SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Amendment Includes Part III - Items 10 through 13, which were previously
incorporated by reference to the Issuer's Proxy Statement)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1994, OR
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____________ to _____________
Commission File No. 1-8356
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DVL, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 13-2892858
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24 River Road, Bogota, New Jersey 07603
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 487-1300
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Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
----------------------------- -----------------------
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
----
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best
of registrant's knowledge, in definitive proxy information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Aggregate market value of voting stock held by non-affiliates of the Registrant,
based upon the closing sale price of the stock as reported on the New York Stock
Exchange ("NYSE") on March 28, 1995: $2,378,741.
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At March 28, 1995, 8,593,268 shares of the Registrant's Common Stock were
outstanding.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
=========================================================
The directors of DVL, Inc. (the "Company") consist of three (3)
independent directors and one (1) director who is also an executive
officer as follows:
Director
Name Age Since Office(s)
---- --- -------- ---------
Director and Executive
Officer
- ----------------------
Alan E. Casnoff 51 1991 President and Director
Independent Directors
- ----------------------
Herbert L. Golden 81 1979 Director
Myron Rosenberg 66 1973 Director
Frederick E.
Smithline 63 1982 Chairman of the Board
Directors are currently elected to serve until the next annual
meeting of stockholders and until their successors have been elected and
have qualified.
ALAN E. CASNOFF has served as President since November 1994 and as
Executive Vice President and a director since October 1991. Since June
1992, Mr. Casnoff has served as Of Counsel to the law firm of Fox,
Rothchild, O'Brien & Frankel, Philadelphia, Pennsylvania. From November
1990 to October 1991, Mr. Casnoff served as a consultant to the Company
and from 1971 to October 1991, as Secretary of the Company. Since May
1991, Mr. Casnoff has served as a director of Kenbee Management, Inc.
("Kenbee"). Mr. Casnoff also served as Executive Vice President of
Kenbee from January 1992 to November 1994 and has served as President of
Kenbee since November 1994. In addition, since 1977, Mr. Casnoff has
been a Partner of P&A Associates, a private real estate development firm.
From 1969 to October 1990, Mr. Casnoff was associated with the law firm
of Saul, Ewing, Remick & Saul, Philadelphia, Pennsylvania, previous legal
counsel to the Company and Kenbee.
FREDERICK E. SMITHLINE has served as Chairman of the Board of the
Company since 1990 and as a director since 1982. Since September 1989,
Mr. Smithline has been Of Counsel to the law firm of Epstein, Becker &
Green, P.C., New York, New York.
HERBERT L. GOLDEN has served as a director of the Company since
1979. From January 1979 to November 1991, Mr. Golden served as a senior
consultant to Bankers Trust Company, New York, New York. Mr. Golden is
currently retired.
MYRON ROSENBERG has served as a director of the Company since 1973.
Mr. Rosenberg is currently Executive Vice President of Rosenthal &
Rosenthal, Inc., New York, New York, a commercial finance concern, and
has been employed by Rosenthal & Rosenthal, Inc. since 1961.
1
In addition, Joel Zbar is Chief Operating Officer, Chief Financial
Officer and Treasurer of the Company, Robert W. LoSchiavo is Vice
President, Secretary and General Counsel of the Company and Mark J.
Schwartz is Vice President of the Company.
JOEL ZBAR (age 38) has served as the Company's Chief Operating
Officer since November 1994, as Chief Financial Officer of the Company
and Kenbee since January 1993, and as Treasurer of the Company and of
Kenbee since 1988.
ROBERT W. LOSCHIAVO (age 37) has served as Vice President of the
Company since January 1990, as Secretary of the Company since October
1991 and as General Counsel since December 1991. Mr. LoSchiavo also
serves as Vice President, General Counsel and Secretary of Kenbee.
MARK J. SCHWARTZ (age 35) has served as Vice President of the
Company and Kenbee since December 1991. From August 1987 to December
1991, Mr. Schwartz served as a financial analyst and as Assistant Vice
President of Kenbee.
2
ITEM 11. EXECUTIVE COMPENSATION
================================
The following table discloses the compensation awarded to or earned by,
during the Company's last three fiscal
years, the Chief Executive Officers and the four (4) other most highly
compensated executive officers as of the end
of fiscal 1994 whose annual salary plus other forms of compensation exceeded
$100,000:
SUMMARY COMPENSATION TABLE
--------------------------
All Other
Annual Compensation
Long-Term Compensation Compensation
-------------------
- ----------------------------------- ------------
Other
Cash Annual Restricted
Performance LTIP
Name Year Salary Bonus Compensation Stock Awards
Units Payouts
---- ---- ------ ----- ------------ ------------
- ----------- -------
Ben S. Read, Jr.(6) 1994 $327,655 $--- $32,183(5) None
0 None None
President and Chief 1993 353,871 --- $32,122(5) None
52,000 None None
Executive Officer 1992 337,836(1) 5,000 None None
112,500 None None
through October 1994
Alan E. Casnoff 1994 339,810(2) --- None None
0 None None
Executive Vice 1993 340,636 --- None None
52,000 None None
President 1992 307,905(1,2) 5,000 None None
112,500 None None
since November 1994
Joel Zbar 1994 250,000 --- None None
0 None None
Treasurer, Chief 1993 226,000 13,000 None None
50,000 None None
Financial Officer 1992 188,308 7,000 None None
50,000 None None
and Chief Operating
Officer
David C. Loughlin(6) 1994 193,674(3) --- None None
0 None None
Senior Vice President 1993 193,590(3) --- None None
50,000 None None
1992 149,753 --- None None
0 None None
Robert W. LoSchiavo 1994 144,530 --- None None
0 None None
Vice President, 1993 119,189 5,000 None None
15,000 None None
Secretary and 1992 115,000 5,000 None None
0 None None
General Counsel
Richard K. Moeller(6) 1994 116,000 5,000 None None
25,000 None None
Vice President of 1993 96,500 28,000 None None
15,000 None None
Finance 1992 97,971 5,000 None None
- None None
<FN>
(1) Includes compensation received as director of the Company and Kenbee and
for Mr. Casnoff the payment of certain
deferred fees for services rendered as secretary of the Company.
(2) Does not include payments made to a corporation partially owned and
controlled by Mr. Casnoff which provided
management assistance for two properties in Philadelphia, Pennsylvania
owned by affiliated partnerships for
which such corporation received $9,187.50, $12,000 and $57,000 in 1994,
1993 and 1992, respectively.
(3) Includes compensation received from Kenbee and affiliated partnerships.
(4) The Performance Units granted under the Company's Performance Unit Plan are
SAR's for purposes of Item 402 of
Regulation S-K of the Commission.
(5) Represents the date of redemption cash value of 61,511 performance units
redeemed by Mr. Read to meet note
payments due under a certain note to the Company. See "Indebtedness of
Management".
(6) Ben S. Read, Jr., David C. Loughlin and Richard K. Moeller resigned from
their positions with the Company on
November 1, 1994, January 1, 1995 and March 16, 1995, respectively.
3
The Company has employment contracts with Messrs. Zbar and LoSchiavo
pursuant to which they are paid current annual salaries at the rate per
annum of $250,000 and $144,500, respectively. The employment contracts
with Messrs. Zbar and LoSchiavo provide for certain payments if the
employment term is terminated without cause or is not renewed at the end
of the term in amounts equal to six (6) months salary. The employment
contracts with Messrs. Zbar and LoSchiavo expire on October 31, 1995 and
December 31, 1995, respectively. In addition, the Board of Directors has
authorized the Company to make certain termination payments to Mr.
Casnoff in an amount equal to six (6) months salary.
In November 1994,February 1995 and March 1995, respectively, the
Company entered into termination and consulting agreements with Messrs.
Read, Loughlin and Moeller. In Mr. Read's agreement, the Company agreed
to pay Mr. Read $110,000 annually through October 31, 1996 for consulting
services to be rendered as required. Pursuant to Mr. Loughlin's
agreement, certain monthly payments totaling $16,000 are to be made
through July 1995. In Mr. Moeller's agreement, the Company agreed to pay
Mr. Moeller certain monthly payments totalling $15,000 through August
1995 for consulting services to be rendered as required. As part of
Messrs. Moeller and Loughlin's agreements, Messrs. Moeller and Loughlin
surrendered to the Company all of the performance units previously
granted to each of them.
Directors who are not officers or employees of the Company presently
receive a directors fee of $1,500 per month plus $500 for each Audit
Committee meeting of the Board of Directors attended. Directors who are
officers or employees of the Company receive no compensation for their
services as directors or attendance at any Board of Directors Committee
meeting.
INDEBTEDNESS OF MANAGEMENT
Other than as discussed below, Officers, Directors and stockholders
of the Company have not obtained loans and loan commitments in excess of
$60,000.
In January and February 1993, the Company advanced $75,000 as a loan
to Mr. Ben Read, former President and Chief Executive Officer of the
company, which was to be repaid over two years in eight installments of
principal plus interest at 8% which began June 1, 1993, with the second
payment on August 1, 1993 and subsequent payments due and paid quarterly
thereafter. Mr. Read pledged as security for this loan his performance
units equal to the balance of the loan. In 1994 the remaining $19,128
balance of his obligation was satisfied in consideration of his
obligations under his termination agreement with the company.
STOCK BASED COMPENSATION
On November 15, 1990, the Board adopted the Company's 1990
Performance Unit Plan (the "Plan") for the purpose of providing long-term
incentives to Company employees who are largely responsible for the
management, growth and protection of the Company's business.
The Plan authorizes the grant of performance units, considered to
be stock appreciation rights, only to directors and officers, who are
also employees of the Company or any subsidiary thereof, who are in a
position to make substantial contributions to the management, growth and
success of the business of the Company or any subsidiary thereof, as
determined by the Board, or a committee thereof, as the case may be.
The number of performance units reserved for issuance under the
Plan, as amended, is 900,000, 876,881 of which are outstanding to date.
4
Under the Plan, the holder of performance units is entitled to
receive upon exercise of such units an amount equal to the Fair Market
Value (as defined in the Plan) of a performance unit at the time of
exercise plus all dividends declared with respect to a single share of
the Company's Common Stock from the date of exercise minus the Fair
Market Value of a performance unit at the time of grant, multiplied by
the total number of performance units being exercised by the holder.
Under the Plan, the Fair Market Value of a performance unit means
an amount equal to the fair market value of a share of Common Stock as
determined by the Board of Directors, or a committee thereof, either (a)
by determining the average of the closing prices for the Company's Common
Stock for the twenty most recent trading days (or for such other period
as may be agreed upon between the Company and the holder) on the NYSE or
such other national securities exchange (including the NASDAQ system) on
which the Company's Common Stock may then be publicly traded or (b) in
the event no such market exists, pursuant to such other reasonable method
as may be adopted by the Board of Directors or the committee, as the case
may be, in good faith for such purpose.
The following tables set forth certain information with respect to
performance units granted under the Plan to, and performance units
exercised by (i) the executive officers of the Company listed in the Cash
Compensation Table and (ii) all current executive officers of the Company
as a group, during fiscal 1994. No performance units were granted during
fiscal 1990 under the Plan. All performance units granted are vested and
fully exercisable.
5
PERFORMANCE UNIT GRANTS IN FISCAL YEAR ENDED DECEMBER
31, 1994
==============================================================
Individual Grants Potential
Realizable
at
Assumed Annual Alternative to
Rates
of Stock (f) and (g):
Price
Appreciation Grant Date Value
for
Term
------------------------------------------------
- -------------------- ----------------
Percent of
Total
Performance
Performance Units Granted Exercise
Units to Employees or Base
Grant Date
Granted in Fiscal Price Expiration
Present
(#)Year 1992 ($/Sh) Date 5% ($)
10% ($) Value ($)
Name (b) (c) (d) (e) (f)
(g) (h)
----------- ------------- -------- ---------- ------
------- ----------
Ben S. Read, Jr. 0 0 $ 0 None N/A
N/A $ 0
Alan E. Casnoff 0 0 0 None N/A
N/A 0
David C. Loughlin 0 0 0 None N/A
N/A 0
Robert W. LoSchiavo 0 0 0 None N/A
N/A 0
Joel Zbar 0 0 0 None N/A
N/A 0
Richard Moeller 25,000 45 .55 None N/A
N/A 0
All others 30,000 55 .55 None N/A
N/A 0
<FN>
(1) During 1995, the Board of Directors granted 50,000 and 18,750 performance
units at an Exercise Price of $.39
per unit to Messrs. Zbar and LoSchiavo, respectively and 50,000 performance
units at an Exercise Price of
$.29 per unit to Mr. Zbar. Further, Mr. Casnoff surrendered 50,000
performance units to the Company which
units had an exercise price of $.75 per unit.
6
AGGREGATED PERFORMANCE UNITS EXERCISED IN FISCAL YEAR ENDED DECEMBER 31, 1994
PERFORMANCE UNIT VALUES
=============================================================================
Number of Value of
Unexercised Unexercised
Performance Performance
Units at Fiscal Units at Fiscal
Year-End Year-End
(#) ($)
--------------- ---------------
Performance
Units Value
Exercised Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------- ----------- -------- ------------- -------------
Ben S. Read, Jr. 61,511 32,103(1) 248,131 / 0 0/0
Alan E. Casnoff None None 350,000 / 0 0/0
David C. Loughlin None None 50,000 / 0 0/0
Robert W. LoSchiavo None None 15,000 / 0 0/0
Joel Zbar None None 100,000 / 0 0/0
Richard Moeller None None 40,000 / 0 0/0
All others None None 50,000 / 0 0/0
- --------------------------------------
<FN>
(1) Represents the value of performance units exercised the proceeds of which
were used by Mr. Read to meet the debt service payments on his debt to the
Company. See "Indebtedness of Management".
7
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee of the Board of Directors of the Company
is comprised of the independent directors, Messrs. Golden, Rosenberg and
Smithline. The purpose of the Compensation Committee is to review
compensation of the executive officers of the Company to determinate if
such compensation is in line with similar organizations and to recommend
and provide appropriate incentives to key employees.
During 1994, in connection with the Company's efforts to reduce
overhead and expenses, Mr. Casnoff assumed the position of President of
the Company and his salary was reduced by $35,000. Given the Company's
continued operating losses in 1994, the Board of Directors reduced
overhead expenses by terminating certain executive officers and granting
to all remaining executive officers no increases in compensation for 1995
and no bonuses for 1994.
This report was furnished by Messrs. Golden, Rosenberg and
Smithline, all members of the Compensation Committee.
STOCK PERFORMANCE CHART
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock for
each of the Company's last five fiscal years with the cumulative return
(assuming reinvestment of dividends) of the New York Stock Exchange
Equity Market Index.
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
DVL, Inc. 100 8 2 5 8 2
Dow Jones Equity Market Index 100 96 127 138 152 158
Dow Jones Real Estate Investment 100 66 74 67 78 74
8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS AND
OFFICERS
========================================================================
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 27, 1995,
by (a) each person known by the Company to own beneficially more than 5%
of such stock, (b) each director of the Company and (c) all directors and
officers of the Company as a group. Unless otherwise indicated, the
shares listed in the table are owned directly by the individual and the
individual has sole voting and investment power with respect to such
shares.
Name of Beneficial Amount and Nature of % of
Owner Beneficial Ownership Class*
- ---------------------- -------------------- ------
Alan E. Casnoff 33,638 (1) 0.37%
Herbert L. Golden 6,600 0.08%
Myron Rosenberg 89,854 (2) 1.05%
Frederick E. Smithline 7,550 (3) 0.09%
All Directors and
Executive Officers as
a Group (7 persons) 137,642 (1)(2)(3)(4) 1.60%
<FN>
* Each named person and all executive officers, directors and nominees
for director, as a group, are deemed to be the beneficial owners of
securities that may be acquired within 60 days through the exercise
of options, warrants or exchange or conversion rights. Accordingly,
the number of shares and percentage set forth opposite each share-
holder's name in the above table under the columns captioned "Amount
and Nature of Beneficial Ownership" include shares of Common Stock
issuable upon exercise of presently exercisable warrants, convertible
debentures and stock options. The shares of Common Stock so issuable
upon such exercise, exchange or conversion by any such shareholder are
not included in calculating the number of shares or percentage of
Common Stock beneficially owned by any other shareholder.
(1) (a) Excludes 480 shares of the Company's Common Stock held by
Mr. Casnoff's adult son, as to which shares Mr. Casnoff disclaims
beneficial ownership.
(b) Includes 33,638 shares of the Company's common stock which
a corporation, partially owned and controlled by Mr. Casnoff, has the
right to acquire at any time upon the conversion to stock of $10,000
Convertible Subordinated Promissory Notes plus $3,638 of interest
thereon, and 20,000 shares of Common Stock issuable upon the exercise of
Warrants issued by the Company.
(2) Includes 4,300 shares held by Mr. Rosenberg's wife, of which
Mr. Rosenberg disclaims beneficial ownership.
(3) Includes 550 shares held by Mr. Smithline and his brother as
tenants-in-common and 6,000 shares held by Mr. Smithline's wife, of which
6,000 shares Mr. Smithline disclaims beneficial ownership.
(4) Excludes 50,000 shares authorized to be, but not yet issued,
by the Board of Directors to each of Messrs. Golden, Rosenberg,
Smithline, Zbar and LoSchiavo and 150,000 shares authorized to be, but
not yet issued, to Mr. Casnoff.
9
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than
ten percent of a registered class of the Company's equity securities, to
file with the Commission and the New York Stock Exchange (the "Exchange")
initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers,
directors and greater than ten-percent shareholders are required by
Commission regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that
no other reports were required during the two fiscal years ended December
31, 1994, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were
complied with, except Mr. Rosenberg failed to file on a timely basis one
report with respect to ten transactions.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
========================================================
P&A Associates, a Pennsylvania general partnership of which Mr.
Casnoff, President and director of the Company, is a partner, provides
management services for certain properties located in Philadelphia,
Pennsylvania which are owned by partnerships affiliated with the Company.
Management fees paid by various entities to such entity during the 1994
fiscal year totaled $9,188. Further, since February 1992 the Company and
related entities have used a partner of Mr. Casnoff in P&A Associates to
perform legal services for the Company and affiliates in connection with
certain real estate transactions. Mr. Casnoff's partner earned $41,415
in legal fees from the Company and affiliates in 1994.
Certain officers and directors of the Company serve as officers and
directors of Kenbee, which was the Company's largest debtor and previous
manager, and control over which has been given to Mr. Casnoff by virtue
of certain voting trust agreements. Mr. Casnoff, President of the
Company and Kenbee, acquired sole voting power over the shares of capital
stock of R&M Holding, a Delaware corporation and the sole stockholder of
Kenbee, pursuant to the terms of a Voting Trust Agreement, dated May 15,
1991, between R&M Holding and Mr. Casnoff, as trustee. The shares
subject to the Agreement are owned by Roger D. Stern and Martin Wright,
each a 50% owner of the shares of capital stock of R&M Holding, and each
a former officer and director of the Company. The term of the Agreement
expires on January 1, 2000 as to 50% of the shares of capital stock owned
by Mr. Stern and expired on December 31, 1994 as to 50% of the shares of
capital stock owned by Mr. Wright.
Rosenthal & Rosenthal Inc., a commercial finance concern of which
Mr. Rosenberg, director of the Company, is Executive Vice President, made
a loan to the Company in 1990 in the aggregate principal amount of
$1,331,700, secured by the assignment of a certain promissory note and
mortgage executed in favor of the Company. Regular payments of principal
and interest on this loan were made through September 1990. In 1992 the
Company completed a settlement in which this loan was exchanged for the
assignment to Rosenthal & Rosenthal, Inc. of a wraparound mortgage,
certain limited partnership units and options to acquire 600,000 shares
of the Company's common stock for $1.00 per share. Rosenthal &
Rosenthal, Inc. was also provided with a note with a face value of
$107,000 bearing interest at 10% per annum and 214,000 warrants to
purchase common stock for $1.00 per share which warrants expire in April
1998. Rosenthal & Rosenthal, Inc. will at its option return either the
wraparound mortgage or the notes and warrants within five years of the
settlement.
10
Since June 1992, the Company and affiliates have periodically
retained Fox, Rothschild, O'Brien & Frankel to perform certain legal
services in connection with various matters. Mr. Casnoff, director and
President, serves as Of Counsel to Fox, Rothschild, O'Brien & Frankel.
During 1994, the Company and affiliates incurred $52,939 of fees for
legal services rendered by this law firm.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Date: April 27, 1995
DVL, INC.
By: ROBERT LOSCHIAVO
----------------
Robert LoSchiavo
Secretary
11