<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
------------------------
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1995,
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 0-14333
ALL AMERICAN COMMUNICATIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-3803222
(STATE OF OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
808 WILSHIRE BOULEVARD, SANTA MONICA, CALIFORNIA 90401-1810
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (310) 656-1100
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $0.0001 PAR VALUE
COMMON STOCK, CLASS B, $0.0001 PAR VALUE
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
EXECUTIVE OFFICERS AND DIRECTORS
<TABLE>
<CAPTION>
NAME POSITION AGE
- -------------------------- ------------------------------------------- ----
<S> <C> <C>
Anthony J. Scotti** Chief Executive Officer and Chairman of the 56
Board
Myron I. Roth** President, Chief Operating Officer and 63
Director
Thomas Bradshaw** Chief Financial Officer, Senior Executive 53
Vice President and Director
Sydney D. Vinnedge Senior Executive Vice President and 52
Director
Benjamin J. Scotti Senior Executive Vice President; Executive 58
Vice President -- All American Music Group
and Director
Lawrence E. Lamattina Chief Executive Officer and 50
President -- All American/Fremantle
Television Group and Director
Gordon C. Luce*+ Director 70
R. Timothy O'Donnell*+ ++ Director 40
David A. Mount*+ ++ Director 52
Eugene P. Beard Director 61
</TABLE>
- ---------------
* Member of Stock Option Committee
** Member of Executive Committee
+ Member of Compensation Committee
++ Member of Audit Committee
Each of the persons listed above (other than Messrs. Lamattina, O'Donnell,
Mount and Beard) assumed the positions listed above on February 25, 1991, the
date on which Scotti Brothers Entertainment Industries, Inc. ("SBEI") merged
(the "Merger") into All American Television, Inc. ("AATV"), which was the legal
predecessor to the registrant, All American Communications, Inc. (the
"Company"). Prior to such date, Anthony J. Scotti and Mr. Vinnedge were already
directors of AATV.
ANTHONY J. SCOTTI was a co-founder of the Company and has been a director
of the Company since its inception in 1982. He became Chief Executive Officer
and Chairman of the Board on February 25, 1991. Mr. Scotti served as a
consultant to Carolco Pictures Inc. (motion picture production) and has been a
director of LIVE Entertainment, Inc. (entertainment software) since November
1988. Mr. Scotti was the non-executive Chairman of the Board of LIVE
Entertainment from November 1992 until his resignation in March 1996.
MYRON I. ROTH joined SBEI in December 1990 as President and Chief Operating
Officer, and he assumed the same titles and became a director of the Company on
February 25, 1991. Mr. Roth is a member of the Board of Directors of the Record
Industry Association of America.
THOMAS BRADSHAW was a director, Senior Executive Vice President and Chief
Financial Officer of SBEI from 1985 and, on February 25, 1991, he assumed the
same positions at the Company. In addition, Mr. Bradshaw was a director of LIVE
Entertainment, Inc. from December 1988 to November 1993.
SYDNEY D. VINNEDGE was a co-founder of the Company and has been a director
of the Company since its inception in 1982. Since February 25, 1991, Mr.
Vinnedge has served as Senior Executive Vice President of the Company.
BENJAMIN J. SCOTTI co-founded the predecessor to SBEI in 1974 and served as
Co-Chairman of SBEI until February 25, 1991. Since February 25, 1991, Mr. Scotti
has been Senior Executive Vice President of the
1
<PAGE> 3
Company, Senior Executive Vice President of All American Music Group (a
subsidiary of the Company) and a director of the Company. He is the brother of
Anthony J. Scotti.
LAWRENCE E. LAMATTINA became Chief Executive Officer and President of All
American/Fremantle Television Group, an operating division of the Company, on
August 3, 1994 and a director on October 12, 1994. Since May 1989, he has been
Chairman of the Board of Fremantle International, Inc. and Chairman and Chief
Executive Officer of EC TV, a division of The Interpublic Group of Companies,
Inc. ("IPG"). Mr. Lamattina also continues to act as a consultant to IPG with
respect to areas that are not competitive with the Company.
GORDON C. LUCE is a senior advisor to Eastman & Benirschke Financial Group
(financial planning and insurance brokerage), a position he has held from July
1990 to the present. Mr. Luce is a member of the Board of Directors of PS Group
(a diversified investment company) and Molecular Biosystems, Inc. (a medical
research enterprise) and is currently a member of the Board of Trustees of the
University of Southern California and the Chairman of Scripps Health. He became
a director of the Company on February 25, 1991. Mr. Luce was a director of
Carolco Pictures, Inc. until his resignation in November 1995; on November 10,
1995, Carolco Pictures filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code.
R. TIMOTHY O'DONNELL was elected to the Company's Board of Directors
effective January 2, 1992. He is President of Jefferson Capital Group, Ltd., a
privately held investment banking group co-founded by Mr. O'Donnell in September
1989. Mr. O'Donnell has been a director of LIVE Entertainment Inc. since 1988, a
director of Shorewood Packaging Corporation (packager for records, videos and
cassettes) since October 1991 and a director of Cinergi Pictures Entertainment
Inc. (motion picture production) since March 1994.
DAVID A. MOUNT was appointed to the Board of Directors on May 5, 1994. In
March 1995, Mr. Mount was named Chairman and Chief Executive Officer of Warner
Media Manufacturing and Distribution. Prior thereto, Mr. Mount had been
President and Chief Executive Officer of Warner/Elektra/Atlantic Corporation, a
division of Time Warner, Inc., since October 1993. Mr. Mount was President and
Chief Executive Officer of LIVE Entertainment Inc. from August 1988 through
September 1993. In addition, Mr. Mount served as a director of LIVE
Entertainment in 1989 and from January 1992 to the present. On February 2, 1993,
LIVE Entertainment filed a voluntary petition under Chapter 11 of the U.S.
Bankruptcy Code and emerged pursuant to a plan of reorganization on March 17,
1993. From August 1989 to June 1993, Mr. Mount was President of LIVE Home Video
Inc., a subsidiary of LIVE Entertainment, Inc. He was Chief Executive Officer of
LIVE Home Video, Inc. from August 1989 to October 1993.
EUGENE P. BEARD became a member of the Board of Directors on October 12,
1994. Mr. Beard has been the Vice Chairman -- Finance and Operations of IPG
since October 1995, was Executive Vice President -- Finance and Operations of
IPG prior to that time and has served as a director of IPG since 1982. Mr. Beard
is a member of the Board of Directors of Brown Brothers Harriman 59 Wall Street
Fund, Inc. (diversified investment fund), National Westminster Bancorp Inc.
(commercial bank) and Micrografx, Inc. (computer software).
IPG has entered into a voting agreement with certain management
stockholders of the Company (including Anthony J. Scotti) to vote for the
election of one member of the Company's Board of Directors nominated by IPG.
DIRECTORS' REMUNERATION
The Company does not pay any compensation to any person serving as a member
of the Board of Directors of the Company if such person is also an employee of
the Company. All outside directors are paid an annual fee of $25,000 for serving
as a director, except that Mr. Beard serves as a director without compensation
for such services. Non-employee directors receive automatic stock option grants
of 3,000 shares per year, with the exception of Mr. Beard who waived his right
to stock options.
2
<PAGE> 4
COMMITTEES OF THE BOARD OF DIRECTORS; ATTENDANCE
During the year ended December 31, 1995, there were six meetings of the
Board of Directors, and all members participated. To assist in carrying out its
duties and responsibilities, the Board of Directors of the Company has appointed
a Stock Option Committee to administer the Company's Incentive Stock Option
Plan, as amended, and the Company's 1994 Stock Incentive Plan (the "1994 Plan").
For the year ended December 31, 1995, the members of the Stock Option Committee
were R. Timothy O'Donnell, Gordon C. Luce and David A. Mount. During the year
ended December 31, 1995, the Stock Option Committee had one meeting, and all
members were present. The Board of Directors of the Company has appointed an
Executive Committee to assist the Board in the overall management of the
business and affairs of the Company. The members of the Executive Committee are
Anthony J. Scotti, Myron Roth and Thomas Bradshaw. During the year ended
December 31, 1995, the Executive Committee had no formal meetings. The Company
has an Audit Committee, the members of which are R. Timothy O'Donnell and David
A. Mount. For the year ended December 31, 1995, the Audit Committee held one
meeting, and both members participated. In 1994, the Board of Directors
established a Compensation Committee to assist in the establishing of executive
compensation and the performance goals of the Company and the executive
officers. The members of the Compensation Committee are Gordon C. Luce, R.
Timothy O'Donnell and David A. Mount. During the year ended December 31, 1995,
there was one meeting of the Compensation Committee, and all members were
present. In connection with the Company's Class B Common Stock offering in
December 1995, the Board of Directors appointed a Pricing Committee, consisting
of Anthony J. Scotti and R. Timothy O'Donnell, to assist in the pricing of such
stock. During the year ended December 31, 1995, the Pricing Committee met once,
and both members participated.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
executive officers and directors and persons who beneficially own more than 10%
of the company's stock to file initial reports of ownership and reports of
changes in ownership with the Securities and Exchange Commission ("SEC").
Executive officers, directors and greater than 10% beneficial owners are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms filed by them.
Based solely on a review of the copies of such forms furnished to the
Company and written representations from the executive officers and directors,
the Company believes that all Section 16(a) filing requirements applicable to
its executive officers, directors and greater than 10% beneficial owners were
complied with, except that (i) the following directors, Timothy O'Donnell, David
Mount and Gordon Luce, failed to file a Form 4 in July 1995 relating to the
vesting of 600 stock options in June 1995 held, respectively, by each of them,
and (ii) Benjamin Scotti, a director, failed to file a Form 4 in July 1995
relating to the vesting of 2,000 stock options in June 1995 held by him.
3
<PAGE> 5
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid or accrued by
the Company to the Chief Executive Officer and the four most highly compensated
executive officers of the Company who served in such capacities during fiscal
1995 (the "Named Executive Officers") for services rendered during each of the
last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION AWARDS
------------------------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
-------------------------- RESTRICTED UNDERLYING COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS STOCK AWARDS OPTIONS/SARS(#) SATION(1)
- -------------------------------- ---- -------- -------- ------------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Anthony J. Scotti 1995 $813,000 $ -- $ -- 100,000 $ --
Chief Executive Officer 1994 719,000 -- -- 100,000 --
1993 547,000 -- -- -- --
Myron I. Roth 1995 $425,000 $ 79,000 $ -- 50,000 $ --
President and Chief 1994 408,000 79,000 -- 50,000 --
Operating Officer 1993 389,000 79,000 -- -- --
Thomas Bradshaw 1995 $419,000 $ 43,000 $ -- 35,000 $ --
Chief Financial Officer 1994 399,000 43,000 -- 35,000 --
and Senior Executive Vice 1993 380,000 43,000 -- -- --
President
Sydney D. Vinnedge 1995 $396,000 $ 13,000 $ -- 6,000 $ --
Senior Executive Vice 1994 371,000 13,000 -- 6,000 --
President 1993 346,000 13,000 -- -- --
Lawrence E. Lamattina(2) 1995 $561,000 $550,000 $ -- 25,000 $ --
Chief Executive Officer and 1994 229,000 229,000 218,000(3) 150,000 --
President, All American/ 1993 -- -- -- -- --
Fremantle Television Group
</TABLE>
- ---------------
(1) The Named Executive Officers received compensation in the form of personal
benefits, including automobile allowances, premiums for health insurance,
disability insurance and life insurance, which did not exceed the lesser of
$50,000 or 10% of the total annual salary and bonus reported for each year.
(2) Mr. Lamattina's employment with the Company commenced on August 3, 1994.
(3) In accordance with his employment agreement dated August 3, 1994, Mr.
Lamattina was granted restricted stock awards ("RSAs") under the 1994 Plan,
as of July 6, 1994, for 30,000 shares of common stock, $0.0001 par value (as
a class, collectively, the "Common Stock"), with a vesting date of July 5,
1998. The shares have been valued using the closing bid price on July 6,
1994 of $7.25.
OPTION GRANTS IN 1995(4)
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES BASE PRICE PRESENT
NAME GRANTED(#) IN 1995 ($/SH)(1) EXPIRATION DATE VALUE(2)
- ------------------------------ ---------- ---------- ----------- ---------------- ----------
<S> <C> <C> <C> <C> <C>
Anthony J. Scotti............. 100,000(3) 21.91% $ 9.125 April 24, 2005 $479,874
Myron I. Roth................. 50,000(3) 10.95% $ 9.125 April 24, 2005 $239,937
Thomas Bradshaw............... 35,000(3) 7.67% $ 9.125 April 24, 2005 $167,956
Sydney D. Vinnedge............ 6,000(3) 1.31% $ 9.125 April 24, 2005 $ 28,792
Lawrence E. Lamattina......... 25,000(3) 5.48% $ 9.125 April 24, 2005 $119,969
</TABLE>
- ---------------
(1) Exercise price is based upon the closing bid price of the Company's Common
Stock on the date of grant.
4
<PAGE> 6
(2) Grant date present value is determined using the Black-Scholes option
valuation model.
(3) Each of these options vests in varying percentages based upon the
satisfaction of certain performance targets. None of these options had
vested as of December 31, 1995. All of these options became fully vested
subsequent to December 31, 1995 upon the Company's achievement of the
specified performance targets.
(4) Excludes all options granted in 1996 in connection with amendments of the
employment contracts of certain Named Executive Officers. See "-- Employment
Agreements."
OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES
The following table provides certain information concerning the exercise of
stock options and shows the number of shares covered by both exercisable and
non-exercisable stock options held as of the end of 1995. Also shown are values
for "in-the-money" options, which represent the positive difference between the
exercise price of such options and the price of the Common Stock at year end.
AGGREGATED OPTION EXERCISES DURING 1995 AND
OPTION VALUES ON DECEMBER 31, 1995
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1995 DECEMBER 31, 1995
ON VALUE (#) ($)
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- --------------------------------- -------- -------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Anthony J. Scotti................ -- -- --/200,000 $ --/$237,500
Myron I. Roth.................... -- -- --/100,000 $ --/$118,750
Thomas Bradshaw.................. -- -- --/ 70,000 $ --/ $83,125
Sydney D. Vinnedge............... -- -- --/ 12,000 $ --/ $14,250
Lawrence E. Lamattina............ -- -- 25,000/150,000 $ 59,375/$318,750
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with all of the Named
Executive Officers, Anthony J. Scotti, Thomas Bradshaw, Sydney D. Vinnedge,
Lawrence Lamattina and Myron Roth. The employment agreement with Mr. Scotti,
originally entered into in February 1991 and amended most recently in February
1996, provides that Mr. Scotti shall serve as Chief Executive Officer of the
Company through February 25, 2001 (unless earlier terminated in accordance with
the terms of such agreement), commencing at a base salary of $907,500 in 1996
and increasing by 10% per year (subject to a maximum base salary of $1,000,000
per year). Mr. Scotti is required to render his services on a full-time basis to
the Company, provided that he may devote such reasonable amount of time, as he
determines, to other business activities which may be conducted in the
entertainment industry. The term of the agreement may be terminated by the
Company for "good cause" (as defined) or by Mr. Scotti in the event of the
"Company's Material Breach" (as defined) or a "Change in Control" or other
"Event" as defined in the Company's 1994 Stock Incentive Plan (the "1994 Plan").
The employment agreement with Mr. Bradshaw, originally entered into in
February 1991 and amended most recently in February 1996, provides that Mr.
Bradshaw shall serve as Senior Executive Vice President, Finance and Chief
Financial Officer of the Company through February 25, 2001 (unless earlier
terminated), commencing at a base salary of $476,650 in 1996 and increasing by a
minimum of 6% per year. The five-year term employment agreement with Mr.
Vinnedge, originally entered into in February 1991, which provides that he will
serve as a Senior Executive Vice President of the Company, has been extended
through August 25, 1997, commencing at a base compensation of $250,000 per year,
plus contingent compensation of up to $250,000 per year at the Company's
discretion. The employment agreement with Mr. Lamattina, entered into in August
1994, provides that Mr. Lamattina shall serve as the Chief Executive Officer and
President of the All American/Fremantle Television Group through August 3, 1999
(unless earlier terminated), commencing
5
<PAGE> 7
at a base salary of $550,000 and increasing by 5% per year. His current salary
is $577,500. Mr. Lamattina is also entitled to receive annual incentive
compensation up to $550,000 per year if certain operating income targets are
achieved by the All American/Fremantle Television Group. Under Mr. Lamattina's
employment agreement, he is entitled to annual grants of options to purchase
25,000 shares of Common Stock. See "Security Ownership of Certain Beneficial
Owners and Management" for a description of the vesting of Mr. Lamattina's stock
options. The five-year term employment agreement for Mr. Roth, originally
entered into in February 1991, has expired, but he continues his employment with
the Company as President and Chief Operating Officer without an employment
agreement under substantially the same terms as those in effect in the last year
of his employment agreement. Mr. Roth's current salary is $425,000 per year.
Each of the Named Executive Officers is provided with an automobile expense
reimbursement allowance and an annual allowance to cover premiums for life,
health and disability insurance.
Under his employment agreement, prior to its amendment in February 1996,
Mr. Scotti was entitled to receive, as long-term incentive compensation, 100,000
annual stock option grants (from 1994 to 1999). In February 1996, subject to Mr.
Scotti relinquishing his remaining contractual right to future grants under his
employment agreement, the Company granted to Mr. Scotti options (under the 1994
Plan) to purchase 250,000 shares of Common Stock at the market price ($9.875 per
share) on the date of grant and options (under the 1991 Incentive Stock Option
Plan) to purchase 50,000 shares of Common Stock at 110% of the fair market value
($10.8625 per share) on the date of grant. All such stock options vested on the
date of grant in February 1996.
In addition, in connection with the extension of Mr. Scotti's employment
agreement, the Option Committee granted to Mr. Scotti, subject to shareholder
ratification, options (under the 1994 Plan) to purchase 1,200,000 shares of
Class B Common Stock at an exercise price equal to the market price ($7.875 per
share) on the date of grant. These options vest subject to Mr. Scotti's staying
in the continuous employment of the Company for a period of 9 years and 9 months
from the original date of his employment agreement and are entitled to
accelerated vesting in four equal annual tranches upon the achievement of
certain operating income targets set annually by the Option Committee or the
Board of Directors or earlier upon the occurrence, with certain exceptions, of a
"Change in Control" or other "Event" (as defined in the Plan). The Company has
also agreed to reimburse Mr. Scotti for any federal, state or local excise tax
("Excise Tax"), and any additional taxes to which he may be subject, on any
payments to Mr. Scotti from the Company as a result of accelerated vesting of
this option grant upon a "Change in Control" or otherwise, up to a maximum
reimbursement equal to two times the amount of such Excise Tax.
As part of the amendment of Mr. Bradshaw's employment agreement, the
Company granted to Mr. Bradshaw options to purchase 250,000 shares of Class B
Common Stock at the market price ($7.875 per share) on the date of grant. One
hundred thousand of such stock options vested on the date of grant in February
1996. The remainder vest in a substantially similar manner to the vesting
provisions described above with respect to Mr. Scotti's stock options to
purchase Class B Common Stock.
6
<PAGE> 8
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of April 19, 1996 concerning
the beneficial ownership of certain securities of the Company by (i) each person
who is known to the Company to be a beneficial owner of more than 5% of each
class of the outstanding common stock of the Company, (ii) each of the current
directors of the Company, and (iii) all current directors and Named Executive
Officers of the Company as a group. Unless otherwise specified, the address of
each beneficial owner listed below is 808 Wilshire Boulevard, Santa Monica,
California 90401.
<TABLE>
<CAPTION>
PERCENT OF CLASS B PERCENT OF CLASS B
COMMON STOCK COMMON STOCK COMMON STOCK COMMON STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED (1) OWNED OWNED (1) OWNED
------------ ------------ ------------ ------------------
<S> <C> <C> <C> <C>
Anthony J. Scotti(2)........................... 2,980,229 45.89% -- --
Benjamin J. Scotti(3).......................... 1,441,995 24.92% -- --
Myron I. Roth(4)............................... 440,850 7.50% -- --
Thomas Bradshaw(5)............................. 385,850 6.60% -- --
Sydney D. Vinnedge(6).......................... 153,975 2.66% -- --
Lawrence E. Lamattina (7)...................... 105,000 1.79% -- --
Gordon C. Luce(8).............................. 2,800 * -- --
David A. Mount(8).............................. 1,800 * -- --
R. Timothy O'Donnell(9)........................ 97,400 1.67% --
Jefferson Capital Group, Ltd.
One James Center
901 East Cary Street
Suite 1400
Richmond, Virginia 23219
Eugene P. Beard(10)............................ -- -- -- --
The Interpublic Group of
Companies, Inc.
1271 Avenue of the Americas
New York, New York 10020
The Interpublic Group of
Companies, Inc.(11),(12)..................... 630,000 10.45% 2,520,000 44.06%
1271 Avenue of the Americas
New York, New York 10020
FMR Corp.(13).................................. 628,403 9.48% -- --
82 Devonshire Street
Boston, Massachusetts 02109
Franklin Resources, Inc.(14) 366,957 5.74% -- --
777 Mariners Island Boulevard
San Mateo, California 94404
Janus Capital Corp.(15) -- -- 500,000 8.74%
100 Fillmore Street, Suite 300
Denver, Colorado 80206
All Directors and Named........................ 4,571,574 69.73% -- --
Executive Officers as a group (10 persons)
</TABLE>
- ---------------
* less than 1%
(1) Amounts include options and other securities exercisable or convertible
into shares of Common Stock held by such beneficial owner, unless such
securities are not convertible or exercisable within 60 days.
(2) Includes 1,275,538 shares beneficially owned by Messrs. Roth, Bradshaw,
Vinnedge, Lamattina and certain employees which Anthony J. Scotti has a
proxy to vote. See "Certain Relationships and Related Transactions."
Includes vested performance options to purchase 200,000 shares of Common
Stock. Further includes 8,696 shares of Common Stock issuable upon
conversion of the Company's convertible
7
<PAGE> 9
subordinated notes registered under a registration statement. Does not
include options granted to Mr. Scotti in February 1996. See "-- Employment
Agreements."
(3) Includes 6,000 time vesting options which have vested. Excludes 14,000 time
vesting options not yet vested or subject to vesting in the next 60 days.
Does not include options granted to Mr. Scotti in February 1996. See
"-- Employment Agreements."
(4) 415,850 of such shares are subject to a voting proxy granted to Anthony J.
Scotti. Includes vested performance options to purchase 100,000 shares of
Common Stock.
(5) 385,850 of such shares are subject to a voting proxy granted to Anthony J.
Scotti. Includes vested performance options to purchase 70,000 shares of
Common Stock. Does not include options granted to Mr. Bradshaw in February
1996. See "-- Employment Agreements."
(6) 120,225 of such shares are subject to a voting proxy granted to Anthony J.
Scotti. Includes vested performance options to purchase 12,000 shares of
Common Stock.
(7) Mr. Lamattina owns 30,000 shares of restricted Common Stock which vest in
July 1998, is vested in time vesting options to purchase 25,000 shares of
Common Stock and is vested in performance options to purchase 50,000 shares
of Common Stock. All such shares are subject to a voting proxy granted to
Anthony J. Scotti. Excludes 100,000 time vesting options not yet vested or
subject to vesting in the next 60 days.
(8) Includes 1,800 time vesting options which have vested. Excludes 4,200 time
vesting options not yet vested or subject to vesting in the next 60 days.
(9) Mr. O'Donnell owns 33,100 shares of Common Stock and his affiliate,
Jefferson Capital Group, Ltd., owns warrants to purchase 62,500 shares.
Includes 1,800 time vesting options which have vested. Excludes 4,200 time
vesting options not yet vested or subject to vesting in the next 60 days.
(10) Mr. Beard was appointed to the Board of Directors on October 12, 1994 to
fill a vacancy. Mr. Beard does not own any shares directly and disclaims
beneficial ownership of the 630,000 shares of Common Stock and the
2,520,000 shares of Class B Common Stock owned by IPG.
(11) As disclosed on a Schedule 13D, dated August 12, 1994.
(12) Represents approximately 26.3% (approximately 19% on a fully-diluted basis)
of common stock when Common Stock and Class B Common Stock are aggregated
as one class.
(13) As disclosed on a Schedule 13G, dated January 10, 1996; includes shares
issuable upon conversion of the Company's convertible subordinated notes
registered under a registration statement.
(14) As disclosed on a Schedule 13G, dated February 13, 1996.
(15) As disclosed on a Schedule 13G, dated February 8, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1995, the Company entered into a domestic distribution
agreement for recorded music with Warner/Elektra/Atlantic Corporation, a
division of Time Warner, Inc. ("WEA"). A member of the Company's Board of
Directors is currently Chairman and Chief Executive Officer of Warner Media
Manufacturing and Distribution and was previously President and Chief Executive
Officer of WEA.
In October 1995, in order to further strengthen its position in the game
show business, the Company formed a 50/50 joint venture (the "LLC") with The
Interpublic Group of Companies, Inc. ("IPG"), the holder of more than 5% of the
Company's Common Stock, and the LLC acquired substantially all of the assets of
Mark Goodson Productions, L.P. and a related entity, including ownership of
rights to approximately 45 Goodson game show formats, including The Price Is
Right, and a tape library of approximately 17,000 hours of programming and
30,000 broadcast episodes. IPG and the Company, effective January 1, 1996,
entered into an agreement pursuant to which the Company purchased IPG's 50%
interest in the LLC for: (i) $12.4 million plus accrued interest thereon at a
rate of 7% per annum from January 1, 1996 to April 17, 1996 (the "Closing
Date"); (ii) the issuance of a subordinated note in the amount of $12.5 million
due 12 months from the Closing Date, subject to acceleration upon either a
"Change of Control" (as defined)
8
<PAGE> 10
or the acceleration of the term loan (the "Term Loan") provided under the
Company's credit facility with its primary lender, plus accrued interest thereon
at a rate of 7% per annum from January 1, 1996; and (iii) the issuance of a
subordinated note in the amount of $2.8 million, yielding interest at the rate
of 7% per annum from January 1, 1996 representing IPG's 50% share of the LLC's
earnings through December 31, 1995, as defined, with $.7 million due 30 days
from the Closing Date and the balance due 30 days after maturity of the Term
Loan (December 31, 1998) and subject to acceleration upon a "Change of Control"
(as defined), or the acceleration of the Term Loan.
As of January 1995, the Company entered into an agreement to engage the
services of Jefferson Capital Group, Ltd. ("JCG") to provide investment banking
services to the Company for the term of one year, with automatic one year
extensions but with both parties retaining the right to terminate such services
upon 30 days' written notice. R. Timothy O'Donnell, a member of the Company's
Board of Directors, is the President and a significant stockholder of JCG. The
agreement is further subject to termination upon the resignation or non-election
of Mr. O'Donnell as a director of the Company. It provides for annual
compensation of $25,000 per year, prorated for any partial year. The Company has
also agreed to indemnify JCG against any liabilities incurred by it in
connection with the services provided, except due to JCG's gross negligence or
willful misconduct. JCG's services for 1995 were provided solely with respect to
the Company's Class B Common Stock offering, including advice regarding
valuation and pricing of the transaction.
In October 1994, the Company provided a loan of $250,000 to Thomas
Bradshaw. Such loan is secured by a pledge of shares of Common Stock of the
Company owned by Mr. Bradshaw, bears interest at a rate equal to a market rate
determined by reference to the Company's working capital line (8%) and has been
extended to mature upon the expiration of Mr. Bradshaw's current employment
agreement (February 2001).
SBEI currently leases, from month to month, a building from Anthony J.
Scotti and Benjamin J. Scotti at a cost to SBEI of approximately $4,300 per
month, which the Company believes is a market rate. This building is used for
office and warehouse space for the Company's recorded music operations.
The Company believes that the terms of the transactions described above are
substantially comparable to those that would have been obtainable in similar or
analogous transactions with unaffiliated parties.
MANAGEMENT STOCKHOLDERS AGREEMENT
The Company has entered into a stockholders' agreement with Anthony J.
Scotti, Benjamin J. Scotti, Myron Roth, Thomas Bradshaw, George Back, Joseph E.
Kovacs and Sydney D. Vinnedge (the "Management Stockholders Agreement"),
pursuant to which (i) each of Messrs. Roth, Bradshaw and Vinnedge granted (a) to
Anthony J. Scotti and Benjamin J. Scotti a right of first refusal on all shares
of the Company's Common Stock owned by Messrs. Roth and Bradshaw immediately
after the Merger and the 108,225 shares received by Mr. Vinnedge in the Merger
for shares of SBEI Common Stock owned by him and a right to purchase all such
shares upon termination of their employment for a reason other than "cause" (as
defined in their respective employment agreements), and (b) to Anthony J. Scotti
an irrevocable proxy to vote substantially all such shares until August 25,
1996; and (ii) each of the individuals was granted certain registration rights
for such shares owned by him. As a result of such rights, in the event of any
public offering, each of such individuals could cause the Company to register
all of such shares of Common Stock owned by him, which would permit each such
individual to sell his shares in the public market. The proxy granted to Anthony
J. Scotti gives him the ability to control the voting of 2,235,920 shares of the
5,779,653 shares (or approximately 39%) of the voting Common Stock outstanding.
Additionally, Messrs. Roth, Bradshaw and Vinnedge have granted to Anthony J.
Scotti an irrevocable proxy to vote all shares of Common Stock acquired upon
exercise of their options to purchase an aggregate of 182,000 shares of Common
Stock.
Lawrence E. Lamattina, David Champtaloup and Doug C. Gluck have granted to
Anthony J. Scotti an irrevocable proxy to vote all shares of Common Stock
acquired upon exercise of their options to purchase an aggregate of 236,500
shares of Common Stock and, in Mr. Lamattina's case, 30,000 shares of restricted
stock granted pursuant to the 1994 Plan.
9
<PAGE> 11
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly cause this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: June 18, 1996
ALL AMERICAN COMMUNICATIONS, INC.
By: /s/ ANTHONY J. SCOTTI
------------------------------------
Anthony J. Scotti
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ ANTHONY J. SCOTTI Chairman of the Board and June 18, 1996
- ----------------------------------------------- Chief Executive Officer
Anthony J. Scotti (principal executive
officer)
/s/ THOMAS BRADSHAW Director, Chief Financial June 18, 1996
- ----------------------------------------------- Officer and Treasurer
Thomas Bradshaw (principal financial
officer and principal
accounting officer)
Director June , 1996
- -----------------------------------------------
Eugene Beard
/s/ LAWRENCE E. LAMATTINA Director June 18, 1996
- -----------------------------------------------
Lawrence E. Lamattina
/s/ GORDON C. LUCE Director June 18, 1996
- -----------------------------------------------
Gordon C. Luce
/s/ DAVID A. MOUNT Director June 18, 1996
- -----------------------------------------------
David A. Mount
/s/ R. TIMOTHY O'DONNELL Director June 18, 1996
- -----------------------------------------------
R. Timothy O'Donnell
/s/ MYRON I. ROTH Director June 18, 1996
- -----------------------------------------------
Myron I. Roth
/s/ BENJAMIN J. SCOTTI Director June 18, 1996
- -----------------------------------------------
Benjamin J. Scotti
/s/ SYDNEY D. VINNEDGE Director June 18, 1996
- -----------------------------------------------
Sydney D. Vinnedge
</TABLE>
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1995 AND THE CONSOLIDATED STATEMENT
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 20,094
<SECURITIES> 0
<RECEIVABLES> 118,561
<ALLOWANCES> 2,980
<INVENTORY> 75,662
<CURRENT-ASSETS> 0
<PP&E> 8,235
<DEPRECIATION> 3,709
<TOTAL-ASSETS> 301,582
<CURRENT-LIABILITIES> 0
<BONDS> 134,982
0
0
<COMMON> 2
<OTHER-SE> 68,278
<TOTAL-LIABILITY-AND-EQUITY> 301,582
<SALES> 22,026
<TOTAL-REVENUES> 228,760
<CGS> 15,803
<TOTAL-COSTS> 204,669
<OTHER-EXPENSES> 2,399
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,959
<INCOME-PRETAX> 12,497
<INCOME-TAX> 5,249
<INCOME-CONTINUING> 7,248
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,248
<EPS-PRIMARY> .87
<EPS-DILUTED> .71
</TABLE>
