UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the year ended April 30, 1999 Commission File No. 0-17174
HAUSER, INC.
(Exact name of registrant as specified in its charter)
Colorado 84-0926801
(State or other jurisdiction of (I.R.S. Identification Number)
incorporation or organization)
5555 Airport Blvd., Boulder, Colorado 80301
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 443-4662
Securities registered pursuant to Section 12(b) of the Act:
Securities registered pursuant to Section 12(g) of the Act: None.
Title of each class Name of each exchange on which registered
Common Stock, par value $0.001 per share Nasdaq National Market
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes __ No _X_
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 the 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 common stock held by non-affiliates as
of September 30, 1999 was $9,248,346.90.
As of September 30, 1999, there were 5,183,785 shares of common stock
outstanding.
<PAGE>
EXPLANATORY NOTE
This Form 10-K/A amends Items 10, 11, 12 and 13 of the Annual Report on
Form 10-K for the year ended April 30, 1999 filed by Hauser, Inc. (the
"Company") on July 29, 1999. In that report, these items were incorporated
by reference from the Company's proxy statement, which was expected to be
filed by August 28, 1999. Because the Company's proxy statement had not
been finalized by August 28, 1999, Items 10, 11, 12 and 13 of Form 10-K are
being filed via this Form 10-K/A.
TABLE OF CONTENTS
PART III
10. Directors and Executive Officers of the Registrant 1
11. Executive Compensation 2
12. Security Ownership of Certain Beneficial
Owners and Management 9
13. Certain Relationships and Related Transactions 10
RECENT DEVELOPMENTS
Pursuant to an Agreement and Plan of Merger dated December 8, 1998 (the
"Merger Agreement"), the Company completed a merger on June 11, 1999, with
three subsidiaries (collectively, the "Contributed Subsidiaries") of
Zuellig Group N.A., Inc. ("ZGNA") and Zuellig Botanicals, Inc. ("ZBI"). The
Contributed Subsidiaries were the surviving corporations and became
wholly owned subsidiaries of the Company as a result of the merger. In
consideration for the stock of the Contributed Subsidiaries, the Company
issued 2,515,351 shares of common stock to ZGNA and ZBI, which shares
constitute 49% of the outstanding shares of the Company. As part of the
merger, Volker Wypyszyk, President of ZGNA, became Co-Chief Executive
Officer with Dean P. Stull, and the Company's Board of Directors was
increased from seven to nine directors comprised of three continuing
company directors, three ZGNA nominated directors and three independent
directors.
Additionally, on June 11, 1999, the Company effected a 1 for 4 reverse
stock split. All per share information in this amendment is presented after
giving effect to the reverse split.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors
Rudolfo C. Bryce Age 55 Director since 1999
Mr. Bryce has served as a Director of the Company since June 1999. Mr.
Bryce served as Chairman of Schering-Plough Health Care Products and
Executive Vice President of Schering-Plough Corporation until December 31,
1998. Mr. Bryce has been a director of Noven Pharmaceuticals since 1998 and
is a Trustee of St. Mary's University, San Antonio, Texas.
William E. Coleman, Ph.D. Age 65 Director since 1988
Dr. Coleman has served as a Director of the Company since February 1988.
Dr. Coleman is Chairman of Colorado Venture Management, Inc., an investment
and project management firm. Dr. Coleman is a Director of B.I., Inc., a
company that designs, manufactures, markets and supports electronic
monitoring systems. Dr. Coleman has a Ph.D. in Organic Chemistry.
Herbert Elish Age 65 Director since 1999
Mr. Elish has served as a Director of the Company since June 1999. Mr.
Elish was the Chief Executive Officer of Weirton Steel Corporation from
1987 until December 31, 1995. Currently, Mr. Elish is Director of The
Carnegie Library of Pittsburgh and a Director of Hampshire Group Limited,
an apparel manufacturer.
James R. Mellor Age 68 Director since 1999
Mr. Mellor has served as a Director of the Company since June 1999. Mr.
Mellor was Chairman and Chief Executive Officer of General Dynamics
Corporation before retiring in May 1997. Currently, Mr. Mellor is a
Director of General Dynamics Corporation, Bergen Brunswig Corporation,
Computer Sciences Corporation and Howmet International Corporation. Mr.
Mellor also serves as a Director and the Chairman of USEC, Inc.
Robert F. Saydah Age 72 Director since 1994
Mr. Saydah has served as a Director of the Company since January 1994. Mr.
Saydah has been a Managing Partner of Heidrick & Struggles, a publicly held
international executive search consulting firm, since May 1992. Previously,
Mr. Saydah held general management positions for the Lederle Laboratories
Division of American Cyanamid Company.
Harvey L. Sperry Age 69 Director since 1999
Mr. Sperry has served as a Director of the Company since June 1999. Mr.
Sperry is a Partner of the law firm of Willkie Farr & Gallagher. Mr. Sperry
is a Director of Hampshire Group Limited, an apparel manufacturer.
Dean P. Stull, Ph.D. Age 49 Director since 1983
Dr. Stull has served as a Director since 1983. He was Chief Executive
Officer and Chairman of the Board from 1983 to June 1999. Since June 1999,
Dr. Stull has been Chairman of the Board and Co-Chief Executive Officer of
the Company. Dr. Stull has a Ph.D. in Physical Organic Chemistry.
Volker Wypyszyk Age 53 Director since 1999
Mr. Wypyszyk has been a Director, President and Co-Chief Executive Officer
of the Company since June 1999. Since 1983, Mr. Wypyszyk has been President
and Chief Executive Officer of Zuellig Group N.A., Inc. which owns all of
the capital stock of ZBI (See Security Ownership And Certain Beneficial
Owners And Management).
Peter Zuellig Age 48 Director since 1999
Mr. Zuellig has been a Director since June 1999. Mr. Zuellig has served as
Chief Executive Officer of Interpacific Holding, Limited, the holding
company for Zuellig Companies (other than Zuellig Group, N.A., Inc. and its
subsidiaries) for more than the past five years. Mr. Zuellig is also a
Director of Zatpack, Inc. and the Chairman and Director of Zuellig Group
N.A., Inc.
Executive Officers
The following sets forth the names of the executive officers of the Company
who are not Directors of the Company, their respective positions with the
Company and business experience and background.
Ralph L. Heimann became Chief Financial Officer of the Company in June
1999. Since 1987, Mr. Heimann has served as Chief Financial Officer of
ZGNA. Mr. Heimann has also served as President of Zuellig Botanicals, Inc.,
a subsidiary of ZGNA, which distributes raw botanical powders to
manufacturers of dietary supplements worldwide.
Philip H. Katz has served as President of Shuster Laboratories, Inc., since
January 1996. Prior to that he was the President of Shuster's Food and
Pharmaceutical division.
Brian Hufford has served as Executive Vice President of Manufacturing of
the Company since February, 1999. Prior to February 1999, Mr. Hufford
served as Executive Vice-President of Operations at Murdock, Madaus,
Schwabe, Inc., a large dietary supplement consumer products company for the
period from 1996 to 1999. Prior thereto Mr. Hufford was Senior Director -
Manufacturing of Schering-Plough Corporation.
Compliance with Section 16(a) of the Securities and Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
The Company's directors, executive officers and holders of more than 10% of
the Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the
Company common stock. Based solely upon a review of Forms 3, 4 and 5 and
amendments thereto furnished to the Company with respect to the fiscal year
ended April 30, 1999, to the best of the Company's knowledge, the Company's
directors, officers and holders of more than 10% of the Common Stock
complied with all Section 16(a) filing requirements.
ITEM 11. EXECUTIVE COMPENSATION
The following table contains information concerning annual and long-term
compensation for the chief executive officer during Fiscal 1999 and each of
the other four most highly compensated executive officers of the Company
who were serving as executive officers at the end of Fiscal 1998 (the
"Named Executive Officers") for services rendered in all capacities during
the fiscal years 1999, 1998, and 1997.
<TABLE>
Compensation Table
Long Term Compensation Awards
Restricted Securities
Name and Fiscal Annual Compensation Stock Underlying All Other
Principal Positions Year Salary ($) Bonus ($) Award(s) ($) Options(#) Compensation ($)
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull<F1> 1999 $200,000 - - 25,001<F2> -
Chief Executive Officer 1998 155,500 - - 17,500<F2> -
and Chairman 1997 155,500 - - 6,250<F2> -
Randy J. Daughenbaugh<F3> 1999 $145,000 - - 6,251<F4> -
Executive Vice Pres./Chief 1998 138,500 - - 3,575<F4> -
Technical Officer 1997 138,500 - - 2,275<F4> -
Brian Hufford<F5> 1999 $ 36,346<F6> - - - -
Executive Vice President
Manufacturing
Philip A. Katz 1999 $120,838 61,001<F7> - 2,174 3,495<F8>
President 1998 117,500 29,410<F7> - 1,000 4,212<F8>
Shuster Laboratories, Inc. 1997 117,500 22,057<F7> - 88 38,408<F8>
Martin C. Wehr<F9> 1999 $160,000 - - 12,501<F11> -
Chief Operating Officer 1998 140,000 $20,000<F10> $14,175<F10> 52,500<F11> $60,617<F12>
1997 35,000 - 10,350<F10> 50,000<F11 -
<FN>
<F1> As of June 11, 1999, Dr. Stull and Volker Wypyszyk have served as Co-Chief
Executive Officers of the Company. Additionally, Dr. Stull currently serves
as Chairman of the Board of the Company.
<F2> Of these shares, 25,001, 12,500 and 6,250 options were performance options based upon operating income objectives for
fiscal 1999, 1998 and 1997.
<F3> As of June 11, 1999, Mr. Daughenbaugh became a consultant to the Company.
<F4> Of these shares 6,251, 1,000 and 1,500 options were performance options based upon operative income objectives for fiscal
1999, 1998 and 1997.
<F5> Mr. Hufford commenced employment as Executive Vice President of Manufacturing of the Company on February 10, 1999.
<F6> As of April 30, 1999, Mr. Hufford received $36,346.21 in compensation.
<F7> The bonuses represent earn-out payments in connection with the Company's acquisition of Shuster Laboratories, Inc. in
1995. The fiscal year 1999 payment is the last payment due to Mr. Katz.
<F8> The bonuses represent phantom stock payments made to Mr. Katz for his phantom stock in Shuster. The Shuster Phantom Stock
Plan was a bonus plan through which the individuals earned an equity interest in Shuster. The payments were made monthly. The
individuals are also entitled to share in an earnout which may be paid to former shareholders of Shuster. No earnout was paid
during 1998, 1997, or 1996.
<F9> On June 11, 1999, the Company elected, in accordance with the employment agreement of Mr. Wehr, to terminate Mr. Wehr's
employment.
<F10> Represents grants of restricted stock based upon the fair market value on the date of grant and cash monies from
original employment agreement.
<F11> Of these shares, 12,051 and 9,375 options were performance options based upon operating income objectives for fiscal
1999 and 1998/1997.
<F12> Represents relocation expenses paid to Mr. Wehr.
</FN>
</TABLE>
<TABLE>
Option Grants in Last Fiscal Year
Number of Percentage of Potential Realizable Value
Securities Total Options Market at Assumed Annual Rate of
Underlying Granted to Exercise Price on Stock Price Appreciation
Options Employee in Price Date of Expiration for Option Term
Grated(#) Fiscal Year ($/sh) Grant Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C> <C>
Dean P. Stull<F1> 25,001<F2> 34.347% $23.380 $23.380 06/24/2008 367,603.62 931,579.73
Randall J. Daughenbaugh<F3> 6,251<F4> 8.587% $23.380 $23.380 06/24/2008 91,911.93 232,922.88
50<F5> 0.069% 15.250 15.250 12/30/2008 479.53 1,215.23
50<F5> 0.069% 10.750 10.750 04/06/2009 338.03 856.64
Brian E. Hufford<F6> -0- -0- -0- -0- -0- -0-
Philip H. Katz 2,174<F7> 2.987% $23.380 $23.380 06/24/2008 31,965.53 81,006.93
Martin C. Wehr<F8> 12,501<F9> 17.174% $23.380 $23.380 06/24/2008 183,809.15 465,808.50
<FN>
<F1> As of June 11, 1999, Dr. Stull and Volker Wypyszyk have served as
Co-Chief Executive Officer of the Company. Additionally, Dr. Stull currently
serves as and Chairman of the Board of the Company.
<F2> 5,000 options became immediately vested and exercisable on the date of
grant, June 24, 1998. As of June 11, 1999, the remaining 20,001 became
immediately vested and exercisable due to a change in control of the Company in
connection with the Company's acquisition of the Contributed Subsidiaries.
<F3> As of June 11, 1999, Mr. Daughenbaugh became consultant to the Company.
<F4> 1,250 options became immediately vested and exercisable on the date of
grant, June 24, 1998. As of June 11, 1999, the remaining 5,001 became
immediately vested and exercisable due to a change in control of the Company in
connection with the Company's acquisition of the Contributed Subsidiaries.
<F5> These options were granted to Mr. Daughenbaugh in connection with
patents registered and became immediately vested and exercisable upon the
date of their grant.
<F6> Mr. Hufford commenced employment as Executive Vice President of
Manufacturing of the Company on February 10, 1999.
<F7> As of June 11, 1999, 2,174 options became immediately vested and
exercisable due to a change in control of the Company in connection with the
Company's acquisition of the Contributed Subsidiaries.
<F8> On June 11, 1999, the Company elected, in accordance with the employment
agreement of Mr. Wehr, to terminate Mr. Wehr's employment.
<F9> 2,500 options became immediately vested and exercisable on the date of
grant, June 24, 1998. As of June 11, 1999, the remaining 10,001 became
immediately vested and exercisable due to a change in control of the Company
in connection with the Company's acquisition of the contributed subsidiaries.
</FN>
</TABLE>
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table shows with respect to the Company's Named Executive
Officers, (a) the number of shares exercised during the fiscal year, (b)
the dollar value realized upon exercise (c) the total number of unexercised
stock options and (d) the aggregate dollar value of in-the-money,
unexercised options held at the end of the fiscal year.
<TABLE>
Shares Number of Securities Underlying Value of Unexercised In-The-
Acquired on Value Unexercised Options at FY End (#) Money Options at FY End ($)
Exercise # Realized ($) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Dean P. Stull<F1> 0 $ - 29,235 37,501<F2> $ - $ -
Randall J. Daughenbaugh<F3> 0 $ - 17,333 7,728<F4> $ - $ -
Brian E. Hufford<F5> 0 $ - - - $ - $ -
Philip H. Katz 0 $ - 754 2,508<F6> $ - $ -
Martin C. Wehr<F7> 0 $ - 14,903 23,223<F8> $ - $ -
<FN>
<F1> As of June 11, 1999, Dr. Stull and Volker Wypyszyk have served as Co-Chief Executive Officers of the Company.
Additionally, Dr. Stull currently serves as Chairman of the Board of the Company.
<F2> As of June 11, 1999, 20,001 options became immediately vested and exercisable due to a change in control of the Company
in connection with the Company's acquisition of the Contributed Subsidiaries.
<F3> As of June 11, 1999, Mr. Daughenbaugh became consultant to the Company.
<F4> As of June 11, 1999, 5,001 options became immediately vested and exercisable due to a change in control of the Company
in connection with the Company's acquisition of the Contributed Subsidiaries.
<F5> Mr. Hufford was employed as Executive Vice President of Manufacturing of the Company on February 10, 1999.
<F6> As of June 11, 1999, 2,174 options became immediately vested and exercisable due to a change in control of the Company
in connection with the Company's acquisition of the Contributed Subsidiaries.
<F7> On June 11, 1999, the Company elected, in accordance with the employment agreement of Mr. Wehr, to terminate Mr. Wehr's
employment.
<F8> As of June 11, 1999, 10,001 options became immediately vested and exercisable due to a change in control of the Company
in connection with the Company's acquisition of the Contributed Subsidiaries.
</FN>
</TABLE>
The fair market value of Company Common Stock at April 30, 1999, measured
as the average between the high and low trade of Common Stock on such date,
was $2.313 per share.
Director Compensation
During fiscal 1999, the Company's non-employee directors as a group were granted
options to purchase a total of 4,474 shares of Common Stock for services
rendered to the Company at an average price of $22.87 per share (100% of
fair market value on the date of grant). Directors receive an option to
purchase 75 shares for Board service and options to purchase 38 shares for
attendance at each meeting of the Board, and each committee thereof. The
options are exercisable for a five-year period.
In May 1992, the Board of Directors approved a two-step plan to compensate
outside Directors. The plan includes options for Board and committee
service as discussed above, and an annual cash payment of $10,000 per
outside Director plus an annual payment of $2,500 for a committee chairman.
During fiscal 1999, the Company's five outside directors received cash
compensation of approximately $50,826.50 in the aggregate pursuant to this
plan.
Compensation Committee Interlocks and Insider Participation
During fiscal year ended April 30, 1999, Messrs. Coleman, Stanley J.
Cristol, Saydah and Bert M. Tolbert comprised the Company's Compensation
Committee. All were non-employee directors. None of the members of the
Compensation Committee have ever been officers of the Company.
Compensation Committee Report on Compensation of Executive Officers of The
Company
The Compensation Committee of the Board of Directors and the Company's
Chief Executive Officer have furnished the following joint report on
executive compensation. The specific responsibility of the Chief Executive
Officer to furnish information to the Compensation Committee has been
outlined below. During fiscal 1999, the Compensation Committee established
salaries and bonus compensation for the Chief Executive Officer, two Vice
Presidents, the Chief Financial Officer and the Corporate Secretary.
Executive Officer Compensation
The Committee has responsibility for making decisions with regards to
compensation and compensation policy. The Committee's first objective is to
provide a strong and direct link among shareholder value, Company
performance and executive compensation. The second objective is to promote
long-term, stable growth and development. The Committee believes that the
Company's corporate development is dependent on its ability to attract and
retain high quality people. The Chief Executive Officer's responsibility is
to evaluate for the Compensation Committee the individual performance of
the executive officers, other than himself. He is also asked to report on
the performance reviews of these officers to the Compensation Committee and
make suggestions of the percentage of discretionary cash and discretionary
stock bonuses to be awarded.
The Company's compensation program consists of three key elements: base
salary, short term discretionary bonuses and profit sharing, plus long term
discretionary incentive stock option awards. Compensation for the Company's
executive officers involves a high proportion of pay which is at risk, a
variable bonus based on individual performance, and stock options, which
directly relate a portion of the officer's compensation to the long-term
stock price appreciation realized by the Company's shareholders. The
executive officers also participate in a 401(k) retirement plan and a
medical insurance plan with other employees.
Base Salary. The Compensation Committee's policy is to provide compensation
competitive within the Denver/Boulder metropolitan area while giving
consideration to national compensation. The committee also considers the
salary recommendations and performance reviews submitted by the Chief
Executive Officer.
In evaluating the performance of the executive officers other than the Chief
Executive Officers, the committee considered individual leadership skills,
business development skills, management skills, external relations and
communication skills. The executive officers' individual contribution to
corporate financial results for the fiscal year, including revenue growth and
changes in net income and earnings per share, were also evaluated. In addition,
extraordinary management and supervisor responsibilities were taken into
consideration. The Compensation Committee then makes a subjective determination
with respect to compensation increases for the executive officers. The
Compensation Committee made no changes to the base salary of the named
executive officers during fiscal 1999.
Discretionary Cash Bonuses Paid in Fiscal 1999. During fiscal 1998, the
Compensation Committee developed a series of specific goal-oriented
compensation awards for fiscal 1999. Fiscal 1999 awards for these
executives were based on achieving operating income goals, which were not
met. After reviewing the Company's annual report and audited financial
statements for the fiscal year ended April 30, 1999, the Compensation
Committee awarded no cash bonuses for fiscal 1999.
The Compensation Committee instructs the Chief Executive Officer to
complete performance evaluations for each of the executive officers other
than himself. The performance evaluations by the Chief Executive Officer
consists of reports to the Compensation Committee, including
recommendations as to stock and cash bonuses to be awarded. In evaluating
these performance, the Chief Executive Officer measures leadership,
strategic planning, financial results, business development, management
skills, external relations and communication skills. The Compensation
Committee evaluates these performance reviews. Factors, other than the
report of the Chief Executive Officer, reviewed by the Compensation
Committee include increased management or supervisory responsibilities and
the direct impact of the departments supervised by those executive officers
on the net sales, operating income and earnings per share of the Company.
Stock Options. It is the Compensation Committee's policy that a significant
portion of the total compensation package for its executive officers will
be derived from stock options.
During any fiscal year, executive officers of the Company may receive
incentive stock options or non-qualified stock options based on
performance. Discretionary stock options distributed to the named executive
officers were determined by the Compensation Committee and were based upon
the same performance review criteria previously stated. The number of
options granted were based upon the individual executive's performance
during the fiscal year, anticipated future contributions based on that
performance, and the officer's ability to impact corporate financial
results. Additional factors considered by the Committee included increased
management or supervisory responsibilities and the direct impact of the
departments supervised by those executive officers on the net sales,
operating income and earnings per share of the Company. During fiscal 1999,
executive officers received stock options to purchase 46,027 shares at an
average price of $23.36.
Discretionary stock option awards granted to the named executives during
fiscal 1999, for fiscal 1998 performance, were determined based upon the
Chief Executive Officer's evaluation report to the Committee of individual
performances, plus the Compensation Committee's knowledge of the
performance of the senior executive officers.
The Compensation Committee regularly reviews other possible forms of
incentive compensation and modifies or supplements the existing programs
when appropriate. The stock awards continue the Committee's policy that
officers of the Company should have a strong motivation to enhance the
Company's stock value.
Chief Executive Officer Compensation
As Chief Executive Officer, Dr. Stull was compensated based on a review of
his performance by the Compensation Committee. The increase in Dr. Stull's base
salary and the number of options granted to him was based on a subjective
determination by the Compensation Committee of Dr. Stull's overall performance.
The key factors measured by the Committee in determining Dr. Stull's
compensation package was its assessment of his ability and dedication to
enhancing the long-term value of the Company.
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code")
limits to $1 million the amount of compensation deductible by a public
company paid to its Named Executive Officers. Because none of the Named
Executive Officers has compensation from the Company in excess of $1 million,
the Company has not yet formulated a policy with respect to the deduction
limitations of Section 162(m) of the Code.
Summary
The Compensation Committee will continue to review the Company's executive
compensation programs to assure that such programs are consistent with the
objective of providing competitive executive compensation which will permit
the Company to obtain and retain the services of those individuals
requisite to establishing shareholder value.
By the Compensation Committee
Dr. Bert M. Tolbert, Chairman
Dr. William E. Coleman, Director
Dr. Stanley J. Cristol, Director
Mr. Robert F. Saydah, Director
and by Dr. Dean P. Stull, Chief Executive Officer, for the limited
purposes stated above.
Employment Contracts
Stull Employment Agreement. On June 11, 1999, the Company and Dean P. Stull
entered into an employment agreement pursuant to which Mr. Stull receives
an annual base salary of $200,000 and incentive compensation as determined
by the Compensation Committee. Mr. Stull's employment agreement may be
terminated by the Company without cause provided that for a period of 24
months after such termination Mr. Stull receives an amount equal to his
salary, incentive compensation paid to him for the prior fiscal year and
benefits provided at termination.
Wypyszyk Employment Agreement. On June 11, 1999, the Company and Volker
Wypyszyk entered into an employment agreement pursuant to which Mr.
Wypyszyk receives an annual base salary of $200,000 and incentive
compensation as determined by the Compensation Committee. Mr. Wypyszyk's
employment agreement may be terminated by the Company without cause
provided that for a period of 24 months after such termination Mr. Wypyszyk
receives an amount equal to his salary, incentive compensation paid to him
for the prior fiscal year and the benefits provided at termination.
Heimann Employment Agreement. On June 11, 1999, the Company and Ralph L.
Heimann entered into an employment agreement pursuant to which Mr. Heimann
receives an annual base salary of $160,000 and incentive compensation as
determined by the Compensation Committee. Mr. Heimann's employment
agreement may be terminated by the Company without cause provided that for
a period of 12 months after such termination Mr. Heimann receives an amount
equal to his salary, incentive compensation paid to him for the prior
fiscal year and the benefits provided at termination.
Shareholder Return
The following chart compares the cumulative total return to shareholders
over the past five years for a holder of the Company's Common Stock against
the cumulative total return of the NASDAQ Stock Market-US Index and the S &
P Chemicals (Specialty) Index. The chart depicts the value on April 30,
1999, of a $100 investment made on April 30, 1994.
The value of a stock over time is affected by many factors, including the
Company's earnings. The decline in the stock price in August 1993, occurred
after Bristol-Myers Squibb Company failed to renew the Company's contract.
A primary objective of the Company since August 1993 has been to diversify
into natural ingredients markets. The Company's revenue mix is currently
made up of sales of natural ingredients, technical services and
pharmaceuticals.
Comparison of Five-Year Cumulative Total Return
Among Hauser, Inc., The NASDAQ Stock Market (U.S.) Index and the S&P
Chemicals (Specialty) Index
[Caption]
<TABLE>
Measurement period Hauser - NASDAQ - U.S. S&P Specialty
<C> <C> <C> <C>
4/94 100 100 100
4/95 54 116 111
4/96 78 166 135
4/97 78 175 262
4/98 95 262 356
4/99 30 356 160
</TABLE>
* $100 invested on 4/30/94 in stock or index - including reinvestment of
dividends. Fiscal Year Ending April 30.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of September 30, 1999, and giving effect
to the Merger, the number of shares of Common Stock owned by any person who
is known by Hauser to be the beneficial owner of more than 5% of Hauser's
voting securities, by all individual Directors, by the Company's Co-Chief
Executive Officers and the three executives with annual base salaries of
$100,000 or more, and by all Executive Officers and Directors as a group:
<TABLE>
Amount and Nature of
Name of Beneficial Owner Beneficial Ownership<F1> Percent of Class
Directors:
<S> <C> <C>
Dean P. Stull<F2> 104,728 2.0%
William E. Coleman<F3> 19,445 (*)
Robert F. Saydah<F4> 7,986 (*)
Rudolfo C. Bryce<F5> 113 (*)
Herbert Elish<F6> 113 (*)
James R. Mellor<F7> 113 (*)
Harvey L. Sperry<F8> 10,113 (*)
Volker Wypyszyk<F9> 625 (*)
Peter Zuellig<F10> 113 (*)
Executive Officers:
Ralph L. Heimann 0 (*)
Brian E. Hufford 0 (*)
Philip H. Katz<F11> 4,178 (*)
All Officers and Directors as a Group: (14 persons) 149,821 2.9%
5% Shareholders:
Fidelity Management & Research Company<F12> 288,825 5.6%
T. Rowe Price Associates<F13> 320,525 6.2%
ZBI<F14> 1,383,443 26.7%
ZGNA<F15> 1,131,908 22.0%
___________
* Indicates less than 1%.
<FN>
<F1> Includes the following number of shares which could be acquired within 60 days through the exercise of stock options
(including options which accelerated as a result of the Merger): Dr. Stull, 57,236 shares;
Mr. Saydah, 5,861 shares and all directors and officers as a group, 76,065 shares.
<F2> Their business address is 5555 Airport Boulevard, Boulder, CO 80301.
<F3> Includes 11,090 shares owned by Dr. Coleman directly, 1 share owned by CVM Equity Fund II, Ltd., of which Dr. Coleman is
a general partner; 1,174 shares owned by Colorado Venture Management, Inc., of which Dr. Coleman is Chairman; and shares which
could be acquired within 60 days through the exercise of options to purchase 7,181 shares held by CVM, Inc. Dr. Coleman's
address is Colorado Venture Management, Inc., 4845 Pearl East Circle, Suite 300, Boulder, CO 80301.
<F4> Mr. Saydah's address is Heidrick & Struggles, 2493 Biltmore Dr., Alamo, CA 94507.
<F5> Mr. Bryce's address is One Charlotte Hill Drive, Bernardsville, NJ 07924.
<F6> Mr. Elish's address is 4400 Forbes Avenue, Pittsburgh, PA 15231.
<F7> Mr. Mellor's address is 32161 South Coast Highway, Laguna Beach, CA 92651.
<F8> Mr. Sperry's address is 787 Seventh Ave., New York, NY 10019.
<F9> Mr. Wypyszyk's address is 2550 El Presidio St., Long Beach, CA 90810.
<F10> Mr. Zuellig's address is 18-F, The Hong Kong Club Building, 3A Charter Road, Central, Hong Kong.
<F11> Mr. Katz's address is Shuster, Inc., Quincy Research Park, 5 Hayward St., Quincy, MA 02171.
<F12> The business address for Fidelity Management & Research Company is 82 Devonshire Street, Boston, MA 02109.
<F13> The business address for T. Rowe Price Associates, Inc., is 100 E. Pratt Street, Baltimore, MD 21202.
<F14> ZBI is a wholly-owned subsidiary of ZGNA.
<F15> ZGNA is a wholly-owned subsidiary of Zatpack Inc. an international business company organized under the laws of the
British Virgin Islands ("Zatpack"). Zatpack has 100 shares of common stock issued and outstanding, which is divided into three
classes. 49 shares of Zatpack Class A common stock are held by the Stephen Zuellig Issue Trust for the benefit of Stephen
Zuellig's descendants. 49 shares of Zatpack Class B common stock are held by the Gilbert Zuellig Issue Trust for the benefit
of Gilbert Zuellig's descendants. 2 shares of Zatpack Class C common stock are held by the Peter Zuellig and Thomas Zuellig
Trust for the benefit of Peter Zuellig, the eldest son of Stephen Zuellig, and Thomas Zuellig, the eldest son of Gilbert
Zuellig. The trustee for each trust is the Bermuda Trust Company.
</FN>
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to an Inventory Purchase Agreement between the Company and Zuellig
Group N.A., Inc., dated December 8, 1998, the Company sold raw materials
and finished goods inventory to Zuellig Group N.A., Inc. for approximately
$3,000,000.
On June 11, 1999, the Company and Zuellig Group N.A., Inc. entered into an
Agreement to Acquire Powders Business from Zuellig Botanicals, Inc. (the
"Powders Option"). The Powders Option grants the Company the right to
purchase the powders business from Zuellig Botanicals, Inc., including
without limitation all assets related thereto and all associated
liabilities.
On June 11, 1999, the Company and Zuellig Botanicals, Inc. entered into an
Agreement Regarding Employees, pursuant to which certain employees will
provide sales and marketing services to Zuellig Botanicals, Inc. and the
Company and be employed and compensated by the Company and ZBI,
respectively, when performing such services.
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.
Dated: October 18, 1999
HAUSER, INC.
By: /s/ Dean P. Stull
Co-CEO/Chairman
By: /s/ Volker Wypyszyk
Co-CEO/President
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 Title Date
/s/ Dean P. Stull Chairman of the Board of Directors, 10/18/99
Co-Chief Executive Officer
(Principal Executive Officer)
/s/ Volker Wypyszyk Co-Chief Executive Officer, 10/18/99
President,(Principal Executive
Officer) and Director
/s/ Ralph L. Heimann Chief Financial Officer and 10/18/99
Treasurer (Principal Financial and
Accounting Officer)
/s/ Herbert Elish Director 10/18/99
/s/ James R. Mellor Director 10/18/99
/s/ Harvey Sperry Director 10/18/99
