- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 10-K/A
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED
NOVEMBER 30, 1997
[_]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 NUMBER 000-22551
CAREY INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 52-1171965
(State of incorporation or (IRS Employer Identification No.)
organization)
4530 WISCONSIN AVENUE, NW, FIFTH FLOOR
WASHINGTON, DC 20016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 895-1200
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 $.01
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 last 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 10-K. [_]
As of February 24, 1998, an aggregate of 7,680,691 shares of Common Stock,
par value $.01, were outstanding, and the aggregate market value of the
Registrant's Common Stock held by non-affiliates was $104,243,382 based upon
the closing price of the Common Stock on the Nasdaq National Market on such
date.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "CARY." The following table sets forth for each period indicated the
high and low sale prices for the Common Stock as reported by the Nasdaq
National Market.
HIGH LOW
---- ---
May 28, 1997 through August 31, 1997......................... $15 7/8 $11
September 1, 1997 through November 30, 1997.................. 18 13 1/2
December 1, 1997 through February 23, 1998................... 17 5/8 14 7/8
On February 23, 1998, the last reported sale price of the Common Stock was
$17.25 and there were approximately 107 holders of record of Common Stock.
DIVIDEND POLICY
The Company intends to retain all earnings to finance the growth and
development of its business and does not anticipate paying cash dividends on
its Common Stock in the foreseeable future. Any future determination as to the
payment of dividends on the Common Stock will depend upon the Company's future
earnings, results of operations, capital requirements and financial condition
and any other factor the Board of Directors of the Company may consider. The
Company's agreements with its principal lenders prohibit dividend payments.
USE OF PROCEEDS
In its Report on Form 10-Q for the quarterly period ended August 31, 1997,
the Company reported on the use of proceeds from the sale of 3,335,000 shares
of its Common Stock pursuant to the Company's Registration Statement on Form
S-1 (File No. 333-22651), which was declared effective on May 27, 1997, in
connection with its initial public offering of Common Stock (the "IPO"). In
addition to the use of proceeds previously reported, the Company used $1.3
million of the net proceeds from the IPO for acquisitions during the quarter
ended November 30, 1997.
SALES OF UNREGISTERED SECURITIES
During the fiscal year ended November 30, 1997 the Company issued securities
in the following transactions which were not registered under the Securities
Act.
As disclosed in the Company's IPO Registration Statement on Form S-1, on
June 2, 1997 the Company issued (i) two warrants, each to purchase 67,500
shares of the Company's Common Stock, issued to Montgomery Securities and
Ladenburg Thalman & Co. Inc. for financial advisory services and warrants to
purchase an aggregate of 15,000 shares of Common Stock to LP Associates,
William Russell, Michael Press and Allen M. Lewin as finder's fees and (ii)
228,571 shares of Common Stock in connection with the Company's acquisition of
Manhattan Limousine.
1
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information pertaining to the
Company's directors and executive officers.
NAME AGE CURRENT POSITION
---- --- ----------------
Vincent A. Wolfington........... 57 Chairman of the Board and Chief Executive
Officer
Don R. Dailey................... 60 President and Director
Guy C. Thomas................... 59 Executive Vice President--Operations
David H. Haedicke............... 51 Executive Vice President and Chief
Financial Officer
Richard A. Anderson, Jr......... 52 Senior Vice President
Sally A. Snead.................. 38 Senior Vice President--Information Systems
John C. Wintle.................. 51 Senior Vice President--Europe
Paul A. Sandt................... 37 Vice President and Chief Accounting Officer
Devin J. Murphy................. 31 Senior Vice President and Chief Development
Officer
S. Terrell Mellen............... 41 Senior Vice President--Sales and Marketing
Michael P. O'Callaghan.......... 32 Senior Vice President and Director of
Acquisitions
Robert W. Cox................... 60 Director
William R. Hambrecht............ 62 Director
David McL. Hillman.............. 44 Director
Nicholas J. St. George.......... 58 Director
Set forth below is a description of the backgrounds of each of the directors
and executive officers and the director nominee of the Company.
Vincent A. Wolfington, a co-founder of the Company, has served as its
Chairman of the Board of Directors and Chief Executive Officer since 1979. For
over 25 years, Mr. Wolfington has been involved in the limousine industry and
directly associated with the Carey system of licensees and affiliates. Mr.
Wolfington has served as a consultant to the National Academy of Sciences
Transportation Research Board, President of the National Para-transit
Association and a member of the International Limousine Association. Mr.
Wolfington currently is a member of the Executive Committee of the World
Travel and Tourism Council.
Don R. Dailey has been President and a director of the Company, which he co-
founded, since 1979. Mr. Dailey has been directly involved in the limousine
business for over 30 years. Mr. Dailey serves on a number of boards and
committees related to the travel industry, including the National Business
Travel Association, the International Business Travel Associates, the
Association of Corporate Travel Executives, the National Limousine Association
and the International Limousine Association (as its past president and member
of its executive committee).
Guy C. Thomas has served as Executive Vice President--Operations of the
Company since 1987. Mr. Thomas has served on a number of boards and committees
related to the travel industry, including the National Business Travel
Association, the Greater Washington Area Passenger Traffic Association, the
American Society of Association Executives, Meeting Planners International,
the Association of Corporate Travel Executives, the National Limousine
Association and the International Taxicab and Livery Association.
David H. Haedicke has been an Executive Vice President and Chief Financial
Officer of the Company since October 1996. From August 1996 to October 1996,
he was Senior Vice President and Chief Financial Officer of Infotechnology,
Inc., Hadron, Inc. and Comtex Scientific Corporation, an affiliated group of
companies engaged in systems management and software development. From
September 1993 to May 1996, he was Chief Financial Officer of Walcoff &
Associates, Inc., a communications and information management firm. From June
1991 to
2
September 1993, he was Chief Financial Officer and Vice President of Xsirus,
Inc., a high technology research and development company. Mr. Haedicke also
was a partner at Ernst & Young L.L.P. from 1985 to June 1991, and was an
employee at that firm from 1973 to 1985. Mr. Haedicke is a Certified Public
Accountant.
Richard A. Anderson, Jr. has served as a Senior Vice President of the
Company since December 1988. Mr. Anderson also was Chief Operating Officer of
the Company's New York subsidiary, Carey Limousine NY, Inc., from December
1988 until August 1997. Mr. Anderson is Chairman of the New York Taxi and
Limousine Commission's Limousine Advisory Board, a former Board Member of the
Association of Corporate Travel Executives, and a member of the National
Business Travel Association and Meeting Planners International.
Sally A. Snead has served as the Company's Senior Vice President--
Information Systems since June 1993. From January 1987 to June 1993, she was
Executive Vice President and General Manager of Carey Limousine L.A., Inc. She
is a member of Executive Women International, the National Business Travel
Association, the Association of Corporate Travel Executives and the National
Limousine Association.
John C. Wintle has served as the Company's Senior Vice President--Europe
since May 1996 and as Executive Vice President and Managing Director of Carey
U.K. Ltd., a subsidiary of the Company, since March 1996. From 1982 to
February 1996, Mr. Wintle served Savoy Hotel PLC ("Savoy") and its affiliates,
including Camelot Barthropp Ltd. ("Camelot"), in various capacities. From
March 1993 to February 1996, Mr. Wintle was Executive Vice Chairman of
Camelot, which was acquired by Carey U.K. Ltd. in February 1996. Previously,
from 1989 to 1993, Mr. Wintle was General Manager, Restaurant Division, of
several entities affiliated with Savoy. From 1982 to 1989, Mr. Wintle had been
Group Financial Controller at Savoy.
Paul A. Sandt has served as a Vice President and Chief Accounting Officer of
the Company since October 1994. From May 1992 through September 1994, Mr.
Sandt was a staff member with the Securities and Exchange Commission, and from
December 1990 through May 1992, he was Director of Finance of The Kline
Automotive Group. From 1984 through 1990, he was employed by Coopers & Lybrand
L.L.P. Mr. Sandt is a Certified Public Accountant.
Devin J. Murphy has served as a Vice President of the Company since May
1996, and became Senior Vice President and Chief Development Officer in April
1997. Mr. Murphy received a Master's Degree in Business Administration from
Duke University in May 1996. For the six years prior to the commencement of
his MBA program in September 1994, Mr. Murphy held various sales and marketing
positions at companies within the information technology industry. These
companies included Bay Networks, Inc., where Mr. Murphy was Marketing Manager
from January 1993 to August 1994, Motorola Inc., where he was Manager, Major
Accounts from February 1991 to January 1993, and Hewlett-Packard Co. Inc.,
where he was Territory Manager from 1988 to 1991.
S. Terrell Mellen has served as Senior Vice President--Sales and Marketing
of the Company since September 1997. From September 1994 until September 1997
Ms. Mellen was Executive Director of the Association of Corporate Travel
Executives (ACTE), a professional organization serving 1,800 members in
thirteen countries. From October 1988 until September 1994 Ms. Mellen was
Director of Marketing and Industry Relations for the Air Travel Card, a
corporate payment system issued by seven major US airlines. Prior to joining
Air Travel Card, Ms. Mellen held sales positions at Computer Associates
International and Piedmont Airlines. Ms. Mellen holds a Masters in Business
Administration degree from Georgetown University.
Michael P. O'Callaghan has served as a Senior Vice President and Director of
Acquisitions of the Company since June 1997. From September 1995 through June
1996, Mr. O'Callaghan was an Associate Special Counsel to the United States
Senate Special Committee Investigation of Whitewater Development Corporation
and Other Related Matters, and from September 1992 through September 1995 he
was a staff attorney with the Enforcement Division of the United States
Securities and Exchange Commission. Mr. O'Callaghan received a Juris Doctor
Degree from Fordham University in May 1992.
3
Robert W. Cox has served as a director of the Company since 1995. From 1969
until his retirement in 1994, Mr. Cox was a partner in the New York and
Chicago offices of the law firm Baker & McKenzie. From 1984 to 1992, Mr. Cox
was Chairman of the Executive Committee and Managing Partner of the firm, and
from 1993 to 1994, Mr. Cox was Chairman of the Policy Committee. Mr. Cox
currently is a director of Hon Industries, Inc.
William R. Hambrecht has served as a director of the Company since 1995.
Until December 31, 1997 Mr. Hambrecht was Chairman of Hambrecht & Quist LLC,
an investment banking firm which he co-founded in 1968. Mr. Hambrecht also
serves as a director of Adobe Systems, Inc.
David McL. Hillman has served as a director of the Company since 1994. Mr.
Hillman is Executive Vice President of PNC Capital Corp. and Executive Vice
President and Director of PNC Equity Management Corp., which he co-founded in
1982. Mr. Hillman is a director of several privately-held companies in
connection with PNC Capital Corp.'s investments in such companies.
Nicholas J. St. George has served as a director of the Company since June
1997. Mr. St. George has been President and Chief Executive Officer of Oakwood
Homes Corporation ("Oakwood"), a manufacturer and retailer of manufactured
homes, since February 1979. Mr. St. George serves as a director of Oakwood,
and also is a director of American Bankers Insurance Group, Inc. and Legg
Mason, Inc.
BOARD OF DIRECTORS
The Company's Board of Directors is divided into three classes with
staggered three-year terms. The initial term of Messrs. Hambrecht and Hillman
expire at the Company's 1998 annual meeting, the initial terms of Messrs. Cox
and St. George expire at the Company's 1999 annual meeting, and the initial
terms of Messrs. Wolfington and Dailey expire at the Company's 2000 annual
meeting. Successors to the directors whose terms expire at each annual meeting
are elected for three-year terms. A director holds office until the annual
meeting for the year in which his term expires and until his successor is
elected and qualified.
Executive Committee. The members of the Executive Committee of the Company's
Board of Directors are Messrs. Wolfington, Cox and Dailey. The Executive
Committee exercises all the powers of the Board of Directors between meetings
of the Board of Directors, except such powers that are reserved to the Board
of Directors by applicable law.
Audit Committee. The members of the Audit Committee of the Company's Board
of Directors are Messrs. Hillman and St. George. The Audit Committee makes
recommendations concerning the engagement of independent public accountants,
reviews with the independent public accountants the plans for and results of
the audit, approves professional services provided by the independent public
accountants, reviews the independence of the independent public accountants,
considers the range of audit and non-audit fees and reviews the adequacy of
the Company's internal accounting controls.
Compensation Committee. The members of the Compensation Committee of the
Company's Board of Directors are Messrs. Cox and St. George. The Compensation
Committee establishes a general compensation policy for the Company and
approves increases in directors' fees and salaries paid to officers and senior
employees of the Company. The Compensation Committee administers the Company's
equity incentive plans and determines, subject to the provisions of the
Company's plans, the directors, officers and employees of the Company eligible
to participate in any of the plans, the extent of such participation and terms
and conditions under which benefits may be vested, received or exercised.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Messrs. Wolfington, Sandt and Murphy each filed a Form 4 with the Securities
and Exchange Commission on July 9, 1997 for shares purchased on May 27, 1997
in connection with the IPO.
4
ITEM 11. EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
Members of the Board of Directors who also serve as officers of the Company
do not receive compensation for serving on the Board. Each other member of the
Board receives an annual retainer of $15,000 for serving on the Board, plus a
fee of $1,000 for each Board of Directors' meeting attended. In addition, such
directors receive an additional fee of $500 for each committee meeting
attended, except that only one fee is paid in the event that more than one
such meeting is held on a single day. All directors receive reimbursement of
reasonable expenses incurred in attending Board and committee meetings and
otherwise carrying out their duties.
The Company maintains the Stock Plan for Non-Employee Directors (the
"Directors' Plan"). A maximum of 100,000 shares of Common Stock may be
delivered upon the exercise of options granted under the Directors' Plan and
elections to receive shares in lieu of cash compensation. Only directors of
the Company who are not employees of the Company or any of its subsidiaries
(the "Non-Employee Directors") are eligible to participate in the Directors'
Plan. While grants of stock options under the Directors' Plan are automatic
and non-discretionary, all questions of interpretation of the Directors' Plan
are determined by the Board of Directors.
On the date of each annual meeting of stockholders, each Non-Employee
Director continuing in office will be granted an option pursuant to the
Directors' Plan covering 2,500 shares. Any newly elected Non-Employee Director
will be granted an option pursuant to the Directors' Plan covering 5,000
shares on the date of his or her election (whether such election occurs at an
annual meeting or otherwise). The option exercise price for all options
granted under the Directors' Plan is the closing price of a share of the
Common Stock as reported on the Nasdaq National Market on the date the option
is granted. All options granted under the Directors' Plan become fully
exercisable six months after the date of grant. Unless sooner terminated
following the death, disability or termination of service of a director,
options granted under the Directors' Plan will remain exercisable until the
fifth anniversary of the date of grant. In addition, upon certain transactions
involving a change of control or the dissolution or liquidation of the
Company, all options held by Non-Employee Directors will terminate; provided,
however, that for a period of 20 days prior to the effective date of any such
transaction, dissolution or liquidation, all options outstanding under the
Directors' Plan that are not otherwise exercisable shall immediately vest and
become exercisable.
Under the Directors' Plan, a Non-Employee Director may elect to be paid all
or a portion of his or her annual retainer in shares of Common Stock. Any such
election must be made in writing at least 30 days prior to the date the annual
retainer would be paid by the Company. The number of shares to be delivered to
a Non-Employee Director upon such election is determined by dividing the
amount of the annual retainer to be received in shares of Common Stock by the
closing price of a share of Common Stock as reported on the Nasdaq National
Market on the date the annual retainer is to be paid.
The Board of Directors may at any time or times amend the Directors' Plan
for any purpose which at the time may be permitted by law.
The Company has entered into deferred compensation agreements with three of
its Non-Employee Directors, Messrs. Cox, Hambrecht and St. George, pursuant to
which they have elected to defer the payment to them of director's fees that
otherwise would be paid in cash. Under the agreements, the deferred fees are
converted into phantom shares during the fiscal quarter when they otherwise
would have been paid based upon the average closing price of the Common Stock
during the 20 trading days preceding the end of the quarter. On the last day
of the fiscal year when the director ceases to be a member of the Board
because of death or any other reason, he is entitled to receive, at his
election, shares of Common Stock equal to the number of phantom shares
credited to him or cash equal to the market value of such phantom shares based
upon the average closing price of the Common Stock during the 20 trading days
preceding the end of such fiscal year.
5
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table contains a summary of the compensation paid or accrued
during the fiscal year ended November 30, 1997 to the Chief Executive Officer
of the Company and the four other most highly compensated executive officers
(the "Named Executive Officers").
ANNUAL COMPENSATION
-------------------------------------------------------------------------
LONG-TERM
COMPENSATION
NAME AND OTHER ANNUAL AWARDS--SHARES ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS COMPENSATION
- ------------------ ---- -------- ------- ------------ ------------------ ------------
Vincent A. Wolfington
...................... 1997 $231,620 $85,000 -- 100,000 $12,000 (1)
Chairman and Chief
Executive Officer 1996 231,620 20,000 -- -- 57,000 (1)
Don R. Dailey.......... 1997 205,001 70,000 -- 100,000 12,000 (2)
President and Director 1996 205,001 20,000 -- -- 57,000 (2)
David H. Haedicke...... 1997 135,000 55,000 -- 30,000 --
Executive Vice 1996 20,510 (3) 2,500 -- 25,800 --
President and Chief
Financial Officer
Guy C. Thomas.......... 1997 115,000 25,000 -- 15,000 9,900 (4)
Executive Vice
President--Operations 1996 115,000 10,000 $13,020 (5) -- 9,900
Richard A. Anderson.... 1997 91,000 18,950 11,200 (6) 10,000 8,219 (7)
Senior Vice President 1996 91,000 12,000 11,200 (6) -- 9,513
- --------
(1) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Wolfington. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(2) Includes the annual payment of premiums of $12,000 on a life insurance
policy for a beneficiary designated by Mr. Dailey. As to 1996, also
includes $45,000 paid for providing personal guarantees on behalf of the
Company.
(3) Mr. Haedicke's 1996 salary reflects the fact that his employment with the
Company began in October 7, 1996.
(4) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Thomas.
(5) Includes a car allowance of $11,820.
(6) Includes a car allowance of $6,600 and a club membership of $4,600.
(7) Represents premiums on a life insurance policy for a beneficiary
designated by Mr. Anderson.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding options granted
during the fiscal year ended November 30, 1997 by the Company to each of the
Named Executive Officers:
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ------------------------------------------------------------------------ -------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS GRANTED EXERCISE
UNDERLYING TO EMPLOYEES OR BASE
OPTIONS IN FISCAL PRICE EXPIRATION
NAME GRANTED YEAR ($/SHARE) DATE 5% 10%
- ---- ---------- --------------- --------- ---------- -------- ----------
Vincent A. Wolfington... 100,000 19.8% $10.50 5/27/07 $660,339 $1,673,430
Don R. Dailey........... 100,000 19.8% $10.50 5/27/07 660,339 1,673,430
David H. Haedicke....... 30,000 5.9% $10.50 5/27/07 198,102 502,029
Guy C. Thomas........... 15,000 3.0% $10.50 5/27/07 99,051 251,014
Richard A. Anderson..... 10,000 2.0% $10.50 5/27/07 66,034 167,343
6
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END STOCK OPTION
VALUES
There were no options exercised by any of the Named Executive Officers
during the fiscal year ended November 30, 1997. The following table indicates
the aggregate value of all unexercised options held by each Named Executive
Officer as of November 30, 1997.
NUMBER OF SHARES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT NOVEMBER 30, 1997 NOVEMBER 30, 1997 (1)
------------------------------ -------------------------
NUMBER OF NUMBER OF
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME SHARES SHARES VALUE VALUE
- ---- --------------- ---------------- ----------- -------------
Vincent A. Wolfington 205,706 * $1,286,925 $ --
Don R. Dailey 205,706 * $1,286,925 $ --
David H. Haedicke 24,700 31,100 $ 180,895 $151,385
Guy C. Thomas 35,768 11,250 $ 303,551 $ 36,563
Richard A. Anderson 6,886 7,500 $ 48,038 $ 24,375
(1) Value of unexercised in-the-money options based upon the closing price of
the Company's Common Stock on the Nasdaq National Market on November 28,
1997 (the last trading day prior to November 30, 1997).
EQUITY INCENTIVE PLANS
The Company currently maintains the 1987 Stock Option Plan (the "1987 Plan")
and the 1992 Stock Option Plan (the "1992 Plan"), both of which provide for
the award of incentive and non-statutory stock options by the Company. The
Company also maintains the 1997 Equity Incentive Plan (the "1997 Plan"), which
provides for the award of up to 650,000 shares of Common Stock in the form of
incentive stock options, non-statutory stock options, stock appreciation
rights, restricted stock, performance stock units and other stock units which
are valued by reference to the value of the Common Stock. The 1987 Plan, 1992
Plan and 1997 Plan are hereinafter referred to collectively as the "Equity
Plans."
As of February 27, 1998, options were outstanding to purchase an aggregate
of 939,336 shares of Common Stock under the Equity Plans, and an aggregate of
153,756 shares of Common Stock are authorized but have not yet been granted
under options pursuant to such plans (including 149,611 shares pursuant to the
1997 Plan).
Officers, key employees, non-employee directors of and consultants to the
Company are eligible to participate in the Equity Plans. The Equity Plans are
administered by the Compensation Committee of the Board of Directors. Among
other things, the Compensation Committee determines, subject to the provisions
of said plans, who shall receive awards, the types of awards to be made, and
the terms and conditions of each award. Options that are intended to qualify
as incentive stock options under the Equity Plans may be exercisable for not
more than 10 years after the date the option is awarded and may not be granted
at an exercise price less than the fair market value of the shares of Common
Stock at the time the option is granted (and, in the case of stock options
granted to holders of more than 10% of the Common Stock, may not be granted at
an exercise price less than 110% of the fair market value of the shares of
Common Stock at the time the options are granted). The Compensation Committee
may at any time, including in connection with a change in control of the
Company, accelerate the exercisability of all or any portion of any option
issued under the Equity Plans.
The Compensation Committee may amend, modify or terminate any outstanding
award under the Company's Equity Plans with the participant's consent, except
consent shall not be required if the Compensation Committee determines that
such action will not materially and adversely affect the participant. The
Board may amend, suspend or terminate any of the Equity Plans, or any part of
such plans, at any time, except that no amendment may be made without
stockholder approval if such approval is necessary to comply with any
applicable tax or regulatory requirement.
7
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 27, 1998, certain information
with respect to the beneficial ownership of Common Stock for each beneficial
owner of more than 5% of the Company's Common Stock, each director of the
Company, each Named Executive Officer of the Company and all directors and
executive officers as a group. Except as indicated in the footnotes below, the
persons named in this table have sole investment and voting power with respect
to the shares beneficially owned by them.
SHARES
BENEFICIALLY PERCENT
NAME OWNED OWNED
- ---- ------------ -------
Vincent A. Wolfington................................... 355,989(1) 4.6%
Don R. Dailey........................................... 345,176(2) 4.5%
David H. Haedicke....................................... 24,700(3) *
Guy C. Thomas........................................... 98,550(4) 1.2%
Richard A. Andersen..................................... 15,486(5) *
Robert W. Cox........................................... 20,400(6) *
William R. Hambrecht.................................... 921,333(7) 11.9%
David McL. Hillman...................................... 624,044(8) 8.1%
Nicholas J. St. George.................................. 12,500(9) *
Kaufman Fund, Inc....................................... 850,000(10) 11.0%
140 East 45th St.
43rd Floor
New York, NY 10017
H&Q London Ventures..................................... 444,093 5.7%
One Bush St.
San Francisco, CA
PNC Capital Corp. ...................................... 616,544 8.0%
One PNC Plaza
249 Fifth Avenue
Pittsburgh, PA 15222
Yerac Associates, L.P. ................................. 516,018(11) 6.7%
45 Belden Place
San Francisco, CA 94104
All directors and executive officers as a group ........ 2,470,670(12) 31.9%
- --------
* Less than 1%.
(1) Includes options to purchase 205,706 shares of Common Stock. Also includes
(i) 1,183 shares of Common Stock currently held by a company controlled by
Mr. Wolfington and (ii) 1,560 shares held by a limited partnership which
are attributable to Mr. Wolfington's wife (780 shares) and one of his
children (780 shares) and (iii) 450 held by one of his children. Excludes
shares held by Yerac Associates, L.P. ("Yerac"), a limited partnership of
which Mr. Wolfington is a limited partner, with respect to which shares
Mr. Wolfington has no voting or investment power. Mr. Wolfington's address
is c/o Carey International, Inc., 4530 Wisconsin Avenue, N.W., Washington,
D.C. 20016.
(2) Includes options to purchase 205,706 shares of Common Stock. Excludes
shares held by Yerac Associates, L.P., a limited partnership of which Mr.
Dailey is a limited partner, with respect to which shares Mr. Dailey has
no voting or investment power. Mr. Dailey's address is c/o Carey
International, Inc., 4530 Wisconsin Avenue, N.W., Washington, D.C. 20016.
(3) Represents options to purchase shares of Common Stock.
(4) Includes options to purchase 35,768 shares of Common Stock.
(5) Includes options to purchase 6,886 shares of Common Stock.
(6) Represents options to purchase shares of Common Stock.
(7) Includes options to purchase 7,500 shares of Common Stock and also
includes the following number of shares of Common Stock held by the
following venture capital funds, as to which Mr. Hambrecht disclaims
beneficial ownership: H:Q Venture Partners (171,063) Venture Associates
(BVI) Limited (4,134 shares); H&Q London Ventures (444,093 shares); H&Q
Ventures IV (175,197 shares); and Hamquist (10,727 shares). Also includes
(i) 85,816 shares of Common Stock with respect to which Mr. Hambrecht
shares record and beneficial ownership with Hamco Capital Corp. and (ii)
22,803 shares of Common Stock with respect to which Mr. Hambrecht shares
record and beneficial ownership with the Hambrecht 1980 Revocable Trust.
See "Certain Transactions." Mr. Hambrecht's address is c/o Hambrecht &
Quist California, One Bush Street, San Francisco, CA 94104.
(8) Includes options to purchase 7,500 shares of Common Stock: also includes
616,544 shares held by PNC Capital Corp, of which Mr. Hillman is Executive
Vice President. Mr. Hillman disclaims beneficial ownership of the shares
held by PNC Capital Corp.
(9) Includes options to purchase 7,500 shares of Common Stock.
(10) This information is based upon the Schedule 13G dated July 16, 1997 filed
by Kaufman Fund, Inc.
(11) Includes shares of Common Stock issuable upon exercise of a warrant to
purchase 86,003 shares of Common Stock at a price of approximately $4.65
per share. The warrant is exercisable at any time until September 1,
2001.
(12) See Notes 1-9. Includes options to purchase 570,538 shares of Common
Stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1993, for an aggregate purchase price of $850,000, the Company
acquired 85 shares of non-voting redeemable preferred stock of CLI Fleet, Inc.
("CLI Fleet") a privately-held finance company formed for the purpose of
financing the chauffeured vehicle service industry. As a holder of CLI Fleet
preferred stock, the Company is currently entitled to receive an annual
dividend of $500 per share. The Company waived the right to receive any
dividends accrued in respect of its preferred stock through April 30, 1996,
but during 1995 received referral fees totalling $100,000 from CLI Fleet. Also
during 1995, CLI Fleet redeemed 10 shares of preferred
8
stock held by the Company for an aggregate redemption price of $100,000. The
remaining shares of preferred stock are subject to mandatory redemption by
redemption payments of $100,000, $100,000 and $550,000 in May 1998, 1999 and
2000, respectively. Under the terms of an agreement with CLI Fleet, commencing
in April 1997, the Company has an exclusive option to purchase all of the
outstanding shares of common stock of CLI Fleet at a purchase price equal to
the greater of $187,500 or CLI Fleet's liquidating value as determined by an
independent appraisal.
To date, CLI Fleet has provided financing to the Company's independent
operators, without recourse to the Company, for both initial fees due under
the Company's independent operator agreements and with respect to vehicles
purchased by independent operators. Each of the Company's owned and operated
chauffeured vehicle service companies has entered into a Finance & Service
Agreement with CLI Fleet, which provides that the Company will recommend and
refer independent operators to CLI Fleet for financing of vehicles. To date,
CLI Fleet also has purchased from the Company notes receivable due from
independent operators in exchange for cash or demand notes on a non-recourse
basis. The Company sold $378,733, $1,762,345 and $1,015,897 of independent
operator notes receivable to CLI Fleet for cash of $378,733, $1,290,899 and
$733,793 and demand promissory notes of $0, $471,446 and $282,104 in 1994,
1995 and 1996, respectively. These promissory notes are due on demand,
although monthly principal payments generally are received. These notes bear
interest at rates ranging from 5% to 7%. The Company generally no longer sells
notes receivables from independent operators to CLI Fleet, although CLI Fleet
continues to provide vehicle financing to the Company's independent operators.
In May 1996, the exercise price of a warrant issued to PNC was reduced from
$6.14 to $4.65 per share. In addition, in connection with the
Recapitalization, Carey repaid approximately $912,000 of the $3.8 million in
principal outstanding on its subordinated note held by PNC and applied the
balance of the outstanding principal to pay the purchase price for 616,544
shares of Common Stock issued to PNC upon exercise of the warrant held by it.
David McL. Hillman, a director of the Company, is Executive Vice President of
PNC.
In May 1996, the exercise price of a warrant to purchase 86,003 shares of
Common Stock owned by Yerac was reduced from $6.14 to $4.65 per share. In
addition, in connection with the Recapitalization, Yerac converted the entire
outstanding balance of a $2.0 million subordinated note held by it into
approximately 430,000 shares of Common Stock. From the net proceeds of the
IPO, the Company repaid approximately $1.1 million of additional outstanding
indebtedness to Yerac. Messrs. Wolfington and Dailey are limited partners of
Yerac. See "Principal Stockholders."
In connection with the Recapitalization, the Company redeemed 22,000 shares
of Series A Preferred Stock held by entities affiliated with Hambrecht & Quist
California (collectively "H&Q") for an aggregate of $1.1 million in cash plus
44,974 shares of Common Stock. Also in connection with the Recapitalization,
H&Q received 900,089 shares of Common Stock as a result of the conversion of
5,500 shares of Series B Preferred Stock and 31,864 shares of Series G
Preferred Stock. William R. Hambrecht, a director of the Company, is a
director and chairman of Hambrecht & Quist California and Hamco Capital
Corporation, and a general partner of Hambrecht & Quist Venture Partners
which, in turn, is the general partner of H&Q London Ventures, H&Q Ventures
International C.V., and H&Q Ventures IV. Mr. Hambrecht also is a trustee of
The Hambrecht 1980 Revocable Trust. See "Principal Stockholders."
Vincent A. Wolfington, the Company's Chairman and Chief Executive Officer,
and Don R. Dailey, the Company's President, each personally guaranteed certain
indebtedness of the Company in the original principal amount of $4.5 million.
The outstanding balance of this indebtedness totalled approximately $3.7
million as of February 28, 1997. The Company paid Messrs. Wolfington and
Dailey $45,000 each during 1996 as a fee for guaranteeing such indebtedness.
The Company used part of the net proceeds of the IPO to repay the entire
outstanding amount of such indebtedness, and following the repayment the
guarantees were terminated. In connection with the Recapitalization, Messrs.
Wolfington and Dailey received $20,250 and $13,650, respectively, and 7,569
shares and 5,123 shares of Common Stock, respectively, as a result of the
redemption of the shares of Series A Preferred Stock and the conversion of the
shares of Series G Preferred Stock beneficially owned by each of them.
9
SIGNATURES
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 thereunto duly authorized.
Carey International, Inc.
/s/ David H. Haedicke
By___________________________________
DAVID H. HAEDICKE
EXECUTIVE VICE PRESIDENT
CHIEF FINANCIAL OFFICER
10