-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RPHO37bsCoDcI9yI2nljP0+m0Mo1y+AHZ1aSYSlMR8o2wR+er8RXvDmUpxrbkITK Zi6yl9t7y8QF5sW6BvvGLw== 0000950109-96-003560.txt : 19960604 0000950109-96-003560.hdr.sgml : 19960604 ACCESSION NUMBER: 0000950109-96-003560 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960203 FILED AS OF DATE: 19960603 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: 001-11627 FILM NUMBER: 96576107 BUSINESS ADDRESS: STREET 1: ONE VISION DRIVE CITY: ENFIELD STATE: CT ZIP: 06082 BUSINESS PHONE: 2037414444 10-K/A 1 FORM 10-K/A FORM 10-K/A Amendment No. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- (Mark One) [X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended February 3, 1996 [ ] 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 (860) 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) (Titles 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 4, 1996, 2,809,924 shares of Class A Common Stock and 2,783,060 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 $22,429,446.00. 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 February 3, 1996 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 1996 annual meeting of shareholders, as such proxy statement will not be filed within 120 days after the fiscal year ended February 3, 1996; the information required by such items is now set forth in full in Part III and is filed herewith. -2- DOCUMENTS INCORPORATED BY REFERENCE ----------------------------------- NONE PART I ------ ITEM 1. BUSINESS General Dairy Mart Convenience Stores, Inc., and its subsidiaries (the "Company" or "Dairy Mart"), operates one of the nation's largest convenience store chains. Founded in 1957, the Company operates or franchises approximately 877 stores under the "Dairy Mart" name in 11 states located in the Northeast, Midwest and Southeast. Approximately 375 stores sell gasoline and approximately 290 stores are 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 is incorporated in Delaware and maintains its principal executive offices at One Vision Drive, Enfield, Connecticut 06082. The Company's telephone number is (860) 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 375 locations also sell gasoline, which the Company believes is an important convenience for customers. 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. -3- As of February 3, 1996, the Company operated and franchised retail convenience stores in the following three regions of the United States:
Number of Stores Northeast Region --------- Massachusetts........................................... 61 Connecticut............................................. 56 New York................................................ 37 Rhode Island............................................ 18 -------- Total Northeast Stores................................ 172 -------- Midwest Region Ohio.................................................... 448 Michigan................................................ 36 Pennsylvania............................................ 27 -------- Total Midwest Stores.................................. 511 -------- Southeast Region Kentucky................................................ 151 Indiana................................................. 20 Tennessee............................................... 14 North Carolina.......................................... 9 -------- Total Southeast Stores.................................... 194 -------- Total Stores.......................................... 877 ========
Upgrade and Remodel of Existing Store Base and Closing Underperforming Stores The Company has an ongoing program to upgrade and remodel the Company's retail and gasoline locations to cater to the always changing convenience needs of today's customer. The program includes modernizing and re-imaging the store's appearance, upgrading the gasoline facilities and installing the most modern environmental protection equipment. Remodeled stores will also have more space devoted to higher profit margin items and certain stores will install branded fast food concepts, such as Taco Bell(R), Subway(R) and Pizza Hut(R), to attract customers and enhance performance. The Company has historically evaluated the performance of each of its stores in order to determine its contribution to the Company's overall profitability. Management has raised the acceptable level that a store's performance must meet in order for the store to be eligible for on-going capital expenditure support from the Company. Accordingly, in fiscal year 1996, the Company closed 92 of its retail convenience stores and 38 of its retail gasoline facilities due to their inability to meet the Company's economic and non-economic criteria for long-term stability and growth. -4- New Stores A major component in the Company's growth strategy is to continue to build new stores and increase its level of gasoline sales. All new store locations have significantly expanded gasoline retailing capacity and devote a greater amount of selling space to high profit margin products. Technological Upgrade The Company's Information Systems group is continuing to evaluate several technological upgrades and procedural enhancement opportunities to increase the efficiency of the existing store operations and corporate support functions. These enhancements will provide more detailed and timely information regarding store operations, including composition of sales, inventory levels and product pricing and profit analysis. 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 40% of total revenues of the Company in fiscal year 1996 and approximately 35% for fiscal years 1995 and 1994. As of February 3, 1996, 376 stores sold gasoline. Financial information related to the Company's gasoline operations for the last three fiscal years is set forth in Note 11 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 -5- 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. Franchise Operations The Company franchises 290 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. Most franchisees purchase their products through the same supplier 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 February 3, 1996, there were 131 full franchise locations and 159 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:
February 3, 1996 January 28, 1995 January 29, 1994 ------------------------------ ------------------------------- ----------------------------- Company Franchise Company Franchise Company Franchise Operated Operated Total Operated Operated Total Operated Operated Total -------- --------- ----- -------- --------- ----- -------- --------- ----- At beginning of period...... 644 317 961 687 335 1,022 709 370 1,079 Opened or acquired.......... 8 - 8 10 1 11 4 - 4 Closed or sold.............. (68) (24) (92) (57) (15) (72) (50) (11) (61) Transferred (net)........... 3 (3) -- 4 (4) -- 24 (24) -- --- --- --- --- --- ----- --- --- ----- At end of period............ 587 290 877 644 317 961 687 335 1,022 === === === === === ===== === === =====
-6- 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, supermarket 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 February 3, 1996 exclusive of franchisees and franchisees' employees, the Company employed, on a full-time or part-time basis, approximately 4,100 employees. -7- 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 has been 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 $10.0 to $12.0 million in the aggregate over the next three 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 (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. -8- Business Outlook This Form 10-K contains forward-looking statements within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include plans and objectives to upgrade and remodel store locations, to build new stores and increase gasoline sales, to improve certain aspects of the franchisee program, to sell or lease certain assets, as well as the availability of supplies of gasoline, the estimated costs for environmental remediation and the sufficiency of the Company's liquidity and the availability of capital. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward- looking statements. Such factors and uncertainties include, but are not limited to, the availability of financing and additional capital to fund the Company's business strategy on acceptable terms, if at all, the future profitability of the Company, the availability of desirable store locations, the Company's ability to negotiate and enter into lease, acquisition and supply agreements on acceptable terms, competition and pricing in the Company's market area, volatility in the wholesale gasoline market due to supply interruptions, modifications of environmental regulatory requirements, detection of unanticipated environmental conditions, the timing of reimbursements from state environmental trust funds, the Company's ability to manage its long-term indebtedness, weather conditions, the favorable resolution of certain pending and future litigation, and general economic conditions. 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 -------------- ----- Frank W. Barrett (56) Director since 1983 J. Kermit Birchfield, Jr. (56) Director since 1996 John W. Everets, Jr. (50) Director since 1994 Gregory G. Landry (38) Executive Vice President, Chief Financial Officer, and a Director since 1991 Robert B. Stein, Jr. (38) President, Chief Executive Officer, Chairman of the Board and a Director since 1992 Thomas W. Janes (41) Director since 1995 Truby G. Proctor, Jr. (61) Director since 1996 -9- Darrell J. Davis (37) Vice President-Operations (Southeast Region) Edward M. Doyle (42) Vice President-Marketing Gregg 0. Guy (47) Executive Vice President- Operations and Marketing Gary A. Payne (53) Vice President-Business Development Michael L. Poole (49) Vice President-Construction and Planning Scott A. Stein (37) Vice President-Management Information Systems Dennis J. Tewell (39) Vice President-Operations (Northeast Region) Daniel W. Wallace (47) Vice President-Operations (Midwest Region) Gregory Wozniak (48) 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. 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. J. Kermit Birchfield, Jr. Mr. Birchfield is a private investor. From June 1990 to November 1994 he served as Senior Vice President and General Counsel of M/A-COM, Inc., a telecommunications company. Mr. Birchfield is a member of the Board of Directors of HSPC, Inc., a publicly held company that provides financing for the purchase of health care equipment, and Intermountain Gas Company, Inc., an Idaho public utility company. John W. Everets, Jr. Mr. Everets has been Chairman of the Board and Chief Executive Officer of HSPC, Inc., a publicly held company that provides financing for health care equipment, since July 1993 and has been a director of HSPC, Inc. -10- since 1983. He was Chairman of the Board of T.O. Richardson Co., Inc., a financial services company, from January 1990 until July 1993. Mr. Everets is also a director of Eastern Company, a publicly held manufacturing company and Crown Northcorp, a publicly held company that holds real estate. Gregory G. Landry Mr. Landry has served as Chief Financial Officer since August 1990 and was named Executive Vice President of the Company in April 1992. Mr. Landry joined the Company in October 1985 and served in various financial positions, including Treasurer. He is a certified public accountant and a member of the American Institute of Public Accountants. Robert B. Stein, Jr. Mr. Stein was elected President of the Company in September 1994, Chief Executive Officer of the Company in June 1995 and Chairman of the Board of Directors in December 1995. He joined the Company in 1983 and served in various positions, including Treasurer, General Manager of the Midwest Region, and Executive Vice President-Operations and Marketing. Thomas W. Janes Mr. Janes has been a Managing Director since 1990 of Triumph Capital Group, Inc., a firm engaged in investment banking and investment management. He is also a general partner of Triumph-Connecticut Capital Advisors, Limited Partnership, the general partner of Triumph-Connecticut Limited Partnership, and a limited partner of Triumph-California Advisors, L.P., the general partner of Triumph- California Limited Partnership. Truby G. Proctor, Jr. Mr. Proctor is Chairman and Chief Executive Officer of Lee-Moore Oil Company, located in Sanford, North Carolina, a privately held North Carolina based oil jobber. From August 1987 to July 1994, Mr. Proctor served as Chairman and Chief Executive Officer of The Pantry Inc., a privately held 460 store convenience chain headquartered in North Carolina. Darrell J. Davis Mr. Davis was named Vice President-Operations for the Company's Southeast Region in October 1994. Mr. Davis joined the Company in April 1983 as Franchise Coordinator. He has held the positions of Director of Operations, Manager of Franchising, Associate Director of Property Development and International Consultant/Operations Specialist. -11- Edward M. Doyle Mr. Doyle was named Vice President-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. 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 as Vice President and General Manager of the Company's Southeast Region since December 1989. 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. Michael L. Poole Mr. Poole was named Vice President-Construction and Planning in April 1996. Prior to joining the Company and since August 1995, Mr. Poole was Director of Store Design and Construction for Crabtree and Evelyn, Ltd., in Woodstock, Connecticut, and was Director of Design and Construction for Edison Brothers Stores, Inc., in St. Louis, Missouri from August 1992 to July 1995. Prior to August 1992, Mr. Poole was owner and President of The Poole Group, an architectural company. Scott A. Stein Mr. Stein was named Vice President-Management Information Systems (MIS) in November 1994. Since joining the Company in September 1992, Mr. Stein has served as Director of Store Automation, MIS Director, and Vice President-Administration and MIS. From February 1989 to August 1992, Mr. Stein was Director, Open Systems Distributed Computing for Technology Investment Strategies Corporation, an information technology consulting company. Mr. Stein is the brother of Robert B. Stein, Jr., President, Chief Executive Officer and Chairman of the Board. -12- Dennis J. Tewell Mr. Tewell was named Vice President-Operations for the Company's Northeast Region in September 1992. Mr. Tewell joined the former CONNA Corporation, now the Company's Southeast region, in 1985. He previously served as Vice President- Store Operations, Director of Operations, and Strategic Planning Coordinator in the Southeast region and special consultant for the Company's international operations in Europe. Daniel W. Wallace Mr. Wallace was named Vice President-Operations for the Company's Midwest Region in December 1992. Mr. Wallace joined the former Lawson Company, now the Company's Midwest region, in 1986. He previously served as Director of Operations, 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. -13- 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, (ii) were the four most highly compensated executive officers whose total annual salary and bonus exceeded $100,000 and (iii) two additional individuals for whom disclosure would have been provided had they been serving as executive officers of the Company as of February 3, 1996.
Summary Compensation Table Long Term Annual Compensation(a) Compensation ----------------------------------------- ----------------------- Awards(b) ----------------------- Restricted Securities Other Annual Stock Underlying All Other Name and Principal Fiscal Compensation Awards Options Compensation Position Year Salary Bonus (c) (d) (e) (f) - --------------------------------- ------ -------- --------- ------------ ---------- -------- ------------- Robert B. Stein, Jr., 1996 $254,808 $162,500 $ -- $230,000 95,555 $ 9,533 President, Chief 1995 199,808 35,000 -- -- 96,945 11,588 Executive Officer and 1994 175,000 12,000 67,290 -- 7,500 11,633 Chairman of the Board Gregory G. Landry, 1996 214,038 131,500 -- 115,000 55,332 8,670 Executive Vice President 1995 179,041 35,000 -- -- 70,543 9,118 and Chief Financial 1994 160,000 12,500 -- -- 6,500 8,758 Officer Gregg O. Guy, 1996 152,885 22,500 37,554 86,250 -- 645 Executive Vice President 1995 131,860 20,000 -- -- 50,000 1,263 Operations and Marketing 1994 120,000 10,000 -- -- 3,500 1,046 Gregory Wozniak, 1996 112,122 16,500 -- 57,500 6,250 528 Vice President-Corporate 1995 108,754 15,000 20,033 -- 2,500 592 Counsel 1994 105,000 3,500 -- -- 4,000 1,083 Gary A. Payne, 1996 101,923 15,000 13,755 -- -- 460 Vice President-Business 1995 84,682 7,000 -- -- 20,000 435 Development 1994 78,500 0 -- -- 750 578 Charles Nirenberg, 1996 267,311 0 -- -- -- -- Former Chairman of the 1995 500,000 0 -- -- -- -- Board(g) 1994 500,000 0 -- -- -- -- Mitchell J. Kupperman, 1996 177,694 153,500 -- -- 97,500 514,334 Former Executive Vice 1995 208,655 25,000 -- -- 87,500 14,213 President-Human Resources(h) 1994 205,000 7,500 -- -- 5,000 12,794
-14- (a) Annual compensation does not include non-cash compensation that in the aggregate does not exceed the lesser of $50,000 or 10% of the total annual salary and bonus of each named executive officer. (b) The Company did not grant any stock appreciation rights and make any long- term incentive plan payments during fiscal 1996, 1995, or 1994. (c) Other annual compensation for the following named executive officers includes the following amounts paid on behalf of, or received by, each officer (i) $28,801 in relocation expense for Mr. Guy in fiscal 1996, (ii) $6,705 in relocation expense and $6,626 for automobile expenses for Mr. Payne in fiscal 1996, (iii) a $11,250 gain related to an exercised stock option to purchase 6,000 shares of Common Stock and $5,771 for automobile expenses for Mr. Wozniak in fiscal 1995, and (iv) $58,375 in relocation expenses for Mr. Stein in fiscal 1994. (d) In January 1996, the Company awarded restricted stock to certain executive officers. Robert B. Stein, Jr., Gregory G. Landry, Gregg O. Guy and Gregory Wozniak were awarded 40,000, 20,000, 15,000 and 10,000 shares of Class A Common Stock, respectively. The restricted shares will vest equally over a three year period if the closing price of the Company's Class A Common Stock, as reported on the NASDAQ National Market System for a consecutive ten day period, is equal to at least $9.00 in the first year, $11.00 in the second year and $13.00 in the third year from the date of the grant. Dividends will not be paid on unvested restricted stock awards. These named executive officers have not received any other restricted stock awards. (e) The options to purchase 97,500 shares of common stock were granted to Mr. Kupperman to replace options previously granted to him that expired after the termination of his employment. (f) 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 life insurance for the benefit of certain executive officers during the applicable years. Company contributions to the qualified profit sharing plan for each of the 1996, 1995, and 1994 fiscal years, respectively, included $645, $1,984 and $650 for Robert B. Stein, Jr.; $0, $448, and $88 for Gregory G. Landry; $645, $1,263, and $1,046 for Gregg O. Guy; $528, $592 and $1,083 for Gregory Wozniak; $460, $435 and $578 for Gary A. Payne; and $645, $2,080 and $661 for Mitchell J. Kupperman. Premiums paid on split-dollar and life insurance for each of the 1996, 1995 and 1994 fiscal years, respectively, included $8,888, $9,604 and $10,983 for Robert B. Stein, Jr.; $8,670, $8,670 and $8,670 for Gregory G. Landry; and $12,133, $12,133 and $12,133 for Mitchell J. Kupperman. (g) Mr. Nirenberg had an employment agreement with the Company pursuant to which Mr. Nirenberg was employed as Chairman of the Company for a five year term that began on February 1, 1992 and was to end on January 31, 1997, unless terminated earlier. Under the employment agreement, Mr. Nirenberg received an annual salary of $500,000, payable in installments according to the Company's normal compensation policy, plus customary fringe benefits. On August 10, 1995, the Board of Directors of the Company removed Mr. Nirenberg from his positions as Chairman of the Board and Chairman of the Company and terminated his employment agreement. Pursuant to a Settlement Agreement between the Company, Mr. Nirenberg, and others, the Company paid certain amounts to Mr. Nirenberg, including amounts paid in consideration of Mr. Nirenberg's agreement not to compete with the Company (see Information Regarding DM Associates and the Settlement Agreement and note 14 to the Consolidated Financial Statements). (h) Effective December 1, 1995, Mr. Kupperman resigned from his position as Executive Vice President-Human Resources. In connection with the termination of Mr. Kupperman's employment, the Company agreed to pay a lump sum severance of $501,556. The Company also agreed to pay Mr. Kupperman $709,773 in consideration of, among other things, Mr. Kupperman's agreement not to compete with the Company and Mr. Kupperman's waiver of certain alleged claims against the Company. (see Information Regarding DM Associates and the Settlement Agreement and note 14 to the Consolidated Financial Statements), -15- Option 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 Annual Rates of Stock Number of Price Appreciation Securities % Of Total Exercised for Option Term Underlying Options or ------------------- Options Granted to Base Price Granted Employees in Per Share Name (a) Fiscal Year (b) Expiration Date 5% 10% - ----------------------- ---------- ----------- ---------- --------------- -------- -------- Robert B. Stein, Jr.... 95,555 25.5% $3.63 April 18, 2005 $217,841 $552,051 Gregory G. Landry...... 55,332 14.7% 3.63 April 18, 2005 126,143 319,670 Gregg O. Guy........... -- -- -- -- -- -- Gregory Wozniak........ 6,250 1.7% 3.63 April 18, 2005 14,248 36,108 Gary A. Payne.......... -- -- -- -- -- -- Charles Nirenberg...... -- -- -- -- -- -- Mitchell J. Kupperman.. 20,000 5.3% 2.88 May 31, 1997 36,162 91,640 77,500 20.6% 2.75 May 31, 1997 134,033 339,667
- -------------------- (a) The options granted to Mr. Kupperman were granted in connection with the termination of his employment and replaced previous options that expired after his employment terminated. Mr. Kupperman's options vested December 1, 1995 and expire May 31, 1997. Except for Mr. Kupperman'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 Mr. Kupperman'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 Class A Common Stock on the date of grant, as quoted on the NASDAQ Stock Market, except for Mr. Kupperman's options, which were granted at the same exercise price per share as those that they replaced. The fair market value of the Class A Common Stock on the date that Mr. Kupperman's options were granted was $6.625 and the potential realizable value of these options on the date of grant was $ 375,213. The amounts shown as potential realizable value illustrate what might be realizable upon exercise immediately prior to expiration of the option term using the 5% and 10% appreciation rates established in regulations of the Securities and Exchange Commission, compounded annually. The potential realizable value is not intended to predict future appreciation of the Company's stock. The values shown do not consider nontransferablity, vesting on termination of the options upon termination of employment. -16- Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option 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 February 3, 1996, by the executive officers listed in the Summary Compensation Table above:
Number of Value of Shares Underlying Unexercised Unexercised In-the-Money Number of Options at Options at Shares Acquired FY-End FY-End (1) on Exercise of Exercisable (E)/ Exercisable (E)/ Name Options Value Realized Unexercisable (U) Unexercisable (U) - ----------------------- --------------- -------------- ----------------- ----------------- Robert B. Stein, Jr.... -- -- 74,861 (E) $214,462 (E) 117,639 (U) 251,831 (U) Gregory G. Landry...... -- -- 56,292 (E) 161,381 (E) 69,583 (U) 149,984 (U) Gregg O. Guy........... -- -- 24,625 (E) 69,813 (E) 25,375 (U) 70,000 (U) Gregory Wozniak........ -- -- 12,625 (E) 36,219 (E) 10,125 (U) 23,375 (U) Gary A, Payne.......... -- -- 9,750 (E) 27,406 (E) 15,375 (U) 42,328 (U) Charles Nirenberg...... -- -- -- -- -- -- Mitchell J. Kupperman.. -- -- 97,500 (E) 277,813 (E) -- (U) -- (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 February 3, 1996, which amounts were $5.625 and $6.375 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 February 3, 1996. Such options are not "in the money" and their value is, therefore, not disclosed above. Employment Agreements In June 1995, the Company entered into employment agreements (the "Employment Agreements") with Messrs. Stein, Landry, Guy and Payne. The Employment Agreements are initially for two (2) year terms, but such terms are automatically extended each year for an additional year unless the Company or the employee gives notice that it or he does not desire to have the term extended before February 28th of each year. Under the Employment Agreements, Messrs. Stein, Landry, Guy and Payne receive annual salaries that may be increased, but may not be decreased. The Employment Agreements of Mr. Stein and Mr. Landry provide for special bonuses that were earned and paid in September 1995. The special bonuses were payable if the Company's Income Before Income Taxes and Cumulative Effect of Accounting Changes was greater than $2,610,000 for the six month fiscal period ending July 29, 1995. In addition, all of the Employment Agreements provide that the Board of Directors, or a committee -17- thereof, may award each employee annual bonuses if performance criteria to be determined by the Board are met. Under the Employment Agreements, if the employee's employment is terminated for any reason, other than by the Company without cause or by the employee for good reason, or as a result of death or disability, then the employee will receive his salary and bonus through the date of termination. If the employee dies or is disabled, he will also receive any additional benefits that are provided under the Company's death and disability programs in effect at the time of death or disability. In addition, if an employee is disabled and there is no disability program in effect or if an employee dies, then the employee's beneficiary will receive 100% of the employee's annual salary and amount equal to the highest of the aggregate bonus payments earned by the employee for any of the last three twelve month periods prior to the date of termination. The Employment Agreements provide that if the employee's termination is by the Company without cause or by the employee for good reason, and not as a result of the employee's death or disability, the employee will receive his full salary and bonus through the date of termination. The amount of the employee's bonus will be the highest of the aggregate bonus payments earned by the employee for any of the last three twelve month periods prior to the date of termination. The Agreements also provide that after such termination, each of Messrs. Stein and Landry will also receive a severance payment equal to two (2) times the sum of his full base salary and annual bonus, and Messrs. Guy and Payne will receive a severance payment equal to one and one-half (1 1/2) times the sum of his full base salary and annual bonus. With respect to Messrs. Stein and Landry, if any payment in connection with the termination of the employee's employment under the Employment Agreements would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), then the Company will pay the employee an additional payment equal to the amount of any excise tax the employee as a result of the employee's receipt of the additional payment. Under Messrs. Guy's and Payne's Employment Agreements, any payment due pursuant to the Employment Agreements that is subject to excise tax will be reduced to an amount that will not be subject to the excise tax, but the Company will reimburse Messrs. Guy and Payne for any excise tax resulting from any payment due pursuant to any other agreements between the Company and Messrs. Guy and Payne or pursuant to any Company plans. Directors' Compensation Messrs. Barrett, Birchfield, Everets, Janes and Proctor received directors, fees of $27,000, $4,000, $25,000, $23,000, and $4,000, respectively, for the fiscal year ended February 3, 1996. 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. In addition to the forgoing fees, on February 1, 1996, Messrs. Barret, Birchfield, Everets, Janes and Proctor each received an option to purchase 3,500 shares of Class A Common Stock at $5.75 per share pursuant to the Company's 1995 Stock Option Plan for Outside Directors. -18- Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee of the Company's Board of Directors during the last fiscal year were Messrs. Barrett, Everets, and Leed. None of these individuals was at any time during fiscal year 1996, or at any other time, an officer or employee of the Company. No executive officer of the Company serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company's Board of Directors or Compensation Committee. INFORMATION REGARDING DM ASSOCIATES AND THE SETTLEMENT AGREEMENT Stock Owned by 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 66.8% of the issued and outstanding shares of Class B Common Stock, and 60.7% of the total voting power of both classes of the Common Stock. The general partner of DM Associates is New DM Management Associates I ("DM Management I"), which is a general partnership. The general partners of DM Management I are Robert B. Stein, Jr., a Director and the Chairman, Chief Executive Officer and President of the Company, and Gregory G. Landry, a Director and the Executive Vice President and Chief Financial Officer of the Company. 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 "Limited Partnership Loan") from the Connecticut Development Authority ("CDA"). The Limited Partnership Loan is secured by DM Associates' collateral pledge of 1,220,000 shares of the Class B Common Stock owned by DM Associates, 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. In September 1994, FCN Properties Corporation, a corporation owned and controlled by Charles Nirenberg, a former stockholder, Director and executive officer of the Company, purchased all of the CDA's right, title and interest in and to the Limited Partnership Loan. In December 1995, FCN Properties Corporation sold the Limited Partnership Loan to the Company. 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 to consult with a certain 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 votes or exercises consensual rights of such shares in a manner in which such limited partner does not agree, -19- 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. The Settlement Agreement On October 30, 1995, Mr. Nirenberg, and certain of his affiliates (collectively, "Nirenberg") entered into an Agreement, as amended on December 1, 1995 (the "Settlement Agreement"), with the Company, Mr. Stein and Mr. Landry, for purposes of settling the dispute between Mr. Nirenberg and the Company's management with respect to control of the Company. Pursuant to the Settlement Agreement, among other things, the Company purchased for $10 million all of Nirenberg's limited partnership interest in DM Associates, and the promissory note of DM Associates evidencing the Limited Partnership Loan. Pursuant to the settlement Agreement, the Company also paid to Nirenberg $2.3 million in consideration of certain matters, including, Nirenberg's waiver of certain alleged claims against the Company, Nirenberg allowing the Company to use his name and likeness in advertising materials and Nirenberg's agreement that he will not for a period of five years compete with the Company, solicit employment of any employee of the Company, or interfere in a material manner with any material business relationship between the Company and any third party. The Company also agreed to reimburse Nirenberg for up to $850,000 of previously unreimbursed fees and expenses incurred in connection with the activities relating to the Company. Mitchell J. Kupperman's employment with the Company was terminated on December 1, 1995. Mr. Kupperman is a former stockholder, Director and executive officer of the Company. In connection with the termination of Mr. Kupperman's employment, Mr. Kupperman's waiver of certain alleged claims against the Company and Mr. Kupperman's agreement not to compete with the Company, the Company paid $1,211,329 Mr. Kupperman. Mr. Nirenberg and Mr. Kupperman had been partners of DM Management I and New DM Management Associates II ("DM Management II"), a former general partner of DM Associates. Under the terms of the Settlement Agreement, Mr. Nirenberg withdrew as a partner of DM Management I and DM Management II. The remaining partners of DM Management II dissolved DM Management II, and DM Management I is therefore the sole remaining general partner of DM Associates. As a result of the termination of Mr. Kupperman's employment, pursuant to the partnership agreement of DM Management I, DM Management I repurchased Mr. Kupperman's partnership interest in DM Management I for nominal consideration. Accordingly, the remaining partners of DM Management I are Messrs. Stein and Landry, each of whom owns one-half of the partnership interests of DM Management I. The Company has agreed to indemnify Nirenberg and Mr. Kupperman against any liability or expense incurred by them as a result of or in connection with the transactions consummated pursuant to the Settlement Agreement and the termination of Mr. Kupperman's employment. -20- 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 4, 1996. 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 Name and Address of of Beneficial Percent Title of Class Beneficial owner Ownership of Class - -------------- --------------------------------- ----------------- -------- Class B DM Associates Limited Partnership 1,858,743 (1) 66.8% Common Stock One Vision Drive Enfield, Connecticut New DM Management Associates I 1,858,743 (1) 66.8% One Vision Drive Enfield, Connecticut Robert B. Stein, Jr. 1,858,743 (1) 66.8% One Vision Drive Enfield, Connecticut Gregory G. Landry 1,858,743 (1) 66.8% One Vision Drive Enfield, Connecticut - -------------------------------------------------------------------------------- Class A James Wilen and Wilen Management 293,925 (2) 10.5% Common Stock Corporation 2360 West Joppa Road Suite 226 Lutherville, Maryland Heartland Advisors, Inc. 520,000 (3) 18.5% 790 North Milwaukee Street Milwaukee, Wisconsin The IDS Mutual Fund Group 374,665 (4) 11.8% IDS Tower 10 Minneapolis, Minnesota OKGBD & Co. 360,001 (5) 11.4% c/o Bankers Trust P.O. Box 704 Church Street Station New York, NY 10015 Triumph-Connecticut Limited 765,000 (6) 21.4% Partnership 60 State Street, 21st Floor Boston, Massachusetts
- -------------- Notes to Table (1) DM Associates Limited Partnership ("DM Associates") is the owner of record of 1,858,743 shares of Class B Common Stock, representing approximately 66.8% of the issued and outstanding shares of Class B Common Stock, and 60.7% of the total voting power of both classes of the Common Stock. -21- The general partner of DM Associates is New DM Management Associates I ("DM Management I"), which is a general partnership. The general partners of DM Management I are Robert B. Stein, Jr., and Gregory G. Landry, each owning one half of the partnership interest of DM Management I. As the sole general partner of DM Associates and by virtue of the provisions of the limited partnership agreement of DM Associates, DM Management I has the power to vote and dispose of the 1,858,743 shares owned by DM Associates, subject to the consent of the limited partners of DM Associates being required for any sale of more than 360,000 shares. In addition, the partnership agreement of DM Associates provides that, prior to voting the 1,858,743 shares, DM Management I shall consult with a certain limited partner as to the voting of such shares. If, after consultation with the limited partner, DM Management I votes the shares in a manner with which the limited partner disagrees, the limited partner shall have the right to dissolve DM Associates. The partnership agreement of DM Management I provides that a majority of the partnership interests of DM Management I determine how to vote 638,743 of the shares of Class B Common Stock owned by DM Associates, and that the remaining 1,220,000 shares of Class B Common Stock owned by DM Associates will be voted for or against any stockholder motion or proposal in the same proportion that all other shares of Class B Common Stock are voted for or against such motion or proposal (including 638,743 shares voted by DM Associates). As the managing general partner of DM Management I, Mr. Stein has sole indirect dispositive power with respect to the 1,858,743 shares owned by DM Associates, and shares voting power with respect to the 1,858,743 shares with Mr. Landry, as general partners of DM Management I. Mr. Stein and Mr. Landry, as officers and directors of the Company, also share indirect voting and dispositive power with respect to 1,220,000 of the 1,858,743 shares under a stock pledge agreement executed by DM Associates in favor of the Company. The number of shares set forth in the table above does not include shares of Class A Common Stock that any of Messrs. Stein and Landry may beneficially own. (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 293,925 shares represent approximately 5.3% of the total number of issued and outstanding shares of both classes of the Company's Common Stock, and approximately 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 520,000 shares represent approximately 9.3% of the total number of issued and outstanding shares of both classes of the Company's Common Stock and approximately 1.7% of the total voting power of both classes of the Company's Common Stock. (4) The IDS Mutual Fund Group, through nominees, holds currently exercisable Warrants to purchase an aggregate of 374,665 shares of Class A Common Stock. If the 374,665 shares underlying the Warrants were issued, they would represent approximately 6.3% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 1.2% of the total voting power of both classes of Common Stock. (5) OKGBD & Co. and its affiliates hold currently exercisable Warrants to purchase an aggregate of 360,001 shares of Class A Common Stock. If the 360,001 shares underlying the Warrants were issued, they would represent approximately 6.0% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 1.2% of the total voting power of both classes of Common Stock. (6) Triumph-Connecticut Limited Partnership ("Triumph"), Triumph's general partner, Triumph-Connecticut Capital Advisors, Limited Partnership ("TCCALP"), and TCCALP's general partners, Triumph-Capital Group, Inc., Fredrick W. McCarthy, Fredrick S. Moseley, IV, E. Mark Norman, Thomas W. Janes, John M. Chapman and Richard J. Williams, reported on a Schedule 13D filed with the SEC their shared beneficial ownership of currently exercisable Warrants to purchase an aggregate of 765,000 shares of Class A Common Stock. If the 765,000 shares underlying the Warrants were issued, they would represent approximately 12% of the total number of issued and outstanding shares of both classes of Common Stock, and approximately 2.4% of the total voting power of both classes of Common Stock. -22- 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 4, 1996:
Shares (and Percent) of Common Stock Name Beneficially Owned as of May 8, 1995 - ---------------------------- ----------------------------------------------------------- Percent Director Class B Class A of Total Class B Director Since Common Stock Common Stock Voting Power ---------------- -------- ---------------- ---------------- ------------ Frank W. Barrett............ 1983 1,250 (*) 6,000 (1) (*) J. Kermit Birchfield, Jr.... 1996 2,000 (*) 5,000 (*) (*) John W. Everets, Jr......... 1994 10,000 (*) 3,500 (*) (*) Gregory G. Landry........... 1991 1,858,743 (66.8%) 56,292(2.0%)(2)(3) (60.7%) Robert B. Stein, Jr......... 1992 1,858,743 (66.8%) 80,614(2.8%)(2)(4) (60.8%) Class A Director ---------------- Thomas W. Janes............. 1995 0 765,000 (5) (2.4%) Truby G. Proctor, Jr........ 1996 13,000 (*) 0 (*) Named Executive Officers and Directors - ---------------------------- Gregg O. Guy................ N/A 0 33,951 (1.2%)(6) (*) Gary A. Payne............... N/A 0 9,750 (*)(7) (*) Greg Wozniak............... N/A 0 12,625 (*)(8) (*) All Directors and Executive Officers as a Group --------------------------- (16 persons)................ 1,884,993 (67.7%) 1,002,025 (26.4%)(9) (62.8%)
- ---------------------------- (*) Owns Less than 1% of the issued and outstanding class of Common Stock or of the total voting power. (1) Includes currently exercisable non-qualified stock options granted to Mr. Barrett to purchase 6,000 shares of Class A Common Stock. (2) Messrs. Stein and Landry are each partners of DM Management I (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 Mr. Landry to purchase 56,292 shares of Class A Common Stock. (4) Includes currently exercisable incentive stock options granted to Mr. Stein to purchase 74,861 shares of Class A Common Stock. (5) The shares of Class A Common Stock set forth in this table for Mr. Janes include the shares set forth for Triumph in the Principal Shareholders table above. Mr. Jane's pecuniary interest in the 765,000 shares is based upon his status as general partner of TCCALP, general partner of Triumph, the entity holding the shares, and is not discernable. Mr. Janes disclaims beneficial ownership of all shares other than those attributable to him as a general partner of TCCALP. (6) Includes currently exercisable incentive stock options granted to Mr. Guy to purchase 24,625 shares of Class A Common Stock. (7) Includes currently exercisable incentive stock options granted to Mr. Payne to purchase 9,750 shares of Class A Common Stock. (8) Includes currently exercisable incentive stock options granted to Mr. Wozniak to purchase 12,625 shares of Class A Common Stock. (9) Includes currently exercisable stock options granted to all directors and executive officers of the Company to purchase 214,591 shares of Class A Common Stock and currently exercisable Warrants to purchase 765,000 shares of Class A Common Stock. -23- 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: Gary A. Payne (one report due upon becoming an executive officer); and Darrell J. Davis, (one report for one transaction). ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None -24- 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: June 3, 1996 DAIRY MART CONVENIENCE STORES, INC. By/s/ Robert B. Stein, Jr. By/s/ Gregory G. Landry ------------------------ --------------------- Robert B. Stein, Jr. Gregory G. Landry President, Executive Vice President and Chief Executive Officer Chief Financial Officer and Chairman of the Board -25- June 3, 1996 Office of Document Control/EDGAR Securities and Exchange Commission 450 Fifth Street, Northwest Washington, DC 20549 RE: FORM 10-K/A AMENDMENT NO. 1 OF DAIRY MART CONVENIENCE STORES, INC. Dear Sir or Madam: Filed electronically via EDGAR on this date is the annual report on Form 10-K/A Amendment No. 1 of Dairy Mart Convenience Stores, Inc. for the fiscal year ended February 3, 1996, complete with exhibits. If you should have any questions or comments regarding the Form 10-K/A, please contact the undersigned at (860) 741-4444. Very truly yours, DAIRY MART CONVENIENCE STORES, INC. /s/ Gregory G. Landry ----------------------------------- Gregory G. Landry Executive Vice President Chief Financial Officer -1- -----END PRIVACY-ENHANCED MESSAGE-----