SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment no. 2)
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996.
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission File Number: 0-25590
Datastream Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 57-0813674
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 Datastream Plaza, Greenville, South Carolina 29605
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 422-5001
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
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No o
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 the 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. o
Aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 31, 1997: $138,057,651
Number of shares of Common Stock outstanding as of March 31, 1997:
9,151,095
<PAGE>
PART III.
Item 10. Directors and Executive Officers of the Registrant.
Director Nominee Biographical Information
Set forth below is certain biographical information furnished to the
Company by its directors, including Kenneth D. Tracy, the director nominee for
the Company's Class I directorship, to be elected at the Company's 1997 Annual
Meeting of Stockholders on June 13, 1997, with a term expiring in the year 2000.
Dr. Tracy currently serves as a director of the Company.
KENNETH D. TRACY
Age: 54
Kenneth D. Tracy has served as a director of the Company since 1990. Mr.
Tracy currently serves as Vice President-Environmental Technology for
Warner-Lambert Company, a position he has held since February 1991. From January
1990 until February 1991, he was the Director of Research for Air Products &
Chemicals, Inc.
Biographical Information Concerning Other Directors
LARRY G. BLACKWELL
Age: 56
Class III Director - Term Expires 1999
Dr. Blackwell, the founder of the Company, has served as Chairman of
the Board, Chief Executive Officer and President of the Company from its
inception in 1986 until the present. Prior to founding the Company, he was
President of the Datastream Systems Division of a subsidiary of Wisconsin
Power & Light. He also co-founded and formerly served as Chairman of the
Board of EDI Technology Companies, an environmental process engineering
consulting company. Dr. Blackwell holds a B.S. degree in Engineering from the
University of Mississippi, a Master of Science degree from The Georgia
Institute of Technology and a Ph.D. in Environmental Systems Engineering from
Clemson University. Dr. Blackwell is a registered Professional Engineer in
Illinois, Pennsylvania and South Carolina and was named Inc. magazine's 1994
"Entrepreneur of the Year" in the Master Entrepreneur category for the State
of South Carolina.
RICHARD T. BROCK
Age: 49
Class II Director - Term Expires 1998
Mr. Brock has served as a director of the Company since August 1993. In
1984, Mr. Brock founded Brock International, Inc. ("Brock International"), a
publicly-held provider of sales and marketing automation software, for which
he has served in various capacities, including Chairman of the Board, Chief
Executive Officer and President, since 1984. Currently, he serves as the
Chairman of the Board of Brock International. He also founded and formerly
served as Chief Executive Officer of Management Control Systems, Inc. Mr.
Brock is a nationally-recognized developer, author and speaker on sales,
marketing and service automation and business development strategy.
IRA D. COHEN
Age: 45
Class II Director - Term Expires 1998
Mr. Cohen has been a director of the Company since February 1995. Since
1988, Mr. Cohen has served as the Managing Director of Updata Group, Inc., an
investment banking firm focused on mergers and acquisitions in the
information technology industry. Mr. Cohen founded Updata Software, Inc., and
from 1986 to 1988 served as that Company's Chief Financial Officer. Mr. Cohen
is also a director of Computer Learning Centers, Inc.
JOHN M. STERLING, JR.
Age: 59
Class III Director - Term Expires 1999
Mr. Sterling has served as a director of the Company since February
1986. He has also served as the Chairman of the Board of Directors and Chief
Executive Officer of Emergent Group, Inc. ("Emergent Group") since December
1990 and served as President of Emergent Group from December 1990 to August
1996. Mr. Sterling has also served as President of Palmetto Seed Capital
Corp. from September 1993 to the present and served as a General Partner of
Reedy River Ventures Limited Partnership ("Reedy River") from 1981 until
August 1995. Reedy River provided venture capital financing to the Company
to fund its early development, and Mr. Sterling originally served on the
Board of Directors of the Company pursuant to this relationship. Mr.
Sterling is the father of John M. Sterling, III, an executive officer of the
company.
<PAGE>
Additional Information Concerning The Board Of Directors
The Company's Board of Directors held seven meetings during fiscal 1996.
During fiscal 1996, the Board had an Audit Committee and a Compensation
Committee, but did not have a Nominating Committee. No director attended less
than 75% of the aggregate number of meetings of the Board and the committees of
the Board on which he served that were held during his term as a director of the
Company.
Committees of the Board of Directors. In connection with its initial
public offering in March 1995, the Company established an Audit Committee and a
Compensation Committee. The Audit Committee is responsible for reviewing and
making recommendations regarding the Company's employment of independent
auditors, the annual audit of the Company's financial statements and the
Company's internal accounting practices and policies. It consists of Messrs.
Cohen (Chairman), Sterling and Tracy. In fiscal 1996, the Audit Committee held
one meeting.
The Compensation Committee is responsible for making recommendations to
the Board of Directors regarding compensation arrangements for senior management
of the Company (including annual bonus compensation), recommendations concerning
the adoption of any compensation plans in which management is eligible to
participate and grants of stock options or other benefits under such plans. It
consists of Messrs. Brock (Chairman), Sterling and Tracy. The Compensation
Committee held two meetings in fiscal 1996.
Compensation of Directors. The Company's Board of Directors is comprised
of five members. In fiscal 1996, non-management directors received an annual
retainer of $6,000 and a fee of $1,000 for each day on which they attended a
board or committee meeting. All directors are reimbursed for expenses incurred
in connection with attendance at meetings of the Board of Directors or
committees thereof. The Company also has adopted a Stock Option Plan for
Directors, which provides for automatic grants of options to purchase Common
Stock to non-management directors.
Executive Officers
The executive officers of the Company serve at the discretion of the
Board of Directors and presently include Mr. Blackwell, John Fury Christ,
Daniel H. Christie and John M. Sterling, III. See "Biographical Information
Concerning Other Directors" for information about Mr. Blackwell.
JOHN FURY CHRIST
Age: 41
Dr. Christ served as Manager of Development of the Company from May
1992 to December 1994, and has held the position of Vice President of
Development since December 1994. In January 1997 Dr. Christ was named Chief
Technology Officer of the Company. Prior to joining the Company on a full-time
basis, Dr. Christ served as President of Positech, Inc. from January 1990 to
May 1992. During this period, Positech was awarded a Small Business
Innovative Research Contract for the application of neural networks in
support of the U.S. Government's Strategic Defense Initiative. From 1988 to
1990, Dr. Christ provided contract software development services to the Company.
Dr. Christ holds B.S. and Master of Science degrees in Electrical and Computer
Engineering, and a Ph. D. in Computer Science, all from Clemson University.
DANIEL H. CHRISTIE
Age: 44
Mr. Christie served as Controller of the Company from July 1993 to
December 1994, and has held the position of Chief Financial Officer since
December 1994. Prior to joining the Company, from 1991 to 1993, Mr. Christie
served as Group Finance Manager for Digital Equipment Corporation. From 1989
to 1991, Mr. Christie also served as Digital Equipment's PWB Group Cost and
Budgets Manager and the Plant Controller for Digital Equipment's Printed
Wiring Board Advanced Technology Center in Greenville, South Carolina. He
presently serves as a director and as the President and Treasurer of
Vaughn-Russell Candy Co. Mr. Christie holds an A.B. degree in Economics from
Colgate University and an M.B.A. in Accounting/International Finance from
Cornell University.
<PAGE>
JOHN M. STERLING, III
Age: 35
From February 1997 to the present, Mr. Sterling has served as the Company's
Managing Director of European Operations, overseeing the operations of SQL
Systems Group, B.V., a wholly-owned subsidiary of Datastream Systems, Inc. based
in Rotterdam, Holland. Mr. Sterling also served as the Company's Vice President
of Sales from 1989 to January 1997 and held the position of Director of Sales
and Marketing from 1986 to 1989. Prior to joining Datastream, Mr. Sterling
was a Regional Sales Manager for Silicon Valley Products. Mr. Sterling holds
a B.S. degree in Political Science from The Citadel. Mr. Sterling is the son of
John M. Sterling, Jr., one of the Company's directors.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors, executive officers and persons who own
beneficially more than 10% of the Company's Common Stock to file reports of
ownership and changes in ownership of such stock with the Securities and
Exchange Commission (the "SEC") and the National Association of Securities
Dealers, Inc. Directors, executive officers and greater than 10% stockholders
are required by SEC regulations to furnish the Company with copies of all such
forms they file. To the Company's knowledge, based solely on a review of the
copies of such reports furnished to the Company and written representations that
no other reports were required, its directors, executive officers and greater
than 10% stockholders complied during fiscal 1996 with all applicable Section
16(a) filing requirements, except for Forms 5 for 1996 for Messrs. Brock,
Sterling (Jr.) and Tracy, which, due to an administrative oversight, were filed
shortly after the prescribed deadline for the filing of such form. The only
transactions reportable on such Forms 5 were automatic grants of options on
January 1, 1996 to purchase 500 shares of Common Stock of the Company to each of
Messrs. Brock, Sterling,(Jr.) and Tracy pursuant to the Company's Amended and
Restated Stock Option Plan for Directors.
<PAGE>
Item 11. Executive Compensation.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors is comprised of
Messrs. Brock, Sterling (Jr.) and Tracy. During fiscal 1996, the Compensation
Committee did not include any member of the Board of Directors who at that time
served as an officer or employee of the Company. The Company's Chief Executive
Officer, Mr. Blackwell, is not a member of the Compensation Committee, but
typically participates in its deliberations by making recommendations to the
Committee concerning the performance of theCompany's executive officers and
recommendations concerning proposed adjustments to their compensation. During
fiscal 1996, no executive officer of the Company served as a member of the board
of directors of anyentity which had executive officers who served on the
Company's Board of Directors during that year.
Executive Compensation Tables
Table I - Summary Compensation Table
The following table presents certain information required by the SEC
relating to various forms of compensation awarded to, earned by or paid to the
Company's Chief Executive Officer during fiscal 1996. No other executive officer
earned more than $100,000 during fiscal 1996.
Long-Term
Compensation
------------
Annual Compensation Securities
---------------------------------------
Underlying
Name and Options All
Principal Other Annual (# of Other
Position(s) Year Salary Bonus Compensation Shares) Compensation
- ----------- ---- ------ ----- ------------ ------- ------------
Larry G. Blackwell
Chairman, 1996 $167,024(1) -- -- -- $4,750(2)
President, and 1995 $168,000(3) $24,000 -- 57,000 $5,544(2)
Chief Executive 1994 $162,120(3) $15,000 $26,000(4) -- $4,620(2)
Officer
(1) Includes $9,500 deferred at the election of Mr. Blackwell pursuant to the
Company's 401(k) Retirement Plan ("401(k)"). Mr. Blackwell's current
salary is $175,700.
(2) Reflects matching contributions to the Company's 401(k) paid by the
Company on behalf of Mr. Blackwell.
(3) Includes $9,240 deferred at the election of Mr. Blackwell pursuant to the
Company's 401(k).
(4) Includes certain personal benefits, including (i) forgiveness of
indebtedness otherwise payable to the Company by Mr. Blackwell in the amount
of $16,120 and (ii) $9,880 representing the amount of taxes related to the
foregoing transaction for which the Company reimbursed Mr. Blackwell.
<PAGE>
Table II- Option/SAR Grants in Fiscal 1996
The Company did not grant any options or stock appreciation rights to Mr.
Blackwell in 1996.
Table III- Option Exercises in Fiscal 1996 and Fiscal 1996 Year-End Option
Values
Mr. Blackwell did not exercise any stock options during Fiscal 1996.
The following table shows the number of shares of Common Stock subject to
exercisable and unexercisable stock options held by the Company's Chief
Executive Officer as of December 31, 1996. The table also reflects the values of
such options based on the positive spread between the exercise price of such
options and $18.00, which was the closing sales price of a share of Common Stock
reported on the Nasdaq National Market on December 31, 1996 (the last trading
day prior to the end of the Company's fiscal year).
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options
Acquired Value Options at Year-End at Year-End(1)
on Exercise Realized (#) ($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------ ----------- -------------
Mr. Blackwell -- -- 11,771 45,229 $105,000 $420,000
(1) The value of unexercised in-the-money options at December 31, 1996 is
calculated as follows: [(Per Share Closing Sales Price on December 31, 1996)
(Per Share Exercise Price)] x Number of Shares Subject to Unexercised
Options. The closing sales price reported by the Nasdaq National Market of
the Company's Common Stock for December 31, 1996 was $18.00 per share.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information concerning (i) those persons
known by management of the Company to own beneficially more than 5% of the
Company's outstanding Common Stock, (ii) the directors of the Company, (iii) the
executive officer named in the Summary Compensation Table included elsewhere
herein and (iv) all directors and executive officers of the Company as a group.
Except as otherwise indicated in the footnotes below, such information is
provided as of April 28, 1997. According to rules adopted by the SEC, a person
is the "beneficial owner" of securities if he or she has or shares the power to
vote them or to direct their investment or has the right to acquire beneficial
ownership of such securities within 60 days through the exercise of an option,
warrant or right, the conversion of a security or otherwise. Except as otherwise
noted, the indicated owners have sole voting and investment power with respect
to shares beneficially owned. An asterisk in the percent of class column
indicates beneficial ownership of less than 1% of the outstanding Common Stock.
===============================================================================
Amount and Nature Percent
Name of Beneficial Owner of of Class
Beneficial
Ownership
===============================================================================
Executive Officers and Directors
Larry G. Blackwell.......................... 1,725,345(1) 18.8%
John M. Sterling, Jr........................ 54,006(2) *
Richard T. Brock............................ 7,000(2) *
Kenneth D. Tracy............................ 6,000(3) *
Ira D. Cohen................................ 500(4) *
All current directors and
executive officers as a
group (8 persons).......................... 2,059,839(5) 22.3%
Other Stockholders
Pilgrim Baxter & Associates(6).............. 544,600 6.1%
(1) Includes 21,771 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(2) Includes 5,000 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(3) Includes 5,000 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997; includes 1,000 shares of Common Stock
to which Mr. Tracy shares voting and investment power with his spouse.
(4) Represents 500 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(5) Includes 100,602 shares of Common Stock subject to options exercisable on or
within 60 days after April 28, 1997.
(6) The business address of Pilgrim Baxter & Associates is 1255 Drummers Lane,
Suite 300, Wayne, Pennsylvania 19087. The numbers reported were derived from
a Schedule 13G executed by Pilgrim Baxter & Associates on February 14, 1997
and filed with the Securities and Exchange Commission on March 19, 1997.
According to the Schedule 13G, the power to vote such shares is shared among
the following: Pilgrim Baxter & Associates, Harold J. Baxter and Gary L.
Pilgrim.
Item 13. Certain Relationships and Related Transactions.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Datastream Systems, Inc.
Date: April 30, 1997 By: /s/ Daniel H. Christie
-----------------------
Daniel H. Christie
Chief Financial Officer
