<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 COMMISSION FILE NO 0-21522
WILLAMETTE VALLEY VINEYARDS, INC.
(Name of Small Business Registrant in Its Charter)
OREGON 93-0981021
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
8800 ENCHANTED WAY, S.E.
TURNER, OR 97392
(Address of principal executive offices,
including zip code)
(503) 231-7616
(Registrant's telephone number, including area code)
________________________________
Securities registered pursuant to Section 12(b) of the Act: Common Stock
Securities registered pursuant to Section 12(g) of the Act: None
Check 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 past 12
months (or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. YES [X] NO [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this Form 10-KSB [X].
AS OF DECEMBER 31, 1996
-----------------------
Registrant's revenues for its most recent fiscal year: $ 4,235,020
Aggregate market value of the voting stock held by
non-affiliates of the Registrant based upon the closing price
on February 28, 1997, as reported on NASDAQ: $8,880,231
Number of shares of Common Stock outstanding: 3,785,356
Transitional Small Business Disclosure Format: YES [ ] No [X]
<PAGE>
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of the Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1996, as set forth in the pages attached
hereto:
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The directors and executive officers of the Company, and their ages are as
follows:
<TABLE>
<CAPTION>
NAME POSITION(S) AGE
---- ----------- ---
<S> <C> <C>
James W. Bernau Chairperson of the Board,
President, Secretary and Director 43
Donald Voorhies Vice President and Director 73
James Ellis(1) Director 52
Betty M. O'Brien(1) Director 54
Daniel S. Smith Director 57
Delna L. Jones(2)(3) Director 57
Stan G. Turel(2)(3) Director 49
Kevin R. Chambers General Manager 41
</TABLE>
_______________________
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Affiliated Transaction Committee.
All directors hold office until the next annual meeting of Shareholders or
until their successors have been elected and qualified. Executive officers are
appointed by the Board of Directors and serve at the pleasure of the Board of
Directors. Set forth below is additional information as to each director and
executive officer of the Company.
JAMES W. BERNAU. Mr. Bernau has been President and Chairperson of the
Board of Directors of the Company since its inception in May 1988. He is also
the President and Chairperson of the Board of Directors for five other public
companies and has held these positions since the dates indicated: Nor'Wester
Brewing Company, Inc. (formerly Willamette Valley Brewing Company), brewer of
Nor'Wester ales produced principally at its microbrewery located in Portland,
Oregon ("Nor'Wester") (since December 1992); Willamette Valley, Inc.
Microbreweries Across America, a microbrewery development company formed by Mr.
Bernau in 1993 to establish microbreweries in strategic locations throughout
America
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("WVI") (since December 1993); and three majority-owned subsidiaries of
WVI: Aviator Ales, Inc., brewer of Aviator Ales at its microbrewery located in
Woodinville, Washington ("Aviator Ales") (since February 1994); Mile High
Brewing Company, brewer of Timberline Ales at its microbrewery located in
Denver, Colorado ("Mile High Brewing") (since June 1994); and Bayhawk Ales,
Inc., brewer of Bayhawk Ales at its showcase microbrewery in Irvine, California
("Bayhawk Ales") (since February 1994). Mr. Bernau also serves as one of three
managers of the North Country Joint Venture LLC, a wholly-owned subsidiary of
Nor'Wester and brewer of North Country ales at its microbrewery in Saratoga
Springs, New York (since January 1996). Mr. Bernau began this alliance of
consumer/investor owned companies by first co-founding the Company in 1988 with
Director Donald Voorhies. From 1981 to September 1989, Mr. Bernau was Director
of the Oregon Chapter of the National Federation of Independent Businesses
("NFIB"), an association of 15,000 independent businesses in Oregon. While at
NFIB, his responsibilities primarily involved communicating with association
members and lobbying the Oregon state legislature regarding issues impacting the
members.
DONALD VOORHIES. Mr. Voorhies has served the Company as Vice President and
a Director since its inception in May 1988. Mr. Voorhies has also served as a
Director of Nor'Wester since January 1993, as a Director of WVI since April
1995, and as a director of Bayhawk Ales since 1996. From 1981 to November 1995,
Mr. Voorhies owned and managed a 30-acre vineyard, Salem Hills Vineyard, which
he developed from raw land. Prior to his retirement in 1983, Mr. Voorhies was
employed by the General Electric Company as Sales Manager of the Lighting
Products Division for the Pacific Northwest region. Mr. Voorhies holds a B.S.
in Electrical Engineering from University of California-Berkeley. He is a
former Superintendent of the Wine Division of the Oregon State Fair, which
conducts one of the West Coast's major, annual commercial wine competitions.
Currently, Mr. Voorhies serves as liaison between the Oregon Winegrowers
Associations and the Oregon Wine Advisory Board.
BETTY M. O'BRIEN. Ms. O'Brien has served as a Director since July 1991.
Ms. O'Brien has been employed by Willamette University as its Director of News
and Publications since 1988. Ms. O'Brien is a partner in Elton Vineyards, a
commercial vineyard located in Eola Hills in Yamhill County, Oregon. She is a
member of the Oregon Winegrowers Association having previously served as its
President and Treasurer as well as a director.
JAMES L. ELLIS. Mr. Ellis has served as a Director since July 1991. Mr.
Ellis has served as the Company's Director of Human Resources since January
1993; he also serves in that capacity for each of the Company's affiliates,
Nor'Wester since May 1993 and WVI since April 1994. From 1990 to 1992,
Mr. Ellis was a partner in Kenneth L. Fisher, PhD & Associates, a management
consulting firm. From 1980 to 1990, Mr. Ellis was Vice President and General
Manager of R.A. Kevane & Associates, a Pacific Northwest personnel consulting
firm. From 1962 to 1979, Mr. Ellis was a member of and administrator for the
Christian Brothers of California, owner of Mont La Salle Vineyards and producer
of Christian Brothers wines and brandy.
DAN SMITH. Mr. Smith has served as a Director since July 1991. Since
1973, Mr. Smith has been an owner in and the manager of Danco Company, a
commercial refrigeration business. Mr. Smith owns 65 acres of commercial
vineyards near Eugene, Oregon.
DELNA JONES. Ms. Jones has served as a Director since November 1994. Ms.
Jones has served as project director for the CAPITAL Center, an education and
business consortium. From 1985 to 1990 Ms. Jones served as Director of Economic
Development with US West Communications. Beginning in 1982, she was elected six
times to the Oregon House as the State Representative for District 6. During
her tenure, she served as the Assistant Majority Leader; she also chaired the
Revenue and School Finance committee, and served on Legislative Rules and
Reorganization committee and the Business and
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Consumer Affairs committee. In addition, Ms. Jones presently serves on many
community and business boards and advisory panels.
STAN G. TUREL. Mr. Turel has served as a Director since November of 1994.
Mr. Turel is part owner and the CEO of Columbia Turel, Inc. (formerly Columbia
Bookkeeping, Inc.) a position he has held since 1992. Columbia Turel, Inc. has
sixteen offices in Oregon and Washington, servicing 4,000 small business and
26,000 tax clients annually. Mr. Turel is a licensed tax consultant, a member
of the National Association of Public Accountants, a private pilot, and a former
delegate to the White House Conference on Small Business. In addition, Mr.
Turel serves his community on a number of advisory boards and panels.
KEVIN R. CHAMBERS. Mr. Chambers was appointed as General Manager of the
Company's winery on May 1, 1996. From October 1995 until April 1996, Mr.
Chambers served as Vice President of Marketing and Sales for Nor'Wester.
Mr. Chambers served as Director of Sales and Marketing for WVI from January 1995
to October 1995 and in this capacity he also provided sales and marketing
services to the Company under a Management Services Agreement between the
Company and WVI. From February 1994 to December 1994, Mr. Chambers served as
Sales Manager for the Company and Nor'Wester. From August 1989 to January 1994,
Mr. Chambers served as the Marketing Director for LeCep II, Inc., a wine
producer. During his first decade in the wine business, he managed retail and
wholesale operations in Eugene, Oregon. For nearly eight years Mr. Chambers
wrote a self-syndicated wine column, as well as feature articles for national
wine publications. He has extensive experience as a wine judge at national and
regional competitions, such as the American Wine Competition in New York City
and the Oregon State Fair. Mr. Chambers, and his family, farm 17 acres of
premium wine grapes four miles west of Carlton, Oregon. Mr. Chambers holds a
Bachelors Degree in Telecommunications and Journalism from the University of
Oregon.
BOARD OF DIRECTORS COMMITTEES. The Board of Directors acts as a nominating
committee for selecting nominees for election as directors. The Board of
Directors has appointed a standing Audit Committee which, during the year ended
December 31, 1996, conducted one meeting. The new members of the Audit
Committee will be appointed at the next Board of Directors meeting. The Audit
Committee reviews the scope of the independent annual audit, the independent
public accountants' letter to the Board of Directors concerning the
effectiveness of the Company's internal financial and accounting controls and
the Board of Directors' response to that letter, if deemed necessary. The Board
of Directors also has appointed a Compensation Committee which reviews executive
compensation and makes recommendations to the full Board regarding changes in
compensation, and also administers the Company's 1992 Stock Incentive Plan.
During the fiscal year ended December 31, 1996, the Compensation Committee held
three meetings. The members of the Compensation Committee currently are
James L. Ellis and Betty M. O'Brien. In 1994, the Board of Directors created an
Affiliated Transactions Committee. The Affiliated Transactions Committee
reviews transactions deemed to involve a conflict of interest between the
Company and its affiliates as determined by the committee. For a transaction to
be valid, the transaction must be authorized, approved or ratified by the
members of the Affiliated Transactions Committee. The members of the Affiliated
Transactions Committee currently are Delna L. Jones and Stan G. Turel. The
Affiliated Transactions Committee held no meeting in 1996.
During 1996 the Company's Board of Directors held five meetings, all
incumbent directors attended more than 75% of the aggregate of the total number
of meetings held by the Board of Directors and the total number of meetings held
by all committees of the Board on which he or she served during 1996.
The members of the Company's Board of Directors are not compensated for
their service on the Board.
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<PAGE>
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
compensation paid or accrued by the Company, to or on behalf of the Company's
Chief Executive Officer, James W. Bernau (the "Named Executive Officer") for the
years ending December 31, 1996, 1995 and 1994.
NAME AND PRINCIPLE POSITION YEAR ANNUAL COMPENSATION
SALARY($) BONUS
James W. Bernau 1994 $10,900 --
President and Chairperson of 1995 3,040 --
the Board of Directors 1996 6,500 --
As discussed under "Directors," Mr. Bernau serves as the President of each
of the Company, Nor'Wester, WVI, Aviator Ales, Mile High Brewing, Bayhawk Ales
and North Country. Each of these companies pays a pro rata portion of
Mr. Bernau's monthly salary based on the amount of time which Mr. Bernau has
devoted to the respective company's business in that month. It is anticipated
that Mr. Bernau will spend approximately 15% of his time in service to the
Company in future periods. In addition to his salary, Mr. Bernau may receive an
annual bonus from each company based on the respective company's performance and
Mr. Bernau's contribution to such company as determined by the company's board
of directors.
BERNAU EMPLOYMENT AGREEMENT
The Company and Mr. Bernau are parties to an employment agreement dated
August 3, 1988 and amended February 24, 1997. Under the amended agreement Mr.
Bernau is paid an annual salary of $29,000 with annual increases tied to
increases in the consumer price index. Pursuant to the terms of the
employment agreement, the Company must use its best efforts to provide Mr.
Bernau with housing on the Company's property. Mr. Bernau and his family
will live in the house free of rent and must continue to reside there for the
duration of his employment in order to provide additional security and
lock-up services for late evening events at the Winery and Vineyard. The
employment agreement provides that Mr. Bernau's employment may be terminated
only for cause which is defined as non-performance of his duties or
conviction of a crime.
STOCK OPTIONS
In order to reward performance and retain high-quality employees the
Company often grants stock options. The Company does not grant shares of stock.
These options are offered at the closing price as reported by Nasdaq Small Cap
Market at the time the grant is executed. The options vest to the employees
over time. Upon termination of an employment agreement, any and all unvested
options return to the Company.
No stock options were granted to the Named Executive Officer during the
year ended December 31, 1996, under the Company's 1992 Stock Incentive Plan.
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<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information, with respect to the Named
Executive Officer, concerning the exercise options during the last fiscal year
and unexercised options held as of December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FY-END AT FY-END(2)
ACQUIRED VALUE
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
James W. Bernau -0- -0- $15,000(3) -0- -0- -0-
</TABLE>
(1) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(2) Options are "in the money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The amounts set forth represent the difference between the fair
market value of the securities underlying the options on December 31, 1996
($2.75 per share based on the Nasdaq closing price for the Company's Common
Stock on that date), and the exercise price of the option ($3.42 per
share), multiplied by the applicable number of options.
(3) Represents a 15,000 share warrant exercisable at $3.42 per share issued to
Mr. Bernau in 1992. See "Certain Transactions."
SECTION 16 REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's directors and officers, and persons who own more
than 10% of a registered class of the Company's equity securities, to file
initial reports of ownership and reports of changes in ownership with the
Securities and Exchange Commission. Such persons also are required to furnish
the Company with copies of all Section 16(a) reports they file. The Company
believes that all filing requirements applicable to its directors, officers and
persons who own more than 10% of the Company's Common Stock have been complied
with for 1996.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of March 31, 1997, by each
(i) person who beneficially owns more than 5% of the Company's Common Stock (ii)
Director of the Company and (iii) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
-------------------------
PERCENT OF
NUMBER OF OUTSTANDING
SHARES STOCK
--------- ------------
<S> <C> <C>
James W. Bernau
2545 Cloverdale Road
Turner, Oregon 97392 . . . . . . . . 1,180,506(1) 31.2%
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Donald Voorhies
1715 Wickshire Court S.E.
Salem, Oregon 97302. . . . . . . . . 261,617 6.9%
James L. Ellis
7850 S.E. King Road
Milwaukie, OR 97222 . . . . . . . . 9,500 **
Delna Jones
P.O. Box 5969
Aloha, OR 97006 . . . . . . . . . . -- --
Betty M. O'Brien
22500 Ingram Lane, N.W.
Salem, OR 97304 . . . . . . . . . . 2,900 **
Daniel S. Smith
26978 Briggs Hill Road
Eugene, OR 97405. . . . . . . . . . 27,734 **
Stan G. Turel
13909 S.E. Stark Street
Portland, OR 97233 . . . . . . . . . 6,000 **
All Directors and executive
officers as a group (10
persons) . . . . . . . . . . . . . . 1,488,257 39.3%
</TABLE>
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* Less than one percent.
(2) Includes 15,000 shares issuable upon the exercise of an outstanding
warrant.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company and Donald Voorhies, the Company's Vice President, were parties
to a grape purchase contract whereby Mr. Voorhies agreed to sell to the Company
his entire production of Pinot Noir, Chardonnay and Riesling wine grapes from
Salem Hills Vineyards (up to a maximum of 100 tons annually) for a period of
five years, beginning in the fall of 1989. The purchase price per ton equals
the average price paid for each variety of grapes in the Willamette Valley
viticultural region each season, and may include a bonus for those grapes used
to produce cork-finished wine which sells at a price in excess of the Oregon
average retail per bottle price for each variety and vintage. In 1995 the
Company paid Mr. Voorhies $33,347 for grapes purchased under the contract. As
of November 1995, Don Voorhies sold his vineyard, thus voiding his contract with
the Company at that date. During 1996 and 1995, the Company purchased grapes
from Elton Vineyards for $88,364 and $57,219, respectively. Betty M. O'Brien, a
director of the Company, is a principal owner of Elton Vineyards, also during
1996 and 1995, the Company purchased grapes from Sweet Cheeks Vineyards owned by
Director, Dan Smith, for $50,292 and $84,784.
On May, 2, 1988, the Company and James Bernau and Donald Voorhies, officers
and directors of the Company, entered into a Shareholders' Agreement, which
includes certain restrictions on the transfer or encumbrance of their shares of
Common Stock of the Company. Under the terms of the agreement, should Mr.
Bernau or Mr. Voorhies receive a bona fide offer to purchase any or all of their
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respective shares, the Company has a right of first refusal to purchase all
such shares at the price set forth in the bona fide offer. If Mr. Bernau or
Mr. Voorhies elects to sell any or all of their shares absent a bona fide
offer, the Company may purchase the shares at a mutually agreed upon price
or, if an agreement cannot be reached, at a price determined by an outside
appraisal. On January 31, 1997, the Company and Messrs. Bernau and Voorhies
mutually agreed in writing to terminate the Shareholders' Agreement effective
immediately.
On June 1, 1992, the Company granted Mr. Bernau a warrant to purchase
15,000 shares of the Company's Common Stock as consideration for his personal
guarantee of the Company's Real Estate Loan and the Line of Credit from Farm
Credit Services aggregating $1.2 million. The warrant is exercisable anytime
through June 1, 2012, at an exercise price of $3.42 per share.
Each of Nor'Wester, WVI, Aviator Ales, Mile High Brewing, Bayhawk Ales and
North County is affiliated with the Company in that James W. Bernau, the
Company's founder, President and Chairperson of the Board of Directors, is also
President and Chairperson of the Board of Directors of each such affiliated
company. Mr. Bernau is also a significant equity owner of each affiliated
company either directly, as in the case of Nor'Wester and WVI in which Mr.
Bernau owns a 25% and a 62% interest, respectively, or indirectly through his
controlling interest in WVI, which in turn owns a controlling interest in each
of Aviator Ales (51%), Mile High Brewing (51%), Bayhawk Ales (57%) and North
Country (100%). Donald Voorhies, a member of the Company's Board of Directors,
also is a member of the Boards of Directors of Nor'Wester, WVI and Bayhawk Ales.
On December 3, 1992, James W. Bernau borrowed $100,000 from the Company.
The loan is secured by Mr. Bernau's stock in the Company, and is payable,
together with interest at a rate of 7.35% per annum, on March 14, 2009. At
December 31, 1996, the outstanding balance of the loan was $138,511.
The Company believes that the transactions set forth above were made on
terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions between the Company and its
officers, directors, principle shareholders and affiliates will be approved by
the Affiliated Transactions Committee of the Company's Board of Directors who do
not have an interest in the transactions, and will be on terms no less favorable
to the Company than could be obtained from unaffiliated third parties.
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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.
WILLAMETTE VALLEY VINEYARDS, INC.
---------------------------------
(Registrant)
Date: April 28, 1997 By: /s/ James W. Bernau
--------------------------------------------
James W. Bernau, Chairperson of the Board,
President and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ James W. Bernau Chairperson of the Board, April 28, 1997
- ----------------------- President, and Secretary
James W. Bernau (Principal Executive Officer)
/s/ Kevin R. Chambers Vice-President, April 28, 1997
- ----------------------- General Manager
Kevin R. Chambers
/s/ Johne E. Moore Controller April 28, 1997
- ----------------------- (Principal Accounting Officer)
John E. Moore
/s/ Donald Voorhies Director April 28, 1997
- -----------------------
Donald Voorhies
/s/ James L. Ellis Director April 28, 1997
- -----------------------
James L. Ellis
/s/ Betty M. O'Brien Director April 28, 1997
- -----------------------
Betty M. O'Brien
- ----------------------- Director April , 1997
Daniel S. Smith
/s/ Stan G. Turel Director April 28, 1997
- -----------------------
Stan G. Turel
/s/ Delna Jones Director April 28, 1997
- -----------------------
Delna Jones
</TABLE>
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