SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
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
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: 0-25590
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
------- -------
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. ( )
Aggregate market value of the voting stock held by non-affiliates of
the Registrant as of March 20, 1998: $302,339,223.
Number of shares of Common Stock outstanding as of March 20, 1998:
18,981,777.
PART III.
Item 10. Directors and Executive Officers of the Registrant.
Director Nominees Biographical Information
Set forth below is certain biographical information furnished to the
Company by its directors, including Richard T. Brock and Ira D. Cohen, the
director nominees for the Company's Class II directorships to be elected at
the Company's 1998 Annual Meeting of Stockholders on June 12, 1998, with a
term expiring in the year 2001. Messrs. Brock and Cohen currently serve as
directors of the Company.
RICHARD T. BROCK
Age: 50
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: 46
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.
Biographical Information Concerning Other Directors
LARRY G. BLACKWELL
Age: 57
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. Dr. Blackwell has been a member of the Board of Directors
of Emergent Group, Inc. since 1997.
JOHN M. STERLING, JR.
Age: 60
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 that relationship. Mr.
Sterling is the father of John M. Sterling, III, an executive officer of the
Company.
KENNETH D. TRACY
Age: 55
Class I Director - Term Expires 2000
Dr. Kenneth D. Tracy has served as a director of the Company since
1990. He currently serves as Vice President-Environmental Technology for
Warner-Lambert Company, a position he has held since February 1991. From
1984 to 1991, he held positions of increasing responsibility with Air
Products and Chemicals, Inc., including Director of Research from January
1990 to February 1991. Prior to joining Air Products, Dr. Tracy was a
principal in the EDI Technology Companies, where he was involved with process
engineering consulting as well as software design and sales. Dr. Tracy holds
B.S. and Master of Science degrees in engineering from Penn State University
and a Ph.D. in Environmental Systems Engineering from Clemson University.
Additional Information Concerning The Board Of Directors
The Company's Board of Directors held five meetings during fiscal
1997. During fiscal 1997, 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 1997, 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 one meeting in fiscal 1997.
Compensation of Directors. The Company's Board of Directors is
comprised of five members. In fiscal 1997, non-management directors received
an annual retainer of $7,000 and were 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, on January 1 of each year, for an automatic grant
of options to purchase shares of Common Stock to non-management directors.
During 1997, the automatic grant of options to purchase shares was increased
from 1,000 to 2,000 shares.
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
Vice President of Development and
Chief Technology Officer
Age: 42
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
Chief Financial Officer
Age: 45
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.
JOHN M. STERLING, III
Managing Director of European Operations
Age: 36
From February 1997 to the present, Mr. Sterling has served as the
Company's Managing Director of European Operations. Mr. Sterling also served
as the Company's Vice President of Sales from 1989 to January 1997. 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
1997 with all applicable Section 16(a) filing requirements, except for a Form
4 for Mr. J. Fury Christ for the month of April 1997. Such Form 4 was filed
to report the purchase of 7,500 shares of Common Stock by Mr. Christ in that
month and, due to an administrative oversight, was filed one month after the
deadline for filing such form.
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 1997, the
Compensation Committee did not include any member of the Board of Directors
who at that time served as an officer or employee of, or a consultant to, 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 the Company's executive officers and recommendations
concerning proposed adjustments to their compensation. During fiscal 1997,
Mr. Blackwell served as a member of the Board of Directors of Emergent Group,
for which Mr. Sterling serves as Chairman of the Board of Directors and Chief
Executive Officer.
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, Vice President of European Operations
and Vice President of Development during fiscal 1997 (the "Named Executive
Officers"). No other executive officer earned more than $100,000 during
fiscal 1997.
Long-Term
Compensation
------------
Annual Compensation Securities
------------------- Underlying
Options All
Name and Principal Other Annual (# of Other
Position(s) Year Salary Bonus Compensation Shares) Compensation
- ----------- ---- ------ ----- ------------ ------- ------------
Larry G. Blackwell,
Chairman 1997 $186,851(1) -- -- 34,000 $4,750(2)
President and 1996 $176,024(1) -- -- -- $4,750(2)
Chief Executive 1995 $168,000(1) $24,000 -- 114,000 $5,544(2)
Officer
John M. Sterling III
Vice President 1997 $103,600(3) -- -- 34,000 $3,528(2)
of European 1996 $97,683(3) -- -- -- $2,930(2)
Operations 1995 $86,378(3) $20,000 -- 100,000 $3,173(2)
Mr. John F. Christ
Vice President 1997 $102,900(4) -- -- 34,000 $3,296(2)
of Development 1996 $92,042(4) -- -- -- $2,761(2)
1995 $80,529(4) $12,000 -- 100,000 $2,776(2)
(1) Includes $9,500 (1996: $9,500; 1995: $9,240) deferred at the election
of Mr. Blackwell pursuant to the Company's 401(k). Mr. Blackwell's
current annual salary is $203,004.
(2) Reflects matching contributions to the Company's 401(k) paid by the
Company on behalf of the executive officer.
(3) Includes $8,288 (1996: $5,997; 1995: $8,461) deferred at the election
of Mr. Sterling pursuant to the Company's 401(k). Mr. Sterling's current
annual salary is $115,000.
(4) Includes $7,203 (1996: $4,749; $1995: $6,477) deferred at the
election of Mr. Christ pursuant to the Company's 401(k). Mr. Christ's
current annual salary is $115,000.
<PAGE>
TABLE II -- Option/SAR Grants in Fiscal 1997
This table presents information regarding options granted to the
Company's Named Executive Officers during fiscal 1997 to purchase shares of
the Company's Common Stock. The Company has no outstanding stock
appreciation rights (SARs) and granted no SARs during fiscal 1997. In
accordance with SEC rules, the table shows the hypothetical gains or option
spreads that would exist for the respective options based on assumed rates of
annual compound stock price growth of 5% and 10% from the date the options
were granted over the full option term.
Individual Grants
-------------------------------------------
% of Potential
Total Realizable
Options Value at Assumed
Number of Granted Annual Rates of
Securities to Stock
Underlying Employees Exercise Price Appreciation
Options in or for the Option Term
Granted Fiscal Base Price Expiration 5% 10%
Name (#) Year ($/Share) Date ($) ($)
- ----------------- -------- -------- ---------- --------- -------- --------
Mr. Blackwell.... 7,992 0.48% $8.32 5/5/02 18,371 40,595
6,008 0.36% $7.57 5/5/07 28,602 72,484
5,106 0.31% $9.21 7/1/02 12,992 28,710
14,894 0.90% $8.38 7/1/07 78,493 198,918
------ -----
34,000 2.05%
Mr. Christ....... 14,000 0.85% $7.56 5/5/07 66,562 168,682
20,000 1.21% $8.38 7/1/07 105,403 267,111
------ -----
34,000 2.06%
Mr. Sterling..... 14,000 0.85% $7.56 5/5/07 66,562 168,682
20,000 1.21% $8.38 7/1/07 105,403 267,111
------ -----
34,000 2.06%
<PAGE>
TABLE III -- Option Exercises in Fiscal 1997
and Fiscal 1997 Year-End Option Values
The following table shows the number of options exercised during the
1997 fiscal year and the number of shares of Common Stock subject to
exercisable and unexercisable stock options held by the Company's Named
Executive Officers as of December 31, 1997. The table also reflects the
values of such options based on the positive spread between the exercise
price of such options and $15.50, which was the closing sales price of a
share of Common Stock reported on the Nasdaq National Market as of December
31, 1997 (the last trading day prior to the end of the Company's fiscal year).
Number of Securities
Shares Underlying Value of Unexercised
Acquired on Value Unexercised In-the-Money Options
Exercise Realized Options at Year-End(#) at Year-End(1) ($)
Name (#) ($) ExercisableUnexercisable ExercisableUnexercisable
---- --- --- ----------- ------------ ----------- ------------
Mr.Blackwell -- -- 47,086 100,914 $494,541 $962,485
Mr. Christ -- -- 40,000 67,334 $394,135 $607,299
Mr. Sterling -- -- 66,665 67,335 $707,455 $607,305
(1) The value of unexercised in-the-money options at December 31, 1997 is
calculated as follows: [(Per Share Closing Sales Price on December 31,
1997) - (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, 1997 was
$15.50 per share.
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 Named Executive Officers and (iv) all directors and executive officers of
the Company as a group. Such information is provided as of April 1, 1998.
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
of
Beneficial Percent
Name of Beneficial Owner Ownership of Class
- --------------------------------------------------------------------------------
Larry G. Blackwell........................ 3,466,900(1) 18.4%
John M. Sterling, III..................... 498,208(2) 2.6%
John F. Christ............................ 79,530(3) *
John M. Sterling, Jr...................... 141,072(4) *
Richard T. Brock.......................... 16,000(5) *
Kenneth D. Tracy.......................... 14,000(6) *
Ira D. Cohen.............................. 3,000(7) *
All current directors and
executive officers as a
group (8 persons)....................... 4,285,386(8) 22.4%
(1) Includes 67,086 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998. Mr. Blackwell's address is that
of the Company.
(2) Includes 93,332 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998.
(3) Includes 71,334 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998.
(4) Includes 12,000 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998.
(5) Includes 12,000 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998.
(6) Includes 12,000 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998 and 2,000 shares of Common Stock
to which Mr. Tracy shares voting and investment power with his spouse.
(7) Represents 3,000 shares of Common Stock subject to options exercisable
on or within 60 days after April 1, 1998.
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.
By: /s/ Daniel H. Christie
Daniel H. Christie
Chief Financial Officer
Date: April 16, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons in the capacities
indicated on the 16'th day of April, 1998.
Signature Title
* Chairman of the Board, President and
Larry Blackwell Chief Executive Officer
(principal executive officer)
/s/ Daniel H. Christie Chief Financial Officer
Daniel H. Christie (principal financial and accounting
officer)
* Director
Kenneth D. Tracy
* Director
Richard T. Brock
* Director
John M. Sterling, Jr.
* Director
Ira D. Cohen
*By: /s/ DANIEL H. CHRISTIE
Daniel H. Christie
Attorney-in-Fact
