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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2002
Commission File Number: 0-16207
ALL AMERICAN SEMICONDUCTOR, INC.
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(Exact name of registrant as specified in its charter)
Delaware 59-2814714
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16115 N.W. 52nd Avenue
Miami, Florida 33014
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 621-8282
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
As of June 28, 2002, the last business day of the Registrant's most recently
completed second fiscal quarter, the aggregate market value of the common stock
of ALL AMERICAN SEMICONDUCTOR, INC. held by non-affiliates was $9,700,000.
As of March 14, 2003, 3,817,434 shares of the common stock of ALL AMERICAN
SEMICONDUCTOR, INC. were outstanding.
Documents incorporated by reference: None
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Items 10, 11, 12 and 13 of Part III of the Annual Report on Form 10-K for the
fiscal year ended December 31, 2002 of All American Semiconductor, Inc. (the
"Company" or the "Registrant") previously filed with the Securities and Exchange
Commission ("SEC") are hereby amended and restated in their entirety as follows:
Item 10. Directors and Executive Officers of the Registrant
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Executive Officers and Directors
The executive officers and directors of the Company and their ages and positions
with the Registrant as of April 21, 2003 are as follows:
Name Class Age Position
---- ----- --- --------
Paul Goldberg (1)..................... III 74 Chairman of the Board
Bruce M. Goldberg (1)................. II 47 Director and President and Chief Executive Officer
Howard L. Flanders.................... II 45 Director and Executive Vice President, Chief
Financial Officer and Corporate Secretary
Rick Gordon........................... III 49 Director and Senior Vice President of Sales
Robin L. Crandell (2)(3).............. III 53 Director
Howard M. Pinsley (2)(3).............. I 63 Director
Richard E. Siegel..................... II 57 Director
John Jablansky........................ 45 Senior Vice President of Product
Management and Operations
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(1) member of the Executive Committee
(2) member of the Audit Committee
(3) member of the Compensation Committee
The Company's Certificate of Incorporation provides for a staggered Board of
Directors (the "Board"), consisting of three classes. The terms of office of
Class I, II and III directors expire in 2004, 2005 and 2003, respectively. The
Company's executive officers serve at the discretion of the Board; however,
certain executive officers have employment agreements with the Company. See Item
11. Executive Compensation -- Employment Agreements. The following is a brief
resume of the Company's executive officers and directors.
Paul Goldberg, one of the co-founders of the Company and the father of Bruce M.
Goldberg, has been employed by the Company in various executive capacities since
its predecessor's formation in 1964, and has served as Chairman of the Board
since 1978. Paul Goldberg was also Chief Executive Officer of the Company until
1997 and President of the Company until 1994.
Bruce M. Goldberg, the son of Paul Goldberg, joined the Company in 1988 as Vice
President, in 1990 became Executive Vice President and in 1994 became President
and Chief Operating Officer. In 1997, Bruce M. Goldberg was appointed Chief
Executive Officer of the Company. Bruce M. Goldberg has served as a director of
the Company since 1987. From 1981 until joining the Company, Bruce M. Goldberg
practiced law.
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Howard L. Flanders joined the Company in 1991 as its Vice President and Chief
Financial Officer, and in 1992 became a director of the Company and Corporate
Secretary. In 1997, Mr. Flanders was appointed Executive Vice President of the
Company. Prior to joining the Company, Mr. Flanders, who is a CPA, was
Controller of Reliance Capital Group, Inc., a subsidiary of Reliance Group
Holdings, Inc., where he held various positions since 1982. Prior thereto, Mr.
Flanders was an accountant with the public accounting firm of
PricewaterhouseCoopers LLP.
Rick Gordon has been employed by the Company since 1986. He was originally the
General Manager of the Company's Northern California office and Northwest
Regional Manager. In 1990, Mr. Gordon became the Western Regional Vice President
and in 1992 Vice President of North American Sales and a director of the
Company. In 1994, Mr. Gordon was appointed Senior Vice President of Sales and
Marketing for the Company and currently holds the title of Senior Vice President
of Sales. Before working for the Company, Mr. Gordon was Western Regional Vice
President for Diplomat Electronics, another electronic components distributor,
from 1975 until 1986.
Robin L. Crandell is Senior Vice President of Worldwide Sales and Marketing for
E2O Communications, Inc., a manufacturer of high-performance fiber optic
transmission components and modules. Prior to joining E2O Communications, Inc.
in March 2002, Mr. Crandell was Partner and Vice President of Sales for Phase II
Technical Sales, a manufacturers sales representation firm specializing in
semiconductors. Prior to 1998, Mr. Crandell was Senior Vice President of Sales
and Marketing for Samsung Electronics, Storage System Division, Vice President
of North American Business Operations for VLSI Technology and Vice President of
North American Sales for Samsung Semiconductor. Previously he held various sales
positions at Advanced Micro Devices and was a senior engineer with Litton Data
Systems. Mr. Crandell has a BSEE degree from California State Polytechnic
University. Mr. Crandell became a director of the Company in 1999.
Howard M. Pinsley is the President, Chief Executive Officer and a director of
Espey Mfg. & Electronics Corp., a company which has designed, developed and
manufactured high voltage applications for industry and defense since 1928. Mr.
Pinsley has been with Espey for over 20 years. Prior to joining Espey, Mr.
Pinsley was a junior accountant at an accounting firm located in New York City.
Mr. Pinsley became a director of the Company on July 31, 2002.
Richard E. Siegel is the Executive Vice President and a director of Supertex,
Inc., a manufacturer of complex proprietary and industry-standard integrated
circuits. Mr. Siegel has been with Supertex since 1981. Prior thereto, Mr.
Siegel worked at Signetics Corporation, Fairchild Semiconductor, Ford
Instrument, and Grumman Aircraft Corporation. Mr. Siegel has a B.S. degree in
Mechanical Engineering from the City College of New York. Mr. Siegel became a
director of the Company in 1999.
John Jablansky has been employed by the Company since 1981. He was originally in
sales and since 1982 has worked in various capacities within the product
management department. In 1997, Mr. Jablansky was appointed Senior Vice
President of Product Management of the Company and in 2001 became Senior Vice
President of Product Management and Operations. Prior to joining the Company,
Mr. Jablansky was employed by Milgray Electronics, another electronic components
distributor.
Board Committees
Executive Committee
The Executive Committee is comprised of Paul Goldberg and Bruce M. Goldberg.
During 2002, the Executive Committee did not meet formally, however, its members
spoke on nearly a daily basis in connection with the operations of the Company.
The Executive Committee possesses substantially all of the powers of the Board
and acts as the Board between Board meetings.
Audit Committee
As a result of the death in October 2002 of Daniel M. Robbin, who was an
independent nonemployee director of the Company serving on the Audit Committee
until his death, the Audit Committee is currently comprised
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of Howard M. Pinsley and Robin L. Crandell, two independent nonemployee
directors of the Company. Mr. Crandell served on the Audit Committee throughout
2002 and Mr. Pinsley became a member on July 31, 2002. The Company is currently
in the process of identifying an additional independent nonemployee director to
replace Mr. Robbin on the Board and Audit Committee. The Audit Committee
monitors and oversees the Company's financial reporting process on behalf of the
Board. It reviews the independence of the Company's auditors and is now
responsible for authorizing or approving the engagement of the independent
auditors for both audit services and permitted non-auditing services, the scope
of audit and non-audit assignments, related fees, the accounting principles used
in financial reporting, internal financial accounting procedures, the adequacy
of the internal control procedures, critical accounting policies, and the
overall quality of the Company's financial reporting.
Compensation Committee
The Compensation Committee currently consists of Howard M. Pinsley and Robin L.
Crandell, two independent nonemployee directors of the Company. The Compensation
Committee is responsible for determining the compensation of all executive
officers of the Company and acts as the stock option committee of the Board,
administering the Company's Employees', Officers', Directors' Stock Option Plan,
as previously amended and restated (the "Option Plan"). The senior management of
the Company makes all decisions with respect to the compensation (other than the
granting of stock options) of all employees other than the executive officers of
the Company.
Nominating Committee
The Board does not currently have a Nominating Committee, such function having
historically been performed by the Board as a whole.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires the Company's directors and executive officers, and persons who
own more than 10% of a registered class of the Company's equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of the Company. Directors,
executive officers and greater than ten percent shareholders are also required
by the SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, during the fiscal year ended December 31, 2002, all
Section 16(a) filing requirements applicable to its directors, executive
officers and greater than ten percent shareholders were satisfied.
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Item 11. Executive Compensation
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The following table sets forth information regarding the compensation earned
during each of the fiscal years ended December 31, 2002, 2001 and 2000 by the
Chief Executive Officer and each of the other four most highly compensated
executive officers of the Company, whose total annual salary and bonus exceeded
$100,000:
Summary Compensation Table
--------------------------
Long-term
Compensation
Annual Compensation Awards
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Other Annual Securities All Other
Compensation Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) ($)(1) Options(#) ($)(2)
--------------------------- ----- ---------- --------- -------------- --------------- ------------
Paul Goldberg...................... 2002 243,000 - - - 10,000
Chairman of the Board 2001 278,000 - - - 17,000
2000 291,000 582,000 - 5,000 16,000
Bruce M. Goldberg.................. 2002 339,000 - - - 26,000
President and Chief 2001 388,000 - - - 32,000
Executive Officer 2000 407,000 815,000 171,000(3) 5,000 34,000
Howard L. Flanders................. 2002 181,000 - - 18,000
Executive Vice President and 2001 207,000 - - - 22,000
Chief Financial Officer 2000 215,000 215,000 - 5,000 23,000
Rick Gordon........................ 2002 183,000 - - - 15,000
Senior Vice President of Sales 2001 210,000 - - - 19,000
2000 218,000 218,000 - 5,000 21,000
John Jablansky..................... 2002 174,000(4) - - - 1,000
Senior Vice President of Product 2001 191,000(4) - - - 4,000
Management and Operations 2000 170,000(4) - - 3,000 70,000
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(1) Except for Bruce M. Goldberg in 2000, other annual compensation for
each of the named executive officers in 2002, 2001 and 2000 did not
exceed the lesser of $50,000 or 10% of the total of annual salary and
bonus reported for such named executive officer.
(2) All other compensation includes Company contributions to life insurance
policies, where the Company is not the beneficiary, to the Deferred
Compensation Plans and to the 401(k) Plan of the Company. See
hereinbelow and "Deferred Compensation Plans for Executive Officers and
Key Employees" and "401(k) Plan."
(3) Includes payments made in connection with Bruce M. Goldberg's
relocation to San Jose to be based where the sales and marketing
functions of the Company are headquartered. See "Employment Agreements
- The Goldberg Agreements" hereinbelow.
(4) Includes commissions paid in the aggregate amounts of $68,000, $71,000
and $72,000 in 2002, 2001 and 2000, respectively, based on meeting
certain levels of gross profits in each of those years.
The Company pays for a $550,000 universal life insurance policy on the life of
Paul Goldberg with benefits payable to his wife, which had an annual premium in
2002 of $7,668. Pursuant to the terms of an employment agreement with Bruce M.
Goldberg, the Company makes annual payments, currently in the amount of $21,995,
to Bruce M. Goldberg to cover the annual premium on a $1,000,000 whole life
insurance policy (the "Whole Life Policy") on the life of Bruce M. Goldberg. The
Company is obligated to continue, for the duration of Bruce M. Goldberg's
employment with the Company, to pay the annual premium to Bruce M. Goldberg for
the Whole Life Policy. In addition, pursuant to the terms of an insurance
agreement effective as
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of January 1, 1993 with each of Howard L. Flanders and Rick Gordon, beginning in
1993 the Company has advanced substantially all of the premiums for $1,000,000
flexible premium life insurance policies owned by each of Howard L. Flanders and
Rick Gordon. The annual premium in 2002 on each of these policies was $11,500.
Under the respective insurance agreement the Company's obligations to make
premium payments in connection with Howard L. Flanders' and Rick Gordon's
policies lasts for a maximum of ten years from the time the insurance policies
were acquired in 1993. The Company's premium advances were secured by a
collateral assignment of the cash surrender value and death benefit of each of
the policies subject to a five year vesting period which commenced on January 1,
1998. If during the vesting period each of them remained in the employ of the
Company, the premium advances to them were deemed ratably cancelled in scheduled
annual percentage increments until January 1, 2003 (the tenth anniversary of the
insurance agreements), at which time all advances were deemed cancelled, the
security interest fully released and the cash surrender value and other benefits
of their respective insurance policies were fully vested in the employees.
Option Grants in Last Fiscal Year
The Company did not grant any stock options during its fiscal year ended
December 31, 2002 to any named executive officer of the Company. The Company
does not have a plan whereby tandem stock appreciation rights ("SARS") are
granted. See "Employees', Officers', Directors' Stock Option Plan" hereinbelow.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-Ended Option
Values
The following table sets forth information concerning the aggregate option
exercises in the fiscal year ended December 31, 2002 and the value of
unexercised stock options as of December 31, 2002 for the individual executive
officers named in the Summary Compensation Table:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options At Options At
Shares FY-End(#) FY-End ($)
Acquired on Value Exercisable/ Exercisable/
Exercise(#) Realized($) Unexercisable Unexercisable(1)
------------------------------------------------------------------------
Paul Goldberg................ - - 83,250 (E) -
- - 6,750 (U) -
Bruce M. Goldberg............ - - 121,000 (E) -
- - 9,000 (U) -
Howard L. Flanders........... - - 50,600 (E) -
- - 15,000 (U) -
Rick Gordon.................. - - 38,600 (E) -
- - 7,000 (U) -
John Jablansky............... - - 6,100 (E) -
- - 3,400 (U) -
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(1) Value is based upon the difference between the exercise price of the
options and the last reported sale price of the Common Stock on The
Nasdaq Stock Market on December 31, 2002 (the Company's fiscal year
end).
Employees', Officers', Directors' Stock Option Plan
In 1987, the Company established an Employees', Officers', Directors' Stock
Option Plan (as previously amended and restated, the "Option Plan"). Subsequent
thereto certain amendments to and a restatement of the Option Plan have been
adopted by the Board and approved by the shareholders of the Company. The
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Option Plan may be further modified or amended by the Board, but certain
modifications and amendments are subject to approval by the Company's
shareholders. The Option Plan provides for the granting to key employees of both
"incentive stock options," within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and "nonqualified stock options"
("nonqualified stock options" are options which do not comply with Section 422
of the Code) and for the granting to nonemployee directors and independent
contractors associated with the Company of nonqualified stock options. Unless
earlier terminated, the Option Plan will continue in effect through April 18,
2009, after which it will expire and no further options could thereafter be
granted under the Option Plan. The expiration of the Option Plan, or its
termination by the Board, will not affect any options previously granted and
then outstanding under the Option Plan. Such outstanding options would remain in
effect until they have been exercised, terminated or have expired. A maximum of
1,100,000 shares of the Company's Common Stock has been reserved for issuance
upon the exercise of options granted under the Option Plan, subject to any
adjustments required upon changes in capitalization to prevent dilution or
enlargement of the shares issuable pursuant to the Option Plan by reason of any
stock split, stock dividend, combination of shares, recapitalization or other
change in the capital structure of the Company.
The Option Plan is administered by the Compensation Committee comprised of two
or more nonemployee directors appointed by the Board from among its members. Any
member of the Compensation Committee may be removed at any time either with or
without cause by action of the Board and a vacancy on the Compensation Committee
due to any reason can be filled by the Board. The current members of the
Compensation Committee are two of the independent nonemployee directors of the
Company, Howard M. Pinsley and Robin L. Crandell. Subject to the express
limitations of the Option Plan, the Compensation Committee has authority, in its
discretion, to interpret the Option Plan, to adopt, prescribe, amend and rescind
rules and regulations as it deems appropriate concerning the holding of its
meetings and administration of the Option Plan, to determine and recommend
persons to whom options should be granted, the date of each option grant, the
number of shares of Common Stock to be included in each option, any vesting
schedule, the option price and term (which in no event will be for a period more
than ten years from the date of grant) and the form and content of agreements
evidencing options to be issued under the Option Plan.
Options may be currently granted under the Option Plan to any key employee or
nonemployee director or prospective key employee or nonemployee director
(conditioned upon, and effective not earlier than, his or her becoming an
employee or director) of or independent contractor associated with the Company
or its subsidiaries. However, as required by the Code, nonemployee directors and
independent contractors are only eligible to receive nonqualified stock options.
In determining key employees to whom options will be granted, the Compensation
Committee takes into consideration the key employee's present and potential
contribution to the success and growth of the Company's business and other such
factors as the Compensation Committee may deem proper or relevant in its
discretion including whether such person performs important job functions or
makes important decisions for the Company, as well as the judgment, initiative,
leadership and continued efforts of eligible participants. Employees who are
also officers or directors of the Company or its subsidiaries will not by reason
of such offices be ineligible to receive options. However, no member of the
Compensation Committee is eligible to receive options under the Option Plan and
it is currently contemplated that nonemployee directors would be granted options
under the Director Stock Option Plan described below and not the Option Plan.
The Compensation Committee has not adopted formal eligibility limitation
criteria. Therefore, quantification of the current number of employees,
nonemployee directors and independent contractors that would technically be
eligible for participation is not currently readily determinable.
The exercise price for all options granted under the Option Plan shall not be
less than the fair market value of the Company's Common Stock on the date of
grant (or, in the case of incentive stock options, 110% of the fair market value
if the beneficiary of the grant beneficially owns 10% or more of the outstanding
shares of the Company's Common Stock). For purposes of the Option Plan, fair
market value on the date of grant of any option is the average of the "market
price" of a share of Common Stock for each of the seven (7) consecutive business
days preceding such date. The "market price" on each such day shall be (i) if
the Common Stock is listed on a securities exchange (including The Nasdaq Stock
Market), the closing sales price on such exchange on such day or, in the absence
of reported sales on such day, the mean between the reported closing bid and
asked prices on such exchange on such day, or (ii) if the Common Stock is not
listed on a securities exchange (including The Nasdaq Stock Market), the mean
between the closing bid and
6
asked prices as quoted by the National Association of Securities Dealers, Inc.
through the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") for such day; provided, however, that, if there are no such
quotations or if it is determined that the fair market value is not properly
reflected by such NASDAQ quotations or the Common Stock is not traded on an
exchange or over the counter, fair market value shall be determined by such
other method as the Compensation Committee determines to be reasonable.
Notwithstanding the foregoing, if on, or within ten (10) days prior to, the date
of grant of any options a registration statement filed by the Company with the
SEC in connection with a public offering of Common Stock becomes effective, the
fair market value of a share of such Common Stock shall be the public offering
price per share of Common Stock being offered pursuant to such offering.
Except as may be specifically limited by the terms of the Option Plan, the
granting of options is made at the sole discretion of the Compensation
Committee. Further, the aggregate fair market value of the Company's Common
Stock (determined at the date of the option grant) for which an employee may be
granted incentive stock options which first become exercisable in any calendar
year under the Option Plan may not exceed $100,000. Options granted pursuant to
the Option Plan are not transferable during an optionee's lifetime.
The term of and any vesting schedule (whether the option will be exercisable
immediately, in stages or otherwise, or the vesting will be based upon any
condition such as the operating performance of the Company or other events such
as a change in control) for an option granted under the Option Plan is
established by the Compensation Committee, but the term may not be more than ten
years from the date of grant of the option, except that, in the case of a person
receiving an incentive stock option who at such time owns the Company's Common
Stock representing more than 10% of the Company's Common Stock outstanding at
the time the option is granted, the term of such incentive stock option shall
not exceed five years from the date of grant of the option. In general, options
will not be exercisable after the expiration of their term. Furthermore, the
Compensation Committee has the authority and discretion to determine the time
frame in which an optionee has to exercise his options (subject to the ten-year
limitation from date of grant) in the event of his termination of employment due
to death, disability, termination without cause, retirement, voluntarily leaving
the Company or a change in control.
As of April 21, 2003, a total of 1,013,830 options were granted and had not
expired or been forfeited, of which 105,646 were exercised and 908,184 options
were outstanding (of which 499,550 options were held by executive officers and
directors of the Company as a group and 299,550 options are presently
exercisable). These options, which are held by 136 persons, are exercisable at
prices ranging from $1.92 per share to $14.32 per share and are exercisable
through various expiration dates from 2003 to 2007.
2000 Nonemployee Director Stock Option Plan
In June 2000, the Company established the 2000 Nonemployee Director Stock Option
Plan, as amended (the "Director Stock Option Plan"). The Director Stock Option
Plan provides for awards of options to purchase shares of Common Stock of the
Company to nonemployee directors of the Company. Under the Director Stock Option
Plan, on or about the day of each nonemployee director's initial election to the
Company's Board, each nonemployee director will be awarded nonqualified stock
options to purchase at least 1,500 shares of the Company's Common Stock, but not
to exceed a maximum of 15,000 shares, at the fair market value of the Company's
Common Stock on the date on which the option is granted. The Board will
determine the number of options to be granted to a nonemployee director upon his
or her initial election as it deems necessary or advisable and in the best
interests of the Company in order to attract and obtain outstanding and highly
qualified candidates to serve on the Company's Board. On the date of the
Company's annual meeting of shareholders occurring later than 12 months after a
nonemployee director's initial election, the Director Stock Option Plan provides
such nonemployee director (subject to his or her re-election if up for
re-election at such annual meeting) will be automatically awarded additional
options to purchase 1,000 shares of Common Stock at the fair market value of the
Company's Common Stock on the date on which the option is granted. An aggregate
of 75,000 shares of the Company's Common Stock has been reserved for issuance
under the Director Stock Option Plan. As of April 21, 2003, a total of 12,000
options were granted and had not expired or been forfeited, all of which were
outstanding. These options, which are held by 4 persons, have exercise prices
ranging from $1.96 per share to $10.53 per share (based on fair market value at
date of grant) and vest in 50% annual
7
increments over a two-year period and are exercisable over a ten-year period.
Under certain circumstances, including death, permanent disability, retirement
or a change in control, vesting is accelerated and the options become fully
exercisable.
Registration Statements
The Company has filed registration statements on Form S-8 with the SEC in order
to register all of the shares of Common Stock issuable under the Company's two
option plans. So long as such registration statements remain effective under the
Securities Act of 1933, as amended (the "Act"), shares of Common Stock issued
upon the exercise of outstanding options under the option plans will be
immediately and freely tradable without restriction under the Act, subject to
applicable volume limitations, if any, under Rule 144 and, in the case of
executive officers and directors of the Company, Section 16 of the Exchange Act.
Deferred Compensation Plans for Executive Officers and Key Employees
Effective January 1, 1988, the Company established a deferred compensation plan
(the "1988 Deferred Compensation Plan") for executive officers and key employees
of the Company. The employees eligible to participate in the 1988 Deferred
Compensation Plan (the "Participants") are chosen at the sole discretion of the
Board, upon a recommendation from the Compensation Committee. Pursuant to the
1988 Deferred Compensation Plan, commencing on a Participant's retirement date,
he or she will receive an annuity for ten years. The amount of the annuity shall
be computed at 30% of the Participant's salary, as defined. Any Participant with
less than ten years of service to the Company as of his or her retirement date
will only receive a pro rata portion of the annuity. Retirement benefits paid
under the 1988 Deferred Compensation Plan will be distributed monthly. The
Company paid benefits under this plan of approximately $15,600 during 2002, none
of which was paid to any executive officer. The maximum benefit payable to a
Participant (including each of the named executive officers) under the 1988
Deferred Compensation Plan is presently $30,000 per annum.
During 1996, the Company established a second deferred compensation plan (the
"1996 Deferred Compensation Plan") for executives of the Company. The executives
eligible to participate in the 1996 Deferred Compensation Plan are chosen at the
sole discretion of the Board upon a recommendation from the Compensation
Committee. The Company may make contributions each year in its sole discretion
and is under no obligation to make a contribution in any given year. For 2002
the Company contributed $115,000 under this plan. Participants in the plan will
vest in their plan benefits over a ten-year period. If the participant's
employment terminates due to death, disability or a change in control of
management, he or she will vest 100% in all benefits under the plan. Retirement
benefits will be paid, as selected by the participant, based on the sum of the
contributions made and any additions based on investment gains. One executive
officer (John Jablansky) of the Company has been chosen as a participant in the
1996 Deferred Compensation Plan.
401(k) Plan
The Company maintains a 401(k) Plan (the "401(k) Plan"), which is intended to
qualify under Section 401(k) of the Code. All full-time employees of the Company
are eligible to participate in the 401(k) Plan after completing 90 days of
employment. During 2002, each eligible employee could elect to contribute to the
401(k) Plan, through payroll deductions, up to 100% of his or her salary,
limited to $11,000 in 2002. The Company's 401(k) Plan in 2002 and currently
provides for discretionary matching contributions by the Company. Prior to 2002,
the Company's 401(k) Plan provided for standard matching contributions by the
Company in the amount of 25% on the first 6% contributed of each participating
employee's salary.
Employment Agreements
The Goldberg Agreements
The Company has employment agreements with each of Paul Goldberg, its Chairman
of the Board, and Bruce M. Goldberg, its Chief Executive Officer and President
(collectively and as amended the "Goldberg
8
Agreements"). Effective January 1, 2000, the term of each of the Goldberg
Agreements was extended until December 31, 2005, with automatic additional
successive one-year renewal periods thereafter unless terminated in writing by
the Company or the employee at least 60 days prior to the expiration of the then
current term and subject, in the case of Paul Goldberg, to earlier termination
in the event that Paul Goldberg elects to exercise his right to retire as
hereinafter described. Each of the Goldberg Agreements provides for a base
salary, in the case of Paul Goldberg, of $291,167 per annum effective January 1,
2000, and, in the case of Bruce M. Goldberg, of $391,723 per annum effective
January 1, 1999, subject to an annual increase equal to the greater of 4% per
annum or the increase in the cost of living. During 2001 and 2002, Bruce M.
Goldberg and Paul Goldberg voluntarily agreed to reductions in their base
salary. Under the Goldberg Agreements, Paul Goldberg and Bruce M. Goldberg are
entitled to receive, in the case of Paul Goldberg, an annual cash bonus equal to
3% and, in the case of Bruce M. Goldberg, an annual cash bonus in 1999 equal to
4% and in 2000 and thereafter 5% of the Company's pre-tax income, before
nonrecurring and extraordinary charges, in excess of $1,000,000 in any calendar
year. Such annual bonus compensation for each of Paul Goldberg and Bruce M.
Goldberg is limited in any year to an amount no greater than two times his
respective base salary for the applicable year. In addition, upon a change in
control, all options granted by the Company to Paul Goldberg and Bruce M.
Goldberg automatically vest.
In 1998, the Board of Directors approved a loan to Bruce M. Goldberg in the
amount of $125,000 in connection with his relocation to Silicon Valley. This
loan, which was evidenced by a promissory note and bore interest at 5% per
annum, was forgiven effective December 31, 2000 and is included in Mr.
Goldberg's compensation for 2000.
Under the Goldberg Agreement for Paul Goldberg, as amended, he is able to elect,
in his sole discretion, to retire at any time (the "Retirement Election"). Upon
the earlier to occur of the Retirement Election or at the expiration of the term
of his Goldberg Agreement, the Company will be obligated to pay Paul Goldberg
(in addition to any other compensation he may be entitled to upon termination),
and his spouse upon his death, a retirement benefit of $100,000 per annum until
the later of the death of Paul Goldberg or his spouse, provide him and his
spouse, without cost, until the later of their respective deaths, at least the
same level of medical and health insurance benefits as was provided prior to his
retirement and continue to pay the premiums on the life insurance policy
insuring his life as described under "Summary Compensation Table" hereinabove.
The Goldberg Agreements also provide certain additional benefits to each of Paul
Goldberg and Bruce M. Goldberg, including participation in the Company benefit
plans, use of a Company automobile and, in the case of Bruce M. Goldberg,
continuance in the event of disability of all his respective compensation and
other benefits for two years.
The Goldberg Agreements, also provide that, in the event of change in control
(as defined) of the Company, each of Paul Goldberg and Bruce M. Goldberg shall
have the option in his sole discretion to terminate his Goldberg Agreement. In
such event, Paul Goldberg would be entitled to elect (in lieu of electing to
continue to receive some or all of the compensation, payments and benefits as
and when due under his Goldberg Agreement) to receive a lump sum payment equal
to the sum of (i) Paul Goldberg's compensation due through the greater of the
end of the term of his Goldberg Agreement or three years after the change in
control, (ii) the present value (assuming a certain discount rate and life
expectancy) of the retirement payments payable to Paul Goldberg commencing from
the later of the end of the term or three years after the change in control
until his death, (iii) an amount sufficient to pay, until the later of his or
his spouse's death, the premium for at least the same level of health insurance
benefits as was provided before the change in control and (iv) an amount
sufficient to pay until his death, the premiums on the life insurance policy
insuring his life as described under "Summary Compensation Table." Similarly,
under the Goldberg Agreement for Bruce M. Goldberg, in the event of a change in
control and Bruce M. Goldberg's election to terminate his Goldberg Agreement,
Bruce M. Goldberg at his option will be entitled to elect to receive a lump sum
payment equal to his compensation due through the later of the end of the term
of his Goldberg Agreement or three years after the change in control or for such
period to continue to receive such compensation as and when due under the
Goldberg Agreement. The Goldberg Agreements (as well as the employment
agreements for each of Howard L. Flanders and Rick Gordon discussed below) also
provide for reimbursement of, and a gross-up for, any federal tax liability
imposed pursuant to Section 4999 or Section 280G (or any successor
9
provisions) of the Internal Revenue Code of 1986, as amended, and any similar
state or local taxes, as a result of a change in control payment, consideration
and/or benefit made or provided by the Company pursuant to such employment
agreements.
The Flanders/Gordon Agreements
Effective as of January 1, 2000, the Company entered into a new employment
agreement with Howard L. Flanders, its Executive Vice President, Chief Financial
Officer and Corporate Secretary (the "Flanders Agreement"), and Rick Gordon, its
Senior Vice President of Sales (the "Gordon Agreement" and collectively with the
Flanders Agreement, the "Flanders/Gordon Agreements"). The Flanders/Gordon
Agreements each expire on December 31, 2003, with automatic additional
successive one-year renewal periods thereafter unless terminated in writing by
the Company or the employee at least 60 days prior to expiration of the then
current term. They provide for a base salary, effective as of January 1, 2000,
of $215,000 per annum for Mr. Flanders and $218,000 per annum for Mr. Gordon,
subject to an annual increase commencing January 1, 2001, equal to the greater
of 5% per annum or the increase in the cost of living. During 2001 and 2002,
Howard L. Flanders and Rick Gordon voluntarily agreed to reductions in their
base salary. Under the Flanders/Gordon Agreements, Messrs. Gordon and Flanders
are entitled to receive an annual cash bonus equal to 2% of the Company's
pre-tax income, before nonrecurring and extraordinary charges, in excess of
$1,000,000 in any calendar year. Such annual cash bonus compensation is limited
in any year to an amount no greater than such executive's base salary for the
applicable year. The Flanders/Gordon Agreements also provide for certain
additional benefits, including participation in the Company benefit plans, use
of a Company automobile and continuance of all their respective compensation and
other benefits for two years in the event of disability. Further, if Mr. Gordon
or Mr. Flanders were to be terminated without cause (which includes requiring
employee to perform duties not commensurate with his offices or which differ
materially from duties that presently exist or, after a change in control,
changing the location where employee is based), he is entitled to receive
severance benefits equal to the greater of two-years compensation or the
remainder of the compensation due under the applicable Flanders/Gordon
Agreement. Additionally, under the Flanders/Gordon Agreements, the Company will
pay premiums under a life insurance policy for each of Messrs. Gordon and
Flanders with the beneficiary to be as designated by Mr. Gordon or Mr. Flanders,
respectively, as described under "Summary Compensation Table" above. The
Flanders/Gordon Agreements also provide that, in the event of a change in
control (as defined) of the Company, each of Mr. Gordon and Mr. Flanders would
have the option in his sole discretion to terminate the applicable
Flanders/Gordon Agreement. In such event, and subject to remaining an employee
of the Company (or its successor) for 180 days after the change in control
(other than as a result of his death, disability or termination without cause),
Mr. Gordon or Mr. Flanders, at his option, is entitled to elect to receive a
lump-sum payment equal to his respective compensation due through the later of
the end of the term of the applicable Flanders/Gordon Agreement or two years
after the change in control or for such period to continue to receive such
compensation as and when due under such Flanders/Gordon Agreement. In addition,
upon a change in control, all options granted by the Company to Messrs. Flanders
and Gordon automatically vest. The Flanders/Gordon Agreements also contain
covenants not to compete, nonsolicitation and nondisclosure provisions.
Board Compensation
The members of the Board do not currently receive compensation from the Company
for acting in their capacity as directors of the Company nor has the Company
adopted any standard arrangement for compensating non-employee directors of the
Company other than grants of options under the Director Stock Option Plan. In
addition to the Director Option Stock Plan, the Company may decide in the future
to further compensate directors and/or to establish a standard cash compensation
arrangement for non-employee directors. See "2000 Nonemployee Director Stock
Option Plan."
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board currently consists of Howard M. Pinsley
and Robin L. Crandell, both being independent, non-employee directors of the
Company. See "BOARD COMMITTEES - Compensation Committee." Since January 1, 2002
to the date hereof, none of the members
10
of the Compensation Committee had any relationship with the Company requiring
disclosure under Item 404 of Regulation S-K.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
------------------------------------------------------------------
Related Stockholder Matters
---------------------------
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of April 21, 2003, by: (i) each
person known by the Company to be the beneficial owner of more than five percent
(5%) of the Company's Common Stock, (ii) each director of the Company, (iii)
each executive officer of the Company who was serving as an executive officer at
the end of fiscal year 2002 (including the Chief Executive Officer) and (iv) all
executive officers and directors of the Company as a group. Except as indicated
in the notes to the following table, the persons named in the table have sole
voting and investment power with respect to all shares shown as beneficially
owned by them.
Percent of
Name and Address Amount and Nature of Outstanding
of Beneficial Owner (1) Beneficial Ownership (2) Shares (2)
----------------------- ------------------------ ------------
Bruce M. Goldberg (3)........................... 340,432 8.6%
Paul Goldberg (4)............................... 212,823 5.5%
Dimensional Fund Advisors Inc. (5).............. 205,620 5.4%
Howard L. Flanders.............................. 55,800 1.4%
Rick Gordon..................................... 39,800 1.0%
John Jablansky.................................. 12,950 *
Richard E. Siegel............................... 3,100 *
Robin L. Crandell............................... 2,000 *
Howard M. Pinsley............................... 1,000 *
All executive officers and directors
as a group (8 persons)(3)(4).................... 667,905 16.2%
-----------------
* Less than 1%
(1) The address of each of Paul Goldberg, Howard L. Flanders and John
Jablansky is 16115 N.W. 52nd Avenue, Miami, Florida 33014; each of
Bruce M. Goldberg and Rick Gordon is 230 Devcon Drive, San Jose,
California 95112; Richard E. Siegel is 10 Long Spur Street, Portola
Valley, California 94028; Robin L. Crandell is 950 Bascom Avenue, Suite
1113, San Jose, California 95128; and Howard M. Pinsley is 233 Ballston
Avenue, Saratoga Springs, New York 12866.
(2) Includes as to the person indicated the following outstanding stock
options to purchase shares of the Company's Common Stock issued under
the Employees', Officers', Directors' Stock Option Plan and the
Director Stock Option Plan which will be vested and exercisable on or
before June 20, 2003: 122,000 options held by Bruce M. Goldberg; 84,250
options held by Paul Goldberg; 51,600 options held by Howard L.
Flanders; 39,600 options held by Rick Gordon; 6,700 options held by
John Jablansky; 2,000 options held by Richard E. Siegel; 2,000 options
held by Robin L. Crandell; and 308,150 options held by the executive
officers and directors as a group. Excludes outstanding stock options
to purchase an aggregate of 199,900 additional shares of the Company's
Common Stock issued under the Employees', Officers', Directors' Stock
Option Plan and the Director Stock Option Plan to the executive
officers and directors as a group that will not be vested nor
exercisable as of June 20, 2003.
(3) Includes a total of 79,500 shares of the Company's Common Stock held of
record by Bruce M. Goldberg as trustee for his sons and for his nieces
and nephew. For federal securities law purposes only, Bruce M. Goldberg
is deemed to be the beneficial owner of these securities. Does not
include 1,500 shares of the Company's Common Stock held of record by
Jayne Goldberg, the wife of Bruce M. Goldberg, and 19,209 shares of the
Company's Common Stock held of record by an unrelated third party as
trustee for Bruce M. Goldberg's sons. Bruce M. Goldberg disclaims
beneficial ownership over all such securities.
11
(4) Includes 57,844 shares of the Company's Common Stock owned of record by
Paul Goldberg's wife, Lola Goldberg, and a total of 500 shares of the
Company's Common Stock held of record by Paul Goldberg as custodian for
two of his grandchildren. For federal securities law purposes only,
Paul Goldberg is deemed to be the beneficial owner of these securities.
Does not include 35,940 shares of the Company's Common Stock held of
record by Robin Phelan, the daughter of Paul and Lola Goldberg, over
which securities Paul and Lola Goldberg disclaim beneficial ownership.
(5) Dimensional Fund Advisors Inc. ("Dimensional") is a registered
investment advisor with offices at 1299 Ocean Avenue, Santa Monica,
California 90401. Information as to the beneficial ownership of the
Company's Common Stock by Dimensional was obtained from a Schedule 13G
filed on February 7, 2003 with the SEC which disclosed that Dimensional
was the beneficial owner of 205,620 shares, over all of which it had
sole voting power and sole dispositive power in its role as investment
advisor or manager to certain investment companies, trusts and accounts
which own the shares. Such filing further disclosed that the shares
were acquired in the ordinary course of business and were not acquired
for the purpose of, and do not have the effect of, changing or
influencing the control of the Company and were not acquired in
connection with or as a participant in any transaction having such
purpose or effect.
Equity Compensation Plan Information
The following table sets forth information about our Common Stock that may be
issued upon exercise of options, warrants and rights under all of our equity
compensation plans as of December 31, 2002, including the Option Plan and the
Director Stock Option Plan. Our stockholders have approved both of these plans.
Number of Securities Remaining
Number of Securities To Weighted Average Available for Future Issuance Under
Be Issued Upon Exercise Exercise Price of Equity Compensation Plans (Excluding
of Outstanding Options, Outstanding Options, Securities
Plan Category Warrants And Rights Warrants and Rights Reflected in the First Column)
------------------ --------------------------- ---------------------- ------------------------------------
Equity compensation plans
approved by stockholders 624,884 $6.46 444,470
Equity compensation plans
not approved by stockholders N/A N/A N/A
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
During 2002, the Company purchased product aggregating approximately $2.5
million from Supertex, Inc., a supplier of the Company where a Board member of
the Company, Richard E. Siegel, is the Executive Vice President and a director.
In January 2001, the Company, with the approval of the Board, entered into a
lease for a California townhouse for the purpose of accommodating employees of
the Company visiting the San Jose area. The townhouse is owned by a partnership
that consists of Paul Goldberg and his spouse and Bruce M. Goldberg. The lease
has a term expiring in 2006 and provides for monthly rent of $4,800 on a
triple-net basis. In consideration of the impact of the severe industry downturn
on the Company, the partnership reduced the monthly rent to $3,400 beginning in
November 2001. Towards the end of 2002 the rent payment was increased to $4,270
per month, still below the rental amount provided for under the lease. The
Company paid a total of $43,400 to this partnership during 2002.
12
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 No. 1 to Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.
ALL AMERICAN SEMICONDUCTOR, INC.
(Registrant)
By: /s/ Bruce M. Goldberg
--------------------------------------------------------
Bruce M. Goldberg, President and Chief Executive Officer
(Duly Authorized Officer)
By: /s/ Howard L. Flanders
--------------------------------------------------------
Howard L. Flanders, Executive Vice President,
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
Dated: April 29, 2003
------------------------
CERTIFICATIONS
I, Bruce M. Goldberg, President and Chief Executive Officer of All American
Semiconductor, Inc., certify that:
1. I have reviewed this amendment to annual report on Form 10-K/A of All
American Semiconductor, Inc.; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
Date: April 29, 2003 /s/ Bruce M. Goldberg
-----------------------------------------
Bruce M. Goldberg
President and Chief Executive Officer
13
I, Howard L. Flanders, Executive Vice President and Chief Financial Officer of
All American Semiconductor, Inc., certify that:
1. I have reviewed this amendment to annual report on Form 10-K/A of All
American Semiconductor, Inc.; and
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
Date: April 29, 2003 /s/ Howard L. Flanders
----------------------------------------
Howard L. Flanders
Executive Vice President and
Chief Financial Officer
14