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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JANUARY 1, 1999
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
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COMMISSION FILE NUMBER 000-24124
FRESH AMERICA CORP.
(Exact name of registrant as specified in its charter)
TEXAS 76-0281274
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6600 LBJ FREEWAY, SUITE 180, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (972) 774-0575
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on which
Title of each class registered:
---------------------------- ------------------------------
Common Stock, $.01 Par Value Nasdaq Stock Market
Securities registered pursuant to Section 12(g) of the Act: NONE.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Based on the closing price reported on the Nasdaq National Market on March
11, 1999, the aggregate market value of the voting stock held by non-affiliates
of the registrant as of such date was approximately $91 million.
Indicated below is the number of shares outstanding of each class of the
registrant's Common Stock, as of March 11, 1999:
TITLE OF EACH CLASS OF COMMON STOCK NUMBER OF OUTSTANDING
----------------------------------- ---------------------
Common Stock, $.01 par value 5,239,051
DOCUMENTS INCORPORATED BY REFERENCE
None.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information concerning the
executive officers and directors of the Company as of March 11, 1999.
NAME AGE POSITION WITH THE COMPANY
David I. Sheinfeld 44 Chairman of the Board and Chief Executive
Officer
Steve R. Grinstead 40 President, Chief Operating Officer and Director
John H. Gray 49 Executive Vice President and Chief Financial
Officer
Edward Sabin 51 Executive Vice President
Thomas M. Hubbard 56 Director
Sheldon I. Stein 45 Director
Colon Washburn 53 Director
Lawrence V. Jackson 45 Director
DAVID I. SHEINFELD. Mr. Sheinfeld joined the Company in June 1990 and
joined its Board of Directors in March 1991. In 1992, Mr. Sheinfeld became
Chairman of the Board and Chief Executive Officer of the Company.
STEVE R. GRINSTEAD. Mr. Grinstead joined the Company in January 1992 and
was named President, Chief Operating Officer and a director of the Company in
May 1992. Mr. Grinstead is active in produce industry associations and was
previously President of the Houston Fresh Fruit and Vegetable Association.
EDWARD SABIN. Mr. Sabin joined the Company in May 1997 as Executive Vice
President. Mr. Sabin has worked in the produce industry for over 28 years. He
has held various positions in sales, marketing and management, including senior
executive positions with Chiquita Brands and Del Monte Fresh. Mr. Sabin also
served as Chief Operating Officer of Cincinnati-based wholesaler Caruso, Inc.
Prior to joining the Company, Mr. Sabin was principal of his own firm providing
consulting services to the produce industry.
JOHN H. GRAY. Mr. Gray joined the Company in September 1998 as Executive
Vice President and Chief Financial Officer. Prior to joining Fresh America, Mr.
Gray was the Chief Accounting Officer and Chief Administrative Officer of Club
Corporation International (CCI), a privately held company, and also served on
CCI's Board of Directors. Prior to joining CCI, Mr. Gray was the
Controller/Treasurer for USLife Title Insurance Company and Supervising Senior
Accountant with KPMG Peat Marwick.
THOMAS M. HUBBARD. Mr. Hubbard, a founder of the Company, has been a
director since 1989 and served as the Company's President until April 1992. Mr.
Hubbard has worked in the produce industry for more than 30 years and is an
active investor in a number of produce companies, including Pacific Fresh
Marketing, Inc., which harvests, packs and markets fresh vegetables in the
southwestern United States and central Mexico.
SHELDON I. STEIN. Mr. Stein has been a director of the Company since
December 1992. Mr. Stein is a Senior Managing Director of Bear, Stearns & Co.
Inc. and heads the firm's southwestern investment banking operations. Mr. Stein
serves as a director of five other companies with publicly traded securities,
namely The Mens Wearhouse, Tandycrafts, Inc., First Plus Financial Group,
Cellstar Corp. and Precept Business Services, Inc.
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COLON WASHBURN. Mr. Washburn has been a director of the Company since July
1993. From 1971 until January 1993, Mr. Washburn was employed by Wal-Mart
Stores, Inc. ("Wal-Mart"), where he served most recently as Executive Vice
President of Wal-Mart and also as Senior Vice President of Sam's Wholesale Club,
a division of Wal-Mart. Since February 1993, Mr. Washburn has been President of
Beau Chene Farms, a real estate development company.
LAWRENCE V. JACKSON. Mr. Jackson has been a director of the Company since
September 1997. Mr. Jackson is a Senior Vice President with Safeway, Inc. Prior
to joining Safeway, Mr. Jackson was a Senior Vice President with PepsiCo, Inc.
During Mr. Jackson's 17 years with PepsiCo, he held a number of positions with
the beverage and food service sectors, including that of Senior Vice President
of Worldwide Operations.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's executive officers and directors and persons who
own more than ten percent (10%) of a registered class of the Company's equity
securities (collectively, the "Reporting Persons") to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of these reports. The Company believes that all
filings required to be made by the Reporting Persons during the fiscal year
ended January 1, 1999 were made on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the last three fiscal years to the Company's chief executive
officer and each of the Company's other executive officers (the "named executive
officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SHARES
NAME AND ------------------------------ UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OTHER OPTIONS COMPENSATION(1)
------------------ ---- -------- ------- ------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
David I. Sheinfeld ................................. 1998 $298,819 $50,000 $ -- 20,000 $ 4,800
Chairman of the Board and 1997 250,230 90,000 -- -- 4,750
Chief Executive Officer 1996 187,500 90,000 54,000(2) 20,000 2,885
Steve R. Grinstead ................................. 1998 $194,327 $25,000 $ -- 12,500 $ 4,800
President and Chief 1997 175,000 45,000 -- -- 4,750
Operating Officer 1996 145,000 45,000 -- 15,000 4,750
Robert C. Kiehnle(3) ............................... 1998 $158,462 $ -- $ -- -- $ 4,800
Executive Vice President and 1997 150,000 25,000 -- -- 1,431
Chief Financial Officer 1996 37,760 20,000 -- 25,000 --
Edward Sabin(4) .................................... 1998 $188,077 $ 5,000 -- -- $ 3,000
Executive Vice President 1997 $107,692 $45,000 $ -- 7,500 $ --
</TABLE>
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(1) These amounts consist of contributions by the Company to a 401(k) plan on
behalf of the named executive.
(2) This amount includes payments of $45,600 for a housing allowance and
$8,400 for an automobile allowance.
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(3) Effective October 1998, Mr. Kiehnle resigned as Executive Vice President
and Chief Financial Officer. John Gray was employed by the Company in
September 1998 to serve in the capacity as Executive Vice President and
Chief Financial Officer.
(4) Edward Sabin was employed by the Company in May 1997 to serve in the
capacity as Executive Vice President.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning options to
purchase Common Stock by the named executive officers during the 1998 fiscal
year under the 1996 Fresh America Corp. Stock Option and Award Plan as amended
and restated effective May 22, 1998 (the "1996 Plan").
<TABLE>
<CAPTION>
POTENTIAL
PERCENT REALIZABLE VALUE
NUMBER OF OF TOTAL AT ASSUMED ANNUAL
SECURITIES OPTIONS RATE OF
UNDERLYING GRANTED TO STOCK PRICE
OPTIONS EMPLOYEES EXERCISE EXPIRATION APPRECIATION
NAME GRANTED IN 1998 PRICE DATE FOR OPTION TERM (1)
-------------------
5% 10%
- -------------------- ---------- ---------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
David Sheinfeld .... 20,000 34.2% $ 17.25 2/25/2008 $216,969 $549,841
Steve R. Grinstead . 12,500 21.4% $ 17.25 2/25/2008 $162,726 $412,381
</TABLE>
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(1) The "Potential Realizable Value" portion of the table illustrates value
that might be realized upon the exercise of the options immediately prior
to the expiration of their term, assuming the specified compounded rates
of appreciation of the Common Stock over the term of the options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information related to options
exercised by the named executive officers during the 1998 fiscal year and the
number and value of options held at fiscal year end.
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT JANUARY 1,
JANUARY 1, 1999 1999(1)
SHARES --------------- -------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
----------- -------- --------------- -------------
David I. Sheinfeld ... 11,388 $155,240 57,537/20,000 $459,669/$--
Steve R. Grinstead ... -- -- 54,993/12,500 $503,408/$--
Robert C. Kiehnle .... -- -- 25,000/-- $--/$--
Edward Sabin ......... -- -- 7,500/-- $20,625/$--
- ------------------
------------------
(1) The value indicated is the amount by which the market value of the
underlying stock on the last trading day of fiscal 1998 ($16.75 per share)
exceeded the aggregate exercise price of the options.
COMPENSATION OF DIRECTORS
The Company's non-employee directors receive cash compensation of $10,000
per year for serving on the Board of Directors and are reimbursed for expenses
reasonably incurred in connection with their services as directors.
Each director is eligible to receive stock options and awards under the
1996 Plan. Pursuant to the 1996 Plan, options to purchase 5,000 shares are
automatically granted annually to each director who is not an officer or
employee of the Company. Such automatic option grants are exercisable at fair
market value
4
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on the date of grant. Pursuant to this provision, on August 7, 1998, each of
Messrs. Hubbard, Stein, Washburn and Jackson received options to purchase 5,000
shares of Common Stock at $19.88 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Stein and Washburn serve on the Compensation Committee of the
Board of Directors. No Compensation Committee interlocks existed in fiscal 1998,
and no insiders participated in Compensation Committee decisions in fiscal 1998.
COMPENSATION COMMITTEE'S REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee was formed in April 1994 in anticipation of the
Company's initial public offering. Prior to the establishment of the
Compensation Committee, the entire Board of Directors was responsible for
determining executive compensation. Since its formation, the Compensation
Committee has been responsible for recommending bonuses and any increase in base
salaries for the Company's executive officers.
The Compensation Committee believes that, in order for the Company to
succeed, it must be able to attract and retain qualified executive officers. In
determining the type and amount of executive officer compensation, the
objectives of the Compensation Committee are to provide levels of base
compensation, bonuses and long-term incentives (in the form of stock options or
other plans) that will attract and retain talented executive officers and align
their interests with the success of the Company. The Company's executive officer
compensation program currently is comprised of base salary, bonus plan,
long-term incentive compensation (in the form of stock options) and various
benefits generally available to employees of the Company (such as health and
disability insurance). Under the supervision of the Compensation Committee and
the Board of Directors, the Company has developed and implemented compensation
policies, plans and programs that seek to enhance the profitability of the
Company and increase shareholder value.
BASE SALARIES
The Company's policy is to maintain base salaries competitive with
salaries paid to similarly situated executive officers of companies of similar
size in comparable industries. Although neither the Board of Directors nor the
Compensation Committee has conducted a formal review of base salaries paid to
similarly situated executive officers, the Company believes that the base
salaries payable to its executive officers are comparable to those paid by
similar companies located in the Company's geographical area and engaged in
industries comparable to the Company's. The Compensation Committee anticipates
that adjustments to base compensation will generally be made based upon assigned
responsibility and performance and successful attainment of specific goals and
objectives of the Company and individual employees. For fiscal 1998, the
Compensation Committee recommended increases in the minimum levels of base
compensation payable to the Company's executive officers.
BONUSES
Year-end cash bonuses are designed to motivate the Company's executive
officers to achieve specific annual financial goals and to achieve favorable
returns for the Company's shareholders. At the end of each fiscal year, the
Compensation Committee will assess each executive's contributions to the Company
as well as the degree to which specific annual financial, strategic, and
operating objectives were met by the Company. For fiscal 1998, the Compensation
Committee granted cash bonuses of $85,000 to the Company's executive officers.
5
<PAGE>
LONG-TERM INCENTIVES
Stock option grants under the Company's stock option plans form the basis
of the Company's long-term incentive compensation for executive officers and
employees. The specific objective of the Company's stock option plans is to
align the long-term interests of the Company's executive officers and employees
with those of shareholders by creating a strong link between executive pay and
shareholder returns. The Company encourages its executive officers and employees
to develop and maintain a significant, long-term stock ownership position in the
Company's Common Stock. Stock options are awarded to executive officers and
employees in order to encourage future management actions aimed at improving the
Company's sales efforts, product quality and profitability. The Company believes
that success in these endeavors will increase the value of the Company's Common
Stock for shareholders. Recipients of options will have the opportunity to share
in the increased value that results from their efforts. The Plan Administration
Committee makes specific awards of options based on an individual's ability to
impact Company-wide performance and in light of the total compensation
appropriate for the individual's position. The Compensation Committee and the
Plan Administration Committee may also consider other bonus or long-term
incentives in their discretion.
CHIEF EXECUTIVE OFFICER COMPENSATION
In approving Mr. Sheinfeld's compensation, the Board of Directors
evaluated and compared Mr. Sheinfeld's duties, responsibilities and performance
results, and the overall results of the Company, to industry norms to determine
the minimum level of base compensation required. The Compensation Committee
recommended a cash bonus of $50,000 for fiscal 1998.
This Report is submitted by the members of the Compensation Committee of
the Board of Directors.
Sheldon I. Stein
Colon Washburn
THIS REPORT WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE IN ANY
FILING BY THE COMPANY UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO THE EXTENT THAT THE COMPANY
SPECIFICALLY INCORPORATES THIS REPORT BY REFERENCE.
CORPORATE PERFORMANCE GRAPH
The following graph compares the cumulative total return of the Company's
Common Stock during the period commencing May 26, 1994, the date public trading
of the Common Stock began following the Company's initial public equity
offering, to January 1, 1999, with the Nasdaq Market Index and an index of
companies within the Standard Industrial Code for Groceries and Related Products
(the "Peer Index").
6
<PAGE>
The graph depicts the results of investing $100 in the Company's Common
Stock, the Nasdaq Market Index and the Peer Index at closing prices on May 26,
1994. The graph assumes that all dividends were reinvested.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
05/26/94 1994 1995 1996 1997 1998
-------- ------ ------ ------ ------ ------
FRESH AMERICA CORP ..... 100.00 87.50 119.12 195.59 236.03 197.06
SIC CODE INDEX ......... 100.00 93.59 121.49 123.57 165.05 186.10
NASDAQ MARKET INDEX .... 100.00 101.30 131.40 163.29 199.73 281.71
THE STOCK PRICE PERFORMANCE DEPICTED IN THE CORPORATE PERFORMANCE GRAPH IS
NOT NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE. THE CORPORATE
PERFORMANCE GRAPH WILL NOT BE DEEMED TO BE INCORPORATED BY REFERENCE IN ANY
FILING BY THE COMPANY UNDER THE SECURITIES ACT OR THE EXCHANGE ACT.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information believed by the Company
to be accurate based on information provided to it concerning the beneficial
ownership of Common Stock by (a) each shareholder who is known by the Company to
own beneficially in excess of 5% of the outstanding Common Stock, (b) each
director, (c) the Company's Chief Executive Officer, (d) each of the Company's
other named executive officers and (e) all executive officers and directors as a
group, as of March 11, 1999.
7
<PAGE>
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER OF COMMON STOCK(1) CLASS(2)
---------------- ------------------ ----------
David I. Sheinfeld (3)(4)............. 544,574 9.94%
Thomas M. Hubbard (3)(5).............. 509,432 9.30%
Steve R. Grinstead (3)(6)............. 115,667 2.11%
Colon Washburn (3)(7)................. 40,135 *
Sheldon I. Stein (3)(8)............... 34,813 *
Edward Sabin (9)...................... 7,500 *
Lawrence V. Jackson (3)(10)........... 6,000 *
John H. Gray ......................... -- --
Paine Webber Group, Inc. (9) 279,123 5.09%
All directors and executive officers
as a group (8 persons) (10)........ 1,258,121 22.96%
- -----------------
*less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Except as indicated in the footnotes
to this table and subject to community property laws, where applicable,
each of the shareholders named in this table has sole voting and
investment power with respect to the shares shown as beneficially owned,
unless otherwise indicated.
(2) Percentages are based on the total number of shares outstanding at March
11, 1999, plus the total number of outstanding options held by each such
person that are exercisable within 60 days of such date and securities
exchangeable into Common Stock within 60 days of such date. Shares
issuable upon exercise of outstanding options or through the conversion of
securities exchangeable into Common Stock, however, are not deemed
outstanding for purposes of computing the percentage ownership of any
other person.
(3) Director of the Company.
(4) Consists of 347,037 shares held of record by David I. Sheinfeld, as
trustee of the Sheinfeld Family Trust, 120,000 shares held of record by
the Sheinfeld Family Partnership and 77,537 shares subject to options
issued to Mr. Sheinfeld under the Company's stock option plans that are
exercisable within 60 days. Mr. Sheinfeld's address is c/o Fresh America
Corp. at 6600 LBJ Freeway, Suite 180, Dallas, Texas 75240.
(5) Includes 25,000 shares subject to options issued to Mr. Hubbard under the
Company's stock option plans that are exercisable within 60 days. Mr.
Hubbard's address is 740 Airport Blvd., Salinas, California 93912.
(6) Includes 67,493 shares subject to options issued to Mr. Grinstead under
the Company's stock option plans that are exercisable within 60 days and
800 shares owned by Mr. Grinstead for the benefit of his minor children.
(7) Includes 30,753 shares subject to options issued to Mr. Washburn under the
Company's stock option plans that are exercisable within 60 days.
(8) Includes 27,813 shares subject to options issued to Mr. Stein under the
Company's stock option plans that are exercisable within 60 days.
8
<PAGE>
(9) Includes 7,500 shares subject to options issued to Mr. Sabin under the
Company's stock option plans that are exercisable within 60 days.
(10) Includes 5,000 shares subject to options issued to Mr. Jackson under the
Company's stock option plans that are exercisable within 60 days.
(11) Based on information set forth in Schedule 13G, dated February 12, 1999,
filed with the Securities and Exchange Commission (the "Commission") by
Paine Webber Group, Inc. includes 71,200 shares held by Mitchell Hutchins
Institutional Investors, Inc. and 207,923 shares held by Mitchell Hutchins
Asset Management Inc., both of which are an indirect, wholly owned
subsidiary of Paine Webber Group, Inc. Paine Webber Group, Inc. has sole
voting power with regards to 267,123 of the above shares.
(12) Includes 241,096 shares subject to options issued to certain directors and
executive officers of the Company that are exercisable within 60 days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
9
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SIGNATURES
Pursuant to the requirements 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.
FRESH AMERICA CORP.
Date: April 29, 1999 By: /S/ JOHN H. GRAY
John H. Gray
Executive Vice President and Chief
Financial Officer
(Principal Financial Officer)
10
