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, 1999 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
4455 West 77th Street
Minneapolis, Minnesota 55435
(Address of principal executive officers) (Zip Code)
Telephone Number: 612-835-4455
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 $.0l
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, 1999 were $10,662,581.
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 2, 1999 was approximately $646,000 (based upon the closing
sale price of the registrant's Common Stock on such date).
Shares of $.0l par value Common Stock outstanding at June 2, 1999: 1,356,425
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the fiscal year
ended March 31, 1999 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>
Current Position(s) Principal Occupation(s) During Director
Name Age With Company Past Five Years Since
<S> <C> <C> <C> <C>
Ronald V. Kelly 63 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.
Steven Lose 40 Director Strategic Business Analyst with Silicon 1997
Graphics, Inc. (a computer
manu-facturer) since April 1999.
Director of North American Sales of
Scitex Digital Video, Inc. (a video
equipment manufacturer) from April 1995
to April 1999. Regional Sales Manager
of Accom, Inc. (a video equipment
manufacturer) from March 1992 to April
1995.
John C. McGrath 41 Director Chairman of the Board of the Registrant 1996
from October 1997 to October 1998, 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.
Gerald W. Simonson 69 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. and The Chromaline
Corporation.
Phillip A. Staden 42 President, Chief President and CEO of the Registrant 1998
Executive Officer, since October 20, 1997 and CFO since
Chief Financial November 1996. Vice President of the
Officer and Director Registrant from November 1996 to October
1997. Controller of the Registrant from
April 1991 to November 3, 1996.
David S. Johnson 56 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 50 Vice President Vice President of the Registrant since N/A
October 20, 1997. Currently General
Manager of the Registrant's Chicago
subsidiary. Vice President of Media
Tech, a video duplication company, from
March 1994 to January 1997. Vice
President of Jan Hughes Productions, a
film and video production company, from
October 1993 to March 1994. Sales and
Marketing Manager of Editel, Inc., a
nationally recognized post-production
facility, from August 1984 to October
1993.
Michael D. Smith 50 Vice President Vice President of the Registrant since N/A
1998. Executive Producer of the
Registrant since 1993. Independent
producer from 1984 through 1993.
</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, 1999, all
Section 16(a) filing requirements applicable to Insiders were complied with
except that Mr. Michael Smith's Form 3 was filed late.
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, Michael Smith and Nancy Reid, the only
other executive officers whose total salary and bonus for fiscal 1999 exceeded
$100,000. Mr. Smith became an executive officer of the Company during fiscal
1999. Ms. Reid became an executive officer of the Company during fiscal year
1998.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Awards Payouts
----------------------------- ------------------------ --------- All Other
Restricted LTIP Compen-
Name and Principal Fiscal Salary Bonus Stock Awards Options/ Payouts sation
Position Year ($)(1) ($)(2) Other ($) SARs (#) ($) ($)(3)
-------- ---- --------- ---------- ----- ----------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Phillip A. Staden 1999 152,750 0 0 None 20,000 None 3,654
President, CEO 1998 125,384 10,000 0 None 35,000 None 2,173
and CFO 1997 100,635 10,000 0 None 15,000 None 3,007
Michael D. Smith 1999 120,000 21,774 0 None 15,000 None 1,413
Vice President
Nancy L. Reid 1999 99,267 3,000 0 None 15,000 None 2,476
Vice President
</TABLE>
- --------------------- -------- ----------
(1) Amounts under "Salary" also include the executive's salary deferral
contributions to the Company's 401(k) profit sharing plan.
(2) Bonus amounts for fiscal 1999 are accrued and not yet paid.
(3) Amounts reflect Company contributions to the Company's 401(k) profit
sharing plan.
Option/SAR Grants During 1999 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, 1999:
<TABLE>
<CAPTION>
Number of Securities Percent of Total
Underlying Options/SARs Granted
Options/SARs to Employees in Exercise or Base
Name Granted Fiscal Year Price ($/Share) Expiration Date
<S> <C> <C> <C> <C>
Phillip A. Staden 20,000(1) 1.4% $0.4275 10/29/03
Michael D. Smith 15,000(2) 1.1% $0.4275 10/29/03
Nancy L. Reid 15,000(2) 1.1% $0.4275 10/29/03
</TABLE>
- --------------------------------------------------------------------------------
(1) Such option is exercisable in annual increments of 6,667 shares each,
commencing October 30, 1999.
(2) Such option is exercisable in annual increments of 5,000 shares each,
commencing October 30, 1999.
Option/SAR Exercises During Fiscal 1999 and Fiscal Year End Option/SAR Values
The following table provides certain information regarding the exercise
of stock options during fiscal 1999 by the officers named in the Summary
Compensation Table and the fiscal year-end value of unexercised options held by
such officers.
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Number of Unexercised Options In-the-Money Options at Fiscal
Acquired on Value at Fiscal Year End Year End ($)
Name Exercise Realized ($) (exercisable/unexercisable) (exercisable/unexercisable)(1)
---- -------- ------------ --------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Phillip A. Staden 0 0 21,667 48,333 0 7,500
Michael D. Smith 0 0 0 15,000 0 5,625
Nancy L. Reid 0 0 0 15,000 0 5,625
</TABLE>
- -------------------------------
(1) Market value of underlying securities at March 31, 1999 ($.8125), minus
the exercise price.
Employment Contracts
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
$155,000 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. 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:
<TABLE>
<CAPTION>
Amount and Nature of Shares
Name and Address of Beneficial Owner Beneficially Owned(1) Percent of Class
<S> <C> <C>
James H. Binger Revocable Trust
80 South Eighth Street 185,109 13.6%
Minneapolis, Minnesota
John G. Lindell
HC 80, Box 304 B 114,937(2) 8.1%
Grand Marais, MN 55604
McDonald & Co. Securities
800 Superior Avenue 104,630 7.7%
Cleveland, Ohio
John C. Lorentzen and Penney L. Fillmer
1205 South Main Street 88,500 6.5%
Wheaton, Illinois
</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.
(2) 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 60,000 shares which
may be purchased upon exercise of currently exercisable warrants.
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.
Name of Director or Number of Shares
Officer or Identity of Group Beneficially Owned(1) Percent of Class
Ronald V. Kelly 27,500(2) 2.0%
Steven Lose 2,250(3) *
John C. McGrath 2,000(3) *
Gerald W. Simonson 46,160(4) 3.4%
Phillip A. Staden 34,667(5) 2.5%
Directors and Executive Officers
as a group (8 persons) 129,702(6) 9.1%
- -----------------------------------------------
* 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) Includes 17,000 shares which may be purchased upon exercise of
currently exercisable options and warrants.
(3) Includes 2,000 shares which may be purchased upon exercise of currently
exercisable options.
(4) Includes 15,000 shares which may be purchased upon exercise of
currently exercisable warrants.
(5) Includes 21,667 shares which may be purchased upon exercise of
currently exercisable options. (6) Includes 67,667 shares which may be
purchased upon exercise of currently exercisable options and warrants.
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. Certain directors of the Company
purchased $412,500 of the Notes in July 1996 and $150,000 of the Notes in
February 1997. In June 1999 the Company restructured the principal and interest
payment terms of the Notes.
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 former 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 $1 1,010 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
John G. Lindell, a shareholder and former director of the Company.
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, 1999 By /s/ Phillip A. Staden
Phillip A. Staden, President
