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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
AMENDMENT NO. 1
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMMISSION FILE NUMBER 0-6920
BRIGHTSTAR INFORMATION TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0553110
(State or other jurisdiction (IRS Employer
of incorporation or Identification No.)
organization)
4900 HOPYARD ROAD, SUITE 200
PLEASANTON, CALIFORNIA 94588
(925) 251-0000
(Address, including zip code, area code with phone number
of the registrant's principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $0.001 PAR VALUE
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. [ ]
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant at March 27, 2000, based on the $8.84 per share
closing price for the registrant's common stock on the NASDAQ National Market
was approximately $68,057,216. For purposes of this computation, all officers,
directors and 10% beneficial owners of the registrant are deemed to be
affiliates. Such determination should not be deemed an admission that such
officers, directors or 10% beneficial owners are, in fact, affiliates of the
registrant.
The number of shares of the registrant's common stock outstanding as of
March 27, 2000 was 8,642,034.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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Item 2 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 2: PROPERTIES
BrightStar's principal executive offices are located at 4900 Hopyard Road,
Suite 200, Pleasanton, California 94588. The Company's lease on these premises
covers approximately 5,600 square feet and expires December 31, 2003.
The Company also operates through leased facilities in:
U.S. Leased Facilities
o Atlanta, GA
o Dallas, TX
o New Orleans, LA
o Austin, TX
o Denver, CO
o Irvine, CA
o Foster City, CA
o Lafayette, LA
o Boston, MA
o Scottsdale, AZ
o Chicago, IL
o Houston, TX
o Little Rock, AR
o New York, NY
o Overland Park, KS
International Leased Facilities
o Adelaide, Australia
o Canberra, Australia
o Melbourne, Australia
o Perth, Australia
o Sydney, Australia
o Brisbane, Australia
Substantially all of the Company's services are performed on-site at
customer locations. BrightStar anticipates that additional space will be
required as its business expands, and believes that it will be able to obtain
suitable space as needed.
Item 9 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
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The following table sets forth certain information concerning the Directors
and Executive Officers, based on data furnished by them.
<TABLE>
<CAPTION>
DIRECTOR
NAME OF NOMINEE AGE PRINCIPAL OCCUPATION SINCE
---------------- --- -------------------------------------------- --------
<S> <C> <C> <C>
George M. Siegel................... 62 Chairman of the Board of the Company 1997
Jennifer T. Barrett................ 50 Group Leader, Data Products Division, Acxiom 1998
Corporation
Michael A. Ober.................... 43 President and Chief Executive Officer of the 1998
Company
Donald W. Rowley................... 48 Chief Financial Officer and Secretary of the 1999
Company
Joseph A. Wagda.................... 56 President of Altamont Capital Management 2000
</TABLE>
There is no family relationship between any of the foregoing nominees or
between any of such nominees and any of the Company's executive officers. The
Company's executive officers serve at the discretion of the Board of Directors.
George M. Siegel has served as Chairman of the Board of Directors of the
Company since its inception. Mr. Siegel co-founded Mindworks, a business
acquired by the Company in 1998. In 1990, he founded Dynamex Inc. (formerly
Parcelway Courier Systems, Inc.), a messenger and delivery service company and
served as its President and Chief Executive Officer until 1995.
Jennifer T. Barrett became a director of the Company at the closing of the
Company's initial public offering in 1998. She has served since 1974 in various
capacities with Acxiom Corporation, a leading data processing and related
computer-based services and software products company. She is currently a Group
Leader in the Data Products Division. Ms. Barrett serves on the Board's
Compensation Committee.
Michael A. Ober has served as a director and as the Company's President
since September 1998, and was named Chief Executive Officer in December 1998. In
1995, Mr. Ober founded SCS America, a business acquired by the Company in 1998,
and served as its president and chief executive officer through September 1998.
Mr. Ober has worked in the software and computing industries for over 20 years.
Prior to founding SCS America, Mr. Ober was a Director of Marketing for Novell,
Inc.
Donald W. Rowley joined the Company in January 1999 when he was appointed
its Chief Financial Officer and Secretary. Mr. Rowley was elected to the Board
at that time. Prior to that appointment, he was interim Chief Financial Officer
and a director of PetroChemNet, Inc., a business-to-business internet-based
marketplace serving the petrochemical and petroleum segments of the energy
industry, from 1998 to 1999. From 1995 to 1998, he was an independent management
consultant and worked with several companies, which included serving as interim
Chief Financial Officer of Norand Corporation, a public company engaged in the
design and development of mobile computing systems and wireless data networks.
From 1994 to 1995 Mr. Rowley was President and a director of VTX Electronics
Corporation, a public company engaged in the distribution of electronic
components and cable, and manufacture of electronic cable assemblies.
Joseph A. Wagda has been a director of BrightStar since April 2000.
President of Altamont Capital Management, Inc., since 1983 and a practicing
attorney, Mr. Wagda's business emphasizes special situation consulting and
investing, including involvement in distressed investments and venture capital
opportunities. Mr. Wagda also is a director of Abraxas Petroleum Corporation, an
independent oil and gas company with operations in Texas and Canada. Previously,
Mr. Wagda was President and CEO of American Heritage Group, a modular
homebuilder, and Senior Managing Director and co-founder of the Price Waterhouse
corporate finance practice. He also served with the finance staff of Chevron
Corporation and in the general counsel's office at Ford Motor Company.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and holders of more than 10% of the Company's
Common Stock, to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Such officers, directors and 10%
stockholders are required by Securities and Exchange Commission regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based on its review of such forms that it received, or written
representations from reporting persons that no Forms 5 were required for such
persons, the Company believes that, during fiscal 1999, all Section 16(a) filing
requirements were satisfied on a timely basis, except for Mr. Rowley whose
initial statement and changes in beneficial ownership, Mr. Ober whose statement
of changes in
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beneficial ownership, and Ms. Barrett and Mr. Wagda whose annual statement of
changes in beneficial ownership were filed late.
Item 11 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 11: EXECUTIVE COMPENSATION
The following table contains information concerning compensation earned by
Messrs. Siegel, Ober and Rowley, all named executive officers of the Company. In
addition the table includes the compensation of Mr. Daniel Arra, and Thomas
O'Gorman, Vice Presidents.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
TOTAL
BASE CASH
SALARY BONUS COMPENSATION
-------- -------- ------------
<S> <C> <C> <C> <C>
George M. Siegel....................... 1999 $ 109,500 -- $ 109,500
1998 -- -- --
Michael A. Ober........................ 1999 300,000 -- 300,000
1998 183,917 $ 70,000 253,917
Donald W. Rowley....................... 1999 222,534 -- 222,534
1998 -- -- --
Daniel Arra............................ 1999 180,335 136,819 317,154
1998 120,000 234,295 354,295
Thomas O'Gorman........................ 1999 226,000 47,500 273,500
1998 173,917 80,000 253,917
</TABLE>
The following table contains information concerning the grant of stock
options to the Named Executive Officers during 1999 under the Company's 1999
Plan:
STOCK OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO POTENTIAL REALIZABLE
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION VALUE FOR
NAME GRANTED FISCAL YEAR PRICE($/SH) DATE OPTION TERM(a)
---- ---------- ------------- ----------- ---------- --------------------
<S> <C> <C> <C> <C> <C>
George M. Siegel............ -- -- -- -- --
Michael A. Ober............. 60,000 * 6.00 6/09 $ 279,000
175,000 12.2% 7.50 12/09 1,230,250
Donald W. Rowley............ 40,000 * 6.00 6/09 186,000
125,000 8.7 7.50 12/09 878,750
Daniel Arra................. 30,000 * 6.00 6/09 139,500
125,000 8.7 7.50 12/09 878,750
Thomas O'Gorman............. 30,000 * 6.00 6/09 139,500
125,000 8.7 7.50 12/09 878,750
</TABLE>
----------
(a) Based on Black-Scholes model. assumes a risk free interest rate of
5.86%, price volatility of 110% and a dividend yield of 0%
No options were exercised in 1999.
* Less than 1%.
EMPLOYMENT AGREEMENTS
Mr. Ober entered into an Executive Employment Agreement in connection with
the Company's initial public offering. The following summary of his Executive
Employment Agreement does not purport to be complete and is qualified by
reference to it, of which a copy has been filed with the Securities and Exchange
Commission. Mr. Ober's Executive Employment Agreement provides for an annual
base salary in an amount not less than the initial specified amount and entitles
him to participate in all of the employee
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benefit plans sponsored by BrightStar. Mr. Ober's base salary was increased to
$300,000, and a bonus of up to $200,000 if the Company achieves certain revenue
and profitability milestones, at the time of his election as the Company's
President. Mr. Ober's agreement has an initial three-year term and continues
thereafter on a year-to-year basis on the same terms and conditions existing at
the time of renewal, subject to the right of BrightStar or Mr. Ober to terminate
Mr. Ober's employment at any time. If Mr. Ober's employment is terminated by
BrightStar without cause (as defined) during the initial three-year term, then
Mr. Ober will be entitled to (i) receive his current base salary for the period
ending the later of (a) the end of the initial three-year term of the agreement
or (b) 12 months after termination of employment, (ii) any other earned and
unpaid compensation, vacation time accrued prior to termination and an amount
equal to the amount of any earned bonuses and commissions payable to Mr. Ober
with respect to the 12 calendar months preceding termination ("Severance
Payments"), and (iii) continued participation in BrightStar's employee benefit
plans (other than the granting of new awards under the 1997 Plan, 2000 Plan, or
any other performance-based plan) for a period of 12 months following the date
of termination. If Mr. Ober is terminated without cause during any one-year
extension of the initial term of the Agreement, then Mr. Ober shall continue to
receive Severance Payments for a period of 12 months after termination of such
employment and shall continue to participate for such period in BrightStar's
employee benefit plans (other than granting of new awards under the 1997 and
2000 Plans, or any other performance-based plan). If a change of control of
BrightStar occurs, and the terms of the employment agreement are not adopted,
Mr. Ober will be entitled to receive an amount equal to 36 months of his
then-current base salary under the agreement, payable on a monthly basis. Under
the Executive Employment Agreements, a "change of control" is defined as (A) the
sale of substantially all assets of the Company or (B) a merger, consolidation,
liquidation or reorganization of the Company in which the Company or an
affiliate of the Company is not the surviving entity, or which results, in any
event, in a change of control of the Company. Mr. Ober's Executive Employment
Agreement contain covenants limiting competition with the Company during the
term of the Executive Employment Agreement and for an additional period to be
the longer of four years from inception of the agreement, or one year after
termination of employment for cause.
Mr. Rowley and the Company entered into an Employment Agreement in January
1999. The agreement provides for a base salary of $250,000, and a bonus of up to
$150,000 if the Company achieves certain revenue and profitability milestones.
The agreement is terminable at will, but if Mr. Rowley's employment is
terminated without cause, he is entitled to one year of additional base salary,
or two years if such termination occurs following a change of control.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Notwithstanding any statement to the contrary in any of the Company's
previous or future filings with the Securities and Exchange Commission, this
Report shall not be incorporated by reference into any such filings.
Compensation Philosophy. In developing the Company's executive compensation
policies, the Compensation Committee (the "Committee") has two principal
objectives: (1) attracting, rewarding and retaining officers who possess
outstanding talent, and (2) motivating officers to achieve Company performance
consistent with shareholder objectives. Accordingly, the Committee adopted the
following policies:
o The Company will pay compensation that is competitive with the
practices of other leading technology companies in the same or similar
businesses;
o A significant portion of the officers' compensation will depend upon
the achievement of challenging performance goals for the Company and
its various business units and officers; and
o The Company will align the interests of its officers with those of the
Company's stockholders -- therefore, stock options will constitute a
significant portion of compensation.
Total Annual Compensation. Each officer's target total annual compensation
(that is, salary plus bonus) is determined after reviewing independent survey
data on the compensation paid to officers at a group of approximately 20
companies in the high technology industry. These companies strenuously compete
with the Company for executive talent and/or have revenues comparable to the
Company's revenues. The Company's goal is to set total target annual
compensation at a level that is near the median level for the officers at the
surveyed companies.
Bonuses. The actual bonus (that is, the percentage of the target bonus)
that any officer (other than the Named Executive Officers) actually receives
depends on the achievement of business unit objectives and financial performance
goals for the Company. Typical business unit objectives include both financial
and operating goals including, for example, increased profitability, customer
satisfaction, and controlling profit and gross margin.
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For each year, the performance goals are set in light of general business
conditions and the Company's strategies for the year. For 1999, the Committee
directed Company management to determine the performance targets for the
officers other than Named Executive Officers, using a philosophy approved by the
Committee. The Committee developed and approved the specific performance targets
for the Named Executive Officers, as described in the following paragraph.
Stock Options. The Committee strongly believes that stock options motivate
the officers to maximize stockholder value and to remain with the Company
despite a very competitive marketplace. All Company stock options have a per
share exercise price equal to the fair market value of the Company's stock on
the grant date. The number of options granted to each officer and each option's
vesting schedule are determined based on the officer's position at the Company,
his or her individual performance, the number of options the executive already
holds and other factors, including an estimate of the potential value of the
options.
In fiscal 1999, the Committee made these determinations for the Named
Executive Officers and other senior officers. For all other grants, the Chief
Executive Officer (that is, Mr. Ober) made these determinations, in consultation
with the Company's Human Resources organization.
Compensation of Chief Executive Officer. The Committee believes the Chief
Executive Officer's compensation should be tied directly to the performance of
the Company and in line with shareholder objectives. Consequently, Mr. Ober's
percentage of bonus to base salary is the highest of any officer.
Tax Deductibility of Executive Compensation. Under section 162(m) of the
Internal Revenue Code the Company generally receives a federal income tax
deduction for compensation paid to any of its Named Executive Officers only if
the compensation is less than $1 million during any fiscal year or is
"performance-based" under section 162(m). Both the Company's 1997 Equity
Incentive Plan and the Bonus Plan permit the Committee to pay compensation that
is "performance-based" and thus fully tax-deductible by the Company. The
Committee currently intends to continue seeking a tax deduction for all of the
Company's executive compensation, to the extent consistent with the best
interests of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1999, non-employee directors Ms. Barrett and Mr. Reamer served as
members of the Compensation Committee. None of the Compensation Committee
members or Named Executive Officers have any relationship that must be disclosed
under this caption.
COMPANY STOCK PERFORMANCE
The following graph sets forth a comparison of the cumulative total share
owner return on the Company's Common Shares for the period beginning April 17,
1998, the date Common Shares began trading on the Nasdaq National Market, and
ending December 31, 1999, the last trading day in fiscal 1999, as compared with
the cumulative total return of the S&P 500 Index and a Peer Group Index. The
Peer Group consists of the Nasdaq Computer & Data Processing Index. This graph
assumes an investment of $100 on April 17, 1998 in each of Common Shares, the
S&P 500 Index and the Peer Group Index, and assumes reinvestment of dividends,
if any. The stock price performance shown on the graph below is not necessarily
indicative of future stock price performance.
<TABLE>
<S> <C> <C> <C>
BrightStar ........................ $100.00 $ 60.60 $ 63.50
S&P 500 ........................... $100.00 $110.60 $133.90
Peer Group ........................ $100.00 $130.50 $287.70
</TABLE>
Item 12 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1999 by (i) persons
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, and their respective addresses (ii) each of the Company's current
directors, (iii) the Chief Executive Officer and each of the Company's
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three other executive officers, and (iv) all directors and executive officers as
a group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
NUMBER(1) PERCENT
--------- -------
<S> <C> <C>
5% BENEFICIAL OWNERS:
Lord Abbett & Co....................................... 712,549 8.25%
767 Fifth Avenue
New York, New York 10153
Brian R. Blackmarr..................................... 790,030 9.14%
4433 Belclaire
Dallas, Texas 75205
Camelot Management Corp.(2)............................ 571,313 6.61%
10 Glenville Street
Greenwich, Connecticut 06831-3638
NON-EMPLOYEE DIRECTORS:(3)
Jennifer T. Barrett.................................. 10,000 --*
David A. Reamer(4)................................... 11,000 --*
Brian R. Blackmarr(5)................................ 790,030 9.14%
Joseph A. Wagda(6)................................... -- --
EXECUTIVE OFFICERS:
George M. Siegel..................................... 167,870 1.94%
Michael A. Ober...................................... 110,410 1.32%
Donald W. Rowley..................................... 13,500 --*
All directors and executive officers as a group (7
persons)............................................. 1,102,810(7) 12.76%
</TABLE>
----------
* Less than 1%
(1) Represents shares held directly and with sole voting and investment power,
except as noted, or with voting and investment power shared with a spouse.
(2) Camelot Management Corp. reports that it shares voting and dispositive
power with respect to the shares it beneficially owns.
(3) As to each non-employee director, except Mr. Blackmarr, includes
immediately exercisable options to purchase 10,000 shares of Common Stock.
(4) Mr. Reamer resigned from the Board of Directors on January 19, 2000.
(5) Mr. Blackmarr has not been renominated to serve as a member of the Board of
Directors.
(6) Mr. Wagda became a director after December 31, 1999, but is included in the
table for informational purposes.
(7) Includes options to purchase 20,000 shares of Common Stock immediately
exercisable by non-employee directors.
Item 13 of the Annual Report filed pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 1999 is
hereby amended in full as follows:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
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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.
BRIGHTSTAR INFORMATION
TECHNOLOGY GROUP, INC.
By /s/ MICHAEL A. OBER
-------------------------------------
Michael A. Ober
President and Chief Executive Officer
Dated: June 19, 2000
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>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<S> <C> <C>
/s/ MICHAEL A. OBER President, Chief Executive Officer June 19, 2000
--------------------------------------- and Director (Principal Executive
Michael A. Ober Officer)
/s/ DONALD W. ROWLEY Chief Financial Officer and June 19, 2000
--------------------------------------- Director (Principal
Donald W. Rowley Financial Officer)
/s/ DAVID L. CHRISTESON Controller and Assistant June 19, 2000
--------------------------------------- Secretary (Principal
David L. Christeson Accounting Officer)
/s/ GEORGE M. SIEGEL Chairman of the Board and Director June 19, 2000
---------------------------------------
George M. Siegel
/s/ JENNIFER T. BARRETT Director June 19, 2000
---------------------------------------
Jennifer T. Bartlett
/s/ JOSEPH A. WAGDA Director June 19, 2000
---------------------------------------
Joseph A. Wagda
</TABLE>
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