UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 2000
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 0-13928
U.S. GLOBAL INVESTORS, INC.
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation or organization)
74-1598370
(I.R.S. Employer Identification No.)
7900 Callaghan Road, San Antonio, Texas 78229
(Address of Principal Executive Offices) (Zip Code)
210-308-1234
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Title of Each Class: Class A Common Stock, par value $0.05 per share
Name of Each Exchange on Which Registered: Nasdaq Small Cap Issues
Indicate by check mark whether the Company (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 twelve 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 (ss.229.405 of this chapter) 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. [X]
The aggregate market value of the 4,109,064 shares of non-voting class A common
stock held by non-affiliates of the registrant on September 19, 2000 (based on
the last sale price on the Nasdaq as of such date), was $6,422,467. Registrant's
only voting stock is its class C common stock, par value of $0.05 per share, for
which there is no active market. The aggregate value of the 104,589 shares of
the class C common stock held by non-affiliates of the registrant on September
19, 2000 (based on the last sale price of the class C common stock in a private
transaction) was $52,294. For purposes of this disclosure only, the registrant
has assumed that its directors, executive officers and beneficial owners of 5%
or more of the registrant's common stock are affiliates of the registrant.
On September 19, 2000, there were 6,299,474 shares of Registrant's class A
common stock issued and 6,034,794 shares of Registrant's class A common stock
issued and outstanding, no shares of Registrant's class B non-voting common
shares outstanding, and 1,496,800 shares of Registrant's class C common stock
outstanding, .
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report To Shareholders for the fiscal year ended June 30,
2000, are incorporated by reference in Part I, Item 1 and Part II, Items 6, 7,
7A, 8 and Part III, Item 13 of this Form 10-K.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 2 of 47
TABLE OF CONTENTS
Page
PART I
Item 1. Business........................................................3
Item 2. Properties......................................................3
Item 3. Legal Proceedings...............................................3
Item 4. Submission of Matters to a Vote of Security Holders.............3
PART II
Item 5. Market for Company's Common Equity and Related Shareholder
Matters.......................................................4
Item 6. Selected Financial Data.........................................5
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.....................................5
Item 7A. Market Risk Disclosures........................................5
Item 8. Financial Statements and Supplementary Data.....................5
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure......................................5
PART III
Item 10. Directors and Executive Officers of the Company................6
Item 11. Executive Compensation.........................................7
Item 12. Security Ownership of Certain Beneficial Owners and
Management..................................................11
Item 13. Certain Relationships and Related Transactions................12
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K....................................................13
SIGNATURES..................................................................16
EXHIBIT 11--SCHEDULE OF COMPUTATION OF NET EARNINGS PER SHARE...............17
EXHIBIT 13--ANNUAL REPORT...................................................18
EXHIBIT 21--SUBSIDIARIES OF THE COMPANY, JURISDICTION OF INCORPORATION,
AND PERCENTAGE OF OWNERSHIP...........................................45
EXHIBIT 23.1--CONSENT OF INDEPENDENT ACCOUNTANT, ERNST & YOUNG LLP..........46
EXHIBIT 23.2--CONSENT OF INDEPENDENT ACCOUNTANT,
PRICEWATERHOUSECOOPERS LLP............................................47
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 3 of 47
PART I
ITEM 1. BUSINESS
There is incorporated in this Item 1 by reference that portion of the U.S.
Global Investors, Inc. (U.S. Global or Company) Annual Report to Shareholders,
attached to this Form 10-K as Exhibit 13, appearing under the caption "The
Company."
ITEM 2. PROPERTIES
The Company presently occupies an office building as its headquarters in San
Antonio, Texas. The office building is approximately 46,000 square feet on
approximately 2.5 acres of land. The Company and its subsidiaries, United
Shareholder Services, Inc. (USSI), A&B Mailers, Inc., Security Trust & Financial
Company (STFC), U.S. Global Brokerage, Inc. (USGB), and U.S. Global
Administrators, Inc. (USGA) occupy approximately 95% of the building.
ITEM 3. LEGAL PROCEEDINGS
Except as described in the following paragraph, there is no material legal
proceeding to which the Company is involved. There are no material legal
proceedings to which any director, officer or affiliate of the Company or any
associate of any such director or officer is a party or has a material interest,
adverse to the company or any of its subsidiaries.
In August 2000, a suit was filed against U. S. Global Investors, Inc. (USGI) and
other defendants in state court alleging negligence, breach of contract and
fraud with regard to processing of certain checks drawn on plaintiff's accounts
held in U.S. Global Investors Funds. USGI denies all allegations and the suit is
in the discovery stage.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during fiscal year 2000.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 4 of 47
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market Information
The Company has three classes of common equity: Class A, class B and class C
common stock, par value $0.05 per share.
There is no established public trading market for the Company's class B and
class C common stock.
The Company's class A common stock is traded over-the-counter and is quoted
daily under the Nasdaq Small Cap Issues. Trades are reported under the symbol
"GROW."
The following table sets forth the range of high and low closing bid quotations
from Nasdaq for the fiscal years ended June 30, 2000 and 1999. The quotations
represent prices between dealers and do not include any retail markup, markdown
or commission and may not necessarily represent actual transactions.
BID PRICE ($)
------------------------------------
2000 1999
---------------- ----------------
HIGH LOW HIGH LOW
------ ------ ------ ------
First Quarter (9/30) $1.625 $1.000 $1.875 $1.375
Second Quarter (12/31) $1.563 $1.313 $1.750 $1.313
Third Quarter (3/31) $2.500 $1.375 $2.906 $1.500
Fourth Quarter (6/30) $1.750 $1.438 $1.688 $1.250
HOLDERS
On September 19, 2000, there were 299 holders of record of the class A common
stock, no holders of record of class B common stock, and 71 holders of record of
class C common stock.
Many of the class A common shares are held of record by nominees, and management
believes that as of September 19, 2000, there were approximately 1,000
beneficial owners of the Company's class A common stock.
DIVIDENDS
The Company has not paid cash dividends on its class C common stock during the
last fourteen fiscal years, and has never paid cash dividends on its class A
common stock. Payment of cash dividends is within the discretion of the
Company's board of directors and is dependent upon earnings, operations, capital
requirements, general financial condition of the Company and general business
conditions.
Holders of the outstanding shares of the Company's class A common stock are
entitled to receive, when and as declared by the Company's board of directors, a
non-cumulative cash dividend equal in the aggregate to 5% of the Company's
after-tax net earnings for its prior fiscal year. After such dividend has been
paid, the holders of the outstanding shares of class B common stock are entitled
to receive, when and as declared by the Company's board of directors, cash
dividends per share equal to the cash dividends per share paid to the holders of
the class A common stock. Holders of the outstanding shares of class C common
stock are entitled to receive when and as declared by the Company's board of
directors, cash dividends per share equal to the cash dividends per share paid
to the holders of the class A and class B common stock. Thereafter, if the board
of directors determines to pay additional cash dividends, such dividends will be
paid simultaneously on a prorated basis to holders of class A, B and C common
stock. The holders of the class A common stock are protected in certain
instances against dilution of the dividend amount payable to such holders.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 5 of 47
ITEM 6. SELECTED FINANCIAL DATA
There is incorporated by reference in this Item 6 that portion of the Company's
Annual Report to Shareholders appearing under the caption "Selected Financial
Data."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
There is incorporated by reference in this Item 7 that portion of the Company's
Annual Report to Shareholders appearing under the caption "Annual Status
Report."
ITEM 7A. MARKET RISK DISCLOSURES
There is incorporated by reference in this Item 7A that portion of the Company's
Annual Report to Shareholders appearing under the caption "Annual Status
Report."
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and notes thereto located in the Company's
Annual Report to Shareholders are incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Within twenty-four months prior to the date of Company's most recent financial
statement, no Form 8-K recording a change of accountants due to a disagreement
on any matter of accounting principles or practices or financial statement
disclosure has been filed with the Commission.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 6 of 47
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The directors and executive officers of the Company are as follows:
NAME AGE POSITION
------------------- --- ---------------------------------------------------
David J. Clark 39 Chief Financial Officer of the Company since May
1997 and Chief Operating Officer since December
1997. Since May 1997 Mr. Clark has served and
continues to serve in various positions with the
Company, its subsidiaries, and the investment
companies it sponsors. Mr. Clark served as a
Foreign Service Officer with U.S. Agency for
International Development in the U.S. Embassy,
Bonn, West Germany from May 1992 to May 1997.
Frank E. Holmes 45 Chairman of the Board of Directors and Chief
Executive Officer of the Company since October 27,
1989, and Chief Investment Officer since June 4,
1999. Since October 1989 Mr. Holmes has served and
continues to serve in various positions with the
Company, its subsidiaries, and the investment
companies it sponsors. Mr. Holmes has also served
as Director of 71316 Ontario, Inc. since April
1987. Director, President, and Secretary of F.E.
Holmes Organization, Inc. since July 1978. Director
of USACI since February 1995, Director and
President from February 1995 to June 1997. Mr.
Holmes has served as director of Franc-Or Resources
Corporation since June 2000 and Broadband
Collaborative Solutions since May 2000.
Thomas F. Lydon, Jr. 40 Director of the Company since June 1997. Chairman
of the Board and President of Global Trends
Investments since April 1996. President, Vice
President and Account Manager with Fabian Financial
Services, Inc. from April 1984 to March 1996.
Member of the Advisory Board for Schwab
Institutional from 1989 to 1991 and from 1995 to
1996. Member of the Advisory Board of Rydex Series
Trust since January 1999. Fund Relations Chair for
SAAFTI since 1994.
Susan B. McGee 41 President of the Company since February 1998,
General Counsel since March 1997. Since September
1992 Ms. McGee has served and continues to serve in
various positions with the Company, its
subsidiaries, and the investment companies it
sponsors.
J. Stephen Penner 59 Director since May 1997. Senior Vice President of
LCG Associates, and since March 1982 has held
various positions with that Company. Senior Vice
President of LCG Holdings, Inc. since November
1992. Mr. Penner currently serves as President and
CEO of Fiduciary Advisory and Management Co., Inc.
Jerold H. Rubinstein 62 Director of the Company since October 1989.
Chairman and Chief Executive Officer of Xtra Music
since July 1997. Chairman of the Board of Directors
and Chief Executive Officer of DMX Inc. from May
1986 to July 1997.
Roy D. Terracina 54 Director of the Company since December 1994 and
Vice Chairman of the Board of Directors since May
1997. Director of STFC since August 1992. Owner of
Sunshine Ventures, Inc., an investment company,
since January 1994.
None of the directors or executive officers of the Company has a family
relationship with any of the other directors or executive officers.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 7 of 47
The members of the board of directors are elected for one-year terms or until
their successors are elected and qualified. The board of directors appoints the
executive officers of the Company. The Company's Compensation Committee consists
of Messrs. Holmes, Terracina and Rubinstein. The Company's Audit Committee
consists of Messrs. Rubinstein and Terracina. The Stock Option Committee
consists of Messrs. Rubinstein and Terracina. The Company does not have a
Nominating Committee.
COMPLIANCE WITH SECTION 16(A) OF THE 1934 ACT
Section 16(a) of the 1934 Act requires directors and officers of the Company,
and persons who own more than 10% of the Company's class A common stock, to file
with the Securities and Exchange Commission (SEC) initial reports of ownership
and reports of changes in ownership of the stock. Directors, officers and more
than 10% shareholders 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 solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the year ended June 30, 2000, all Section 16(a)
filing requirements applicable to its directors, officers and more than 10%
beneficial owners were met.
ITEM 11. EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------------------------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g)
------------------- ---- ---------- -------- -------------- ----------- -----------
OTHER
NAME AND ANNUAL RESTRICTED NUMBER OF
PRINCIPAL POSITION COMPEN- STOCK OPTIONS/
DURING FY 2000 YEAR SALARY BONUS SATION(1) AWARDS SARS(2)
------------------- ---- ---------- -------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Frank E. Holmes 2000 $318,280 $ 58,602 $48,640(3) $50,000 (4) __
Chairman, Chief 1999 318,280 92,054 41,780 338 __
Executive Officer 1998 315,917 164,902 37,405 __ __
Susan B. McGee 2000 135,886 55,857 __ -- 15,000
President, 1999 132,408 43,491 __ 338 __
General Counsel 1998 104,786 5,439 __ 1,328 __
The Company has intentionally omitted columns (h) and (i) as they are not
applicable.
Includes amounts identified for 401(k) contributions (calculable through the
end of June 30, 2000, fiscal year) and amounts for Company savings plans
(calculable through the end of the June 30, 2000, fiscal year).
------------------------
(1) The Company believes that the aggregate amounts of such omitted personal
benefits do not exceed the lesser of $50,000 or 10% of the total of
annual salary and bonus reported in columns (c) and (d) for the named
executive officers.
(2) All options pertain to Company class A common stock.
(3) Includes directors fees of $32,000 paid by the Company.
(4) Includes the board's issuance, in June 1999, of 1,000,000 shares of
class C common stock to be vested over a ten-year period beginning with
fiscal year 1998, with an annual compensation value of $50,000. Mr.
Holmes will be fully vested on June 30, 2008. Issuance was in part to
compensate him for his efforts and upon cancellation of Mr. Holmes'
warrants and option to acquire 986,122 shares of class C common stock.
</TABLE>
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 8 of 47
INCENTIVE COMPENSATION
Executive officers, except Mr. Holmes, participate in a team performance pay
program based on each employee's annual salary to recognize monthly completion
of departmental goals. Additionally, key executive officers are compensated
based on individual performance pay arrangements.
PROFIT SHARING PLAN
In June 1983, the Company adopted a profit sharing plan in which all qualified
employees who have completed one year of employment with the Company are
included. Subject to board action, the Company may contribute up to 15% of its
net income before taxes during each fiscal year, limited to 15% of qualifying
salaries, to a profit sharing plan, the beneficiaries of which are the eligible
employees of the Company. The Company's contribution to the plan is then
apportioned to each employee's account in the plan in an amount equal to the
percentage of the total basic compensation paid to all eligible employees, which
each employee's individual basic compensation represents. For the fiscal year
ended June 30, 2000, the Company did not contribute to the profit sharing plan.
There have been no recent material changes to the plan.
401(k) PLAN
The Company adopted a 401(k) plan in October 1990 for the benefit of all
employees. The Company will match a certain percentage of a participating
employee's pay deferment. The Company will make contributions to participants'
accounts subsequent to the end of each plan year if the employee is still
employed at the end of the plan year.
SAVINGS PLANS
The Company has continued the program pursuant to which it offers employees,
including its executive officers, an opportunity to participate in savings
programs using managed investment companies, which essentially all such
employees accepted. Limited employee contributions to an Individual Retirement
Account are matched by the Company. Similarly, certain employees may contribute
monthly to the Tax Free Fund, and the Company will match these contributions on
a limited basis. Beginning in fiscal year 1997, a similar savings plan utilizing
UGMA accounts has been offered to employees to save for their children's
education.
STOCK OPTION PLANS
In March 1985, the board of directors of the Company adopted an Incentive Stock
Option Plan (1985 Plan), giving certain executives and key salaried employees of
the Company and its subsidiaries options to purchase shares of the Company's
class A common stock. The 1985 Plan was amended on November 7, 1989 and December
6, 1991. In December 1991, it was amended to provide provisions to cause the
plan and future grants under the plan to qualify under 1934 Act Rule 16b-3. As
of June 30, 2000, under this plan, 202,500 options were granted, 88,000 options
had been exercised, 110,500 options had expired and 4,000 options remained
outstanding. The 1985 Plan, as amended, terminated on December 31, 1994.
In November 1989 the board of directors adopted the 1989 Non-Qualified Stock
Option Plan (1989 Plan) which provides for the granting of options to purchase
shares of the Company's class A common stock to directors, officers and
employees of the Company and its subsidiaries. On December 6, 1991, shareholders
approved and amended the 1989 Plan to provide provisions to cause the plan and
future grants under the plan to qualify under 1934 Act Rule 16b-3. The 1989 Plan
is administered by a committee consisting of two outside members of the board of
directors. The maximum number of shares of class A common stock initially
approved for issuance under the 1989 Plan is 800,000 shares. During the fiscal
year ended June 30, 2000, there were no grants. As of June 30, 2000, under this
amended plan, 876,700 options had been granted, 393,000 options had been
exercised, 265,900 options had expired and 217,800 options remained outstanding.
The board of directors, at a meeting held on July 14, 1992, amended the Stock
Option Agreement for stock options granted during November 1989 to provide for
an option period of ten years. All optionees accepted the amendment.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 9 of 47
In April 1997, the board of directors adopted the 1997 Non-Qualified Stock
Option Plan (1997 Plan), which shareholders approved on April 25, 1997. It
provides for the granting of stock appreciation rights (SARs) and/or options to
purchase shares of the Company's class A common stock to directors, officers and
employees of the Company and its subsidiaries. The 1997 Plan expressly requires
that all grants under the plan qualify under 1934 Act Rule 16b-3. The 1997 Plan
is administered by a committee consisting of two outside members of the board of
directors. The maximum number of shares of class A common stock initially
approved for issuance under the 1997 Plan is 200,000 shares. During the fiscal
year ended June 30, 2000, there were 72,000 options granted. As of September 19,
2000, grants covering 6,000 shares have been exercised under the 1997 Plan, and
grants covering 75,500 shares have expired and 159,000 remained outstanding.
Shares available for stock option grants under the 1989 Plan and the 1997 Plan
aggregate to approximately 189,200 and 29,000 shares, respectively, on September
19, 2000.
The following table shows, as to each officer of the Company listed in the cash
compensation table, grants of stock options and freestanding stock appreciation
rights made during the last fiscal year.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
----------------------------------------------------------------------------------------------------------
POTENTIAL REALIZED
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
--------------------------------------------------------------------------------- -------------------
(a) (b) (c) (d) (e) (f) (g)
--------------- -------- ----------- ------ ---------- ------- -------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE OF
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 5% ($) 10% ($)
--------------- -------- ----------- ------ ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Frank E. Holmes 0/0 0/0 $0 -- $0 $0
Susan B. McGee 15,000/0 15.95% $1.50 12-03-2009 $12,630 $33,435
</TABLE>
The following table shows, as to each of the officers of the Company listed in
the cash compensation table, aggregated option exercises during the last fiscal
year and fiscal year-end option values.
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
--------------- ----------- -------- --------------- --------------
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
NUMBER OF AT FY END AT FY END ($)
SHARES --------------- --------------
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
--------------- ----------- -------- --------------- --------------
<S> <C> <C> <C> <C>
Frank E. Holmes 0 0 101,000/0 $0/$0
Susan B. McGee 0 0 51,000/0 $0/$0
</TABLE>
COMPENSATION OF DIRECTORS
The Company may grant non-employee directors options under the Company's 1989
and 1997 Stock Option Plans. Their compensation is subject to a minimum of
$3,000 in any quarter paid in advance. During the fiscal year ended June 30,
2000, the non-employee directors each received cash compensation of $12,000. Mr.
Terracina is also a director of STFC for which he received cash compensation of
$3,600. Directors are reimbursed for reasonable travel expenses incurred in
attending the meetings held by the board of directors.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 10 of 47
REPORT ON EXECUTIVE COMPENSATION
The board appointed Messrs. Holmes, Terracina, and Rubinstein as members of the
Executive Compensation Committee during fiscal year 1997, and they continue to
serve on the committee. There are no compensation committee interlocks to
report. Mr. Holmes served as an employee and officer of the Company. The board
of directors reviews Mr. Holmes' compensation annually to determine an
acceptable base compensation, reflecting an amount competitive with industry
peers and taking into account the relative cost of living in San Antonio, Texas.
The board of directors also reviews Mr. Holmes' performance in managing the
Company's securities portfolio with respect to which he is paid a cash bonus,
which bonus is paid periodically throughout the year. During fiscal year 1999,
Mr. Holmes, in addition to his other duties, became the Company's chief
investment officer responsible for supervising management of clients'
portfolios. In June 1999, in part to compensate him for these efforts and upon
cancellation of Mr. Holmes' warrants and option to acquire 986,122 shares of
class C common stock, the board approved the issuance of 1,000,000 shares of
class C common stock to Mr. Holmes to be vested over a ten-year period beginning
with fiscal year 1998, with an annual compensation value of $50,000. Mr. Holmes
will be fully vested on June 30, 2008.
The base pay of the executives is relatively fixed, but the executive has the
opportunity to increase his/her compensation by (1) participating in team
building programs to enhance operational and fiscal efficiencies throughout the
Company with a percent of resulting savings flowing to the executive and (2)
participating directly in retirement and savings programs whereby the Company
will contribute amounts relative to the executive's contribution.
The Company has utilized option grants under the 1985 Plan, the 1989 Plan, and
the 1997 Plan to induce qualified individuals to join the Company with a base
pay consistent with the foregoing, thereby providing the individual with an
opportunity to benefit if there is significant Company growth. Similarly,
options have been utilized to reward existing employees for long and faithful
service and to encourage them to stay with the Company. Messrs. Penner,
Rubinstein, and Terracina constitute the Stock Option Committee of the board of
directors. This committee acts upon recommendations of the Chief Executive
Officer and President.
COMPANY PERFORMANCE PRESENTATION
The graph below compares the cumulative total return for the Company's class A
common stock to the cumulative total return for the Financial Times Gold Mines
Index, S&P 500 Composite Index, and Russell 2000 Index for the Company's last
five fiscal years. The graph assumes an investment of $10,000 in the class A
common stock and in each index as of June 30, 1995, and that all dividends are
reinvested.
[GRAPHIC:Linear chart plotted from data in table below.]
U.S. GLOBAL
INVESTORS
FT GOLD CLASS A S&P 500 RUSSELL
MINES COMMON COMPOSITE 2000
DATE INDEX STOCK INDEX INDEX
--------- ----------- ----- ----------- -----------
30-Jun-93 100 100 100 100
30-Jul-93 106.3136446 112.5 99.46729408 101.3327619
31-Aug-93 98.74168255 95 102.8921492 105.5024641
30-Sep-93 88.09430028 80 101.8644707 108.3994
29-Oct-93 103.6168749 95 103.8399219 111.0692093
30-Nov-93 101.3397195 97.5 102.4992786 107.3109064
31-Dec-93 116.8701717 112.5 103.533616 110.8163703
31-Jan-94 113.6750117 115 106.8985417 114.214699
28-Feb-94 106.2474726 105 103.6867689 113.7904435
31-Mar-94 106.8960628 107.5 98.94346658 107.5894579
29-Apr-94 99.59561585 87.5 100.0843451 108.2279837
31-May-94 102.6432019 97.5 101.3273256 106.8266552
30-Jun-94 100.3046011 92.5 98.61052538 102.9740733
29-Jul-94 103.0108238 85 101.715757 104.5896722
31-Aug-94 109.3607054 85 105.5423612 110.2721234
30-Sep-94 122.0641448 92.5 102.7034826 109.7578744
31-Oct-94 113.2228367 82.5 104.8431847 109.2864795
30-Nov-94 99.22431767 75 100.7013961 104.6710949
30-Dec-94 103.7633985 65 101.9399374 107.2894793
31-Jan-95 86.01881174 67.5 104.4148003 105.785301
28-Feb-95 90.88192508 67.5 108.1814752 109.9507178
31-Mar-95 101.3491726 67.5 111.137993 111.7505892
28-Apr-95 101.3260649 67.5 114.2454443 114.0647097
31-May-95 99.84087221 55 118.3938916 115.8131562
30-Jun-95 10000 10000 10000 10000
31-Jul-95 10116.88595 10000 10317.76044 10567.28837
31-Aug-95 10233.72001 9523.809524 10314.45617 10764.37612
29-Sep-95 10301.99427 10000 10728.04039 10943.13013
31-Oct-95 8938.584295 8095.238095 10674.62139 10444.94588
30-Nov-95 9791.649373 7142.857143 11112.80404 10879.66717
29-Dec-95 9927.056529 6190.47619 11306.65443 11140.21789
31-Jan-96 11962.21051 11428.57143 11675.44745 11119.41614
29-Feb-96 12141.04134 10952.38095 11756.40202 11456.12241
29-Mar-96 12108.92753 10415.2381 11849.47223 11662.02447
30-Apr-96 12070.79563 10476.19048 12008.62781 12279.37806
31-May-96 12331.70084 12857.14286 12283.06563 12757.81828
28-Jun-96 10462.61517 10952.38095 12310.78476 12220.49854
31-Jul-96 10353.92629 9047.619048 11747.59064 11141.27561
30-Aug-96 10539.08649 9523.809524 11968.60945 11771.67436
30-Sep-96 9607.37113 10240 12616.98027 12212.74195
31-Oct-96 9741.844443 9047.619048 12946.67279 12007.54504
29-Nov-96 9728.822528 9047.619048 13896.64984 12484.92755
31-Dec-96 9460.602225 9047.619048 13597.79715 12784.61376
31-Jan-97 8810.95916 10476.19048 14431.57412 13025.77301
28-Feb-97 9896.084087 9047.619048 14517.11794 12694.35532
31-Mar-97 8492.415124 7859.047619 13898.48554 12077.70687
30-Apr-97 7619.116793 6666.666667 14710.23405 12093.22004
30-May-97 8144.610691 6906.666667 15571.91372 13424.53196
30-Jun-97 7226.072881 7619.047619 16248.55438 13974.89687
31-Jul-97 7336.629451 9047.619048 17517.94401 14613.40479
29-Aug-97 7325.112061 9287.619048 16511.61083 14928.95674
30-Sep-97 7911.980161 8335.238095 17389.26113 16000.42309
31-Oct-97 6441.593343 8335.238095 16789.72006 15275.53503
28-Nov-97 5071.905869 8571.428571 17538.32033 15157.77598
31-Dec-97 5490.059766 7142.857143 17814.22671 15408.1021
30-Jan-98 5799.317257 7619.047619 17995.0436 15162.35941
27-Feb-98 5587.957583 9047.619048 19262.78109 16282.83327
31-Mar-98 5940.898149 10000 20224.8738 16947.43151
30-Apr-98 6736.272516 9763.809524 20408.44424 17025.34993
29-May-98 5639.993359 8571.428571 20024.2313 16099.14325
30-Jun-98 5156.15921 7619.047619 20813.95135 16126.29129
31-Jul-98 4672.480701 6190.47619 20572.18908 14799.21024
31-Aug-98 3639.806591 5478.095238 17572.83157 11915.17117
30-Sep-98 5711.639827 5954.285714 18669.29784 12819.16581
30-Oct-98 5774.829833 5001.904762 20168.3341 13332.86324
30-Nov-98 5474.028804 5954.285714 21360.80771 14023.55181
31-Dec-98 4848.146842 5954.285714 22565.02983 14877.12865
29-Jan-99 4836.00689 6190.47619 23490.40844 15062.58153
26-Feb-99 4520.990703 7859.047619 22732.07894 13829.98978
31-Mar-99 4508.38383 5714.285714 23613.95135 14019.32095
30-Apr-99 5281.345978 5238.095238 24509.9587 15259.66929
31-May-99 4297.335436 5478.095238 23897.93483 15466.62906
30-Jun-99 4591.651448 4761.904762 25198.89858 16136.51588
30-Jul-99 4381.848178 5238.095238 24391.37219 15681.34541
31-Aug-99 4658.888105 5478.095238 24238.82515 15084.08843
30-Sep-99 5858.771893 5714.285714 23546.76457 15065.40211
29-Oct-99 5082.593177 6190.47619 25019.36668 15112.64676
30-Nov-99 4856.292023 5714.285714 25496.2827 16009.58996
31-Dec-99 4815.981157 5714.285714 26971.08765 17796.07235
31-Jan-00 4250.020752 6190.47619 25598.1643 17495.68099
29-Feb-00 4384.182784 8335.238095 25083.43277 20368.43775
31-Mar-00 4055.418361 6190.47619 27509.49977 19006.80464
28-Apr-00 3923.746576 5714.285714 26662.32217 17848.95815
31-May-00 4042.240807 6430.47619 26078.01744 16788.77411
30-Jun-00 4189.113472 6666.666667 26702.15695 18236.08222
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 11 of 47
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Class C Common Stock (Voting Stock). At September 19, 2000, there were 1,496,800
shares of the Company's class C common stock outstanding. The following table
sets forth, as of such date, information regarding the beneficial ownership of
the Company's class C common stock by each person known by the Company to own 5%
or more of the outstanding shares of class C common stock.
PERCENT OF SHARES
NAME AND ADDRESS OF BENEFICIALLY OWNED ISSUED OUTSTANDING
BENEFICIAL OWNER CLASS C COMMON SHARES
-------------------- ------------------ ------------------
Frank E. Holmes
7900 Callaghan Road
San Antonio, TX 78229 1,392,211(1) 93.01%
------------------------
(1) Includes 1,000,000 shares of class C common stock issued to Mr. Holmes
that will be vested in equal amounts over a ten-year period and will
be fully vested on June 30, 2008; 102,280 shares owned by F. E. Holmes
Organization Inc.; 285,000 shares owned directly by Mr. Holmes; and
4,931 shares owned by Mr. Holmes in an IRA.
CLASS A COMMON STOCK (NON-VOTING STOCK). At September 19, 2000, there were
6,034,794 shares of the Company's class A common stock issued and outstanding.
The following table sets forth, as of such date, information regarding the
beneficial ownership of the Company's class A common stock by each person known
by the Company to own 5% or more of the outstanding shares of class A common
stock.
CLASS A
NAME AND ADDRESS OF BENEFICIALLY COMMON SHARES
BENEFICIAL OWNER OWNED PERCENT OF CLASS
------------------------------------ ------------ ----------------
Frank E. Holmes - San Antonio, TX 286,966(1) 4.75%(5)
Mason Hill Asset Management,
Inc. - New York, NY 409,000(2) 6.77%
Royce & Associates, Inc. - New York, NY 386,205(3) 6.39%
Heartland Advisors, Inc. - Milwaukee, WI 600,000(4) 9.94%
------------------------
(1) Detail of beneficial ownership set forth below under "Security
Ownership of Management."
(2) Mason Hill Asset Management, Inc. owns 250,500 shares or 4.15%.
Equinox Partners, LP owns 158,500 shares or 2.62%. Mason Hill Asset
Management, Inc. and Equinox Partners, L.P. may be deemed to be under
the common control of William W. Strong. Information is from Schedule
13D filed with the SEC on March 18, 1996.
(3) Information is from Schedule 13G, dated March 9, 2000, filed with the
SEC.
(4) Information is from Schedule 13G, dated January 18, 2000, filed with
the SEC.
(5) Prior to their expiration in November 1999, Mr. Holmes owned an
additional 100,000 exercisable options. Prior to their expiration, Mr.
Holmes' beneficial ownership was approximately 6.41%.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth, as of September 19, 2000, information regarding
the beneficial ownership of the Company's class A and class C common stock by
each director and by all directors and executive officers as a group. Except as
otherwise indicated in the notes below, each director owns directly the number
of shares indicated in the table and has sole voting power and investment power
with respect to all such shares.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 12 of 47
CLASS C COMMON STOCK CLASS A COMMON STOCK
-------------------- --------------------
NUMBER OF NUMBER OF
BENEFICIAL OWNER SHARES % SHARES %
---------------- ------------ ----- ------------ ----
Frank E. Holmes 1,392,211(1) 93.01 286,966(2) 4.75
Thomas F. Lydon, Jr. -- -- 10,000(3) .16
Susan B. McGee -- -- 67,035(3) 1.11
J. Stephen Penner -- -- 10,000(3) .16
Jerold H. Rubinstein -- -- 50,000(3) .82
Roy D. Terracina -- -- 89,100(3) 1.47
All directors and
executive officers
as a group (7 persons) 1,392,211 93.01 530,343(4) 8.79
------------------------
(1) Includes 1,000,000 shares of class C common stock issued to Mr. Holmes
that will be vested in equal amounts over a period of ten years and
will be fully vested on June 30, 2008; 102,280 shares owned by F. E.
Holmes Organization Inc.; 285,000 shares owned directly by Mr. Holmes;
and 4,931 shares owned by Mr. Holmes in an IRA.
(2) Includes 85,966 shares and options to obtain 101,000 shares of class A
common stock as well as 100,000 shares of class A common stock held by
F.E. Holmes Organization, Inc., a corporation wholly owned by Mr.
Holmes. Mr. Holmes' 85,966 shares also include 1,300 shares of class A
common stock owned separately by Mr. Holmes' wife. Mr. Holmes
disclaims beneficial ownership of these 1,300 shares of class A common
stock.
(3) Includes shares of class A common stock underlying presently
exercisable options held directly by each individual as follows: Mr.
Holmes - 101,000 shares; Mr. Lydon - 10,000 shares; Ms. McGee - 51,500
shares; Mr. Penner - 10,000 shares; Mr. Rubinstein - 40,000 shares;
and Mr. Terracina - 51,000 shares.
(4) Includes the shares underlying presently exercisable options held by
the directors and officers listed above and beneficial ownership of an
additional 17,242 of class A common stock or its underlying presently
exercisable options held by officers other than those listed above.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
U.S. Global is invested in several of the mutual funds it manages. There is
incorporated in this Item 13 by reference that portion of the U.S. Global
Investors, Inc. Annual Report to Shareholders, attached to this Form 10-K as
Exhibit 13, appearing under Note 13 to the Consolidated Financial Statements.
Frank E. Holmes, director and Chief Executive Officer of the registrant, has,
throughout the year, received loans from the registrant. In November 1999 these
loans had an accumulated balance of $121,234. As of September 22, 2000, these
loans had an accumulated balance of $18,081. These loans were made against
bonuses owned to Mr. Holmes. No interest was charged on these loans.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 13 of 47
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
The Consolidated Financial Statements are incorporated herein by reference
to the Company's Annual Report to Shareholders as an exhibit hereto (see
Item 8):
o Reports of Independent Accountants
o Consolidated Balance Sheets at June 30, 2000 and 1999
o Consolidated Statements of Operations for the three years ended June
30, 2000
o Consolidated Statements for Cash Flows for the three years ended June
30, 2000
o Consolidated Statements of Shareholders' Equity for the three years
ended June 30, 2000
o Notes to Consolidated Financial Statements
2. Financial Statement Schedules
None.
3. Exhibits
3.1 Third Restated and Amended Articles of Incorporation of Company,
incorporated by reference in the Company's Form 10-K for the fiscal
year ended June 30, 1996 (EDGAR Accession Number 0000754811-96-
000025).
3.2 By-Laws of Company, incorporated by reference to Exhibit D of the
Company's Registration Statement No. 33- 33012 filed on Form S-8 with
the Commission on January 30, 1990, as amended, included herein for
purposes of entering into EDGAR date base.
10.1 Advisory Agreement dated October 27, 1989, by and between Company and
United Services Funds (USF), incorporated by reference to Exhibit
(4)(b) to the Company's Form 10-K for fiscal year ended June 30, 1990
(EDGAR Accession No. 0000101507-99-000019).
10.2 Advisory Agreement dated September 21, 1994, by and between Company
and Accolade Funds, incorporated by reference to Exhibit 10.2 to
Company's Form 10-K for fiscal year ended June 30, 1995 (EDGAR
Accession Number 0000754811-95-000002).
10.3 Sub-Advisory Agreement dated September 21, 1994, by and between
Company and Accolade Funds/Bonnel Growth Fund and Bonnel, Inc.,
incorporated by reference to Exhibit 10.3 to Company's Form 10-K for
fiscal year ended June 30, 1995 (EDGAR Accession Number
0000754811-95-000002).
10.4 Transfer Agency Agreement dated September 21, 1994, by and between
United Shareholder Services , Inc. (USSI) and Accolade Funds/Bonnel
Growth Fund, incorporated by reference to Exhibit 10.4 to Company's
Form 10-K for fiscal year ended June 30, 1995 (EDGAR Accession Number
0000754811-95-000002).
10.5 Transfer Agent Agreement by and between USSI and USF, incorporated by
reference to Exhibit 10(b) to the Company's Form 10-K for the fiscal
year ended June 30, 1989; Transfer Agency Agreement, as amended,
between U.S. Global Investors Funds and United Shareholder Services,
Inc. dated November 1, 1988, incorporated by reference to Post
Effective Amendment No. 79 filed September 3, 1996 (EDGAR Accession
No. 0000101507-96-000065).
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 14 of 47
10.6 Loan Agreement between Company and Bank One, dated April 12, 1994, and
Modification Agreement, dated February 28, 1995, for $1,385,000 for
refinancing new building, incorporated by reference to Exhibit 10.8 to
Company's Form 10-K for fiscal year ended June 30, 1995 (EDGAR Accession
Number 0000754811-95- 000002).
10.6 United Services Advisors, Inc. 1985 Incentive Stock Option Plan as amended
November 1989 and December 1991, incorporated by reference to Exhibit 4(b)
of the Company's Registration Statement No. 33-3012, Post- Effective
Amendment No. 2, filed on Form S-8 with the Commission on April 23, 1997
(EDGAR Accession No.754811-97-000004).
10.7 United Services Advisors, Inc. 1989 Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 4(a) to the Company's Registration
Statement No. 33-3012, Post-Effective Amendment No. 2, filed on Form S-8
with the Commission on April 23, 1997 (EDGAR Accession No.
754811-97-000004).
10.8 U.S. Global Investors, Inc. 1997 Non-Qualified Stock Option Plan,
incorporated by reference to Exhibit 4 to the Company's Registration
Statement No. 333-25699 filed on Form S-8 with the Commission on April 23,
1997 (EDGAR Accession No. 7548111-97-000003).
10.9 Custodian Agreement dated November 1, 1997, between U.S. Global Investors
Funds and Brown Brothers Harriman & Co. of Massachusetts incorporated by
reference to Post-Effective Amendment No. 82 dated September 2, 1998
(EDGAR Accession No. 0000101507-98-000031).
10.10 Custodian Agreement dated November 1, 1997, between U.S. Global Accolade
Funds and Brown Brothers Harriman & Co. of Massachusetts incorporated by
reference to Post-Effective Amendment No. 13 dated January 29, 1998 (EDGAR
Accession No. 0000902042-98-000006).
10.11 Amendment dated May 14, 1999, to Custodian Agreement dated November 1,
1997, between U.S. Global Accolade Funds and Brown Brothers Harriman & Co.
of Massachusetts incorporated by reference to Post- Effective Amendment
No. 16 dated February 29, 1999 (EDGAR Accession No. 0000902042-99-000004).
10.12 Distribution Agreement by and between USGB and U.S. Global Accolade Funds
dated September 3, 1998, incorporated by reference to Exhibit 10.12 to
Company's Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession
Number 0000754811-98-000009).
10.13 Distribution Agreement by and between USGB and U.S. Global Investors Funds
dated September 3, 1998, incorporated by reference to Exhibit 10.13 to
Company's Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession
Number 0000754811-98-000009).
10.14 Statement re: Computation of Per Share Earnings, filed herein.
13 Annual Report to Shareholders, filed herein.
21 List of Subsidiaries of the Company, filed herein.
23.1 Consent of Independent Accountant, Ernst & Young LLP, filed herein.
23.2 Consent of Independent Accountant, PricewaterhouseCoopers LLP, filed
herein.
24.1 Power of Attorney, incorporated by reference to Exhibit 24.1 to Company's
Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession Number
0000754811-98-000009).
24.2 Power of Attorney, incorporated by reference to Exhibit 24.2 to Company's
Form 10-K for fiscal year ended June 30, 1998 (EDGAR Accession Number
0000754811-98-000009).
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 15 of 47
27 Financial Data Schedule, filed herein.
(b) Reports on Form 8-K
None.
<PAGE>
U.S. Global Investors, Inc.
Annual Report on Form 10-K 2000 Page 16 of 47
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.
U.S. GLOBAL INVESTORS, INC.
By: /s/ Susan B. McGee
------------------------------
SUSAN B. MC GEE
Date: September 29, 2000 President, General Counsel
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.
SIGNATURE CAPACITY IN WHICH SIGN DATE
/s/ Frank E. Holmes
-------------------------------
FRANK E. HOLMES Chairman of the Board September 29, 2000
of Directors
Chief Executive Officer
Chief Investment Officer
* /s/ Thomas F. Lydon, Jr.
-------------------------------
THOMAS F. LYDON, JR. Director September 29, 2000
* /s/ J. Stephen Penner
-------------------------------
J. STEPHEN PENNER Director September 29, 2000
* /s/ Jerold H. Rubinstein
-------------------------------
JEROLD H. RUBINSTEIN Director September 29, 2000
* /s/ Roy D. Terracina
-------------------------------
ROY D. TERRACINA Director September 29, 2000
/s/ David J. Clark
-------------------------------
DAVID J. CLARK Chief Financial Officer September 29, 2000
Chief Operating Officer
Tracy C. Peterson
-------------------------------
TRACY C. PETERSON Chief Accounting Officer September 29, 2000
*BY:
/s/ Susan B. McGee
-------------------------------
SUSAN B. MCGEE September 29, 2000
Attorney -in-Fact under
Powers of Attorney dated
June 30, 1998
