9
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-KSB/A (No. 1)
Annual Report Under Section 13
of
The Securities Exchange Act of 1934
For the fiscal year Commission File
ended March 31, 1998 Number: 0-8505
NORTHWEST TELEPRODUCTIONS, INC.
(Name of Small Business Issuer in its Charter)
Minnesota 41-0641789
(State of Incorporation) (I.R.S. Employer
Identification Number
4000 West 76th Street
Minneapolis, Minnesota 55435
(Address of principal executive officers) (Zip Code)
Telephone Number: 612-835-6450
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.01
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.
[ ]
The issuer's revenues for the fiscal year ended March 31, 1998 were $11,192,233.
The aggregate market value of the Common Stock held by shareholders other than
officers, directors or holders of more than 5% of the outstanding stock of the
registrant as of June 29, 1998 was approximately $991,434 (based upon the
closing sale price of the registrant's Common Stock on such date).
Shares of $.01 par value Common Stock outstanding at June 29, 1998: 1,356,425
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended March 31, 1998 are incorporated by reference into Part II.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Directors and Officers
The following table sets forth certain information concerning the
Registrant's directors and executive officers:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Current
Position(s) Principal Occupation(s) During
Name Age With Company Past Five Years Director Since
-------------- ------- ---------------- -------------------------------- ----------------
C. Dale Haworth 65 Director Retired; Chief Executive Officer from 1996
1970 to 1995 of Haworth Group, Inc.
(a media buying service); Marketing
Advertising Executive with General
Mills from 1954 to 1970.
Ronald V. Kelly 62 Director Retired; Senior Vice President from 1996
September 1992 to August 1996 of
Pentair, Inc. (a diversified industrial
manufacturer); Vice President and
Specialty Products Group President at
Pentair from March 1989 to September
1992.
John G. Lindell 66 Director Chairman of the Board from February 1996 1970
to October 1997 and interim President of
the Registrant from April 1, 1996 to
November 3, 1996. Prior to his
retirement, President (from January 1981
to December 1985) and Chief Operating
Officer (from November 1979 to December
1985) of RayGo, Inc. (a heavy equipment
manufacturer.
Steven Lose 39 Director Director of North American Sales of 1997
Scitex Digital Video, Inc. (a video
equipment manufacturer) since April
1995. Regional Sales Manager of Accom,
Inc. (a video equipment manufacturer)
from March 1992 to April 1995.
John C. McGrath 40 Chairman and Chairman of the Board of the Registrant 1996
Director since October 1997 and President and
Chief Executive Officer from November
1996 to October 1997. Chief Operating
Officer of Cutters, Inc. (a nationally
recognized post production and design
facility) since October 1997 and from
January 1990 to November 1996.
<PAGE>
Gerald W. Simonson 68 Director Venture capital investor since June 1976
1978; President and Chief Executive
Officer of Omnetics Connector
Corporation (manufacturer of
microminiature connectors) since March
1991. Also currently a director of
Medtronic, Inc.
Phillip A. Staden 41 President and Chief President and CEO of the Registrant N/A
Executive Officer since October 20, 1997. Vice
President of the Registrant from November
1996 to October 1997. Controller of
the Registrant from April 1991 to
November 3, 1996.
David S. Johnson 55 Vice President Vice President of the Registrant since N/A
October 20, 1997. Manager of the
Government Services Division of the
Registrant since December 1993. Has
been employed by the Registrant since
January 1986.
Nancy L. Reid 49 Vice President Vice President of the Registrant since N/A
October 20, 1997. Currently General
Manager of the Registrant's subsidiary.
Prior to joining the Registrant, she was
Sales and Marketing Manager of Editel,
Inc., a nationally recognized
prost-production facility.
</TABLE>
The term of office of each director is one year from the date of the
most recent annual meeting of shareholders or until his successor is elected.
The term of office of each executive officer is from one annual meeting of
directors until the next annual meeting of directors or until a successor is
elected. There are no family relationships among any of the Registrant's
directors or executive officers.
Compliance with Section 16(a) of the Securities Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors, and persons who own more than 10
percent 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. Officers, directors and
greater than 10% shareholders ("Insiders") are required by SEC regulations to
furnish the Company with copies of all Section 16(a) forms they file.
To the company's knowledge, based on a review of the copies of such
reports furnished to the Company, during the fiscal year ended March 31, 1998,
all Section 16(a) filing requirements applicable to Insiders were complied with
except that Mr. Steven Lose's Form 3 was filed late, Mr. Staden was late filing
forms to report two transactions and Ms. Nancy Reid and Messrs. David Johnson,
Steven Lose and John McGrath were each late filing a form to report one
transaction.
<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding
compensation paid during the Company's last two fiscal years to the Company's
President and Chief Executive Officer and the Company's former President and
Chief Executive Officer, the only executive officers whose total salary and
bonus for fiscal 1998 exceeded $100,000. Such persons became executive officers
of the Company during fiscal 1997.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Annual Compensation Long Term Compensation
Awards Payouts
Restricted All Other
Name and Fiscal Salary Bonus Stock Options/ LTIP Compensation
Principal Position Year ($)(1) ($) Other Awards ($) SARs (#) Payouts ($) ($)(2)
------------------ ---- ------ ------ ----- --------- -------- ----------- ------------
John C. McGrath 1998 131,826 0 0 None 2,000 None 2,925
Former President 1997 82,981 12,084 0 None 50,000 None 2,075
Phillip A. Staden 1998 125,384 0 0 None 35,000 None 2,173
President, CEO and CFO 1997 100,635 10,000 0 None 15,000 None 3,007
- --------------------------------------------------------------------------------
(1) Amounts under "Salary" also include the executive's salary deferral
contributions to the Company's 401(k) profit sharing plan.
(2) Amounts reflect Company contributions to the Company's 401(k) profit
sharing plan.
</TABLE>
<PAGE>
Option/SAR Grants During 1998 Fiscal Year
The following table sets forth the options that have been granted to
the executive officers listed in the Summary Compensation Table during the
Company's last fiscal year ended March 31, 1998:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Percent of Total
Number of Securities Options/SARs Granted
Underlying to Employees in
Options/SARs Fiscal Exercise or Base
Name Granted Year Price ($/Share) Expiration Date
-------- -------------------- ----------------------- ------------------- -----------------
John C. McGrath 2,000(1) 2.2% $1.25 2/4/03
Phillip A. Staden 35,000(2) 37.2% $1.25 2/4/03
- ------------------------ ---------------------- ----------------------
(1) Such option was granted to Mr. McGrath in his capacity as a director and was
exercisable immediately. (2) Such option is exercisable in annual increments of
11,667 shares each, commencing February 5, 1999.
</TABLE>
Option/SAR Exercises During Fiscal 1998 and Fiscal Year End Option/SAR Values
The following table provides certain information regarding the exercise
of stock options during fiscal 1998 by the officers named in the Summary
Compensation Table and the fiscal year-end value of unexercised options held by
such officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Number of Value of Unexercised
Shares Number of Unexercised In-the-Money Options at
Acquired on Value Realized Options at Fiscal Year End Fiscal year End ($)
Name Exercise ($) (exercisable/unexercisable) exercisable/unexercisable(1)
---- -------------- ------------- --------------------------- -----------------------------
John C. McGrath 0 0 2,000 0 0 0
Phillip A. Staden 0 0 5,000 45,000 0 0
- -------------------------
(1) Market value of underlying securities at March 31, 1998 ($1.141), minus the exercise price.
</TABLE>
Employment Contracts
The Company had an Employment Agreement, dated November 2, 1996, with
its former President, John C. McGrath, which was terminated by Mr. McGrath
effective October 24, 1997. Under such Agreement, Mr. McGrath received a base
annual salary of $200,000 and was eligible to receive an incentive bonus based
upon 5% of pre-tax earnings for a fiscal year in excess of 8% of shareholder
equity at the beginning of the fiscal year. The Agreement was terminable by
written agreement of the parties, by the Company for cause or by Mr. McGrath
without cause upon 60 days written notice to the Company, in which case the
Company had no further obligation to Mr. McGrath except for accrued benefits and
any compensation earned through the last day of employment.
<PAGE>
The Company has an Employment Agreement, dated May 11, 1998, with
Phillip A. Staden whereby Mr. Staden will serve as President and Chief Executive
Officer for a term continuing until October 26, 1998 and renewable annually
thereafter for one-year terms. Mr. Staden receives a base annual salary of
$150,000 and is eligible to receive an incentive bonus based upon 5% of pre-tax
earnings for a fiscal year in excess of 8% of shareholder equity at the
beginning of the fiscal year, with a maximum bonus of 50% of base salary and a
minimum bonus of $10,000. The employment relationship is terminable by written
agreement of the parties, by the Company for cause or by Mr. Staden without
cause upon 60 days written notice to the Company, in which case the Company has
no further obligation to Mr. Staden except for accrued benefits and any
compensation earned through the last day of employment. The employment
relationship may also be terminated by the Company without cause, in which case
the Company is obligated to pay (a) Mr. Staden's base salary for the unexpired
portion of the initial term of employment (or, if the Agreement has been
renewed, the unexpired portion of the one-year renewal term), (b) the greater of
(i) six months of Mr. Staden's base salary or (ii) one week of his base salary
for each full year of employment with the Company, and (c) COBRA premium
payments for continued coverage under the Company's group health plan for 12
months. If Mr. Staden's employment is not renewed by the Company for any reason
other than mutual agreement, death, disability or cause, the Company is
obligated to pay the greater of (i) six months of Mr. Staden's base salary or
(ii) one week of his base salary for each full year of employment, and COBRA
premium payments for 12 months. The Company's obligation to make any of such
payments is contingent upon Mr. Staden's abiding by the confidentiality and
noncompete provisions of the Agreement. If the employment relationship is
terminated by the Company without cause or not renewed without cause by either
party within one year of a "change of control" of the Company, the Company is
obligated to pay (a) Mr. Staden's base salary for the unexpired portion of the
initial term or renewal term of employment, but only if the employment is
terminated by the Company without cause, (b) the greater of (i) six months of
Mr. Staden's base salary or (ii) one week of his base salary for each full year
of employment with the Company, and (c) COBRA premium payments for 12 months;
provided, however, Mr. Staden will not receive any payments under the Employment
Agreement or any other agreement with the Company which would constitute a
"parachute" payment under Section 280G of the Internal Revenue Code.
Directors Fees
Each director who is not an employee of the Company receives $200 for
each Board of Directors or Committee meeting attended by him or her, with an
annual maximum of 42,000, and annual fees of $4,000 payable at a rate of $1,000
for each fiscal quarter during which he or she serves as a director.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table provides information concerning the only persons
known to the Company to be the beneficial owners of more than five percent (5%)
of the Company's outstanding Common Stock:
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Amount and Nature of Shares
Name and Address of Beneficial Owner Beneficially Owned(1) Percent of Class
------------------------------------ --------------------------- ----------------
James H. Binger Revocable Trust
80 South Eighth Street
Minneapolis, Minnesota 185,109 13.6%
McDonald & Co. Securities
800 Superior Avenue
Cleveland, Ohio 104,630 7.7%
John C. Lorentzen and Penney L. Fillmer
1205 South Main Street
Wheaton, Illinois 88,500 6.5%
</TABLE>
(1) Unless otherwise indicated, the person listed as the beneficial owner
of the shares has sole voting and sole investment power over the
shares. The share amounts are based upon information set forth in the
shareholder's latest filing with the Company or the Securities and
Exchange Commission, as updated by any subsequent information
voluntarily provided to the Company by the shareholder.
Management Shareholdings
The following table sets forth the number of shares of the Company's
Common Stock beneficially owned by each executive officer of the Company named
in the Summary Compensation Table, by each of the Company's current directors
and by all of such directors and executive officers (including the named
individuals) as a group.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Name of Director or Number of Shares
Officer or Identity of Group Beneficially Owned(1) Percent of Class
---------------------------- --------------------- ----------------
C. Dale Haworth 2,000(2) *
Ronald V. Kelly 17,500(3) *
John G. Lindell 126,937(4) 4.2%
Steven Lose 2,250(5) *
John C. McGrath 2,000(2) 0
Gerald W. Simonson 43,160(3) 2.1%
Phillip A. Staden 10,300(6)
Directors and Executive Officers
as a group (9 persons) 204,522(7) 13.9%
- --------------------
</TABLE>
*Less than 1%
(1) Unless otherwise indicated, the person listed as the beneficial owner of the
shares has sole voting and sole investment power over the shares.
(2) Such shares are not outstanding but may be purchased upon exercise of
currently exercisable options.
(3) Includes 17,000 shares which may be purchased upon exercise of currently
exercisable options and warrants.
(4) Mr. Lindell has sole voting and sole investment power over 44,012 shares
owned directly by him and shares voting and investment power with his wife
over 10,925 shares. Amount includes 72,000 shares which may be purchased
upon exercise of currently exercisable options and warrants.
(5) Includes 2,000 shares which may be purchased upon exercise of currently
exercisable options.
(6) Includes 5,000 shares which may be purchased upon exercise of currently
exercisable options.
(7) Includes 117,000 shares which may be purchased upon exercise of currently
exercisable options and warrants.
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to facilitate restructure of the Company's bank line and to
provide funding for operations, in July 1996 and February 1997 the Board
authorized the issuance of $562,500 of 10.5% Subordinated Notes with a Warrant
to each investor to purchase, at $2.50 per share, a number of shares of Common
Stock of the Company equal to the principal amount of such investor's Note
divided by the Warrant exercise price. The directors of the Company purchased
$412,500 of the Notes in July 1996 and $150,000 of the Notes in February 1997.
The shares purchasable upon exercise of the Warrants granted by the Company have
been included in the Management Shareholdings table in Item 11.
On October 1, 1997, the Company and its wholly-owned subsidiary,
Northwest Teleproductions Chicago, Inc., borrowed $385,000 and $27,000,
respectively, from Jeanne Lindell, wife of director John G. Lindell, as an
advance against two state income tax refunds receivable from Minnesota and
Illinois. The Promissory Notes, together with interest at the rate of 10.5% per
annum, were paid during the fiscal year ended March 31, 1998 when the refunds
were received.
On June 24, 1998, the Company sold to, and then leased back from,
Lindue, LLC, a Minnesota limited liability company, two parcels of land and
buildings of the Company located at 4000 West 76th Street and 4455 West 77th
Street, Minneapolis, Minnesota. The aggregate sale price for the two parcels was
$1,600,000 and was determined by negotiation between the Company and Lindue,
LLC. The two parcels were leased back to the Company under three-year leases.
The combined monthly rental expense under the two leases for the first three
years will be $16,615 in the first year, $17,030 in the second year and $17,456
in the third year. After the initial three-year term of the leases, the Company
has the option of renewing each lease for an additional five years. The monthly
rental expense will increase incrementally during the fourth through eighth
years of such lease extension from $6,882 to $7,596 for the 4000 West 76th
Street property and from $11,010 to $12,153.50 for the 4455 West 77th Street
property. The Company is also responsible for payment of taxes, operating
expenses and maintenance costs relating to the property. Lindue, LLC is owned by
director John G. Lindell.
SIGNATURES
In accordance with Section 13 of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf of the undersigned, thereunto
duly authorized.
NORTHWEST TELEPRODUCTIONS, INC.
Date: July 29, 1998 By /s/ Phillip A. Staden
Phillip A. Staden, President
