1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A1
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended JUNE 27, 1997
Commission file number 1-8048
TII INDUSTRIES, INC.
(Exact Name of registrant as specified in its charter)
State of incorporation: DELAWARE I.R.S. Employer Identification
No. 66-0328885
1385 AKRON STREET, COPIAGUE, NEW YORK 11726
(516) 789-5000
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.01 par value
Indicate by check mark whether the registrant (l) 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. [ ]
The aggregate market value of the voting stock of the registrant outstanding as
of September 12, 1997 held by non-affiliates of the registrant was approximately
$53,000,000. While such market value excludes the market value of shares which
may be deemed beneficially owned by executive officers and directors, this
should not be construed as indicating that all such persons are affiliates.
The number of shares of the Common Stock of the registrant outstanding as of
September 12, 1997 was 7,513,640.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISRANT
The executive officers and directors of the Company are as follows:
NAME POSITIONS
Alfred J. Roach....................... Chairman of the Board and Director
Timothy J. Roach...................... President and Chief Executive Officer, Vice
Chairman of the Board and Director
C. Bruce Barksdale.................... Senior Vice President and Director
Paul G. Sebetic....................... Vice President - Finance and Chief Financial Officer
Virginia M. Hall...................... Vice President - Administration
Dare P. Johnston...................... Vice President - Fiber Optic Operations
James A. Roach........................ Vice President - Marketing and Sales
Dorothy Roach......................... Secretary and Director
James R. Grover, Jr.(1)............... Director
Joseph C. Hogan(1)(2)................. Director
William G. Sharwell(2)................ Director
- --------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee
Alfred J. Roach, 82, has served as Chairman of the Board of Directors
and a director of the Company and its predecessor from its founding in 1964, and
was Chief Executive Officer of the Company from the Company's founding until
January 1995. Since September 1983, Mr. Roach has also served as Chairman of the
Board of Directors of American Biogenetic Sciences, Inc. ("ABS"), a
biotechnology research company. Mr. Roach devotes a majority of his time to the
affairs of ABS.
Timothy J. Roach, 50, has served the Company in various capacities
since December 1973. He has been President of the Company since July 1980, Chief
Operating Officer since May
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1987, Vice Chairman of the Board since October 1993, Chief Executive Officer
since January 1995 and a director since January 1978. Mr. Roach was a Captain in
the United States Air Force for four years prior to joining the Company and is a
graduate of Harvard University's Business School Program for Management
Development. Mr. Roach has also served as Treasurer, Secretary and a director of
ABS since September 1983. Mr. Roach devotes substantially all of his time to the
affairs of the Company.
C. Bruce Barksdale, 66, has been a Vice President of the Company since
August 1971, serving as Senior Vice President (responsible for customer and
product development) since October 1993, and a director of the Company since
1974. Mr. Barksdale holds a Bachelor of Science degree in Electrical Engineering
from the University of South Carolina.
Paul G. Sebetic, 33, has been Vice President-Finance and Chief
Financial Officer of the Company since October 1996. Mr. Sebetic joined the
Company in April 1996 as Corporate Controller. From November 1992 until joining
the Company, Mr. Sebetic held various financial management positions with V Band
Corporation, a telecommunications equipment manufacturer, serving as Controller
since August 1995. From February 1991 through August 1992, Mr. Sebetic was the
Financial Controller of the European operations of MacDermid Inc., a specialty
chemical manufacturer. Mr. Sebetic is a Certified Public Accountant and holds a
Masters of Business Administration in Finance from New York University.
Virginia M. Hall, 44, has served the Company in various capacities
since February 1976, serving as Vice President-Administration since December
1993 and Vice President-Contract Administration from September 1990 until
December 1993.
Dare P. Johnston, 56, has been Vice President - Fiber Optic Operations
since December 1993. Ms. Johnston joined the Company in September 1993 with the
Company's acquisition of TII-Ditel, Inc., a designer, manufacturer and supplier
of fiber optic products. Prior to joining the Company, Ms. Johnston served in
various capacities with TII-Ditel, Inc. since January 1989, serving as President
since September 1990. Prior to joining Ditel, Inc., Ms. Johnston was employed by
NCNB National Bank of North Carolina since 1973, where she served as Senior Vice
President since October 1983. Ms. Johnston holds a Bachelor of Arts degree in
English from Duke University.
James A. Roach, 44, has served the Company in various capacities since
January 1982, serving as Vice President-Marketing and Sales since July 1987.
Dorothy Roach, 74, has been Secretary of the Company for more than the
past five years, served as Treasurer of the Company for more than five years
prior to relinquishing that position in December 1993 and, except for a brief
period, has been a director of the Company since 1964.
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James R. Grover, Jr., 78, has been a director of the Company since
1978. Mr. Grover has been engaged in the private practice of law in the State of
New York since 1974, and has been General Counsel to the Company for more than
the past five years.
Dr. Joseph C. Hogan, 75, has been a director of the Company since
January 1974. Dr. Hogan served as Dean of the College of Engineering of the
University of Notre Dame from 1967 to 1981, following which he performed various
services for the University of Notre Dame until 1985, where he remains Dean
Emeritus. From 1985 until his retirement in 1987, Dr. Hogan was a Director of
Engineering Research and Resource Development at Georgia Institute of
Technology. He is past President of the American Society of Engineering
Education. Dr. Hogan is also a director of ABS.
William G. Sharwell, 75, has been as a director of the Company since
October 1995. Mr. Sharwell was President of Pace University in New York from
1984 until his retirement in 1990. He was Senior Vice President of American
Telephone & Telegraph Company (now AT&T Corporation) between 1976 and 1984, and
previously served as executive Vice President of Operations of New York
Telephone Company (now Bell Atlantic Corporation). Mr. Sharwell serves as an
independent general partner of Equitable Capital Partners, L.P. and Equitable
Capital Partners (Retirement Fund), L.P., registered investment companies under
the Investment Company Act of 1940. He is also a director of ABS.
Alfred J. Roach and Dorothy Roach are married. Timothy J. Roach is
their son and James R. Roach is their nephew. There are no other family
relationships among the Company's directors and executive officers.
The Company's Board of Directors presently consists of seven directors
divided into three classes. C. Bruce Barksdale, Dr. Joseph C. Hogan and William
G. Sharwell serve as Class I directors, James R. Grover, Jr. and Dorothy Roach
serve as Class II directors and Alfred J. Roach and Timothy J. Roach serve as
Class III directors. The term of office of Class III directors continues until
the Company's 1997 Annual Meeting of Stockholders scheduled to be held in
December 1997, the term of office of Class I directors continues until the next
succeeding annual meeting of stockholders and the term of office of Class II
directors continues until the second succeeding annual meeting of stockholders,
and in each case until their respective successors are elected and qualified. At
each annual meeting directors are chosen to succeed those in the class whose
term expires at that meeting.
Officers hold office until their successors are chosen and qualified.
Any officer elected or appointed by the Board of Directors may be removed at any
time by the Board.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's three fiscal years
ended June 27, 1997, information concerning the compensation paid by the Company
to Timothy J. Roach who served as the Company's Chief Executive Officer, and
each of the four other most highly compensated persons who were serving as
executive officers of the Company, at the end of the Company's fiscal year ended
June 27, 1997 (the "Named Executive Officers"):
LONG-TERM
COMPENSATION
SECURITIES
NAME AND ANNUAL COMPENSATION UNDERLYING ALL OTHER
----------------------------------------------
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS (#) COMPENSATION
- ------------------ ---- ------ ----- ----------- ------------
Timothy J. Roach............... 1997 $ 193,985 $ 6,976 50,000 $ 7,521(1)
Chief Executive Officer 1996 171,618 -- -- 7,586
1995 143,677 -- 200,000 7,282
Alfred J. Roach................ 1997 $ 150,000 $ 200(2) 50,000 --
Chairman of the Board 1996 150,000 200(2) -- --
1995 150,000 200(2) 200,000 --
Dare P. Johnston............... 1997 $ 129,825 $ 4,017 -- --
Vice President - 1996 120,779 -- 10,000 --
Fiber Optics Operations 1995 107,692 77,071 20,000 --
James A. Roach................. 1997 $ 111,564 $ 44,209 -- --
Vice President - Marketing 1996 106,440 24,347(3) 10,000 --
1995 100,098 39,554(3) 20,000 --
Paul G. Sebetic................ 1997 $ 105,254 $ 3,503 25,000 --
Vice President - Finance 1996 14,615(4) -- -- --
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(1) Includes (i) $1,172 representing the dollar value to Mr. Roach of the
portion of the premium paid by the Company on split dollar life
insurance policy during such year with respect to the deemed term life
insurance portion of the premiums and (ii) $6,349, representing the
annual premium paid by the Company on long-term disability insurance
maintained by the Company for the benefit of Mr. Roach.
(2) Required to be paid under Puerto Rico law.
(3) Commissions based on sales.
(4) Mr. Sebetic joined the Company in April 1996.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table contains information concerning options granted
during the Company's fiscal year ended June 27, 1997 to the Named Executive
Officers:
POTENTIAL REALIZABLE
NUMBER OF PERCENT OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION OPTION TERM
NAME GRANTED FISCAL YEAR SHARE DATE 5% 10%
- ---- -------- ------------- ------- ----- ---- ----
Alfred J. Roach.......... 50,000 13% $4.50 7/24/06 $141,501 $358,592
Timothy J. Roach......... 50,000 13% 4.50 7/24/06 141,501 358,592
Paul G. Sebetic.......... 15,000 4% 4.50 7/24/06 42,450 107,578
10,000 3% 5.25 10/22/06 33,017 83,671
Each option was granted at an exercise price equal to the market value
of the Company's Common Stock on the date of grant and is exercisable during a
ten year term (subject to early termination in certain instances) with respect
to 20% of the number of shares subject to the option in each annual period, on a
cumulative basis, commencing one year after the date of grant.
AGGREGATE OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUE TABLE
No options were exercised by any of the Named Executive Officers during
the Company's fiscal year ended June 27, 1997. The following table contains
information with respect to the fiscal year-end value of unexercised options
held by the executive officers named in the Summary Compensation Table:
NUMBER OF SHARES OF COMMON STOCK
UNDERLYING UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED IN-THE-MONEY
JUNE 27, 1997 OPTIONS AT JUNE 27, 1997
---------------------------------------------- ----------------------------------------
NAME EXERCISABLE UNEXERCISABLE (1) EXERCISABLE UNEXERCISABLE (1)
- ---- ----------- ----------------- ----------- -----------------
Alfred J. Roach 120,360 170,000 $201,170 $167,500
Timothy J. Roach 120,000 170,000 175,000 167,500
Dare P. Johnston 30,000 20,000 9,000 13,500
James A. Roach 25,000 20,000 22,600 13,500
Paul G. Sebetic - 25,000 - 23,750
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(1) Represents the closing price of the underlying Common Stock at fiscal
year-end minus the option exercise price.
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REMUNERATION OF DIRECTORS
Non-employee directors receive a fee of $1,000 for each meeting of the
Board held and members of Committees of the Board receive a fee of $500 for
attending each meeting of the Committee of the Board on which such director
serves. Non-employee directors are also granted options to purchase 10,000
shares of the Company's Common Stock under the Company's 1994 Non-Employee
Director Stock Option Plan at the time such person becomes a non-employee
director and immediately following each annual meeting of stockholders at which
directors are elected. Each option granted is exercisable for period of ten
years subject to earlier termination at specified times following a non-employee
director's cessation of service) at an exercise price equal to 100% of the fair
market value on the date of grant of the shares subject thereto.
EMPLOYMENT AGREEMENTS
The Company and Timothy J. Roach are parties to an Amended and Restated
Employment Agreement, effective as of August 1, 1997, pursuant to which Mr.
Roach is to serve as the Company's President, Chief Executive Officer and Chief
Operating Officer. The Agreement provides for a five-year term presently ending
July 31, 2002, with automatic one-year extensions on each July 31 during the
term unless either party gives notice of termination at least 90 days prior to
such July 31 that the term of the Agreement is not to be extended. Under the
Agreement, Mr. Roach is presently entitled to an annual salary of $250,000 per
year, subject to increases and bonuses at the discretion of the Board of
Directors. In addition, the Agreement requires the Company to provide Mr. Roach
(whose principal place of business is the Company's executive offices in
Copiague, New York) with an allowance to reimburse him for the cost of
maintaining a place of abode in Puerto Rico, where the Company maintains its
principal manufacturing facilities, not to exceed 20% of his then salary and to
continue to maintain insurance benefits provided Mr. Roach at levels and terms
no less favorable than are currently in effect. Mr. Roach has agreed, among
other things, not to disclose confidential information of the Company and not to
directly or indirectly engage, during the term of the agreement and for two
years thereafter, in any activity which is competitive with the Company's
business. In consideration for such covenant, Mr. Roach is to receive, for each
year during the two-year period following termination of his employment, an
amount equal to his highest salary rate in effect at any time during the
one-year period preceding the date of such termination unless Mr. Roach's
employment is terminated by reason of his death, voluntary termination other
than for "good reason" (in general, adverse changes in his powers, duties,
position or compensation or certain changes in the location where his duties are
to be performed) or disability, as defined, for cause, as defined, and he is not
capable of providing day-to-day services to a competitor. In the event of
termination of employment by reason of death or disability, as defined, Mr.
Roach or his beneficiary is entitled to receive a continuation of his
compensation for a period of one year and two years, respectively. In the event
Mr. Roach terminates his employment "for good reason", the Company will also be
required to pay him a sum equal to three times the amount of his highest annual
salary and highest bonus, for the current, or two preceding fiscal years,
subject to reduction, as to any amount that would constitute a "parachute
payment" under the Code to the maximum amount that would not
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constitute such a "parachute payment." In the event of the termination of Mr.
Roach's employment other than for cause, all outstanding stock options then held
by Mr. Roach shall fully vest.
Dare P. Johnston is a party to an Employment Agreement, dated September
23, 1993, with the Company's subsidiary, TII-Ditel Inc., under which Ms.
Johnston is to serve as President/General Manager of the Ditel Fiber Optic
Division of the Company. The Agreement, as extended, provides for a term
expiring April 30, 2000. Under the Agreement, Ms. Johnston's current annual
salary is $133,000 per annum, subject to review at the end of each year of
employment, with Ms. Johnston to receive a salary increase of up to 10% per year
but not less than the percentage increase of a consumer price index. In the
event of the termination of Ms. Johnston's employment by the Company other than
for cause, death, disability or by Ms. Johnston following a reduction in rank or
authority, Ms. Johnston will be entitled to receive all compensation that she
would have received for the remaining term of her Agreement, but not less than
six months' compensation, in a lump sum, and all outstanding options then held
by Ms. Johnston shall fully vest. Ms. Johnston has agreed not to disclose
confidential information of the Company during or after her employment and that,
during the term of her employment and, for a period of two years thereafter, not
to directly or indirectly engage in certain activities which are competitive to
the Company.
Paul G. Sebetic is a party to an Employment Agreement, dated May 1,
1997, with the Company under which Mr. Sebetic is to serve as Vice
President-Finance. The Agreement provides for a term expiring April 30, 2000.
Under the Agreement, Mr. Sebetic's salary is presently $110,000 and is subject
to review at the end of each year of employment, with Mr. Sebetic to receive a
salary increase of 10% per year but not less that the increase in a consumer
price index. Mr. Sebetic is also to receive $6,000 per year as an allowance to
reimburse him for the cost of maintaining a place of abode in Puerto Rico. In
the event of the termination of Mr. Sebetic's employment by the Company, other
than for cause, death, disability or by Mr. Sebetic following a reduction in
rank or authority, Mr. Sebetic will be entitled to receive all compensation that
he would have received for the remaining term of his Agreement, but not less
than six months' compensation, in a lump sum, and all outstanding options held
by Mr. Sebetic shall fully vest. Mr. Sebetic has agreed not to disclose
confidential information of the Company during or after his employment and that,
during the term of his employment and, for a period of two years thereafter, not
to directly or indirectly engage in certain activities which are competitive to
the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee currently are Joseph C. Hogan
and William G. Sharwell. Mr. Sharwell was elected to the Committee in August
1996 to replace James R. Grover, Jr., who served on the Committee with Dr. Hogan
during all of the Company's fiscal year ended June 30, 1996. The Company has
retained Mr. Grover as legal counsel during the Company's last fiscal year and
is retaining him during the Company's current fiscal year. Fees paid
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Mr. Grover for services rendered to the Company during the Company's fiscal year
ended June 27, 1997 were $30,000.
STOCK OPTION PLANS
The Company currently maintains a 1995 Stock Option Plan (the "1995
Plan"), which enables the Company to grant options to purchase Common Stock to
employees of, and consultants to, the Company and its present and future
subsidiaries and a 1994 Non-Employee Director Stock Option Plan (the
"Non-Employee Director Plan"), which provides for the automatic grant of options
to nonemployee directors at the time a person becomes a non-employee director
and immediately following each annual meeting of stockholders at which directors
are elected. See "-Renumeration of Directors." Options to purchase
974,661 shares of Common Stock also remain outstanding under the Company's 1983
Stock Option Incentive Plan and 1986 Stock Option Plan, each of which have
terminated except with respect to outstanding options thereunder.
After giving effect to option exercises to date, the 1995 Plan
presently enables the Company to grant options to purchase 494,800 shares of
Common Stock, of which options to purchase 382,300 shares are presently subject
to outstanding options. The Company intends to seek stockholder approval of an
amendment to the 1995 Plan to increase the number of shares of Common Stock
subject thereto by 500,000 shares. The 1995 Plan permits the grant of either
"incentive stock options" which are designed to qualify for the favorable tax
treatment afforded under Section 422A of the Code ("ISOs") or non-qualified
stock options ("NQSOs"). Options granted to consultants may only be granted as
NQSOs. The exercise price of an option granted under the 1995 Plan cannot be
less than the fair market value of the Common Stock on the date of grant (except
that, in the case of ISOs granted to an employee who possesses more than 10% of
all classes of stock of the Company, the option exercise price may not be less
than 110% of such fair market value). The 1995 Plan is presently administered by
the Company's Compensation Committee which, among other things, is empowered (as
is the full Board of Directors) to determine, within the limits of the 1995
Plan, which employees and consultants are to be granted options, whether an
option granted is to be an ISO or a NQSO, the number of shares of Common Stock
to be subject to each option, the exercise price of each option, the term of
each option (which may not exceed ten years, except that the term of an option
granted to an employee who possesses more than 10% of all classes of stock of
the Company may not exceed five years), the dates at which and terms under which
an option may be exercised, whether to accelerate the date or the event for
exercise of any option and the form of payment of the exercise price and any
withholding taxes.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information, as of September 30, 1997,
with respect to the beneficial ownership of Common Stock by (i) each person
(including any "group", as that term is used in Section 13(d)(3) of the
Securities Exchange Act of 1934) known by the Company to own more than 5% of the
outstanding shares of Common Stock; (ii) each director of the Company; (iii)
each Named Executive Officer; and (iv) all executive officers and directors of
the Company as a group. The Company understands that, except as noted below,
each beneficial owner has sole voting and investment power with respect to all
shares attributable to such owner.
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
---------------- --------- ------
Alfred J. Roach.................................. 893,600(2) 11.6%
Dorothy Roach.................................... 60,704(3) *
Timothy J. Roach................................. 651,013(4) 8.4%
Overseas Private Investment
Corporation.................................... 400,000(5) 5.0%
C. Bruce Barksdale............................... 28,998(6) *
James R. Grover, Jr.............................. 35,600(7) *
Joseph C. Hogan.................................. 34,330(8) *
William G. Sharwell.............................. 35,000(9) *
Dare P. Johnston ................................ 34,000(10) *
James A. Roach................................... 39,488(11) *
Paul G. Sebetic ................................. 7,000(12) *
All executive officers and
directors as a group
(11 persons)..................................... 1,863,733(13) 23.0%
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(1) Asterisk indicates that the percentage is less than one percent.
Percent of Class assumes the issuance of the Common Stock issuable upon
the exercise of options or conversion of indebtedness (to the extent
exercisable or convertible on or within 60 days after September 30,
1997) held by such persons or entity but (except for the calculation of
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beneficial ownership by all executive officers and directors as a
group) by no other person or entity.
(2) Includes 150,360 shares subject to options held under the Company's
1986 and 1995 Stock Option Plans. Excludes the shares owned by Mr.
Roach's wife, Dorothy Roach, reflected below in this table, as to which
shares Mr. Roach disclaims beneficial ownership. Mr. Roach's address is
Route 2-Kennedy Avenue, Guaynabo, Puerto Rico 00657.
(3) Includes 8,960 shares subject to options held under the Company's 1986
Stock Option Plan. Excludes the shares owned by Mrs. Roach's husband,
Alfred J. Roach, reflected above in this table, as to which shares Mrs.
Roach disclaims beneficial ownership. Mrs. Roach's address is Route
2-Kennedy Avenue, Guaynabo, Puerto Rico 00657.
(4) Includes 968 shares owned by Mr. Roach's wife (who has sole voting and
dispositive power with respect to the shares owned by her and as to
which Mr. Roach disclaims beneficial ownership); and 150,000 shares
subject to options held under the Company's 1986 and 1995 Stock Option
Plans. Mr. Roach's address is c/o the Company, 1385 Akron Street,
Copiague, NY 11726.
(5) Represents 300,000 shares issuable upon conversion of $750,000 of
indebtedness and 100,000 shares issuable upon the exercise of an
option. Overseas Private Investment Corporation's address is 1615 M
Street, N.W., Washington, DC 20527.
(6) Includes 78 shares owned by Mr. Barksdale's children and 21,000 shares
subject to options held under the Company's 1983 Employee Incentive
Stock Option Plan and 1986 Stock Option Plan.
(7) Includes 25,000 shares subject to options held under the Company's 1994
Non-Employee Director Option Plan.
(8) Includes 34,250 shares subject to options held under the Company's 1986
Stock Option Plan and 1994 NonEmployee Director Stock Option Plan.
(9) Represents 35,000 shares subject to options held under the Company's
1986 Stock Option Plan and 1994 NonEmployee Director Option Plan.
(10) Represents 34,000 shares subject to options held under the Company's
1986 Stock Option Plan.
(11) Includes 1,000 shares owned by Mr. Roach's wife (who has sole voting
and dispositive power with respect to the shares owned by her and as to
which Mr. Roach disclaims beneficial ownership) and 31,000 shares
subject to options held under the Company's 1986 Stock Option Plan.
(12) Includes 5,000 shares subject to options held under the Company's 1995
Stock Option Plan.
(13) Includes 533,570 shares subject to options.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Since fiscal 1982, the Company has leased equipment from PRC Leasing,
Inc. ("PRC"), a corporation wholly-owned by Alfred J. Roach, Chairman of the
Board of Directors and a director of the Company. On July 18, 1991, as an
inducement to the Company's then bank lenders to restructure the Company's
long-term bank loan, among other things, the Company acquired certain equipment
and replaced its leases for other equipment with a new lease. The equipment
lease (as subsequently amended, the "Equipment Lease") has a term expiring July
17, 1999 (subject to an automatic extension until July 17, 2001, unless
terminated by either party upon at least ninety days written notice prior to the
scheduled renewal period) and provides for rentals at the rate of $200,000 per
year. The Company believes that the rentals charged by PRC are comparable to the
rentals which would have been charged by unrelated leasing companies for similar
equipment.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who
beneficially own more than 10% of the Company's Common Stock, to timely file
initial statements of stock ownership and statements of changes of beneficial
ownership with the Securities and Exchange Commission and furnish copies of
those statements to the Company. Based solely on a review of the copies of the
statements furnished to the Company to date, or written representations that no
statements were required, the Company believes that all statements required to
be filed by such persons with respect to the Company's fiscal year ended June
27, 1997 were timely filed, except that Joseph C. Hogan was late in reporting
the exercise of a stock option covering 500 shares of Common Stock.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORT
ON FORM 8-K
(a) Exhibits, Financial Statements and Schedule
1. Financial Statements
See Index to Consolidated Financial Statements on page F-1.
2. Financial Statement Schedules
The following consolidated financial statement schedule is
filed herewith;
Page Number
Report of Independent Public Accountants............. S-1
Schedule II - Valuation and Qualifying Accounts...... S-2
Information required by other schedules called for by Regulation S-X is
either not applicable or the information required therein is included in the
financial statements or notes thereto
3. Exhibits
Exhibit Number Description
3 (a)(1) Restated Certificate of Incorporation of the
Company, as filed with the Secretary of
State of the State of Delaware on December
10, 1996. Incorporated by reference to
Exhibit 3 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended
December 27, 1996 (File No. 1-8048).
3(b) By-laws of the Company, as amended.
Incorporated by reference to Exhibit 4.02 to
Amendment No. 1 to the Company's
Registration Statement on Form S-3 (File No.
33- 64980).
4(a)(1)(A) Revolving Credit Loan Agreement dated
January 31, 1995 among TII International,
Inc. ("International"), the Company and
Chemical Bank (the "Bank"). Incorporated by
reference to Exhibit 4.1(a) to the Company's
Current Report on Form 8-K dated January 31,
1995 (date of earliest event reported) (File
No. 1-8048).
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4(a)(1)(B) First Amendment dated as of August 3, 1995
to the Revolving Credit Agreement among
International, the Company and the Bank.
Incorporated by reference to Exhibit
4(a)(1)(B) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 28,
1996 (File No. 1-8048).
4(a)(1)(C) Second Amendment dated as of November 10,
1995 to the Revolving Credit Agreement among
International, the Company and the Bank.
Incorporated by reference to Exhibit
4(a)(1)(C) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 28,
1996 (File No. 1-8048).
4(a)(1)(D) Third Amendment dated as of December 27,
1995 to the Revolving Credit Agreement among
International, the Company and the Bank.
Incorporated by reference to Exhibit
4(a)(1)(D) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 28,
1996 (File No. 1-8048).
4(a)(1)(E) Fourth Amendment dated May 2, 1997 to the
Revolving Credit Agreement among
International, the Company and the Bank.
Incorporated by reference to Exhibit 4 to
the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 28, 1997
(File No. 1-8048).
4(a)(1)(F)x Fifth Amendment and Waiver dated as of
September 23, 1997 to the Revolving Credit
Agreement among International, the Company
and the Bank. Incorporated by reference to
Exhibit 4(a)(1)(F) to the Company's Annual
Report is Form 10-K for the fiscal year
ended June 27, 1997 (File No. 1-8048).
4(a)(1)(G)*
Sixth Amendment and Waiver dated as of
October 17, 1997 to the Revolving Credit
Agreement among International, the Company
and the Bank.
4(a)(2) Joint and Several Guaranty of Payment dated
January 31, 1995 executed in favor of the
Bank by the Company and TII Industries NC,
Inc., TII Dominicana, Inc., TII Electronics,
Inc.(since dissolved), Ditel, Inc.(now
TII-Ditel, Inc.), TII Corporation and
Telecommunications Industries, Inc., direct
or indirect subsidiaries of the Company.
Incorporated by reference to Exhibit 4.1(b)
to the Company's Current Report on Form 8-K
dated January 31, 1995 (date of earliest
event reported) (File No. 1-8048).
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4(a)(3) Pledge Agreement dated January 31, 1995
between International and the Bank.
Incorporated by reference to Exhibit 4.1(c)
to the Company's Current Report on Form 8-K
dated January 31, 1995 (date of earliest
event reported) (File No. 1-8048).
4(a)(4) Security Agreement dated January 31, 1995
between the Company and the Bank.
Incorporated by reference to Exhibit 4.1(d)
to the Company's Current Report on Form 8-K
dated January 31, 1995 (date of earliest
event reported) (File No. 1-8048).
4(a)(5) Assignment of Accounts Receivable Agreement
dated January 31, 1995 executed by the
Company in favor of the Bank. Incorporated
by reference to Exhibit 4.1(e) to the
Company's Current Report on Form 8-K dated
January 31, 1995 (date of earliest event
reported) (File No. 1-8048).
4(a)(6) Stock Pledge Agreement dated January 31,
1995 between the Company and the Bank.
Incorporated by reference to Exhibit 4.1(f)
to the Company's Current Report on Form 8-K
dated January 31, 1995 (date of earliest
event reported) (File No. 1-8048).
4(a)(7) Security Agreement dated January 31, 1995
between Ditel, Inc.(now TII-Ditel, Inc.), an
indirect subsidiary of the Company, and the
Bank. Incorporated by reference to Exhibit
4.1(g) to the Company's Current Report on
Form 8-K dated January 31, 1995 (date of
earliest event reported) (File No. 1-8048).
10(a)(1)+ 1983 Employee Incentive Stock Option Plan of
the Company, as amended. Incorporated by
reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended September 27, 1996 (File No.
1-8048).
10(a)(2)+ 1986 Stock Option Plan of the Company, as
amended. Incorporated by reference to
Exhibit 10.2 to the Company's Quarterly
Report on Form 10-Q for the fiscal quarter
ended September 27, 1996 (File No. 1-8048).
10(a)(3)+ 1994 Non-Employee Director Stock Option
Plan, as amended. Incorporated by reference
to Exhibit 99.01 to the Company's
Registration Statement on Form S-8, No.
33-64965.
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10(a)(4)+ 1995 Stock Option Plan. Incorporated by
reference to Exhibit 10.3 to the Company's
Quarterly Report on Form 10-Q for the fiscal
quarter ended September 27, 1996 (File No.
1-8048).
10(b)(1)+x Amended and Restated Employment Agreement
dated as of August 1, 1997 between the
Company and Timothy J Roach. Incorporated by
reference to Exhibit 10(b)(1)+ to the
Company's Annual Report is Form 10-K for the
fiscal year ended June 27, 1997 (File No. 1-
8048).
10(b)(2)+* Amended and Restated Employment Agreement
dated as of May 1, 1997 between the Company
and Paul G. Sebetic.
10(b)(3)(A)+x Employment Agreement dated September 23,
1993 between the Company and Dare P.
Johnston. Incorporated by reference to
Exhibit 10(b)(3)(A)+ to the Company's Annual
Report is Form 10- K for the fiscal year
ended June 27, 1997 (File No. 1-8048).
10(b)(3)(B)+x Extension dated as of June 2, 1997 to the
Employment Agreement dated September 23,
1993 between the Company and Dare P.
Johnston. Incorporated by reference to
Exhibit 10(b)(3)(B)+ to the Company's Annual
Report is Form 10-K for the fiscal year
ended June 27, 1997 (File No. 1-8048).
10(c)(1)(A) Equipment Lease dated July 18, 1991 between
PRC Leasing, Inc. ("PRC") and the Company.
Incorporated by reference to Exhibit
10(b)(57) to the Company's Current Report on
Form 8-K for the month of July 1991 (File
No. 1-8048).
10(c)(1)(B) Amendment dated July 18, 1992 to Equipment
Lease dated July 18, 1991 between the
Company and PRC. Incorporated by reference
to Exhibit 10(b)(67) to the Company's Annual
Report on Form 10- K for the fiscal year
ended June 25, 1993 (File No. 1- 8048).
10(c)(1)(C) Second Amendment dated February 25, 1993 to
Equipment Lease dated July 18, 1991 between
the Company and PRC. Incorporated by
reference to Exhibit 10(b)(7) to the
Company's Annual Report on Form 10-K for the
fiscal year ended June 25, 1993 (File No. 1-
8048).
10(c)(1)(D) Restated Third Amendment dated December 14,
1993 to Equipment Lease dated July 18, 1991
between the Company and
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PRC. Incorporated by reference to Exhibit
4(d) to Amendment No. 2 to the Schedule 13D
filed by Alfred J. Roach (File No. 1-8048).
10(d)(1) Lease Contract dated December 15, 1989
between the Company and Puerto Rico
Industrial Development Company. Incorporated
by reference to Exhibit 10(c)(1) to the
Company's Annual Report on Form 10-K for the
fiscal year ended June 29, 1990 (File No. 1-
8048).
10(d)(2) Consolidated Contract of Lease Renewal and
Construction dated February 1, 1994 between
TII Dominicana, Inc., a subsidiary of the
Company, and The Industrial Development
Corporation of the Dominican Republic.
Incorporated by reference to Exhibit
10(g)(2) to the Company's Annual Report on
Form 10-K for the fiscal year ended June 30,
1995 (File No. 1-8048).
11 x Calculation of earnings per share.
Incorporated by reference to Exhibit 11 to
the Company's Annual Report is Form 10-K for
the fiscal year ended June 27, 1997 (File
No. 1-8048).
21 x Subsidiaries of the Company. Incorporated by
reference to Exhibit 21 to the Company's
Annual Report is Form 10-K for the fiscal
year ended June 27, 1997 (File No. 1-8048).
23 x Consent of Arthur Andersen LLP
27 x Financial data schedule (file electronically
only).
- ----------
* Filed herewith.
+ Management Contract or arrangement
x Previously filed with original filing of this Report
(b) Report on Form 8-K
No Reports on Form 8-K were filed during the last quarter of the year
ended June 27, 1997.
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UNDERTAKING
The undersigned hereby undertakes to furnish to the Securities and
Exchange Commission, upon request, all constituent instruments defining the
rights of holders of long-term debt of the Registrant and its consolidated
subsidiaries not filed herewith. Such instruments have not been filed since none
are, nor are being, registered under Section 12 of the Securities and Exchange
Act of 1934 and the total amount of securities authorized under any of such
instruments does not exceed 10% of the total assets of the Registrant and its
subsidiaries on a consolidated basis.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
TII INDUSTRIES, INC.
(Registrant)
October 24, 1997 By /s/ Paul G. Sebetic
------------------------
Paul G. Sebetic,
Vice President-Finance and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
4(a)(1)(G) Sixth Amendment and Waiver dated as of October 17,
1997 to the Revolving Credit Agreement among
International, the Company and the Bank.
10(b)(2) Amended and Restated Employment Agreement dated as
of May 1, 1997 between the Company and Paul G.
Sebetic.