SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A NO. 1
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF
1934
For the fiscal year ended June 30, 1996.
Commission file number: 0-11895
CONTINENTAL HEALTH AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2362097
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
910 Sylvan Avenue
Englewood Cliffs, N.J. 07632
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (201) 567-4600
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $.02
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. [X]
As of September 27, 1996 the aggregate market value of the voting stock held by
non-affiliates of the registrant was $8,826,436.
As of September 27, 1996, 9,288,716 shares of the registrant's common stock
were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE.
None
PART III
Item 10. Directors and Executive Officers.
Directors
Served on
the Board of
Directors
Name Age Since
Jack Rosen . . . . . . . . . 50 1981
Joseph Rosen . . . . . . . . 45 1981
Israel Ingberman . . . . . . 50 1981
Joseph Giglio. . . . . . . . 55 1981
Bruce Slovin . . . . . . . . 60 1988
Carl D. Glickman . . . . . . 70 1989
Jack Rosen has served as the chief executive officer (the President or
Chairman of the Board) and as a Director of the Company since its
incorporation in 1981 and of its subsidiaries from their respective dates of
incorporation, the first of which was in 1976. Mr. Rosen is also the
President and a Director of CompreMedx Corporation ("CompreMedx"), an 89.1%-
owned subsidiary of the Company, and the Chairman of the Board of Directors
and Chief Executive Officer of Infu-Tech, Inc. ("Infu-Tech"), a 59% owned
subsidiary of the Company. He first became involved in the health care field in
September 1971 when he became a director of Garden State Health Care Center
of East Orange, New Jersey. He is actively engaged, together with Joseph
Rosen and Israel Ingberman, who are officers and directors, and along with
Jack Rosen, are the three principal stockholders of the Company (the
"Principal Stockholders"), in a variety of enterprises, including real estate
development and hotel ownership (the "Rosen-Ingberman Enterprises"). Jack
Rosen is the brother of Joseph Rosen.
Joseph Rosen has served as a Vice President and as a Director of the
Company since its incorporation in 1981 and as a director and officer of all
its subsidiaries (including CompreMedx and Infu-Tech) from their respective
dates of incorporation. He became an Assistant Secretary of the Company in
March 1983. He first became involved in the health care field in October
1974 with the organization of Jayber Inc., which operates a nursing home in
West Orange, New Jersey and now is a subsidiary of the Company. He is actively
engaged, together with the other Principal Stockholders, in the Rosen-Ingberman
Enterprises and with Israel Ingberman in nursing home ownership and management
("R-I nursing homes"). He is the brother of Jack Rosen.
Israel Ingberman has served as Secretary, Treasurer and as a Director of
the Company since its incorporation in 1981 and as a director and officer of
all its subsidiaries (including CompreMedx and Infu-Tech) from their respective
dates of incorporation. He first became involved in the health care field in
October 1974 with the organization of Jayber Inc. He is actively engaged,
together with the other Principal Stockholders, in the Rosen-Ingberman
Enterprises and in the R-I nursing homes with Joseph Rosen.
Joseph M. Giglio has been a director of the Company since January 1983 and
is also a Director of Infu-Tech. Since December 1993, he has been serving as
the Chairman of Apogee Research, Inc., an infrastructure consulting firm.
From December 1993 until August 1994, he was the Senior Advisor to the First
Southwest Company. From April 1992 to November 1993, he was an Executive Vice
President of Smith Barney & Co. And from June 1991 to April 1992, he was a
Managing Director of that firm. From January 1990 to June 1991, he was
the President of Chase Municipal Securities, Inc., an affiliate of The Chase
Manhattan Bank, N.A. From August 1988 through December 1989, Mr. Giglio was
a Senior Vice President at Chase Securities, Inc. in the Municipal Finance
Division. For more than five years prior to joining Chase, Mr. Giglio was the
Senior Managing Director of the Public Finance Department at Bear Stearns &
Co., Inc. Mr. Giglio served as Chairman of the National Council on Public
Works Improvement, which released its final report, "Fragile Foundation," in
February 1988. Mr. Giglio chaired the U.S. Senate Budget Committee's Private
Sector Advisory Panel on Infrastructure Financing. He serves on the board of
directors of The Hudson Institute. Mr. Giglio has served as an Associate
Professor of Finance at New York University. He is a graduate of Rutgers
University, and holds a Master of Public Administration degree from New York
University and a Master's degree in Business from Columbia University.
Carl D. Glickman has been a director of the Company since August 1989 and
is also a Director of Infu-Tech. Since 1953, he has been the president of
The Glickman Organization, a real estate ownership and management company.
In addition, Mr. Glickman is a director of Andal Corporation (a diversified
manufacturing company), Bear Stearns Companies, Inc. (an investment banking
company), Jerusalem Economic Corporation (an Israeli real estate company),
Alliance Tyre and Rubber Co. (an Israeli tire manufacturer), Franklin Holdings,
Inc. (an investment company), Lexington Corporate Properties, Inc. (a real
estate investment trust), Modern Video Co. (a motion picture production
company) and Office Max, Inc. (an office supply retailer).
Bruce Slovin has been a Director of the Company since June 1988 and is
also a Director of Infu-Tech. Mr. Slovin is a graduate of Harvard Law School
and Cornell University. Since 1985, he has been president and a director of
Revlon Group Incorporated, an industrial products holding company. Since 1980,
he has been president and a director of MacAndrews & Forbes Group, Inc., an
industrial holding company. In addition, Mr. Slovin is a director of Andrews
Group Incorporated (a publishing and entertainment company), Power Control
Technologies, Inc. (a manufacturer of aerospace components), Cantel
Industries, Inc. (a distributor of furniture and medical equipment) and The
Coleman Company, Inc. (an outdoor recreational equipment manufacturer).
Item 11. Executive Compensation.
The following table sets forth the compensation received during each of
the year ended June 30, 1996, the six months ended June 30, 1995 and the year
ended December 31, 1994, by the Company's chief executive officer and its
other executive officers:
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
Other All
Annual Restricted Other
Compen- Stock Options/ LTIP Compensation
Name and Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
Jack Rosen, Chairman, 1996 300,000<F2> None None None None None None
President and Chief 1995<F1> 150,000<F2>
Executive Officer 1994 300,000<F2>
Richard S. Gordon 1996 120,312<F2> - None None - None None
Executive Vice 1995<F1> 49,479<F2> 5,000 -
President 1994<F3> 99,920<F2> 37,154 5,000
Benjamin Geizhals, 1996 130,000 None None None 2,000 None None
Vice President 1995<F1> 65,000 -
1994 130,000 2,000
<FN>
<F1> Six months ended June 30, 1995
<F2> Includes compensation paid by Infu-Tech
<F3> For the period since Mr. Gordon became employed by the Company and Infu-
Tech in March 1994. Mr. Gordon became an officer of the Company in
August 1994.
During fiscal 1997, Mr. Rosen was awarded a bonus of $150,000 as a result
of performance of the Company and Infu-Tech during fiscal 1996. These
bonuses will be reported on compensation received during fiscal 1997.
Directors' Fees
Since 1993, the directors have waived directors' fees (which, prior to
1993, had been paid to directors who were not employees at the rate of
$10,000 plus $500 for each directors' meeting attended). During 1994 and 1995,
Directors received options in consideration of their waiver of directors fees
Option Plans
The following table sets forth certain information with regard to options
granted during the year end June 30, 1996 to the Company's executive officers:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation For
Option Term
Number of Percent of
Securities Total Options
underlying /SARs Granted Exercise
option/SARs to Employees or Base
Name Granted (#) in Fiscal Price Expiration
Year (%) ($/Sh) Date 5% ($) 10% ($)
Benjamin Geizhals 2,000 0.8 1.25 12/18/05 1,572 3,960
The following table sets forth certain information with regard to exercises
of options and SARs during year end June 30, 1996 and options and SARs held at
June 30, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money
Options/SARs Options/SARs
at Fiscal Year-End<F1> at Fiscal Year Ende
(#) ($)<F2>
Shares Value
Acquired on Realized Exercisable (E)/ Exercisable (E)/
Name Exercise (#) ($) Unexercisable (U) Unexercisable (U)
Jack Rosen - - 500,000(E) $515,000(E)
0(U) 0(U)
Richard S. Gordon - - 5,000(E) $5,000(E)
0(U) 0(U)
Benjamin Geizhals - - 12,000(E) $13,735(E)
0(U) 0(U)
<FN>
<F1> The Corporation has not granted any SARs.
<F2> Based upon the amount by which the high bid price of the Company's Common
Stock on June 30, 1996 ($2.03 per share) exceeded the exercise price
of the options.
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions
During the year-ended June 30, 1996, the Company did not have a
Compensation Committee. Salaries of its senior executive officers, other than
its Chairman of the Board, were set by the Chairman of the Board. The salary
of the Chairman of the Board was approved by the Board of Directors. Jack
Rosen, who is Chairman of the Board, and Joseph Rosen (Jack Rosen's brother)
and Israel Ingberman (the third of the Principal Stockholders), both of whom
are officers of the Company, are members of the Board of Directors and
participate in its deliberations.
Transactions between the Company and members of its Board of Directors
during 1996 were as follows:
The Company is occupying approximately 15,300 square feet of office space
(including 7,400 square feet leased by Infu-Tech) in an office building in
Englewood Cliffs, New Jersey which is owned by the Principal Stockholders.
The rent expense is $27,167 per month. The Company believes the terms on
which it is occupying this space are more favorable to it than the terms on
which it could rent a similar amount of comparable space from an unaffiliated
person.
Early in 1990 a dispute over management fees between the Company and three
nursing homes owned by the Principal Stockholders was resolved by the nursing
homes' agreeing to pay a total of $1,940,000 in satisfaction of all their
December 31, 1989 obligations to the Company. In early 1992, the settlement
agreement between the Company and the three nursing homes was modified to
provide that the then-existing balance of $1,046,000 would be paid in sixteen
equal quarterly payments of $76,000 each (which included interest at 7 1/2%
and principal) beginning June 15, 1992 and continuing through March 15, 1996.
The balances remaining on the modified settlement agreement at December 31,
1994 and 1993 (including accrued interest due to payment delinquencies) were
$839,000 and $783,000. In January 1995 the settlement agreement was further
modified to provide for a $227,000 principal and interest payment to be made on
or before March 30,1995 and the remaining balance of $626,000 to be paid in
twelve equal quarterly installments of $60,000 each (including interest at 8
1/2%) beginning July 1, 1995 and continuing through March 31, 1998. As of
June 30, 1996, the balance was $622,972 including interest, and three
payments were unpaid.
A subsidiary of the Company which owns and operates a nursing home in
Atlantic City, New Jersey has for several years moved residents of the
subsidiary's nursing home to one of the R-I nursing homes during hurricanes
or serious storms. During 1996, the subsidiary paid the R-I nursing homes a
total of $31,000 for lodging residents of the subsidiary's nursing home during
storms. The Company believes the amounts charged by the R-I nursing homes
were at least as low as what would have been charged by comparable nursing
homes in the area owned by unaffiliated persons.
At June 30, 1996, the Company was owed a total of $180,000 from two
entities owned by the Principal Stockholders resulting from loans to the
entities from various corporations which now are subsidiaries of the
Company, but which were not owned by the Company when the loans were made.
The Company is also owed $20,000 for health insurance premiums and other
charges with regard to the R-I nursing homes.
During 1996, the Company (including its Infu-Tech subsidiary) was charged
$73,000 by a corporation owned by Jack Rosen for use of an airplane owned by
that corporation. The Company believes the rates it was charged for use of
that airplane were lower than those which would have been available from an
independent charter company for use of a similar airplane.
During 1996, Carl Glickman, a director of the Company and Infu-Tech, was
paid $54,000 by the Company for financial consulting fees.
In November 1993, as part of a financial restructuring, the Company
offered to exchange 530 shares of its Common Stock for each $1,000 principal
amount of its 14-1/8% Subordinated Debentures due 1996 ("Subordinated
Debentures"). In response to this offer, The 1965 Trust, of which Carl
D. Glickman, a director of the Company and of Infu-Tech is the sole trustee,
tendered $1,774,000 principal amount of Subordinated Debentures, which it had
purchased on October 12, 1993 for $709,600 (40% of their principal amount)
and received in exchange 940,220 shares of the Company's Common Stock. Prior to
the purchase of the Subordinated Debentures, the Board of Directors had been
informed of the proposed purchase and had determined that the Company would
not at that time be able to purchase the Subordinated Debentures for the
price at which they were being made available to The 1965 Trust. The day after
it purchased the Subordinated Debentures, The 1965 Trust gave the Company the
option, exercisable until October 12, 1994, to purchase 939,160 of the shares
it would receive in exchange for the Subordinated Debentures for $779,680 (which
was 110% of the amount The 1965 Trust paid for the Subordinated Debentures).
The option expired without being exercised.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table contains information concerning the ownership of the
Company's Common Stock on September 30, 1996 by each person known to the Company
to be a beneficial owner of more than 5% of any class of the Company's voting
securities, by the Company's directors, by each of the executive officers of
the Company who was among the five most highly compensated executive officers
of the Company in 1996 and by directors and executive officers as a group are
as follows:
Title of Class Name and Address Amount and Nature of
Of Beneficial Owner Beneficial Ownership Percent of Class
Common Stock Colonial Management 530,000 shares 5.7%
Associates, Inc.
1 Financial Center
Boston, MA 02111
Common Stock Michael Klein 939,160 shares 10.1%
Preferred Stock 100 Shoreline Highway 3,305 shares 23.8%
Building A, Suite 190
Mill Valley, CA 94941
Common Stock Andrew J. McLaughlin, Jr. 1,009,391 shares 10.9%
61 Broadway
New York, NY 10006
Common Stock Carl D. Glickman 76,000 shares <F1> <F2>
The Leader Building,
Suite 1140
Cleveland, OH 44114
Common Stock Israel Ingberman 886,072 shares 9.5%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Jack Rosen 1,405,576 shares <F1><F3> 14.4%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Joseph Rosen 922,827 shares <F3><F4> 9.9%
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Bruce Slovin 92,000 shares <F1> 1.0%
35 E. 62nd Street
New York, NY 10021
Common Stock Joseph M. Giglio 95,517 shares <F1> 1.0%
4350 East West Highway,
Suite 600
Bethesda, MD 20814
Common Stock Richard S. Gordon 5,000 shares <F1> <F2>
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock Benjamin Geizhals 12,000 shares <F1> <F2>
910 Sylvan Avenue
Englewood Cliffs, NJ 07632
Common Stock All directors and 3,494,992 shares <F1> 34.8%
executive officers
as a group (10 persons)
____________________
[FN]
<F1> Includes shares of Common Stock issuable on exercise of outstanding stock
options as follows: Mr. Rosen 500,000 shares; Mr. Giglio, 85,000 shares;
Mr. Glickman, 75,000 shares; Mr. Slovin, 85,000 shares; Mr. Geizhals,
12,000 shares; Mr. Gordon, 5,000 shares; all directors and executive
officers as a group, 762,000 shares.
<F2> Less than 1%.
<F3> Includes shares of common stock held by children as follows: Jack Rosen,
19,500 shares and Joseph Rosen, 9,750 shares.
<F4> Includes 19,500 shares of Common Stock held as Custodian for children.
On October 25, 1996, Cede & Co. owned of record 6,274,773 shares of the
Company's Common Stock, constituting 68% of the outstanding Common Stock. The
Company understands those shares were held beneficially for members fo the New
York Stock Exchange, some of whom may in turn have been holding shares
beneficially for customers.
Item 13. Certain Relationships and Related Transactions
Transactions between the Company and members of its Board of Directors are
described under "Compensation Committee Interlocks and Insider Participation."
Filing of Reports
To the best of the Company's knowledge, no director, officer, or beneficial
owner of more than 10% of the Company's stock failed to file on a timely basis
reports required by Section 16(a) of the Securities and Exchange Act of 1934, as
amended, with regard to the year ended June 30, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Amended Report to be
signed on its behalf by the undersigned, thereunto duly authorized.
CONTINENTAL HEALTH AFFILIATES, INC.
By: /s/ Benjamin Geizhals
Date: October 30, 1996 Benjamin Geizhals
Vice President and General Counsel