-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, SWeZNSUIF69HHr6ylOYpL/OO/xOWbLE8itEvKgye6uuAWpDKsseMj2QODuWWE9Vu RMmkq0u/ZwRHp7XPb7O0lg== 0000922632-95-000021.txt : 19950531 0000922632-95-000021.hdr.sgml : 19950531 ACCESSION NUMBER: 0000922632-95-000021 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950128 FILED AS OF DATE: 19950530 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAIRY MART CONVENIENCE STORES INC CENTRAL INDEX KEY: 0000721675 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CONVENIENCE STORES [5412] IRS NUMBER: 042497894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-12497 FILM NUMBER: 95543339 BUSINESS ADDRESS: STREET 1: ONE VISION DRIVE CITY: ENFIELD STATE: CT ZIP: 06082 BUSINESS PHONE: 2037414444 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K/A Amendment No. 1 (Mark one) X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 28, 1995 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 0-12497 DAIRY MART CONVENIENCE STORES, INC. (Exact name of registrant as specified in its charter) Delaware 04-2497894 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE VISION DRIVE, ENFIELD, CT 06082 (Address of principal executive offices) Registrant's telephone number, including area code (203) 741-4444 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange Title of each class on which registered None None Securities registered pursuant to Section 12(g) of the Act: Class A Common Stock (Par Value $.01) Class B Common Stock (Par Value $.01) (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 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. [ ] As of May 8, 1995, 2,782,109 shares of Class A Common Stock and 2,785,665 shares of Class B Common Stock were outstanding, and the aggregate market value of both classes of Common Stock outstanding of DAIRY MART CONVENIENCE STORES, INC., held by nonaffiliates was approximately $17,547,101.00. This Form 10-K/A Amendment No.1 amends the Form 10-K of Dairy Mart Convenience Stores, Inc. (the "Company") filed for the fiscal year ended January 28, 1995, as follows: (i) a subsection of Item 1 has been added entitled "Executive Officers and Directors of the Company," and Item 1 is filed in its entirety as amended; and (ii) the information required by Items 10, 11, 12 and 13 of Part III is no longer incorporated by reference from the Company's definitive proxy statement for its 1995 annual meeting of shareholders, as such proxy statement will not be filed within 120 days after the fiscal year ended January 28, 1995; the information required by such items is now set forth in full in Part III and is filed herewith. DOCUMENTS INCORPORATED BY REFERENCE NONE PART I ITEM 1. BUSINESS General Dairy Mart Convenience Stores, Inc., and its subsidiaries (the "Company" or "Dairy Mart"), was founded in 1957 and operates one of the nation's largest convenience store chains. As of the fiscal year ended January 28, 1995, the Company operated or franchised approximately 960 stores under the "Dairy Mart" name in 11 states located in the Northeast, Midwest and Southeast, of which 406 stores sold gasoline and 317 stores were franchised. Dairy Mart stores offer a wide range of products and services which cater to the convenience needs of its customers, including milk, ice cream, groceries, beverages, snack foods, candy, deli products, publications, health and beauty aids, tobacco products, lottery tickets and money orders. The stores are typically located in densely populated, suburban areas on sites which are easily accessible to customers and provide ample parking. Dairy Mart stores are generally free standing structures which are well-lit and are designed to encourage customers to purchase high profit margin products, such as deli items, coffee, fountain drinks and other fast food items. The Company's facilities in Enfield, Connecticut and Cuyahoga Falls, Ohio manufacture and process milk, fruit juices, and other non-carbonated beverages which are distributed to stores in the Northeast and the Midwest regions. The dairy plant in Ohio manufactures and distributes ice cream to most stores. In the Southeast region, the Company distributes dairy products, tobacco products, candy and certain other merchandise to stores in Kentucky and Indiana. However, subsequent to the end of fiscal 1995, the Company entered into agreements to sell its dairy manufacturing and distribution operations in both Connecticut and Ohio and announced its intention to sell its distribution center in Kentucky (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Strategic Initiatives-Dairy Manufacturing & Distribution Operations"). The Company is incorporated in Delaware and maintains its principal executive offices at One Vision Drive, Enfield, Connecticut 06082. The Company's telephone number is (203) 741-4444. Stores The Company's stores are generally located in densely populated suburban areas, and are situated close to single-family homes and apartments to attract neighborhood shoppers. Store location, design, lighting and layout are intended to cater to customers' desire for fast and convenient access. Approximately 400 locations also sell gasoline. Shelving and displays, including refrigeration units, deli and other fast food counters and displays, are designed to encourage customers to purchase high profit margin products including impulse purchase items such as candy, fountain drinks and ice cream novelties. Stores are located on sites which are well-lit, easily accessible by customers and provide ample parking. All of the Company's stores also offer extended hours for additional convenience, with over one-half of the stores open 24 hours per day. A typical Dairy Mart store ranges between 2,400 and 2,700 square feet and is a free standing structure. As of January 28, 1995, the Company operated and franchised retail convenience stores in the following three regions of the United States:
Massachusetts .............................. 64 Connecticut ................................ 59 New York ................................... 37 Rhode Island ............................... 22 Total Northeast Stores ................... 182 Midwest Region Ohio ....................................... 498 Michigan ................................... 43 Pennsylvania ............................... 31 Total Midwest Stores ..................... 572 Southeast Region Kentucky ................................... 16 Indiana .................................... 21 Tennessee .................................. 14 North Carolina ............................. 12 Total Southeast Stores ................... 207 Total Stores ........................... 961
Upgrade and Remodel of Existing Store Base and Closing Underperforming Stores Management has implemented a plan to upgrade and remodel the Company's retail and gasoline locations and to downsize its store operations through the closing or sale of underperforming locations. During fiscal 1995, the Company decided to close or sell 143 retail convenience stores, of which 72 had been closed or sold as of January 28, 1995. (See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Strategic Initiatives-Upgrade and Remodel of Existing Store Base" and "- Underperforming Stores"). Gasoline Operations Gasoline sales enable the Company to significantly increase a store's total level of sales without a commensurate increase in overhead. Gasoline sales accounted for approximately 35% of total revenues of the Company for each of the past three fiscal years. As of January 28, 1995, 406 stores sold gasoline; however, the Company plans to close or sell approximately 57 additional gasoline facilities that do not meet the Company's criteria for capital investment in fiscal 1996. Financial information related to the Company's gasoline operations for the last three fiscal years is set forth in Note 9 to the Consolidated Financial Statements. The Company's gasoline pricing strategy is designed, in part, to provide value to customers by offering the same quality gasoline offered by major oil companies at prices which are generally below nationally advertised brands and comparable to other convenience store chains. The Company obtains its gasoline from major oil company suppliers, primarily through spot market purchases, and believes that there are adequate supplies of fuel available from a number of sources at competitive prices. Gasoline profit margins have a significant impact on the Company's income. Such profit margins could be adversely influenced by factors beyond the Company's control, such as volatility in the wholesale gasoline market due to supply interruptions. In addition, gasoline profit margins are continually influenced by competition in each local market area. Product Selection All stores generally offer more than 3,000 food and non-food items limited to a few, well-known brand names as well as the Company's private label products. Most of these items would typically be offered in supermarkets. Food items include a wide variety of products, including canned foods and groceries, dairy products, beverages, snack items, candy, baked goods and food service items, such as fountain soft drinks, coffee, hot dogs, deli meats and deli sandwiches and similar foods. Non-food products and services include gasoline, cigarettes, health and beauty aids, publications, lottery tickets and money orders. In addition to selling well-known brand name products, the stores offer many products that bear the "Dairy Mart" private label, including milk, bakery products, juices and other non-carbonated beverages, ice cream and other dairy products such as dips and cheeses. In recent years, the Company has been altering the mix of products to emphasize the sale of items carrying higher profit margins. Fast food items not only carry higher profit margins but also tend to lead to the purchase of other high profit margin products and impulse items, including salty-snacks, candy and beverages. Dairy Mart has introduced a number of private label products, which generally carry a higher gross profit margin than the Company's average gross profit margin on comparable products. Manufacturing and Distribution Operations The Company supplied its stores and most franchised stores through a product distribution system which included the Company's own manufacturing, distribution and processing facilities, and other distributors. Through its manufacturing, processing and distribution facilities in Connecticut and Ohio, the Company supplied all of the milk and a substantial portion of the ice cream, juices and non-carbonated beverages for the stores in the Northeast and the Midwest. Many other products which were not produced by the Company were, and continue to be, supplied to the Northeast and Midwest regions by one wholesale distributor under a ten-year contract entered into in February, 1988. The Company supplied the Southeast region stores in large part through its 35,000 square foot distribution facility located in Louisville, Kentucky. In April, 1995, the Company entered into agreements to sell its dairy manufacturing and distribution operations in both Connecticut and Ohio and announced its intention to sell its distribution center in Kentucky. In conjunction with these transactions, the Company has entered into long-term marketing and supply agreements to purchase milk and dairy products at competitive prices, primarily under the Company's private label (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Strategic Initiatives-Dairy Manufacturing & Distribution Operations"). Franchise Operations The Company franchises 317 stores throughout its three geographic regions. Franchise stores generally follow the same operating policies as Company stores, and are subject to Company supervision under franchise agreements. Company operated and franchise stores are of the same basic store design and sell substantially the same products. In the past, most franchisees purchased their products from the Company or the suppliers used by the Company. In the future, since the Company has agreed to sell its manufacturing and distribution businesses in both Connecticut and Ohio and announced its intention to sell its distribution center in Kentucky, the Company will encourage its franchisees to purchase their products from the suppliers used by the Company. The Company offers two types of franchising arrangements- the "full" franchise and the "limited" franchise. Under a full franchise agreement, the franchisee purchases and owns both the merchandise inventory and the equipment located in the store, and leases or subleases the store from the Company. Under a limited franchise agreement, the franchisee owns only the merchandise inventory while the Company retains ownership of the store equipment. Franchise fees are higher for limited franchisees. As of January 28, 1995, there were 146 full franchise locations and 171 limited franchise locations. The Company's franchising strategy seeks to: (i) improve the level of retail experience of its new franchisees; and (ii) increase the level of financial commitment by new franchisees. As part of this strategy, new franchisees are now required to undergo more rigorous and thorough interviews and background checks, receive increased levels of financial and retail training, and typically make larger initial cash payments. The following table sets forth the number of stores, on both a Company operated and franchise operated basis, that were opened or acquired, closed or sold, and transferred between Company operated and franchise operated, during the last three fiscal years:
January 28, 1995 January 29, 1994 January 30, 1993 CompanyFranchise CompanyFranchise CompanyFranchise OperatedOperated TotalOperatedOperatedTotalOperatedOperatedTotal At beginning of period. 687 335 1,022 709 3701,079 685 4491,134 Opened or acquired..... 10 1 11 4 - 4 6 - 6 Closed or sold......... (57) (15) (72) (50) (11) (61) (34) (27) (61) Transferred (net)...... 4 (4) -- 24 (24) -- 52 (52) -- At end of period....... 644 317 961 687 335 1,022 709 370 1,079
International Operations The Company conducts business outside the United States as a joint-venturer, licensor or consultant. Currently, the Company is a party to two agreements with convenience store operators in South Korea and Mexico. As with the Company's prior international arrangements, both such agreements require a specified commitment of Company personnel, but do not require any significant commitment of capital. Advertising To promote a uniform image for all stores, the Company designs and coordinates advertising for all stores to complement its marketing strategy, which is derived, in part, from market surveys and research. In-store, newspaper, and direct-mail advertising, special promotions and seasonal radio and television advertising usually feature certain items which can be purchased at the stores, and frequently include national brand items for which advertising costs are often supplemented by the national brand suppliers. Sales promotions are generally established and maintained on a bi-weekly or monthly basis. Competition The convenience store and retail gasoline industries are highly competitive. The number and type of competitors vary by location. The Company presently competes with other convenience stores, large integrated gasoline service station operators, super market chains, neighborhood grocery stores, independent gasoline service stations, fast food operations and other similar retail outlets, some of which are well recognized national or regional retail chains. Some of the Company's competitors have greater financial resources than the Company. Key competitive factors include, among others, location, ease of access, store management, product selection, pricing, hours of operation, store safety, cleanliness, product promotions and marketing. Seasonality Weather conditions have a significant effect on the Company's sales, as convenience store customers are more likely to go to stores to purchase convenience goods and services, particularly higher profit margin items such as fast food items, fountain drinks and other beverages, when weather conditions are favorable. Accordingly, the Company's stores generally experience higher revenues and profit margins during the warmer weather months, which fall within the Company's second and third fiscal quarters. Employees As of January 28, 1995, exclusive of franchisees and franchisees' employees, the Company employed, on a full-time or part-time basis, approximately 4,400 employees. Environmental Compliance The Company incurs ongoing costs to comply with federal, state and local environmental laws and regulations, including costs for assessment, compliance, remediation and certain capital expenditures relating to its gasoline operations. These laws and regulations relate primarily to underground storage tanks ("USTs"). The United States Environmental Protection Agency has established standards for, among other things: (i) maintaining leak detection; (ii) upgrading UST systems; (iii) taking corrective action in response to releases; (iv) closing USTs to prevent future releases; (v) keeping appropriate records; and (vi) maintaining evidence of financial responsibility for taking corrective action and compensating third parties for bodily injury and property damage resulting from releases. A number of states in which the Company operates also have adopted UST regulatory programs. In the ordinary course of business, the Company periodically detects releases of gasoline or other regulated substances from USTs it owns or operates. As part of its program to manage USTs, the Company is involved in environmental assessment and remediation activities with respect to releases of regulated substances from its existing and previously operated retail gasoline facilities. The Company accrues its estimates of all costs to be incurred for assessment and remediation for known releases. These accruals are adjusted if and when new information becomes known. Additionally, the Company records as receivables the estimated reimbursements of a portion of the total costs from various state environmental trust funds which have provisions for sharing or reimbursing certain costs incurred by UST owners or operators based upon compliance with the terms and conditions of such funds. Due to the nature of such releases, the actual costs of assessment and remediation activities may vary significantly from year to year. Under current federal and state regulatory programs, the Company also will be obligated by December 22, 1998 to upgrade or replace most existing USTs it owns or operates to meet certain corrosion-, overfill- and spill-protection and leak-detection requirements. The Company currently is evaluating each site on an individual basis to determine the type of expenditures required to comply with these and other requirements under the federal and state UST regulatory programs. In addition to ongoing assessment and remediation costs, the Company presently estimates that it will be required to make capital expenditures, including those requiring upgrading or replacing of existing USTs, ranging from approximately $12.0 to $16.0 million in the aggregate over the next four fiscal years to comply with current federal and state UST regulations, which capital expenditures could be reduced for locations (especially low volume locations) which may be closed in lieu of the capital costs of compliance. During fiscal 1995, the Company decided to close 81 retail gasoline facilities that do not meet the Company's criteria for capital investment. The Company had closed 24 of these locations by January 28, 1995 (see "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-Liquidity and Capital Resources-Environmental Responsibility"). The Company's estimate of costs to be incurred for environmental assessment and remediation and for UST upgrading and other regulatory compliance are based on factors and assumptions that could change due to modifications of regulatory requirements, detection of unanticipated environmental conditions, or other unexpected circumstances. As a result, the actual costs incurred may vary significantly from the estimate noted above. Executive Officers and Directors of the Company Set forth below are the Company's executive officers and directors. Each executive officer is appointed by the Board of Directors and serves for a one year term, and each director serves for a one year term and until the election and qualification of his successor.
Name and (Age) Title John W. Everets, Jr. (49) Class B Director since 1994 Mitchell J. Kupperman (43) Executive Vice President-Human Resources, Secretary, and a Class B Director since 1988 Gregory G. Landry (37) Executive Vice President, Chief Financial Officer, and a Class B Director since 1991 Charles Nirenberg (71) Chairman of the Company, and a Class B Director since 1972 Robert B. Stein, Jr. (37) President, and a Class B Director since 1992 Frank W. Barrett (55) Class A Director since 1983 Theodore W. Leed (68) Class A Director since 1983 Thomas A. Chicoine (45) Vice President-Manufacturing and Distribution Darrell J. Davis (36) Vice President-Operations (Southeast Region) Edward M. Doyle (41) Vice President-Strategic Marketing Gregg O. Guy (46) Executive Vice President- Operations and Marketing Gary A. Payne (52) Vice President-Business Development Scott A. Stein (36) Vice President-Management Information Systems Dennis J. Tewell (38) Vice President-Operations (Northeast Region) Daniel W. Wallace (46) Vice President-Operations (Midwest Region) Gregory Wozniak (47) Vice President-Corporate Counsel
Except as noted below, each of the executive officers of the Company has been employed by the Company for more than the last five (5) years, in areas similar to or encompassed by their current responsibilities. John W. Everets, Jr. Mr. Everets has been Chairman of the Board and Chief Executive Officer of HPSC, Inc., a publicly held company which provides financing for health care equipment, since July 1993 and has been a director of HPSC, Inc. since 1983. He was Chairman of the Board of T.O. Richardson Co., Inc., a financial services company, from January 1990 until July 1993. Previously, he was Executive Vice President of Advest, Inc., an investment banking firm, from 1983 to January 1990. Mr. Everets also served as Chairman of the Board of Billings and Co., Inc., a real estate investment banking firm, and Chairman of Advest Credit Corp., both subsidiaries of Advest Group, Inc. He is also a director of Eastern Company, a publicly held company, and serves on the Board of Directors of Crown Northcorp. Mitchell J. Kupperman Dr. Kupperman joined the Company in 1983 as Director of Human Resources and was named Vice President-Human Resources in 1985. He was elected Executive Vice President-Human Resources and Secretary of the Company in January 1989. Prior to joining the Company, Dr. Kupperman attended the University of Connecticut, where he obtained a doctoral degree in Educational Administration. Gregory G. Landry Mr. Landry was named Executive Vice President of the Company in April 1992 and has served as Chief Financial Officer since August 1990. Mr. Landry joined the Company in October 1985 and served in various financial positions until he was named Treasurer of the Company in July 1989 and served in this capacity until April 1991. He is a certified public accountant and a member of the American Institute of Public Accountants. Charles Nirenberg Mr. Nirenberg is the founder of the Company. He served as Chief Executive Officer and President since its formation in 1957 until January 1989, when Mr. Nirenberg resigned as President of the Company, and until March 1992, when Mr. Nirenberg resigned as Chief Executive Officer. Mr. Nirenberg continues to serve as Chairman of the Company. Additionally, Mr. Nirenberg is Dr. Kupperman's father- in-law. Robert B. Stein, Jr. Mr. Stein was elected President of the Company in September 1994. He previously served as Executive Vice President-Operations and Marketing since April 1992. He joined the Company in 1983 and served in various positions until serving as Treasurer of the Company from January 1989 until June 1989. Subsequently, Mr. Stein served as General Manager of the Company's Midwest Region from July 1989 until March 1992. Frank W. Barrett Mr. Barrett is Executive Vice President of Springfield Institution for Savings. He previously served as Senior Vice President for Bank of Ireland First Holdings, Inc. from September 1990 to December 1993, as Senior Vice President for Connecticut National Bank from May 1990 to September 1990, and as Senior Vice President for Shawmut Bank, N.A. from January 1988 to May 1990. Mr. Barrett also served as President and Chief Executive Officer of Shawmut Home Bank in Hartford, Connecticut from April 1987 to December 1987 and prior to that was Executive Vice President for Shawmut Worcester County Bank in Worcester, Massachusetts since 1982. Theodore W. Leed Dr. Leed is a professor emeritus of food marketing at the University of Massachusetts and a lecturer, author and consultant to numerous companies on the subject of food merchandising. He holds a doctoral degree in agricultural economics from Ohio State University. Dr. Leed is a principal of Group 7, Inc., a management consulting company. Thomas A. Chicoine Mr. Chicoine was named Vice President-Manufacturing and Distribution in July 1989. He previously served the Company in the same capacity from 1985 to 1987. Mr. Chicoine also served in managerial capacities at Massachusetts-based dairies prior to 1982 and during a period between 1987 and 1989 before rejoining the Company. He also served as Vice President-Manufacturing of the Lawson Company from 1982 to 1985. Mr. Chicoine serves on the Board of the International Dairy Food Association, and is a member of the Milk Industry Foundation Darrell J. Davis Mr. Davis was named Vice President-Operations for the Company's Southeast Region in October 1994. He formerly served as Director of Operations from December 1990 until October 1994. Mr. Davis joined the Company in April 1983 as Franchise Coordinator. He has also held the positions of Manager of Franchising, Associate Director of Property Development and International Consultant/Operations Specialist. Edward M. Doyle Mr. Doyle was named Vice President-Strategic Marketing in February 1993. Since joining the Company in August 1990, he has served as acting Corporate Director of Marketing and Corporate Director of Food Services. Prior to joining the Company, he served as Chief Operating Officer for 6-Twelve Convenient Mart, Inc., and Director of Beverage Programs for the Circle K Corporation. Gregg O. Guy Mr. Guy was named Executive Vice President-Operations and Marketing in October 1994. He previously served as Vice President-Operations for the Company's Southeast Region since December 1992 and had served as Vice President and General Manager of the Company's Southeast Region since December 1989. He also served as an international consultant for the Company from December 1986 through December 1988. Prior to joining the Company, Mr. Guy had served as Vice President of Operations and Corporate Vice President of Marketing for the CONNA Corporation. Mr. Guy is a member of the Board of Directors of the Kentucky Retail Federation. Gary A. Payne Mr. Payne was named Vice President-Business Development in October 1994. He previously served as Corporate Director of Franchising. Mr. Payne joined the former CONNA Corporation, now the Company's Southeast Region, in 1970. Between 1970 and 1984, he served in various roles including Supervisor, Merchandising Manager, Vice President-Marketing and Vice President-Business Development. Mr. Payne left the CONNA Corporation in September 1984 to operate his own business, and returned to the Company in October 1988 as Vice President-Franchise Sales. Scott A. Stein Mr. Stein was named Vice President-Management Information Systems in November 1994. He joined the Company in September 1992 as Director of Store Automation, and his role was later expanded to MIS Director. He was promoted to Vice President-Administration and Management Information Systems in April 1994. Prior to joining the Company, Mr. Stein was Director, Client/Server Computing for Technology Investment Strategies Corporation. Mr. Stein also has consulting, training and systems analysis experience through former roles with Orion Group, Inc. and the Hartford Insurance Group. Mr. Stein is the brother of Robert B. Stein, Jr., President of the Company Dennis J. Tewell Mr. Tewell was named Vice President-Operations for the Company's Northeast Region in September 1992. He previously served as Vice President-Store Operations in the Southeast Region since December 1990. Mr. Tewell has also served in the positions of Director of Operations, Strategic Planning Coordinator and special consultant for the Company's international operations in Europe. Daniel W. Wallace Mr. Wallace as named Vice President-Operations for the Company's Midwest Region in December 1992. He had served as Director of Operations since December 1991. Mr. Wallace has also served as Corporate Operations Coordinator for the Company's Point-of-Sale (POS) project, Division Manager, Supervisor and Store Manager. He also spent two years as a special consultant for the Company's international operations. Gregory Wozniak Mr. Wozniak was named Vice President-Corporate Counsel in December 1992. He is an attorney and has served as counsel to the Company since the Company's 1985 acquisition of the Lawson Company. In 1989, he was promoted to Corporate Counsel. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information required by this Item regarding directors and executive officers of the Company is set forth under the caption "Executive Officers And Directors Of The Company" in Item 1 of this Form 10-K/A Amendment No. 1 and is incorporated herein by reference. ITEM 11. EXECUTIVE COMPENSATION Executive Officers' Compensation The following table provides certain information for the Company's past three fiscal years regarding the cash and other compensation paid to, earned by, or awarded to those persons who, during the last fiscal year, (i) served as the Company's Chief Executive Officer or in a similar capacity and (ii) were the four most highly compensated executive officers whose total annual salary and bonus exceeded $100,000: Summary Compensation Table
Long Term Annual CompensationCompensation Awards Securities Underlying All Other Name and PrincipalFiscal Total SalaryOptions/SARsCompensation Position Year Salary Bonus and Bonus (#)(a) (b) Robert B. Stein, Jr.,1995$199,808$35,000$234,808 96,945 $11,588 President (c) 1994 175,000 12,500 187,500 7,500 11,633 1993 160,481 0 160,481 -- 6,657 Mitchell J. Kupperman,1995 208,655 25,000 233,655 87,500 14,213 Executive Vice President-1994 205,000 7,500 212,500 5,000 12,794 Human Resources 1993 215,000 0 215,000 -- 6,899 Gregory G. Landry,1995 179,041 35,000 214,041 70,543 9,118 Executive Vice President1994 160,000 12,500 172,500 6,500 8,758 and Chief Financial Officer1993 143,654 0 143,654 -- 4,923 Gregg O. Guy, 1995 131,860 20,000 151,860 50,000 1,263 Executive Vice President-1994 120,000 10,000 130,000 3,500 1,046 Operations and Marketing1993 119,545 0 119,545 -- 349 Charles Nirenberg,1995 500,000 0 500,000 -- -- Chairman of the Company (d)1994 500,000 0 500,000 -- -- 1993 500,000 0 500,000 -- 567 Frank Colaccino, 1995 187,311 70,000 257,311 150,000 149,901 President and Chief1994 300,000 25,000 325,000 10,000 27,828 Executive Officer (e)1993 286,442 0 286,442 -- 13,942 __________________________ (a) The options to purchase shares of Common Stock granted to Messrs. Stein, Kupperman, Landry and Guy in the last fiscal year were granted to replace existing options, except for new options to purchase 24,445 shares, 10,000 shares, 14,688 shares and 31,500 shares that were granted to Messrs. Stein, Kupperman, Landry and Guy, respectively, that were granted for the first time. The options to purchase 150,000 shares granted to Mr. Colaccino were granted to replace options previously granted to him that expired after the termination of his employment described in footnote (e) below. (b) Includes amounts contributed for the benefit of the Company's executive officers to the Company's qualified profit sharing plan and premiums paid by the Company for split-dollar and term life insurance for the benefit of certain executive officers during the fiscal years ended January 28, 1995, January 29, 1994 and January 30, 1993. Company contributions to the qualified profit sharing plan for each of the 1995, 1994 and 1993 fiscal years, respectively, included $1,984, $650 and $467 for Robert B. Stein, Jr.; $2,080, $661 and $531 for Mitchell J. Kupperman; $448, $88 and $358 for Gregory G. Landry; $1,263, $1,046 and $349 for Gregg O. Guy; $0, $0 and $567 for Charles Nirenberg; and $1,093, $2,263 and $567 for Frank Colaccino. Premiums paid on split-dollar and term life insurance for each of the 1995, 1994 and 1993 fiscal years, respectively, included $9,604, $10,983 and $6,190 for Robert B. Stein, Jr.; $12,133, $12,133 and $6,368 for Mitchell J. Kupperman; $8,670, $8,670 and $4,565 for Gregory G. Landry; and $0, $25,565 and $13,375 for Frank Colaccino. (c) Mr. Stein was elected President of the Company in September 1994. He previously served as Executive Vice President - Operations and Marketing since April 1992. (d) Mr. Nirenberg has an employment agreement with the Company pursuant to which Mr. Nirenberg is employed as Chairman of the Company for a five year term that began on February 1, 1992 and ends on January 31, 1997, unless terminated earlier. Under the employment agreement, Mr. Nirenberg receives an annual salary of $500,000, payable in installments according to the Company's normal compensation policy, plus customary fringe benefits. If Mr. Nirenberg dies during the term of the employment agreement, his designated beneficiary is entitled to receive his salary for the remainder of the term. The Company has purchased insurance insuring the life of Mr. Nirenberg and has designated itself as beneficiary. (e) Mr. Colaccino served as President and Chief Executive Officer of the Company from March 12, 1992 until August 25, 1994. Prior to March 12, 1992, he served as President of the Company since January 1, 1989. On August 25, 1994, Mr. Colaccino's employment as President and Chief Executive Officer was terminated. In order to settle certain disagreements with Mr. Colaccino concerning the termination of his employment, the Company entered into an agreement with Mr. Colaccino that provides for certain payments and other benefits to him. Under the agreement, the Company agreed to pay to Mr. Colaccino $365,000 per year for three years commencing August 25, 1994. The amount set forth above under "All Other Compensation" for Mr. Colaccino includes $148,808 of such payments made to him after his termination of employment through January 28, 1995. The Company also agreed to pay Mr. Colaccino $306,032 to cover certain expenses. The Company will also provide certain health insurance benefits and has granted certain stock options described in footnote (a) above.
Option/SAR Grants In Last Fiscal Year The table below provides certain information regarding stock options granted during the Company's last fiscal year to the executive officers listed in the Summary Compensation Table above:
Individual Grants Potential Realizable Value at Assumed Number of Annual Rates of Stock Securities Price Appreciation Underlying % Of Total for Option Term Options/SARsOptions/SARsExercise or Granted Granted toBase Price (#) Employees in Per Share Expiration Date Name (a) Fiscal Year (b) (a) 5% 10% Robert B. Stein, Jr 12,500 1.9%$ 2.75December 17, 1996$ 3,838$ 7,913 12,500 1.9% 2.75 October 31, 1999 9,497 20,986 22,500 3.4% 2.75 January 27, 2002 26,278 61,716 7,500 1.1% 2.75 February 23, 2003 10,355 25,059 2,500 0.4% 2.75 May 6, 1997 926 1,929 7,500 1.1% 2.75 September 11, 2000 6,904 15,638 24,445 3.7% 2.88 November 1, 2004 44,198 112,007 7,500 1.1% 2.75 January 27, 2002 8,759 20,572 Mitchell J. Kupperman 26,250 3.9%$ 2.75October 31, 1999$19,944$ 44,071 30,000 4.5% 2.75 January 27, 2002 35,037 82,288 10,000 1.5% 2.75 September 11, 2000 9,205 20,850 5,000 0.7% 2.75 February 23, 2003 6,903 16,706 10,000 1.5% 2.88 November 1, 2004 18,081 45,820 6,250 0.9% 2.75 May 6, 1997 2,315 4,822 Gregory G. Landry 8,438 1.3%$ 2.88 November 1, 2004$15,257$ 38,663 7,500 1.1% 2.75 January 27, 2002 8,759 20,572 6,250 0.9% 2.75 May 6, 1997 2,315 4,822 22,500 3.4% 2.75 January 27, 2002 26,278 61,716 5,000 0.7% 2.75 September 11, 2000 4,603 10,425 6,500 1.0% 2.75 February 23, 2003 8,974 21,718 6,230 0.9% 2.88 November 1, 2004 11,264 28,546 8,125 1.2% 2.75 October 31, 1999 6,173 13,641 Gregg O. Guy 31,500 4.7% $ 2.88 November 1, 2004$56,954$144,333 2,500 0.4% 2.75 April 8, 1997 894 1,860 12,500 1.9% 2.75 October 31, 1999 9,497 20,986 3,500 0.5% 2.75 February 23, 2003 4,832 11,694 Charles Nirenberg -- -- -- -- -- -- Frank Colaccino 15,000 2.2% $ 4.60 July 26, 1996$ 5,261$ 10,695 10,000 1.5% 5.25 July 26, 1996 4,003 8,138 60,000 9.0% 7.25 July 26, 1996 33,169 67,425 48,750 7.3% 6.20 July 26, 1996 23,047 46,849 6,250 0.9% 6.60 July 26, 1996 3,145 6,394 10,000 1.5% 5.50 July 26, 1996 4,194 8,525 ________________________ (a) All options granted in the last fiscal year to Messrs. Stein, Kupperman, Landry and Guy were granted to replace options previously granted (the "Repriced Options") except for the options whose exercise price is $2.88, which options were granted for the first time. The Repriced Options continued the vesting schedules contained in the options that were replaced. The options granted to Mr. Colaccino were granted in connection with the termination of his employment and replaced previous options that expired after his employment terminated. Except for the Repriced Options and Mr. Colaccino's options, each option becomes fully exercisable over four years, with 25% of the shares subject to the option becoming exercisable on each anniversary of the option grant date. Except for the Repriced Options and Mr. Colaccino's options, all options expire ten years from the date of grant, unless sooner terminated by, for example, the failure to exercise an option, to the extent it is then exercisable, before three months after termination of employment, except for termination in the case of death, in which case, the option is exercisable within one year from the date of death by the optionee's executor, administrator or personal representative, to the extent it is then exercisable. (b) All options were granted at an exercise price per share equal to the fair market value of the Common Stock on the date of grant, as quoted on the NASDAQ Stock Market, except for Mr. Colaccino's options, which were granted at the same exercise price per share as those that they replaced.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End Option/SAR Values The table below sets forth information regarding stock options that were exercised, if any, during the past fiscal year, and unexercised stock options held as of January 28, 1995, by the executive officers listed in the Summary Compensation Table above:
Number of Value of Shares Underlying Unexercised Unexercised In-the-Money Options/SARs atOptions/SARs at Shares Acquired FY-End (#) FY-End (1) on Exercise of Exercisable (E)/Exercisable (E)/ Name Options (#)Value RealizedUnexercisable (U)Unexercisable (U) Robert B. Stein, Jr........... -- -- 60,125 (E)$ 52,250 (E) 37,570 (U) 30,006 (U) Mitchell J. Kupperman......... -- -- 70,000 (E) 58,300 (E) 21,250 (U) 17,450 (U) Gregory G. Landry............. -- -- 43,500 (E) 38,280 (E) 27,043 (U) 21,964 (U) Gregg O. Guy.................. -- -- 15,875 (E) 13,970 (E) 34,125 (U) 26,092 (U) Charles Nirenberg............. -- -- -- -- -- -- Frank Colaccino............... -- --150,000 (E) -0- (E) -0- (U) -0- (U) ____________________________ (1) Values are calculated for options "in the money" by subtracting the exercise price per share from the closing price per share of the applicable class of the Company's Class A and Class B Common Stock on January 28, 1995, which amounts were $3.63 and $3.63 per share, respectively. Certain of the executive officers have options to purchase shares of Common Stock at exercise prices greater than the fair market value of the applicable class of Common Stock as of January 28, 1995. Such options are not "in the money" and their value is, therefore, not disclosed above.
Employment Related Agreements Messrs. Stein, Kupperman and Landry, executive officers of the Company, entered into agreements with the Company dated September 16, 1994, pursuant to which they will receive certain payments if their employment is terminated under certain circumstances. The terms of the agreements provide that if the Company terminates any of such executive officer's employment for any reason, other than as a result of death, disability or cause, or if such executive officer terminates his employment for "good reason", as described below, such executive officer is entitled to receive, among other things, a payment equal to two times the sum of base salary plus annual bonus; health and medical insurance coverage; ownership of life insurance policies held by the Company that insure such executive officer; and the immediate vesting of all stock options held by such executive officer with the right to exercise them for up to eighteen months after termination of employment. Any of the executive officers would have "good reason" to terminate his employment and receive such payments and benefits if any of the following occur and such executive officer terminates his employment between September 16, 1995 and September 16, 1996: (i) he is assigned duties that are inconsistent with his current status as an executive officer, or he is removed from that position; (ii) the Company reduces his annual base salary, annual bonus or fringe benefits in effect on September 16, 1994, or as they may be increased from time to time thereafter; or (iii) the Board of Directors of the Company fails to nominate the executive officer for election as a director of the Company, except if his employment is terminated as a result of death, disability or cause, or he terminates his employment for any reason other than those in (i) or (ii) above. The agreements expire on September 16, 1996. Directors' Compensation Messrs. Everets, Leed and Barrett each received directors' fees of $17,000, $21,000 and $21,000, respectively, for the fiscal year ended January 28, 1995. The annual fee for outside directors for the 1996 fiscal year is $12,000 plus $1,000 for each regular or special meeting of the Board attended. The remaining directors, who are employees of the Company, receive no directors' fees. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Principal Shareholders The following table sets forth certain information concerning beneficial ownership of the Company's Common Stock by each shareholder known by the Company to be the beneficial owner of 5% or more of either class of Common Stock as of May 8, 1995. This information is furnished in accordance with the Securities and Exchange Commission ("SEC") regulations relating to any persons known by the Company to be the beneficial owners of 5% or more of Common Stock. In preparing the following table, the Company has relied on information filed by such persons with the SEC, and in some cases, other information provided to the Company by such persons.
Amount and Nature of Beneficial Title of Class Name and Address of Beneficial Owner OwnershipPercent of Class Class B New DM Management Associates I1,531,938 (1)55.0% Common Stock One Vision Drive Enfield, Connecticut New DM Management Associates II326,805 (1)11.7% One Vision Drive Enfield, Connecticut Charles Nirenberg 1,531,888 (1) 55.0% One Vision Drive Enfield, Connecticut Robert B. Stein, Jr. 1,525,336 (1) 54.7% One Vision Drive Enfield, Connecticut Gregory G. Landry 1,527,426 (1) 54.8% One Vision Drive Enfield, Connecticut Mitchell J. Kupperman 1,524,659 (1) 54.7% One Vision Drive Enfield, Connecticut Frank Colaccino 365,770 (1) 13.1% 57 Thistledown Suffield, Connecticut ____________________________________________________________________________________________________________ Class A James Wilen and Wilen Management277,425 (2)10.0% Common Stock Corporation 2360 West Joppa Road Suite 226 Lutherville, Maryland Heartland Advisors, Inc. 558,250 (3) 20.0% 790 North Milwaukee Street Milwaukee, Wisconsin Liberty Investment Management, Inc.287,800 (4)10.3% 2502 Rocky Point Drive Tampa, Florida ____________________________ Notes to Table (1) New DM Management Associates I ("DM Management I") is a Connecticut general partnership which is a general partner of DM Associates Limited Partnership ("DM Associates"), a Connecticut limited partnership. New DM Management Associates II ("DM Management II") is a Connecticut general partnership which is a special general partner of DM Associates. The individual general partners of DM Management I are Charles Nirenberg, Robert B. Stein, Jr., Mitchell J. Kupperman and Gregory G. Landry. The individual general partners of DM Management II are Messrs. Nirenberg, Stein, Kupperman, Landry and Frank Colaccino. DM Associates is the owner of record of 1,858,743 shares of Class B Common Stock, representing approximately 66.7% of the Class B Common Stock and approximately 60.7% of the total voting power of both Class B Common Stock and Class A Common Stock. However, as the general partners of DM Associates and by virtue of the provisions of its limited partnership agreement, DM Management I and DM Management II have the power to vote and dispose of 1,531,938 shares and 326,805 shares, respectively, of the 1,858,743 shares owned of record by DM Associates. As general partners of each of DM Management I and/or DM Management II, and by virtue of the respective general partnership agreements of each of such partnerships, Messrs. Nirenberg, Stein, Kupperman and Landry are each indirect beneficial owners (through shared and/or sole voting and dispositive power) of 1,531,388, 1,524,586, 1,506,305 and 1,527,426 shares of Class B Common Stock, respectively. As a general partner of DM Management II and by virtue of the provisions of its partnership agreement, Mr. Colaccino is the indirect beneficial owner of 306,388 shares of Class B Common Stock. In addition, the partnership agreements require certain consents of partners having certain percentage interests in the partnerships before shares of Class B Common Stock may be voted or disposed of. The number of shares of Class B Common Stock set forth above for each of Messrs. Nirenberg, Stein, Kupperman, Landry and Colaccino also includes the following amounts that are beneficially owned individually: 500 shares for Mr. Nirenberg; 750 shares for Mr. Stein (which represent currently exercisable options to purchase 750 shares); 18,354 shares for Mr. Kupperman (including currently exercisable options to purchase 3,750 shares); 0 shares for Mr. Landry; and 59,382 shares for Mr. Colaccino (including currently exercisable options to purchase 10,000 shares). The foregoing number of shares, or those set forth in the table above, do not include shares of Class A Common Stock that any of Messrs. Nirenberg, Stein, Kupperman, Landry or Colaccino may beneficially own. In addition, Mr. Nirenberg is an officer, director and the sole shareholder of FCN Properties Corporation ("FCN") which is the pledgee of 1,220,000 shares of Class B Common Stock owned of record by DM Associates. Mr. Nirenberg has shared voting and dispositive power with FCN as to these shares which are part of the 1,531,888 shares listed in the table above for Mr. Nirenberg. See "Certain Information Regarding DM Associates." (2) A Schedule 13G was filed with the SEC by Wilen Management Corporation ("Wilen") and James Wilen in his capacity as President and sole owner of Wilen, to report Wilen's beneficial ownership as an investment advisor to various clients, of shares of Class A Common Stock. The 277,425 shares represent approximately 5.0% of the total number of issued and outstanding shares of both classes of the Company's Common Stock, and less than 1.0% of the total voting power of both classes of the Company's Common Stock. (3) Heartland Advisors, Inc. reported on a Schedule 13G filed with the SEC its beneficial ownership, as an investment advisor, of shares of Class A Common Stock. The 558,250 shares represent approximately 10% of the total number of issued and outstanding shares of both classes of the Company's Common Stock and approximately 1.8% of the total voting power of both classes of the Company's Common Stock. (4) The 287,800 shares of Class A Common Stock represent approximately 5.2% of the total number of issued and outstanding shares of both classes of the Company's Common Stock and less than 1% of the total voting power of both classes of the Company's Common Stock.
Stock Ownership of Management The following table sets forth certain information furnished by the directors, certain executive officers, and all directors and executive officers as a group concerning ownership of the Company's Common Stock as of May 8, 1995:
Shares (and Percent) of Common Stock Name Beneficially Owned as of May 8, 1995 Percent Class B Class A of Total Common Stock Common Stock Voting Power Frank W. Barrett............... 1,250 (*) 2,500 (*) (*) (1) John W. Everets, Jr............ 10,000 (*) 0 (*) Mitchell J. Kupperman..........1,524,659 (54.7%) 72,795 (2.6%) (49.8%) (2)(3) Gregory G. Landry..............1,527,426 (54.8%) 45,125 (1.6%) (49.9%) (2)(4) Theodore W. Leed............... 1,552 (*) 2,500 (*) (*) (1) Charles Nirenberg..............1,531,888 (55.0%) 500 (*) (50.0%) (2)(5) Robert B. Stein, Jr............1,525,336 (54.7%) 66,020 (2.3%) (49.9%) (2)(6) All Directors and Executive Officers as a Group ____________________________ (16 persons) 1,591,511 (56.9%)254,607 (8.4%) (52.2%) (7) ____________________________ (*) Owns less than 1% of the issued and outstanding class of Common Stock. (1) Includes currently exercisable non-qualified stock options granted to each of Messrs. Barrett and Leed to purchase 2,500 shares of Class A Common Stock. Such options were not granted pursuant to any stock option plan of the Company. (2) Messrs. Kupperman, Landry, Nirenberg and Stein are each partners of DM Management I and DM Management II (described in footnote 1 to the Principal Shareholders table above). The shares of Class B Common Stock Set forth in this table for each of such persons include the shares set forth for each person in the Principal Shareholders table above. (3) Includes currently exercisable incentive stock options granted to Dr. Kupperman to purchase 3,750 shares of Class B Common Stock and 67,500 shares of Class A Common Stock. Also includes shares of Common Stock owned by Dr. Kupperman's wife and children. (4) Includes currently exercisable incentive stock options granted to Mr. Landry to purchase 45,125 shares of Class A Common Stock. (5) Does not include shares of Class B Common Stock and shares of Class A Common Stock owned by Mr. Nirenberg's children, the ownership of which Mr. Nirenberg disclaims. (6) Includes currently exercisable incentive stock options granted to Mr. Stein to purchase 750 shares of Class B Common Stock and currently exercisable incentive stock options to purchase 61,250 shares of Class A Common Stock. (7) Includes currently exercisable stock options granted to all directors and executive officers of the Company to purchase 11,250 shares of Class B Common Stock and 232,875 shares of Class A Common Stock. The following executive officers and directors of the Company did not timely file with the SEC, on certain occasions, their reports on Forms 3, 4 or 5 to report changes in their beneficial ownership of the Company's Common Stock: Mr. Everets (one report due upon becoming a director); Gary A. Payne (one report due upon becoming an executive officer and one report for one transaction); and Gregory Wozniak, Darrell J. Davis, Robert B. Stein, Jr., Mitchell J. Kupperman, Gregory G. Landry, Edward M. Doyle, Gregg O. Guy, Scott A. Stein, Dennis J. Tewell and Daniel W. Wallace (one report each for one transaction each).
Certain Information Regarding DM Associates DM Associates Limited Partnership ("DM Associates") is the owner of record of 1,858,743 shares of Class B Common Stock of the Company, representing approximately 66.7% of the issued and outstanding shares of Class B Common Stock, and 60.7% of the total voting power of both classes of the Company's Common Stock. The general partners of DM Associates are New DM Management Associates I ("DM Management I") and New DM Management Associates II ("DM Management II"), both of which are general partnerships. DM Management I and DM Management II are the beneficial owners of 1,531,938 and 326,805 shares, respectively, of the 1,858,743 shares of Class B Common Stock owned of record by DM Associates. The general partners of DM Management I and DM Management II include Robert B. Stein, Jr., President; Charles Nirenberg, Chairman of the Company; Mitchell J. Kupperman, Executive Vice President-Human Resources; and Gregory G. Landry, Executive Vice President and Chief Financial Officer. In March 1992, DM Associates financed part of the purchase of its 1,858,743 shares of Class B Common Stock by obtaining a $7,100,000 loan (the "Loan") from the Connecticut Development Authority ("CDA"). The Company has been advised that on September 30, 1994, FCN Properties Corporation ("FCN"), a corporation owned and controlled by Charles Nirenberg, purchased all of the CDA's right, title and interest in and to the Loan. FCN paid the CDA $3,600,000 and gave the CDA a promissory note for $3,500,000 (the "FCN Note"). The Loan is secured by DM Associates' collateral pledge of 1,220,000 shares of Class B Common Stock owned by DM Associates (the "Pledged Shares"), representing 43.8% of the issued and outstanding shares of Class B Common Stock and 39.8% of the total voting power of both classes of Common Stock. To secure the FCN Note to the CDA, the Company has been advised that FCN granted a lien to the CDA on, among other things, FCN's rights to the Pledged Shares (the "FCN Lien"). The Loan provides that a default of the Loan will result upon certain events occurring. If a default occurs under the Loan, FCN has the right to sell or otherwise dispose of the Pledged Shares. If a default occurs under the FCN Note or the FCN Lien while there is a default under the Loan, the CDA has the right to sell or otherwise dispose of the Pledged Shares. In either event, such a sale or disposal could result in a change in control of the Company. Unless a default occurs under the Loan, DM Associates has the right to vote the Pledged Shares, subject to having received the required consents of FCN with respect to certain matters. In addition, the limited partnership agreement of DM Associates provides that if the term of the limited partnership is extended beyond September 12, 1997, any limited partner whose percentage interest in DM Associates is greater than 30% may sell all or a portion of his or its interest, subject to DM Associates right of first refusal to purchase such interest. If DM Associates and such limited partner do not agree on the terms of acquiring such limited partner's interest, and there is not a third party purchaser, such limited partner has the right to: (i) demand the dissolution of DM Associates and the distribution of its assets to its partners; or (ii) cause such assets to be sold. The limited partnership agreement also requires DM Management I and DM Management II to consult with a limited partner of DM Associates before voting any shares at a meeting of the Company's shareholders or exercising any consensual rights of such shares. If DM Management I and/or DM Management II votes or exercises consensual rights of such shares in a manner in which such limited partner does not agree, the limited partner may dissolve DM Associates. As DM Associates' principal asset is its 1,858,743 shares of Class B Common Stock, if such a dissolution or sale occurs, a change in control of the Company could result. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None 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. Dated: May 30, 1995 DAIRY MART CONVENIENCE STORES, INC. By /s/ Robert B. Stein, Jr. By /s/ Gregory G. Landry Robert B. Stein, Jr. Gregory G. Landry President and Chief Executive Vice President and Operating Officer Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----