<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A 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
Commission File Number: 000-23283
[LOGO OF FMAC]
Franchise Mortgage Acceptance Company
(Exact name of registrant as specified in its charter)
Delaware 95-4649104
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1888 Century Park East, Third Floor,
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 229-2600
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 NASDAQ National Market
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 From 10-K or any amendment to this
Form 10-K.
---
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, based upon the closing sale price of the Common Stock on February
28, 1999 as reported on the NASDAQ National Market System, was approximately
$89,716,618.
As of February 28, 1999, registrant had 28,760,557 shares of Common Stock
outstanding.
The following documents are incorporated by reference into this report: None
<PAGE>
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
1998 FORM 10-K/A ANNUAL REPORT
The Registrant hereby amends the following items, financial statements,
exhibits or other portions of its Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, which was filed with the Commission on March 31, 1999,
as set forth in the pages attached hereto:
A. Part I, Item 3 of the Annual Report on Form 10-K is amended to
reflect the most recent information available on the legal
proceeding involving De Wald, et al. vs. Knyal, et al. filed on
November 15, 1996 in Los Angeles County Superior Court.
B. Part III, Item 12 of the Annual Report on Form 10-K is amended to
reflect a correction to the Principal Stockholders and Ownership by
Management section.
C. Part IV, Item 14, Exhibit 23.1 of the Annual Report on Form 10-K is
amended to reflect the most recent consent of independent auditors.
<PAGE>
PART I
Item 3. LEGAL PROCEEDINGS
The predecessor entity to Franchise Mortgage LLC, and Mr. Knyal, among
others, were named as defendants in De Wald, et al. vs. Knyal, et al. filed on
November 15, 1996 in Los Angeles County Superior Court. The complaint sought an
accounting, monetary and punitive damages for alleged breach of contract, breach
of fiduciary duty, breach of implied covenant of good faith and fair dealing and
fraud arising from an alleged business relationship. On March 25, 1999, the
Superior Court entered an order in connection with the action, a portion of
which was stayed on March 29, 1999. The stayed portion included, among other
things, an order to dissolve Franchise Mortgage Acceptance Co., L.P. ("FMACLP"),
a partnership of which FLRT, Inc. is the general partner and which was formed in
1991 to originate and securitize franchise loans, and an order requiring an
accounting by FLRT, Inc. and Mr. Knyal to the limited partners of FMACLP. The
unstayed portion of the order includes a finding, among other things, that Mr.
Knyal and FLRT, Inc. breached the FMACLP partnership agreement and that the
limited partners of FMACLP have a right to a portion of the shares of the
Company owned by FLRT, Inc. or Mr. Knyal, and of the proceeds realized from any
sale of FLRT, Inc.'s or Mr. Knyal's Company shares after November 1997. The
order also states that Mr. Knyal and FLRT, Inc. may not dispose of or encumber
any shares of the Company held by either of them, and that Mr. Knyal may not
dispose of or encumber any shares of FLRT, Inc. held by him.
On April 6, 1999, a verdict was rendered in the Superior Court whereby Mr.
Knyal and FLRT, Inc. were ordered to pay approximately $24.3 million in
compensatory damages and $8 million in punitive damages for breach of fiduciary
duty and fraud. Counsel to the predecessor entity and Mr. Knyal believe that the
verdict is without basis, that reversible error occurred during the course of
the trial and in connection with the rendering of the verdict and such counsel
and Mr. Knyal intend to vigorously appeal the verdict. Although the Company is
not a party to the action, Imperial Credit Industries, Inc. ("ICII"), Mr. Knyal
and FLRT, Inc. have agreed to indemnify the Company against any and all
liability that the Company and its stockholders (other than ICII, Mr. Knyal and
FLRT, Inc.) may incur as a result of this lawsuit.
The Company has been named as a defendant in other legal actions, which
legal actions have arisen in the ordinary course of business, none of which
management believes to be material.
<PAGE>
PART III
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Stockholders and Ownership by Management
As of February 28, 1999, there were 28,760,557 shares of the Company's
Common Stock outstanding. The following table sets forth certain information
known to the Company with respect to the beneficial ownership of the Company's
Common Stock as of February 28, 1999, by (i) each director of the Company, (ii)
each of the Named Executive Officers of the Company, (iii) each person who is
known to the Company to beneficially own more than 5% of the Company's Common
Stock, and (iv) all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Beneficial Owner Ownership of Class
---------------- --------- --------
<S> <C> <C>
Imperial Credit Industries, Inc.(l)........................................ 11,023,492 38.3%
FLRT, Inc. (2)............................................................. 7,004,633 24.4
Wellington Management Company, LLP(3)...................................... 2,047,750 7.1
Wayne L. Knyal(4)(5)....................................................... 5,953,938 20.7
Kevin T. Burke(4).......................................................... - -
Thomas P. Kaplan(4)(6)..................................................... 30,000 *
Peter A. Mozer(4).......................................................... - -
Raedelle Walker(4)(7)...................................................... 11,000 *
H. Wayne Snavely(4)(6)..................................................... 30,000 *
Ronald V. Davis(4)(6)...................................................... 30,000 *
Perry A. Lerner(4)(6)...................................................... 30,000 *
Richard J. Loughlin(4)(6).................................................. 35,000 *
John E. Martin(4)(6)....................................................... 50,000 *
Michael L. Matkins(4)(6)................................................... 30,000 *
Brad S. Plantiko(4)........................................................ - -
All Directors and Officers as a Group(12 Persons)(4)(8).................... 6,199,938 21.6
</TABLE>
_____
* Less than 1.0%
(1) Imperial Credit Industries, Inc. may be reached at 23550 Hawthorne
Boulevard, Building One, Suite 110, Torrance, California 90505.
(2) FLRT, Inc. may be reached through the Company at 1888 Century Park East,
Third Floor, Los Angeles, California 90067.
(3) Based upon Schedule 13G filed with the Securities and Exchange Commission
on February 8, 1999. Wellington Management Company, LLP ("WMC"), in its
capacity as investment advisor, may be deemed to beneficially own the
Company's shares which are held of record by clients of WMC. WMC may be
reached at 75 State Street, Boston, Massachusetts 02109.
(4) Franchise Mortgage Acceptance Company and each of such persons may be
reached at 1888 Century Park East, Third Floor, Los Angeles, California
90067.
(5) Wayne L. Knyal is deemed to beneficially own 85% of the shares of the
Company's Common Stock held by FLRT, Inc.
(6) Includes 30,000 shares which the named beneficial owner has the right to
acquire upon exercise of vested stock options.
(7) Includes 11,000 shares which Raedelle Walker has the right to acquire upon
exercise of vested stock options.
(8) Includes a total of 221,000 shares which the Directors and Executive
Officers have the right to acquire upon exercise of vested stock options.
Section 16(a) Beneficial Ownership Reporting Compliance
Under Section 16(a) of the Securities Exchange Act of 1934, as amended, the
Company's Directors, officers and persons holding more than 10% of the Company's
Common Stock are required to file forms reporting their beneficial ownership of
the Company's Common Stock and subsequent changes in that ownership with the
Securities and Exchange Commission. Such persons are also required to furnish
the Company copies of the forms so filed. Based solely upon a review of copies
of such forms filed with the Company, the Company believes that during 1998 its
officers and Directors complied with the Section 16(a) filing requirements,
except for the filing of one Form 3 by Brad S. Plantiko.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Exhibit
Number Exhibit Description
------ -------------------
23.1 Consent of Independent Auditors.
<PAGE>
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.
FRANCHISE MORTGAGE ACCEPTANCE COMPANY
/s/ Wayne L. Knyal
---------------------------------------
Wayne L. Knyal
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Wayne L. Knyal President, Chief Executive Officer April 20, 1999
- -------------------------- and Director
Wayne L. Knyal (Principal Executive Officer)
/s/ Raedelle A. Walker Executive Vice President and April 20, 1999
- -------------------------- Chief Financial Officer
Raedelle A. Walker (Principal Financial Officer and
Principal Accounting Officer)
/s/ H. Wayne Snavely Chairman of the Board April 20, 1999
- --------------------------
H. Wayne Snavely
/s/ Ronald V. Davis Director April 20, 1999
- --------------------------
Ronald V. Davis
/s/ Perry A. Lerner Director April 20, 1999
- --------------------------
Perry A. Lerner
/s/ Richard J. Loughlin Director April 20, 1999
- --------------------------
Richard J. Loughlin
/s/ John E. Martin Director April 20, 1999
- --------------------------
John E. Martin
/s/ Michael L. Matkins Director April 20, 1999
- --------------------------
Michael L. Matkins
/s/ Brad S. Plantiko Director April 20, 1999
- --------------------------
Brad S. Plantiko
</TABLE>
<PAGE>
EXHIBIT 23.1
Consent of Independent Auditors
The Board of Directors
Franchise Mortgage Acceptance Company:
We consent to incorporation by reference in the registration statement (No. 333-
74375) on Form S-8 of Franchise Mortgage Acceptance Company of our report dated
January 19, 1999, except as to notes 22, 23, and 20 to the consolidated
financial statements, which are as of February 16, 1999 and March 10, 1999, and
March 29, 1999, respectively, relating to the consolidated balance sheets of
Franchise Mortgage Acceptance Company as of December 31, 1998 and 1997, and the
related consolidated statements of income, changes in stockholders' or members'
equity and cash flows for each of the years in the three-year period ended
December 31, 1998, which report appears in the December 31, 1998, annual report
on Form 10-K/A of Franchise Mortgage Acceptance Company.
KPMG LLP
Los Angeles, California
April 21, 1999
