July 1997, Mr.
Friedman served as corporate
secretary of a private company
which in July 1997 filed a
voluntary petition under Chapter 11
of the United States Bankruptcy
Code.
Margaret M. Krumholz 40 Margaret M. Krumholz is Senior Vice
President of Finance and Chief
Financial Officer of the Company.
Ms. Krumholz joined Disc Graphics
in 1994 and served as Controller
until 1996 when she was elected
Chief Financial Officer. She was
elected Senior Vice President of
Finance in August 1998. Prior to
joining the Company, Ms. Krumholz
held various financial and
accounting positions, including
Corporate Finance Manager for
General Foods Baking Company, and
received her C.P.A. while employed
with PricewaterhouseCoopers, LLP.
<PAGE>
Frank A. Bress 52 Frank A. Bress is Vice President
for Legal Affairs and Human
Resource Policy and General Counsel
of the Company. Mr. Bress joined
the Company in January 1988 as
General Counsel, and was elected
Vice President for Legal Affairs in
August 1998 and Vice President for
Human Resource Policy in October
1998. Prior to jointing Disc
Graphics, Mr. Bress served as
principal outside counsel to the
Company from 1988 through 1997
while a partner in various law
firms. Mr. Bress was an Associate
Professor of Law at New York
University School of Law from 1974
to 1986, and a Professor of Law and
Associate Dean at Pace University
School of Law from 1986 to 1988.
- ----------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Incentive Stock Option Committee
(4) Member of Compensation Committee
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers, directors, and certain stockholders
owning more than 10% of any class of the Company's equity securities ("10%
Stockholders") to file reports with the SEC indicating their ownership of
securities of the Company and any changes in such ownership. Executive officers,
directors and 10% Stockholders are required to provide copies of these reports
to the Company. Based on a review of copies of all such reports filed with
respect to fiscal 1999 and furnished to the Company, as well as certain written
representations provided to the Company by executive officers, directors and
certain 10% Stockholders, all such reports required to be filed with respect to
fiscal 1999 have been filed in a timely manner, except that a transaction made
by Seymour Zises, a director of the Company, was reported in a Form 5 filed with
the SEC on March 17, 2000.
<PAGE>
ITEM 11. Executive Compensation
The following table summarizes the compensation earned by or paid to
the Company's Chief Executive Officer and the other four most highly compensated
executive officers during 1999 who were officers as of December 31, 1999
(collectively, the "Named Executives") for their services to the Company and its
subsidiaries during fiscal 1997, 1998 and 1999.
<TABLE>
Summary Compensation Table
Long-Term Compensation
----------------------------------------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Long Term
Annual Securities Incentive All Other
Compen Restricted Underlying Plan Compensa-
Name and Bonus sation Stock Options/ Payouts($) sation
Principal Position Year Salary ($) ($)(1) ($) Awards SARs(#) ($)(2)
- ------------------ ---- ---------- ------ --- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Donald Sinkin, 1999 $289,400 $115,760 0 0 0 $0 $26,090
Chairman President 1998 275,625 137,813 0 0 0 0 27,262
and Chief Executive 1997 262,500 157,500 0 0 0 0 21,123
Officer
Stephen Frey, 1999 185,220 74,088 0 0 0 0 7,669
Senior Vice 1998 176,400 88,200 0 0 0 0 9,820
President of 1997 168,000 143,425 0 0 0 0 6,291
Operations
John Rebecchi, 1999 185,220 74,088 0 0 0 0 15,563
Senior Vice 1998 176,400 88,200 0 0 0 0 12,499
President of 1997 168,000 145,832 0 0 0 0 8,937
Sales and
Marketing
Margaret Krumholz, 1999 171,150 68,460 0 25,000 25,000 0 15,461
Senior Vice 1998 163,000 81,500 0 25,000 25,000 0 12,200
President of 1997 131,291 59,062 0 0 0 0 1,273
Finance and
Chief Financial
Officer
Frank A. Bress, 1999 157,500 11,100 0 10,000 11,100 0 13,103
Vice President 1998 150,000 13,500 0 5,000 0 0 8,153
for Legal Affairs 1997 0 0 0 0 0 0 0
and Human
Resources Policy
and General
Counsel
</TABLE>
- --------------------------
(1) For Messrs. Sinkin, Frey and Rebecchi, the total bonus amounts shown
in this column were payable under the employment agreements described
below under "Employment Contracts and Termination of Employment and
Change of Control Arrangements."
(2) For fiscal 1999, All Other Compensation includes: (a) $20,805, $5,000,
$8,572 and $3,960 of premiums paid by the Company for certain life and
disability insurance policies for Messrs. Sinkin, Frey, Rebecchi, and
Ms. Krumholz respectively; (b) Company contributions under the
Company's 401(k) Retirement Plan of $3,005, $1,384, $2,021 and 2,501
to Messrs. Sinkin, Frey, Rebecchi and Ms. Krumholz respectively; and
$2,003 to Mr. Bress; and (c) miscellaneous car allowances for each
named executive.
<PAGE>
Option/SAR Grants
The following table describes the options to purchase shares of Common
Stock granted to the Named Executives during fiscal 1999 and the potential value
of such options at the end of their terms, assuming certain levels of stock
price appreciation.
<TABLE>
Option/SAR Grants in Fiscal 1999
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (1)(2)
----------------- ----------------------
% of Total
Options/
Number of SARs
Securities Granted to
Underlying Employees Exercise or
Options/ SARs in Fiscal Base Price Expiration
Name Granted (#) Year (3) ($/share) Date 5%($) 10%($)
- ---- ----------- -------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Donald Sinkin 0 n/a n/a n/a n/a n/a
Stephen Frey 0 n/a n/a n/a n/a n/a
John Rebecchi 0 n/a n/a n/a n/a n/a
Margaret M. 0 n/a n/a n/a n/a n/a
Krumholz
Frank A. Bress 1,000 5.3% $4.438 1/1/09 $ 7,230 $ 11,510
- ------------------------
</TABLE>
(1) All options are either incentive or non-qualified stock options
granted under the Company's 1995 Incentive Stock Option Plan. All
options were granted with an exercise price greater than or equal to
the fair market value on the date of grant.
(2) Potential realizable values reflect the difference between the option
exercise price on the date of grant and the fair market value of the
Company's Common Stock at the end of the option term, assuming 5% and
10% compounded annual appreciation of the stock price from the date
of grant until the expiration of the option. The 5% and 10%
appreciation rates are assumed pursuant to rules promulgated by the
SEC and do not reflect actual historical or projected rates of
appreciation of the Common Stock. Assuming such appreciation, on
January 1, 2009 the per share value would be $7.23 at 5% or $11.51 at
10% (based on a fair market value of $4.438 on January 1, 2009, which
was the grant date for the option listed in the table above). The
foregoing values do not reflect appreciation actually realized by the
Named Executives. See "Option/SAR Exercises and Values," below.
(3) For purposes of calculating these percentages, the total number of
options granted to all employees in fiscal 1999 was 18,879.
<PAGE>
Option/SAR Exercises and Values
The following table provides certain information concerning the
exercise of stock options during 1999 and the value of unexercised options to
purchase shares of Common Stock held by the Named Executives as of December 31,
1999.
Aggregated Option/SAR Exercises in Fiscal 1999 and
Fiscal Year End Option/SAR Values
<TABLE>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year End Fiscal Year End(1)
--------------- ------------------
Shares
Acquired on Value
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald Sinkin 0 n/a 0 0 0 $0
Stephen Frey 0 n/a 0 0 0 $0
John Rebecchi 0 n/a 0 0 0 $0
Margaret M.
Krumholz 0 n/a 25,000 25,000 26,575 $0
Frank A. Bress 0 n/a 0 0 0 $0
</TABLE>
_____________________
(1) The fair market value per share of Common Stock on December 31, 1999
was $3.063 based on the closing price on the Nasdaq National Market
System on December 31, 1999 which was the last trading day of the
year.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements
The Company is party to employment agreements dated as of June 28,
1995 with each of Messrs. Sinkin, Frey and Rebecchi. Each agreement provides for
an annual base salary, annual salary increases calculated with reference to the
Consumer Price Index, bonus compensation based on the Company's performance (as
measured by its gross revenues and its earnings before interest, taxes,
depreciation and amortization), and a monthly car allowance. Bonuses under these
agreements cannot exceed 100% of an employee's base salary. If in any year the
Company does not meet the specific performance requirements set forth in these
agreements, the Company will be obligated to pay, in lieu of bonus compensation,
incentive compensation pursuant to a management incentive plan. The amounts paid
to each of Messrs. Sinkin, Frey and Rebecchi under his employment agreement are
set forth above in the "Summary Compensation Table." In addition, the Company
will pay a fee to each of these executives for any Company loans which they have
personally guaranteed. Each of these employment agreements also provides for
continued payments of salary, bonus and incentive compensation for two years in
the event of the death, disability or termination without cause of the officers
party to these agreements. These agreements require the executives to dedicate
substantially all of their business time to the Company's affairs, and will
terminate on December 31, 2001.
<PAGE>
The Company has also entered into employment agreements dated December
15, 1998 with each of Margaret M. Krumholz and Frank A. Bress. The agreement
with Ms. Krumholz provides for an annual base salary, annual salary increases
calculated with reference to the Consumer Price Index, bonus compensation based
upon the Company's performance (as described above in relation to the employment
contracts with Messrs. Sinkin, Frey and Rebecchi), and monthly car, gas and
cellular telephone allowances. Her agreement also provides for the payment of
salary, incentive compensation and bonus for two years following her death,
disability or discharge without cause, which includes a change of control, among
other things. This agreement will terminate on December 31, 2001. The agreement
with Mr. Bress provides for an annual base salary, annual salary increases
calculated with reference to the Consumer Price Index, bonus compensation
pursuant to a management incentive plan, and monthly car, gas and cellular
telephone allowances. His agreement also provides for the payment of salary,
incentive compensation and bonus for one year following his death, disability or
discharge without cause, which includes a change of control, among other things.
This agreement will terminate on December 31, 2001.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The compensation of the Company's executive officers is generally
determined by either the Board of Directors or the Compensation Committee of the
Board of Directors, subject to approval by the Board of Directors, and subject
to applicable employment agreements. See "Compensation of Executive Officers --
Employment and Change of Control Arrangements." Each member of the Compensation
Committee, except for Donald Sinkin, is a director who is not an employee of the
Company or any of its affiliates.
The Company's compensation programs are intended to enable the Company
to attract, motivate, reward and retain the management talent required to
achieve its corporate objectives, and thereby increase shareholder value. It is
the Company's policy to provide incentives to its senior management to achieve
both short-term and long-term objectives and to reward exceptional performance
and contributions to the development of the Company's businesses. To attain
these objectives, the Company's executive compensation program includes a
competitive base salary, cash incentive bonuses and stock-based compensation.
Stock options are granted to employees, including the Company's
executive officers, by the Compensation Committee under the Company's 1995
Incentive Stock Option Plan. The Committee believes that stock options provide
an incentive that focuses the executive's attention on managing the Company from
the perspective of an owner with an equity stake in the business. Incentive
stock options are awarded with an exercise price equal to the market value of
Common Stock on the date of grant, and all options have a maximum term of ten
years and generally become exercisable not less than six months from the date of
grant. Among the Company's executive officers, the number of shares subject to
options granted to each individual generally depends upon the level of that
officer's responsibility. Subsequent to the Merger, the largest grants generally
have been awarded to the most senior officers who, in the view of the
Compensation Committee, have the greatest potential impact on the Company's
profitability and growth. Previous grants of stock options are reviewed but are
not considered the most important factor in determining the size of any
executive's stock option award in a particular year.
Relationship of Compensation to Performance
The Compensation Committee annually establishes, subject to the
approval of the Board of Directors and any applicable employment agreements, the
salaries that will be paid to the Company's executive officers during the coming
year. In setting salaries, the Compensation Committee takes into account several
factors, including competitive compensation data, the extent to which an
individual may participate in the stock plans maintained by the Company, and
qualitative factors bearing on an individual's experience, responsibilities,
management and leadership abilities, and job performance.
For fiscal 1999, pursuant to the terms of their employment agreements
with the Company, Donald Sinkin, Stephen Frey and John Rebecchi each received a
base salary and a cash incentive bonus based on the Company's pre-tax income.
See "Compensation of Executive Officers -- Employment Contracts and Termination
of Employment and Change of Control Arrangements." Each of Margaret M. Krumholz
and Frank A. Bress received a base salary and a cash bonus. In addition, Mr.
Bress was granted options under the 1995 Incentive Stock Option Plan to purchase
1,000 shares at the fair market value on the date of grant. The Compensation
Committee determined that these amounts were appropriate given the Company's
financial performance, the substantial contribution made by each of Ms. Krumholz
and Mr. Bress to such performance, and the compensation levels of executives at
companies competitive with the Company.
<PAGE>
Compensation of Chief Executive Officer
For fiscal 1999, pursuant to the terms of his employment agreement with
the Company, Donald Sinkin received a base salary and a cash incentive bonus
based on the Company's pre-tax income. See "Compensation of Executive Officers
- -- Employment Contracts and Termination of Employment and Change of Control
Arrangements." In light of this employment agreement, the Compensation Committee
was not required to make any decision regarding the cash compensation of Mr.
Sinkin.
COMPENSATION COMMITTEE
Daniel Levinson
Donald Sinkin
Seymour W. Zises
Directors' Compensation
Directors who are officers of the Company receive no additional
compensation for serving on the Board or any Board committee. For 1999, the
Company paid an annual fee to non-employee directors of $2,500 each for service
on the Board, plus $1,000 for each Board and committee meeting attended.
Accordingly, the Company paid $7,500 to Mr. Friedman and $5,500 to Mr. Zises in
1999. Pursuant to the 1995 Incentive Stock Option Plan, the Company has also
agreed to grant annually to each member of the Incentive Stock Option Committee
for service on that Committee an option to purchase 1,000 shares of Common Stock
on January 1 of each year. This arrangement will terminate in 2005, in
accordance with the 1995 Incentive Stock Option Plan. On January 1, 1999, the
Company granted to Mr. Friedman and Mr. Levinson an option to purchase 1,000
shares of Common Stock at an exercise price of $4.438 per share, which was the
fair market value of the Common Stock at the time of grant. These options vest
on January 1, 2001 and will expire on January 1, 2009.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
Each of Messrs. Sinkin, Frey and Rebecchi served as an executive
officer and director of the Company, and also served as an executive officer and
director of Horizon Equities, Inc., a New York corporation. Mr. Sinkin serves on
the Company's Compensation Committee.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information regarding the
beneficial ownership of the Company's voting securities by each person known by
the Company to be the beneficial owner of more than 5% of the Company's voting
securities as of March 1, 2000. Unless otherwise indicated, the persons named in
the table below have sole voting and investment power with respect to all shares
shown as beneficially owned by them. The inclusion of any shares for any
stockholder in the table below shall not be deemed an admission that such
stockholder is, for any purpose, the beneficial owner of such shares.
The Company had outstanding as of March 1, 2000, 1,000,000 Common
Stock Purchase Warrants, 250,000 of which are exercisable to purchase one share
of common Stock at $7.00 per share 250,000 of which are exercisable to purchase
one share of common Stock at $8.00 per share, 250,000 of which are exercisable
to purchase one share of Common Stock at $9.00 per share, and 250,000 of which
are exercisable to purchase one share of Common Stock at $10.00 per share (the
"Merger Warrants"). The outstanding Merger Warrants will expire on November 9,
2002.
<PAGE>
Amount and
Nature of
Name and Address of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ---------------- --------- --------
Common Stock, Donald Sinkin 1,720,266(1) 29.2%
$0.01 par value
Stephen Frey 650,979(2) 11.5%
John Rebecchi 616,186(3) 10.9%
Holding Capital 395,643(4) 7.0%
Management Corp.
Allen & Company
Incorporated 350,827(5) 6.3%
(1) Donald Sinkin is Chairman of the Board, President and Chief Executive
Officer of the Company. His address is 10 Gilpin Avenue, Hauppauge,
New York 11788. The number of shares of Common Stock shown in the
table as beneficially owned by Mr. Sinkin includes the following:
1,339,698 shares owned directly by Mr. Sinkin and indirectly by his
spouse and a limited liability company controlled by him; and Merger
Warrants to purchase 380,368 shares of Common Stock owned directly by
Mr. Sinkin and indirectly by the same limited liability company. Of
the total number of shares reported as beneficially owned, Mr. Sinkin
shares investment power with respect to 165,601 shares.
(2) Stephen Frey is a director and the Senior Vice President of Operations
and Secretary of the Company. His address is 10 Gilpin Avenue,
Hauppauge, New York 11788. The number of shares of Common Stock shown
in the table as beneficially owned by Mr. Frey includes 506,387 shares
owned directly by Mr. Frey and indirectly by a limited liability
company controlled by him; and Merger Warrants to purchase 144,592
shares of Common Stock owned directly by Mr. Frey and indirectly by
the same limited liability company. Of the total number of shares
reported as beneficially owned, Mr. Frey shares investment power with
respect to 158,044 shares.
(3) John Rebecchi is a director and the Senior Vice President of Sales and
Marketing of the Company. His address is 10 Gilpin Avenue, Hauppauge,
New York 11788. The number of shares of Common Stock shown in the
table as beneficially owned by Mr. Rebecchi includes 479,322 shares
owned directly by Mr. Rebecchi and indirectly by a limited liability
controlled by him; and Merger Warrants to purchase 136,864 shares of
Common Stock owned directly by Mr. Rebecchi and indirectly by the same
limited liability company. Of the total number of shares reported as
beneficially owned, Mr. Rebecchi shares investment power with respect
to 158,044 shares.
(4) Holding Capital Management Corp. is a Connecticut corporation
("Holding Capital"). Its address is 685 Fifth Avenue, New York, New
York 10022. The number of shares of Common Stock shown in the table as
beneficially owned by Holding Capital includes 292,560 shares of
Common Stock and Merger Warrants to purchase an aggregate of 103,083
shares of Common Stock. The information regarding ownership of Common
Stock by Holding Capital was furnished to the Company by Holding
Capital.
(5) Allen & Company Incorporated is a New York corporation ("Allen &
Co."). Its address is 711 Fifth Avenue, New York, New York 10022. The
number of shares of Common Stock shown in the table as beneficially
owned by Allen & Co. includes the following: 264,915 shares of Common
Stock and Merger Warrants to purchase an additional 85,912 shares of
Common Stock. Allen Holding Inc., a Delaware corporation ("Allen
Holding"), is an affiliate of Allen & Co. that is deemed to own
beneficially all of the shares reported on the table above as owned by
Allen & Co. The information regarding ownership of Common Stock by
Allen & Co. and Allen Holding was contained in a Schedule 13G/A dated
February 11, 2000 and filed with the SEC on February 14, 2000.
According to the Schedule 13G/A, Allen & Co. has sole voting and
investment power with respect to all shares reported as beneficially
owned.
<PAGE>
Security Ownership of Management
The following table sets forth certain information as to each class of
outstanding equity securities of the Company beneficially owned as of the Record
Date by: (i) each director and nominee; (ii) the Company's Chief Executive
Officer and the other four most highly compensated executive officers who were
officers as of December 31, 1999; and (iii) all current directors and executive
officers as a group. No executive officer or director of the Company owns
securities of any parent or subsidiary of the Company, except as indicated in
the footnotes to the table below. Unless otherwise indicated, the persons named
in the table below have sole voting and investment power with respect to all
shares shown as beneficially owned by them. The inclusion of any shares for any
stockholder in the table below shall not be deemed an admission that such
stockholder is, for any purpose, the beneficial owner of such shares. An
asterisk denotes beneficial ownership of less than 1% of the class of securities
indicated.
Amount and
Nature of
Name of Beneficial Percentage
Title of Class Beneficial Owner Ownership of Class
- -------------- ---------------- --------- --------
Common Stock, Donald Sinkin 1,720,066(1) 29.2%
$0.01 par value
Stephen Frey 650,979(2) 11.5%
John Rebecchi 616,186(3) 10.9%
Daniel A. Levinson 262,856(4) 4.7%
Seymour W. Zises 176,722(5) 3.2%
Mark L. Friedman 168,920(6) 3.1%
Margaret M. Krumholz 91,870(7) 1.6%
Frank A. Bress 21,150(8) *
All directors and 3,708,749 58.2%
executive officers as a group
___________________
(1) See Note (1) under "Security Ownership of Certain Beneficial Owners"
table above.
(2) See Note (2) under "Security Ownership of Certain Beneficial Owners"
table above.
(3) See Note (3) under "Security Ownership of Certain Beneficial Owners"
table above.
(4) Includes 200,584 shares owned directly by Mr. Levinson and indirectly
by a family trust of which he is the trustee; Merger Warrants to
purchase 57,272 shares of Common Stock owned directly by Mr. Levinson
and indirectly by such trust; and options granted under the Company's
1995 Incentive Stock Option Plan to purchase 5,000 shares of Common
Stock, of which 2,000 such options were exercisable as of the Record
Date. Of the total number shares reported as beneficially owned, Mr.
Levinson shares investment power with respect to 128,928 shares.
(5) Includes 151,722 shares owned directly by Mr. Zises and indirectly by
a limited liability company controlled by him; and options granted
under the 1995 Incentive Stock Option Plan to purchase 25,000 shares
of Common Stock, all of which options were exercisable as of the
Record Date. Of the total number shares reported as beneficially
owned, Mr. Zises shares voting and investment power with respect to
28,827 shares.
<PAGE>
(6) Includes shares held in a joint account with Mr. Friedman's wife; and
options to purchase 29,000 shares, of which options to purchase 26,000
shares were exercisable as of the Record Date. Mr. Friedman shares
voting power pursuant to a voting agreement with respect to all shares
reported in the table above.
(7) Includes 16,870 shares owned directly by Ms. Krumholz and indirectly
by members of her immediate family; and options to purchase 75,000
shares pursuant to the 1995 Incentive Stock Option Plan, of which
options to purchase 25,000 shares were exercisable as of the Record
Date. Ms. Krumholz has sole voting and investment power with respect
to 51,270 shares reported above.
(8) This number represents 5,150 shares owned directly by Mr. Bress and
indirectly by members of his immediate family; and options granted
under the Company's 1995 Incentive Stock Option Plan to purchase
16,000 shares, none of which options were exercisable as of the Record
Date.
ITEM 13. Certain Relationships and Related Transactions
From January 1, 1999 to the present, there have been no transactions
involving more than $60,000 to which the Company or any of its subsidiaries was
a party and in which any executive officer, director or nominee for director,
beneficial owner of more than 5% of any class of the Company's voting
securities, or member of the immediate family of any of the foregoing persons,
had a material interest, except as indicated in "Item 11 -- Executive
Compensation" above, and as follows.
The Company leases a 55,000 square foot building in Hauppauge, New
York from Horizon Equities L.P., a Delaware limited partnership ("Horizon")
under a 15 year lease that will terminate on December 31, 2007. Horizon
Equities, Inc., the corporate general partner of Horizon, is owned by Messrs.
Sinkin, Frey and Rebecchi, executive officers and directors of the Company, and
one other employee of the Company. The limited partners of Horizon include,
among others, Holding Capital (which owns more than five percent of the Company)
and one of its affiliates, and Investment Services Corp., an affiliate of Mr.
Levinson. The aggregate payments made by the Company in 1999 for rental of the
building were $348,000. The Company believes that the terms of the building
lease are at least as favorable to the Company as the terms for an equivalent
lease which could have been obtained from unaffiliated third parties.
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amendment No. 1 to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
hereunto duly authorized.
DISC GRAPHICS, INC
May *, 2000 By: /s/Donald Sinkin
---------------------
Donald Sinkin, Chairman of
the Board, Chief Executive
Officer and President
(Principal Executive Officer)
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Amendment No. 1 to its Annual Report on Form 10-K has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the dates indicated:
Signature Title Date
/s/Donald Sinkin Chairman of the Board, Chief
- -------------------- Executive Officer and President
Donald Sinkin (Principal Executive Officer)
/s/Stephen Frey* Senior Vice President of Operations,
- -------------------- Secretary and Director
Stephen Frey (Principal Operating Officer)
/s/Margaret Krumholz Chief Financial Officer and Senior
- -------------------- Vice President of Finance
Margaret Krumholz (Financial Officer and Principal
Accounting Officer)
/s/John Rebecchi Senior Vice President of Sales and
- -------------------- Marketing and Director
John Rebecchi
/s/Frank A. Bress Vice President for Legal Affairs and
- ----------------- General Counsel
Frank A. Bress
/s/Daniel Levinson* Director
- --------------------
Daniel Levinson
/s/Seymour W. Zises* Director
- --------------------
Seymour W. Zises
/s/Mark L. Friedman* Director
- --------------------
Mark L. Friedman
By: /s/ Margaret M. Krumholz
- ----------------------------
Margaret M. Krumholz
Attorney-in-fact
granted in the Company's Annual
Report on Form 10-K, as filed on
March 7, 2000
