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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended Commission File Number
January 2, 1994 0-13195
Adia Services, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-2933186
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
64 Willow Place, Menlo Park, CA 94025
(Address of principal executive offices) (Zip Code)
(415) 324-0696
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
(Title of Class)
Indicate by checkmark 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 checkmark 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. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant, as of February 28, 1994, was approximately $60.8 million.
10,245,358 shares of Common Stock and Class B Common Stock held by officers and
directors and by persons who own 5% or more of the outstanding Common Stock and
Class B Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of outstanding shares of the registrant's Common Stock on
February 28, 1994 was 6,983,783 shares, $.25 par value, and the number of
outstanding shares of the registrant's Class B Common Stock as of such date was
5,600,000 shares, $.25 par value.
DOCUMENTS INCORPORATED BY REFERENCE
Part II of the registrant's original Annual Report on Form 10-K for
the Fiscal Year ended January 2, 1994 incorporates by reference the registrant's
1994 Annual Report to Stockholders.
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Page 1 of 12 pages
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As of March 1, 1994, the following persons were the directors of the
Company:
Peter V. Ueberroth, age 56, has been a director of the Company since 1992 and
has been Chairman of the Board of the Company since January 1993. Mr. Ueberroth
is an investor in and has been Manager of The Contrarian Group, Inc., a
management company, since 1989. He served as Commissioner of Major League
Baseball from 1984 until March 1989. Mr. Ueberroth is also a director of The
Coca Cola Company, Morrison Knudsen Corporation and Transamerica Corporation.
The shares reported in Item 12 (Security Ownership by Management) as
beneficially owned by Mr. Ueberroth were acquired on November 18, 1993 by Peter
and Virginia Ueberroth as Trustees of the Peter and Virginia Ueberroth Trust.
The Form 4 relating to such purchase was filed with the Securities and Exchange
Commission on February 9, 1994.
John P. Bowmer, age 49, has been a director of the Company since 1992. Mr.
Bowmer has also been Chief Executive Officer of the Company since July 1992 and
President of the Company since February 1993. Additionally he has been Chief
Executive Officer of Adia S.A. since January 1993 and Chief Operating Officer of
the personnel service business of Adia S.A. since June 1992. Mr. Bowmer has
served as Adia S.A. Zone Manager for Australia and Asia from 1989 to June 1992
and has been Chief Executive Officer of Jonathan Wren, a branch of Adia S.A. in
London, from 1987 to 1989.
Klaus J. Jacobs, age 57, has been a director of the Company since 1993. Mr.
Jacobs has been Chairman of the Board of Adia S.A. since June 1991. He has been
the sole owner of JAA Holdings, the majority stockholder of Adia S.A., since
December 28, 1993. Additionally he was Chairman of the Board and Chief
Executive Officer of Jacobs Suchard Tobler A.G. from 1984 to 1990.
Nico Issenmann, age 43, has been a director of the Company since 1991. Mr.
Issenmann was Chairman of the Board of the Company and Chief Executive Officer
of Adia S.A. from June 1991 to January 1993. He has been President of Issenmann
Management Consulting since March 1991 and was General Manager of Jacobs Suchard
Tobler A.G. from February 1988 to February 1991.
Jon H. Rowberry, age 47, has been a director of the Company since 1993. Mr.
Rowberry has been Senior Vice President and Chief Financial Officer of the
Company since August 1985 and was Acting President of the Company from March
1992 to July 1992. He has been Chief Financial Officer of Adia S.A. since
January 1993.
Anthony M. Frank, age 62, has been a director of the Company since 1992. Mr.
Frank has been Chairman of Acrogen, Inc., a biotechnology company, since March
1992 and was Postmaster General of the United States from March 1988 to March
1992. He was Chairman and Chief Executive Officer of First Nationwide Bank from
1971 to February 1988. Mr. Frank is also a director of Charles Schwab, Temple-
Inland, Bedford Properties, General American Investors Corporation and Living
Centers of America.
Priscilla Florence, age 53, has been a director of the Company since 1993. Ms.
Florence has been President of Priscilla Florence and Associates, a human
resources consulting company, since 1985 and has been Vice President - Human
Resources for United States World Cup '94 since October 1992.
Page 2 of 12 pages
The executive officers of the Company, other than Messrs. Bowmer and
Rowberry, as of March 1, 1994, were as follows:
Edward P. Drudge, Jr., age 54, has served as a Senior Vice President of the
Company responsible for the overall management of ten of the operating divisions
of the Company since April 1989. From 1973 until he joined the Company Mr.
Drudge was employed by Manpower, Inc., serving from August 1987 until March 1989
as Vice President, Regional Manager and from 1983 until August 1987 as Vice
President, United States Operations.
George J. Gremse, age 46, has been President of the Adia Personnel Services
division of the Company since February 1993. From 1988 to February 1993 Mr.
Gremse served as Regional Vice President for National Car Rental.
Each of the executive officers of the Company serves at the discretion of
the Board of Directors of the Company. There are no family relationships among
the executive officers or directors of the Company.
ITEM 11. EXECUTIVE COMPENSATION
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the years ended
December 31, 1993, 1992 and 1991 of (i) the Chief Executive Officer of the
Company and (ii) the other three most highly compensated executive officers of
the Company whose annual salary and bonus exceeded $100,000 for the year ended
December 31, 1993 (collectively the "Named Executive Officers"). Compensation
information is only included for those years during which the named individual
served as an executive officer of the Company.
Page 3 of 12 pages
SUMMARY COMPENSATION TABLE
--------------------------
Long Term
Annual Compensation All Other
Compensation Awards Compensation/(1)(3)/
---------------------------------------- ------------- --------------------
Securities
Name and Principal Other Annual Underlying
Position Year Salary Bonus Compensation/(1)(2)/ Options (#)
- - ----------------------- ---- -------- -------- -------------------- -------------
John P. Bowmer, 1993 $232,881 $142,866 $ 2,010 20,000 --
Chief Executive 1992 $100,000 -- -- 20,000 --
Officer(4)
Jon H. Rowberry, 1993 $146,537 $ 60,000 $ 7,808 10,000 $12,521
Senior Vice 1992 $147,843 $ 56,501 $ 7,807 10,000 $11,554
President and Chief 1991 $146,301 $ 30,000 5,000
Financial Officer(4)
Edward P. Drudge, 1993 $224,200 $167,033 $ 20,859 5,000 $18,765
Jr., Senior Vice 1992 $213,119 $ 35,000 $ 13,794 5,000 $15,095
President 1991 $210,053 $ 15,000 5,000
George J. Gremse, 1993 $202,315 $277,885 $125,965 10,000 $19,331
President, Adia
Personnel Services
- - -----------------------
/(1)/ In accordance with the transitional provisions applicable to the revised
rules on executive officer and director compensation adopted by the
Securities and Exchange Commission amounts of Other Annual Compensation
and All Other Compensation are excluded for 1991.
/(2)/ Other Annual Compensation for each of Messrs. Bowmer, Rowberry and Drudge
represents the value of the automobile provided by the Company to the
officer. Other Annual Compensation for Mr. Gremse represents $110,685 for
relocation costs (either paid directly to Mr. Gremse or on his behalf)
plus reimbursement for income taxes relating thereto and $15,280 as the
value of an automobile provided by the Company to Mr. Gremse.
/(3)/ Amounts of All Other Compensation are amounts contributed or accrued for
the named individuals under the Company's Non-Qualified Profit Sharing
Plan and includes amounts matched by the Company for individual retirement
account contributions made by the individual. The Company contributions
under the Plan for Messrs. Rowberry, Drudge and Gremse are $12,521,
$18,265 and $19,331 for 1993, respectively, and for Messrs. Rowberry and
Drudge $11,554 and $14,595, respectively, for 1992, with $500 contributed
to match the individual retirement account contribution of Mr. Drudge for
each of 1993 and 1992. Mr. Bowmer does not participate in the Plan.
/(4)/ The amounts shown for 1992 and 1993 for Messrs. Bowmer and Rowberry
reflect only the portion of their total compensation paid by the Company
for services rendered as executive officers of the Company and exclude any
amounts paid to them on behalf of Adia S.A. for services rendered to Adia
S.A. See "Compensation Committee Interlocks and Insider Participation."
Page 4 of 12 pages
The following table sets forth information with respect to options granted
during the year ended December 31, 1993 to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
Potential
Realizable Value
at Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term/(2)/
------------------------------------------------------ --------------------
Percent of
Total
Number of Options
Securities Granted to
Underlying Employees
Options in Fiscal Exercise Expiration
Name Granted/(1)/ Year Price Date 5% 10%
- - ------------- ------------ ----------- -------- ----------------- -------- --------
John P. 20,000 14.0% $ 23.00 November 29, 2003 $289,292 $733,122
Bowmer
Jon H. 10,000 7.0% $ 23.00 November 29, 2003 $144,646 $366,561
Rowberry
Edward P. 5,000 3.5% $ 23.00 November 29, 2003 $ 72,323 $183,280
Drudge, Jr.
George J. 10,000 7.0% $18.125 March 19, 2003 $113,987 $288,866
Gremse
_____________________
/(1)/ Options become exercisable at the rate of 20% per year over each of the
next five years.
/(2)/ Gains are reported net of the option exercise price, but before taxes
associated with exercise. These amounts represent certain assumed rates of
appreciation only. Actual gains, if any, on stock option exercises are
dependent on the future performance of the Common Stock, overall stock
conditions, as well as the optionholders' continued employment through the
vesting period. The amounts reflected in this table may not necessarily be
achieved.
The following table sets forth information concerning the number of
shares acquired upon exercise of outstanding options during the year ended
December 31, 1993, the value realized upon such exercise and the value of
unexercised options held at December 31, 1993 by each of the Named Executive
Officers.
Page 5 of 12 pages
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
--------------------------------------------
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
December 31, 1993 December 31, 1993/(1)/
-------------------------------- ----------------------------
Shares Acquired Value
Name Upon Exercise Realized/(1)/ Exercisable Unexercisable Exercisable Unexercisable
- - ----------------- --------------- ------------- ----------- ------------- ----------- -------------
John P. Bowmer -- -- 4,000 36,000 $ 25,000 $105,000
Jon H. Rowberry 10 $96 31,435 26,000 $173,223 $101,000
Edward Drudge, Jr. -- -- 19,750 19,000 $ 81,250 $ 81,250
George J. Gremse -- -- -- 10,000 -- $ 51,250
- - ----------------
/(1)/ Calculated as the difference between the market value of the Common Stock
on the date of exercise of the stock option or on December 31, 1993, as
may be applicable, and the exercise price of the options.
Supplemental Executive Retirement Plan
- - --------------------------------------
The following table shows the estimated annual retirement benefit payable to
participating employees upon retirement, including executive officers, in the
earnings and years of service classifications indicated, under the Company's
Supplemental Executive Retirement Plan which plan includes selected management
employees as participants.
Final Average Estimated Annual Retirement Benefits For Years
Earnings Of Service Indicated (1)
------------ -----------------------------------------------
10 Years 15 Years 20 Years 25 Years
-------- -------- -------- --------
$200,000 $40,000 $ 60,000 $ 80,000 $100,000
$300,000 $60,000 $ 90,000 $120,000 $150,000
$400,000 $80,000 $120,000 $160,000 $200,000
- - ----------------
(1) The maximum benefit under the Plan is determined by multiplying 2% of such
participant's final average earnings as defined in the Plan by years of
service with the Company, with a maximum service credit of 25 years. The
Plan also provides for a reduced early retirement benefit provided the
participant is at least 50 years of age and the sum of the participant's age
and years of service equals or exceeds 65. The amount of the annual benefit
is subject to reduction by the amount of other retirement income payable to
the participant from other Company plans.
Covered compensation consists of the total compensation of each participant
as reported to the Internal Revenue Service which differs from the compensation
included in the Summary Compensation Table by the amount of perquisites awarded
to the participant. The credited years of service for Messrs. Rowberry, Drudge
and Gremse are eight, five and one, respectively. Mr. Bowmer does not
participate in this Plan.
Page 6 of 12 pages
Compensation of Directors
- - -------------------------
During 1993 members of the Board of Directors who were neither an executive
officer of the Company nor an executive officer of Adia S.A., the parent
corporation of the principal stockholder of the Company, were paid an annual
director's fee of $12,500 per year plus $1,000 for each meeting of the Board of
Directors attended and travel and accommodation expenses. Other directors who
are executive officers of the Company or executive officers of Adia S.A. receive
no compensation from the Company but are reimbursed for travel and accommodation
expenses. A portion of the management fee paid to Adia S.A., however, includes
reimbursement for the services and travel and accommodation expenses of those
Company directors who are affiliated with Adia S.A. See "Compensation Committee
Interlocks and Insider Participation."
Mr. Ueberroth is being paid an annual salary of $96,000 for the services he
is providing to the Company as Chairman of the Board.
Page 7 of 12 pages
Compensation Committee Interlocks and Insider Participation
- - -----------------------------------------------------------
Nico Issenmann, who served as a member of the Company's Compensation
Committee and Stock Option Committee during the year ended December 31, 1993 and
who presently serves on such Committees, was the Chairman of the Board of the
Company during 1992.
Adia S.A., either directly, or indirectly through its wholly-owned subsidiary
Adia International S.A., has performed certain services for the Company which
have included the sharing of marketing information and evaluating acquisition
and other expansion opportunities for the Company. The charge for services
rendered to the Company for the year ended December 31, 1993 was $546,000. The
charge for services by Adia S.A. includes reimbursement for the services and the
related travel and accommodation expenses of the Company's directors who are
affiliated with Adia S.A.
Since August 1, 1992, under a tax sharing agreement with Adia Holdings
Incorporated ("AHI") a wholly-owned subsidiary of Adia S.A., the Company and AHI
have been included in the same consolidated U.S. Federal income tax return. The
tax sharing agreement is designed to allow the Company to share in any tax
savings realized as a result of its consolidation for tax purposes with other
AHI companies.
The Company has a credit agreement with AHI which was entered into in 1992
providing for the borrowing of up to $50,000,000 by AHI from the Company. The
credit agreement requires AHI to pay interest monthly at a rate equal to the 90
Day U.S. Treasury Bill rate plus two percent, and includes a provision for an
annual commitment fee on all available unborrowed amounts. The terms of the
credit agreement prevent any advance to AHI that would reduce the Company's cash
balance to less than $10,000,000. All amounts borrowed under the credit
agreement are collateralized by Common Stock of the Company owned by AHI and
were repayable at December 31, 1993, the original expiration date of the credit
agreement. The Board of Directors of the Company agreed to extend the credit
agreement through December 31, 1994. On December 20, 1993, AHI repaid all
amounts previously borrowed under the credit agreement. The highest balance
outstanding during 1993 under the credit agreement was $37,886,062.
Adia S.A. and the Company are parties to an agreement which currently governs
the provision of services by Adia S.A. to the Company. The agreement provides
that any loans to the Company by Adia S.A. will be at a rate equal to the most
favorable rate available to the Company from an unaffiliated lender and any
guarantees of present or future obligations of the Company by Adia S.A. will be
subject to an annual fee of 1.2% of the principal amount of the guaranteed
indebtedness. Adia S.A., through its wholly-owned subsidiary Adia International
S.A., will also provide executive and administrative advice and services to the
Company, share advertising, promotional and marketing plans, assist in the
analysis of proposed acquisitions or divestitures, and train Company personnel
in various marketing and administrative skills. The Company will pay Adia S.A.
a fee for such services based upon the reasonable and ordinary charges for the
time spent by Adia S.A. personnel rendering the services, including directors
fees. Future charges for services provided by Adia S.A. shall be reviewed and
approved by a committee of the Company's Board of Directors, a majority of which
shall neither be officers of Adia nor affiliated with Adia S.A.
Messrs. Jacobs and Issenmann, directors of the Company, are also directors of
Adia S.A. Mr. Ueberroth, a director of the Company, was a director of Adia S.A.
from April 1993 until December 2, 1993. Messrs. Bowmer and Rowberry, executive
officers and directors of the Company, are also presently executive officers of
Adia S.A. The Company anticipates that each of Messrs. Bowmer and Rowberry will
devote approximately fifty percent of his time to providing services to the
Company.
Effective as of January 1, 1993, the Company has had a consulting agreement
with The Contrarian Group, Inc. pursuant to which The Contrarian Group provides
consulting, marketing and management services to the Company for an annual fee
of $144,000. Mr. Ueberroth is an investor and Manager of The Contrarian Group.
There is incorporated by reference herein in response to this Item the
material under the caption "Changes In Control" in Item 12.
Page 8 of 12 pages
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial Owners
- - -----------------------------------------------
As of March 1, 1994, the following persons were known by the Company to be
the beneficial owners of more than five percent of the shares of Common Stock
and/or Class B Common Stock then outstanding:
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP
-----------------------------------------
Shares Shares
Held of Record Owned Beneficially
------------------- ------------------
Percent Percent
Name and Address of Title of Number of of Number of
Beneficial Owner Class Shares Class Shares Class
- - ------------------------ --------- --------- ------- --------- -------
Adia Holdings Incorporated Common Stock 4,632,348 66.3 % 10,232,348/(1)/ 81.3%
c/o The Corporation Trust
Center
1209 Orange Street Class B
Wilmington, Delaware Common Stock 5,600,000 100% 5,600,000 100.0%
Adia S.A./(2)/ Common Stock -- -- 10,232,348/(1)(3)/ 81.3%
Place Chauderon 4
Case Postale 59 Class B
Lausanne, 9, Switzerland Common Stock -- -- 5,600,000/(3)/ 100.0%
Franklin Resources, Inc. Common Stock -- -- 437,300/(4)/ 6.3%
777 Mariners Island Blvd.
San Mateo, California
/(1)/ Includes the 5,600,000 shares of Class B Common Stock held of record by
Adia Holdings Incorporated, as the shares of Class B Common Stock are
convertible into shares of Common Stock on a share-for-share basis.
/(2)/ In Schedule 13D filings with the Securities and Exchange Commission, JAA
Holdings, a Swiss Holding Company, reported that as of December 31, 1993
it owned 54.2% of the Common Stock of Adia S.A. and as a result thereof
might be deemed to beneficially own the shares of stock of the Company
beneficially owned by Adia S.A. Klaus J. Jacobs owns 100% of the
outstanding stock of JAA. Mr. Jacobs previously owned only 50% of JAA and
acquired the balance of the stock of JAA effective December 31, 1993. Mr.
Jacobs used his personal funds to make the purchase. On March 22, 1994
Adia S.A. made a merger proposal to the Company pursuant to which Adia
S.A. would acquire all of the Company's Common Stock not currently held by
Adia S.A. The proposal provides that in the merger eight shares of the
Company's Common Stock would be exchanged for one share of the stock of
Adia S.A. and $112 in cash.
/(3)/ The shares of Common Stock and Class B Common Stock held of record by Adia
Holdings Incorporated are included in this table as beneficially owned by
Adia S.A. as Adia Holdings Incorporated is a wholly owned subsidiary of
Adia S.A.
/(4)/ This information has been obtained from a Schedule 13G filed by Franklin
Resources, Inc. ("Franklin") with the Securities and Exchange Commission
and reflects beneficial ownership as of December 31, 1993. The information
in the Schedule 13G was provided by Franklin on behalf of a group of its
funds which in the aggregate had such beneficial ownership. In the
Schedule 13G Franklin reported that the group had sole voting power with
respect to 418,500 shares and shared dispositive power with respect to
437,300 shares.
Page 9 of 12 pages
Security Ownership by Management
- - --------------------------------
The following table shows the beneficial ownership of Common Stock of the
Company of each director and each of the Named Executive Officers of the Company
and, as a group, of such persons and the other executive officers of the
Company, as of March 1, 1994.
Shares Owned Percent
Name Beneficially of Class
- - --------------------- ------------------ --------
Peter V. Ueberroth 10,000/(1)/ *
John P. Bowmer 4,000/(2)(3)/ *
Klaus J. Jacobs 10,232,348/(4)/ 81.3%
Nico Issenmann -- --
Jon H. Rowberry 31,445/(2)(5)/ *
Anthony M. Frank 3,000 *
Priscilla Florence -- --
Edward P. Drudge, Jr. 19,750 /(6)/ *
George J. Gremse -- --
All of the directors and 10,300,543/(4)(7)/
executive officers as a
group (9 persons)
- - ----------------------
/*/ Less than one percent of the outstanding shares of Common Stock of the
Company.
/(1)/ Consists of shares acquired by Peter and Virginia Ueberroth as Trustees of
the Peter and Virginia Ueberroth Trust.
/(2)/ Does not include the 4,632,348 shares of Common Stock and 5,600,000 shares
of Class B Common Stock which are beneficially owned by Adia S.A. See
"Compensation Committee Interlocks and Insider Participation."
/(3)/ Consists of 4,000 shares subject to stock options which are exercisable
on or before April 30, 1994.
/(4)/ Consists of the 4,632,348 shares of Common Stock and 5,600,000 shares of
Class B Common Stock which are beneficially owned by Adia S.A. See
"Principal Stockholders."
/(5)/ Includes 31,435 shares subject to stock options which are exercisable on
or before April 30, 1994.
/(6)/ Consists of 19,750 shares subject to stock options which are exercisable
on or before April 30, 1994.
/(7)/ Includes 55,185 shares subject to stock options which are exercisable on
or before April 30, 1994.
Changes In Control
- - ------------------
On March 22, 1994 Adia S.A. made a merger proposal to the Company pursuant
to which Adia S.A. would acquire all of the Company's Common Stock not currently
held by Adia S.A. In the proposal eight shares of the Company's Common Stock
would be exchanged for one share of the stock of Adia S.A. and $112 in cash.
The Company has appointed a special committee of its board of directors to
evaluate the proposal.
Page 10 of 12 pages
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There is incorporated by reference herein in response to this Item the
material under the caption "Compensation Committee Interlocks and Insider
Participation" in Item 11.
Page 11 of 12 pages
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: May 3, 1994 ADIA SERVICES, INC.
By: /s/ Keith Corbin
-------------------------
Keith Corbin
Assistant Treasurer
Page 12 of 12 pages