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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the fiscal year ended: DECEMBER 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number: 0-22689
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SCM MICROSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 77-0444317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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160 KNOWLES DRIVE, LOS GATOS, CALIFORNIA 95032
(Address of principal executive offices) (zip code)
(408) 370-4888
(Registrant's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.001 PAR VALUE PER SHARE
(Title of Class)
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 [ ] No [X]
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. [ ]
As of March 26,1999 there were 14,057,759 shares of the Registrant's Common
Stock outstanding, and the aggregate market value of such shares held by
non-affiliates of the Registrant was $999,207,000. Shares of Common Stock held
by each executive officer and director and by each entity affiliated with such
persons have been excluded from such calculation in that such persons may be
deemed to be affiliates. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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EXPLANATORY NOTE
This Annual Report on Form 10-K/A ("Form 10-K/A") is being filed as
Amendment No. 1 to the Registrant=s Annual Report on Form 10-K for the fiscal
year ended December 31, 1998 filed with the Securities and Exchange Commission
(the ACommission@) solely for the purpose of supplementing the following items.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who own more than ten percent
of a registered class of our equity securities, or 10% stockholders, to file
certain reports of ownership with the Securities and Exchange Commission and
with the National Association of Securities Dealers. Such officers, directors
and 10% stockholders are also required by the Commission's rules and regulations
to provide us with copies of all forms that they file under Section 16(a) of the
Exchange Act. Based solely on our review of copies of such forms received by us,
or on written representations from certain reporting persons, we believe that,
during the period from January 1, 1998 to December 31, 1998, our executive
officers, directors and 10% stockholders filed all required reports under
Section 16(a) of the Exchange Act on a timely basis.
ITEM 11. EXECUTIVE COMPENSATION.
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and approves our compensation policies.
The following is the report of the Compensation Committee describing the
compensation policies applicable to the compensation of our executive officers
for their services to the Company during 1998.
Compensation Philosophy. Our philosophy in setting our compensation
policies for executive officers is to maximize shareholder value over time. The
primary goal of our executive compensation program is therefore to closely align
the interests of the executive officers with those of our stockholders. To
achieve this goal, we attempt to (i) offer compensation opportunities that
attract and retain executives whose abilities are critical to our long-term
success, motivate individuals to perform at their highest level and reward
outstanding achievement, (ii) maintain a portion of the executive total
compensation at risk, with payment of that portion tied to achievement of
financial, organizational and management performance goals, and (iii) encourage
executives to manage from the perspective of owners with an equity stake in SCM.
The Compensation Committee currently uses salary, incentive bonuses and stock
options to meet these goals.
Base Salary. The base salary component of total compensation is primarily
designed to attract, motivate, reward and retain highly skilled executives and
to compensate executives competitively within the industry and the marketplace.
The Compensation Committee reviewed and approved fiscal 1998 base salaries for
the Chief Executive Officer and other executive officers at the beginning of
fiscal 1998. In establishing base salaries of executive officers, the
Compensation Committee evaluates each executive's salary history, scope of
responsibility, prior experience, past performance for us and recommendations
from management. The Compensation Committee also takes into account the salaries
for similar positions at comparable companies in our industry, based on each
individual Committee member's industry experience. In reviewing and setting base
salaries for executive officers, the Compensation Committee focused on each
executive's historical salary level, which in most instances was based upon the
date on which the executive was hired by us, the executive's prior performance
with us and expected contribution to our future success. In making its salary
decisions, the Compensation Committee exercised its discretion and judgment
based upon these factors. No specific formula was applied to determine the
weight of each factor.
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Incentive Bonuses. Each executive officer's annual bonus is based on
qualitative and quantitative factors and is intended to motivate and reward
executive officers by directly linking the amount of the bonus to performance
targets. In addition, incentive bonuses for executive officers are intended to
reflect the Compensation Committee's belief that the compensation of each
executive officer should be contingent upon our overall performance. To carry
out this philosophy, our board of directors reviews and approves the financial
goals for the fiscal year. The Compensation Committee evaluates our overall
performance and approves performance bonuses based on the extent to which the
goals of the board of directors have been achieved.
Equity Incentives. The Compensation Committee views stock option grants as
an important component of our long-term, performance-based compensation
philosophy. We provide long-term incentives to our Chief Executive Officer and
our other executive officers through our 1997 Stock Plan. The purpose of the
Plan is to attract and retain the best employee talent available and to create a
direct link between compensation and our long-term performance. The Compensation
Committee believes that stock options directly motivate its executive officers
to maximize long-term shareholder value. The options also utilize vesting
periods that encourage key executives to continue in our employ. All options
granted to executive officers to date have been granted at the fair market value
of our common stock on the date of grant. The board of directors considers the
grant of each option subjectively, considering factors such as the individual
performance of the executive officer and the anticipated contribution of the
executive officer to the attainment of our long-term strategic performance
goals.
CEO Compensation. The compensation of Mr. Humphreys, our Chief Executive
Officer, consists of base salary, an annual bonus and stock options. For 1998,
the Compensation Committee retained Mr. Humphreys' base salary at $190,000, the
same level as in 1997 based upon the Compensation Committee's knowledge of base
salary levels for similar positions in the industry. In May 1998, Mr. Humphreys
was awarded an incentive bonus of $60,000 based on the financial and operational
performance of the Company during 1997.
Compensation of Certain Other Executive Officers. The compensation of Mr.
Schneider, our Executive Chairman and a Managing Director of our German
subsidiary, consists of base salary, an annual bonus and stock options. For
1998, the Compensation Committee retained Mr. Schneider's base salary at
$190,000 based upon the Compensation Committee's knowledge of base salary levels
for similar positions in the industry. In May 1998, Mr. Schneider was awarded an
incentive bonus of $60,000 based on the financial and our operational
performance during 1997.
The compensation of Mr. Meier, our Chief Operations Officer and a Managing
Director of our German subsidiary, consists of base salary, an annual bonus and
stock options. For 1998, the Compensation Committee retained Mr. Meier's base
salary at $190,000 based upon the the Compensation Committee's knowledge of base
salary levels for similar positions in the industry. In May 1998, Mr. Meier was
awarded an incentive bonus of $78,000 based on our financial and operational
performance during 1997.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of March 26, 1999 for: (a) each
person or entity who is known by us to beneficially own five percent or more of
our outstanding common stock; (b) each of our directors; (c) each of the Named
Executive Officers; and (d) all of our directors and executive officers as a
group.
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<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
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NAME OF BENEFICIAL OWNER NUMBER PERCENT
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<S> <C> <C>
TVM Techno Venture Management GmbH(2).................. 143,580 1.0
c/o Friedrich Bornikoel
Tolzerstrasse 12A
82031 Grunwald Germany
Robert Schneider(3).................................... 520,402 3.7
c/o SCM Microsystems GmbH
Luitpoldstrasse 6
D-85276 Pfaffenhofen Germany
Bernd Meier(4)......................................... 249,637 1.8
c/o SCM Microsystems GmbH
Luitpoldstrasse 6
D-85276 Pfaffenhofen Germany
Steven Humphreys(5).................................... 106,570 *
John Niedermaier(6).................................... 18,333 *
Friedrich Bornikoel(7)................................. 148,163 1.1
Oystein Larsen (8)..................................... 6,667 *
Poh Chuan Ng(9)........................................ 4,583 *
Andrew Vought(10)...................................... 5,583 *
All directors and executive officers as
a group (8 persons)(11)............................ 1,059,940 7.5
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* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are
currently exercisable or exercisable but not necessarily vested within 60
days of April 30, 1999 are deemed outstanding. Such shares, however, are
not deemed outstanding for the purpose of computing the percentage
ownership of each other person. Except as indicated in the footnotes to
this table and pursuant to applicable community property laws, each
stockholder named in the table has sole voting and investment power with
respect to the shares set forth opposite such stockholder's name.
(2) Includes 52,081 shares held by TVM Eurotech Ltd.
(3) Includes: (i) 13,510 shares held by Robert Schneider's wife, Ursula
Schneider; and (ii) options to purchase 56,458 shares and 500 shares of
common stock exercisable within 60 days of April 30, 1999 held by Robert
Schneider and Ursula Schneider, respectively.
(4) Includes: (i) 5,000 shares held by Bernd Meier's wife, Sonja Meier; (ii)
options to purchase 56,458 shares and 500 shares of common stock
exercisable within 60 days of April 30, 1999 held by Bernd Meier and Sonja
Meier, respectively, and (iii) 35,064 shares held in trust for Nicholas
Efthymiou.
(5) Includes 74,904 shares of common stock which are subject to repurchase by
SCM until vested.
(6) Includes options to purchase 15,851 shares of common stock exercisable
within 60 days of April 30, 1999.
(7) Includes: (i) 143,580 shares held by TVM Techno Venture Management GmbH.
Mr. Bornikoel is a partner of TVM Techno Venture Management GmbH. Mr.
Bornikoel disclaims beneficial ownership of shares beneficially owned by
such entity except to the extent of his pecuniary interest therein and (ii)
options to purchase 4,583 shares of common stock exercisable within 60 days
of April 30, 1999.
(8) Includes options to purchase 4,583 shares of common stock exercisable
within 60 days of April 30, 1999.
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(9) Includes options to purchase 6,667shares of common stock exercisable within
60 days of April 30, 1999.
(10) Includes options to purchase 4,583 shares of common stock exercisable
within 60 days of April 30, 1999.
(11) Includes shares and exercisable options which may be deemed to be
beneficially owned by certain directors and executive officers. See Notes
3, 4, 6, 7, 8, 9, and 10 above.
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PERFORMANCE GRAPH
The following Performance Graph compares the cumulative total return to
stockholders of our common stock since October 7, 1997, the date we first became
subject to the reporting requirements of the Exchange Act, to the cumulative
total return over such period of (i) the Standard & Poor's 500 Stock Index, and
(ii) the Hambrecht & Quist Technology Index, which is comprised of publicly
traded stocks of approximately 275 companies in the computer hardware, computer
software, communications, semiconductor and information services industries. The
Performance Graph assumes that $100 was invested on October 7, 1997 in our
common stock and in each of the comparative indices. The Performance Graph
further assumes that such amount was initially invested in our common stock at a
price of $13.00 per share, the price at which our stock was first offered to the
public by us on such date.
Our historic stock price performance is not necessarily indicative of
future stock price performance. The information contained in the Performance
Graph shall not be deemed to be "soliciting material" or to be "filed" with the
Commission, nor shall such information be incorporated by reference into any
existing or future filing by the Company under the Securities Act of 1933, as
amended, or the Exchange Act, except to the extent that we specifically
incorporate such information by reference into any such filing.
COMPARISON OF 15 MONTH CUMULATIVE TOTAL RETURN
AMONG SCM MICROSYSTEMS, INC., THE S & P 500 INDEX
AND THE HAMBRECHT & QUIST TECHNOLOGY INDEX
[GRAPH]
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<CAPTION>
SCM
MEASUREMENT PERIOD MICROSYSTEMS HAMBRECHT & QUIST
(FISCAL YEAR COVERED) S&P 500 INC. TECHNOLOGY
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<S> <C> <C> <C>
10/7/97 100 100 100
Dec-97 99 185 82
Dec-98 127 547 128
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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 Amendment No. 1 to
Form 10-K on Form 10-K/A to be signed on its behalf by the undersigned,
thereunto duly authorized on this 30th day of April, 1999.
SCM MICROSYSTEMS, INC.
By: /s/ STEVEN HUMPHREYS
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Steven Humphreys
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K on Form 10-K/A has been signed below by the
following persons on April 30, 1999 on behalf of the Registrant and in the
capacities and on the dates indicated:
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<CAPTION>
SIGNATURES TITLE
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<S> <C>
* President and Chief Executive Officer
- ------------------------ (Principal Executive Officer)
Steven Humphreys
* Vice President, Finance and Chief Financial Officer
- ------------------------ (Principal Financial and Accounting Officer)
John G. Niedermaier
* Chief Operating Officer and Director
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Bernd Meier
* Director
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Friedrich Bornikoel
* Director
- ------------------------
Oystein Larson
* Director
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Poh Chuan Ng
* Director
- ------------------------
Andrew Vought
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* By: /s/ STEVEN HUMPHREYS
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Steven Humphreys
President and Chief Executive Officer
