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Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1 to Annual Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the Fiscal Year ended Commission File Number
December 31, 1997 0-4431
AUTO-GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
California 95-2105641
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
3201 Temple Avenue
Pomona, California 91768
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number: (909) 595-7204
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.10 par value)
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 and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
The aggregate market value of voting Common Stock held by nonaffiliates of
the registrant was $679,000 as of December 31, 1997. The number of shares
of the registrant's Common Stock outstanding was 1,090,478 as of December
31, 1997.
DOCUMENTS INCORPORATED BY REFERENCE
Part III of the Company's Annual Report to the SEC on Form 10-K for the
fiscal year ended December 31, 1997 is hereby amended to incorporate:
Item 11. "Executive Compensation", Item 12. "Security Ownership of Certain
Beneficial Owners and Management" and Item 13. "Certain Relationships and
Related Transactions" of this Form 10-K/A dated April 30, 1998.
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ITEM 11. EXECUTIVE COMPENSATION
The following table summarizes the aggregate annual cash compensation and
long-term incentive compensation of the Company's Chief Executive Officer
and each of the named executive officers whose total cash compensation for
the fiscal year ended December 31, 1997 for services rendered in all
capacities exceeded $100,000 and cash compensation received by each
named executive officer for the Company's two previous fiscal years:
Summary Compensation Table
Long-Term
Compensation
Number of
Securities
Annual Compensation Underlying
Name Principal Position Year Salary($) Options
Robert S. Cope CEO, President 1997 $165,000 None
and Treasurer 1996 140,000
1995 130,000
William J. Kliss Chief Operating 1997 $150,000 20,000
Officer 1996 138,000
1995 133,000
Daniel E. Luebben Chief Financial 1997 $109,000 10,000
Officer and Secretary 1996 99,000
1995 98,000
There have been no restricted stock awards during fiscal year ended December
31, 1997.
1997 Non-Qualified Stock Option Plan
The Company adopted and implemented a 1997 Non-Qualified Stock Option Plan
effective December 31, 1997. The Plan is a non-qualified Plan covering only
senior executives and related persons. The Plan consists of 100,000 shares
of the Company's authorized but unissued Common Stock. At the inception of
the Plan, the Company granted options to four persons whereby they may
purchase up to a total of 47,500 shares over the next five years at a price
per share of $1.65. The recipient's right to exercise such options and
acquire the stock is conditioned upon further employment with the Company and
on the market trading price of the Company's stock rising to a minimum of
$6.50 per share. Shares actually sold and issued pursuant to the Plan will
be restricted stock requiring that such stock be held by the recipients for
a minimum period of one year following purchase before they are eligible to
sell such stock in the public market. Following such initial option grant,
52,500 shares remain eligible for future grants under the Plan. Under certain
circumstances in the event of a change in control as defined in the Plan,
recipients of options under the Plan are entitled to require the Company to
liquidate their outstanding options at a price deemed equivalent to the then
current fair market value of the underlying shares. The Plan was filed as an
exhibit (10.25) to the Company's Annual Report to the SEC on Form 10-K for the
year ended December 31, 1997 and is incorporated herein by reference. The
Company is also considering a qualified incentive stock option plan covering
an additional 100,000 shares available for grant to all employees of the
Company at the then current fair market value of shares of the Company's
stock at the date of grant. The Company intends to propose such a plan for
approval by the shareholders at the Company's next Shareholder Meeting.
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The following table summarizes information concerning stock option grants to
named executive officers during the fiscal year ended December 31, 1997. All
options were granted under the 1997 Non-Qualified Stock Option Plan and
have five year terms. Under SEC Regulation S-K, the Company is required to
disclose the hypothetical gains which the named executive officers would
realize at the end of the option term. The gain assumes a compound annual
stock price appreciation of 5% and 10% from the date the option was originally
granted to the end of the option term. These rates of stock price
appreciation are not necessarily the Company's estimate nor do they represent
any projection of the future prices of the Company's stock.
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Option Grants in Last Fiscal Year
Individual Grants Potential Realizable
Number of Pct. of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Exercise Price Appreciation Grant Date
Options Employees in Price Expiration For Option Term Present
Name Granted Fiscal Year ($/Share) Date 5%($) 10%($) Value($)
Robert S. Cope None -- N/A N/A 0 0 N/A
William J. Kliss 20,000 42.1% $1.65 12/31/02 0 0 $0.56
Daniel E. Luebben 10,000 21.1% $1.65 12/31/02 0 0 $0.56
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The Percent of Total Options Granted to Employees in Fiscal Year may not
total 100% due to options granted to individuals other than named executive
officers. The grant date market value of the Common Stock underlying all of
the above options was approximately $3.00 as of December 31, 1997. The
Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation
for the Option Term of 5% and 10% is zero because the fair market value of the
underlying stock must rise above $6.50 per share before the corresponding
options may be exercised. Under the terms of the Plan, the underlying stock
price must therefore rise a minimum of 31.5% per annum over the five year
term for the option to be exercisable by the recipients. At 5% and 10%
assumed annual rates of stock price appreciation for the option term, the
equivalent fair market value of the underlying stock would be $3.83 and
$4.83, respectively, at the end of the five year term. The Grant Date Present
Value was established using the Black-Scholes option pricing model based on
a current market price of $3.00 per share on the grant date and applying a
discount of 45% due to the restricted nature of the stock yielding an exercise
price of $1.65, a five year expected term, an estimated volatility factor of
25%, no dividends and a risk-free interest rate of 5.7%.
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The following table summarizes information concerning the value received on
options exercised during the fiscal year ended December 31, 1997 and the
value as of December 31, 1997:
Aggregated Option Exercises in the Last Fiscal Year
and Fiscal Year-End Option Values
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Number of Options Options
Securities at Fiscal at Fiscal
Underlying Year-End Year-End
Options Value($) Exercisable/ Exercisable/
Name Exercised Realized Unexercisable Unexercisable
Robert S. Cope None None None/None None/None
William J. Kliss None None 0/20,000 None/None
Daniel E. Luebben None None 0/10,000 None/None
All stock options granted under the 1997 Non-Qualified Stock Option Plan are
currently not exercisable as of December 31, 1997, because the fair market
value of the underlying Common Stock must rise from the market price of
approximately $3.00 per share as of December 31, 1997 to a minimum of $6.50
per share for the stock option to be exercisable by the recipients.
The following table summarizes information on the stock price-based option
plan awards made during the fiscal year ended December 31, 1997:
Long-Term Incentive Plans Awards in Last Fiscal Year
Performance
or Other
Period Until
Number of Maturation
Name Shares or Payout
Robert S. Cope None None
William J. Kliss 20,000 5 Years
Daniel E. Luebben 10,000 5 Years
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below reflects information pertaining to certain beneficial owners
of the Company's Common Stock known to own more than 5% of the Company's
securities and all officers and directors of the Company as a group as of
April 30, 1998.
Shares of the
Company's
Common
Stock Owned Percent
Beneficially as of
Name of Beneficial Owner of Record Date Class
Robert S. Cope 721,675 68%
CEO, President
and Treasurer
Auto-Graphics, Inc.
Douglas K. Bisch 98,256 9%
Retired Officer of
and Consultant to
Auto-Graphics, Inc.
Robert L. Lovett, Trustee 62,500 6%
Robert L. Lovett Trust
All Officers and Directors 824,431 77%
as a group (5 persons).
Robert S. Cope, who is the President and Chief Executive Officer of the
Company and a member of the Company's Board of Directors, is the beneficial
owner of 721,675 shares or 68% of the Company's total outstanding shares of
Common Stock. As a result of his positions with and ownership of shares in
the Company, Robert S. Cope may be deemed to be in a control relationship
with the Company. Mr. Cope's beneficial ownership includes 523,391 (49%)
shares of Common Stock owned by him personally and 198,284 shares (19%)
owned by members of his family, including Paul R. Cope who is employed by
the Company and owns 125,534 shares (12%). No other single family member
owns more than 5% of the Company's Common Stock. Robert S. Cope has sole
investment and voting power over the shares of Common Stock owned by him
personally, and is presumed to share investment and voting power over the
shares owned by members of his family.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and 10% shareholders to file forms with the SEC
to report their ownership of the Company's shares and any changes in said
ownership. Anyone required to file forms with the SEC must also send copies
of the forms to the Company. Based on information provided to the Company by
such persons, the Company is not aware of any delinquencies in the filing of
such reports.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company occupies approximately 29,000 sq. ft. of office and production
space in an office building owned by a partnership comprised of Robert S. Cope
and Douglas K. Bisch. The facility is currently leased to the Company
through June 2001 under the second of two five-year renewal options. The
original five-year lease, which was entered into in June of 1986, was approved
and authorized by the independent members of the Company's Board of Directors.
Rental payments paid in 1997 by the Company under the lease totaled
approximately $448,000.
Robert H. Bretz is a director of the Company and also serves as the Company's
outside legal counsel. In 1997, Mr. Bretz firm's billings to the Company for
legal services and expenses totaled approximately $242,000.
The Company previously entered into an agreement to purchase substantially
all of the shares of the Company's Common Stock owned by Douglas K. Bisch.
Mr. Bisch retired from day to day operations as an officer of the Company on
December 31, 1994. Mr. Bisch had previously served as the Company's Executive
Vice President for Sales and Marketing and Secretary for the last 25 years.
In accordance with the agreement, the Company will purchase and retire a total
of 156,000 shares of the Company's Common Stock over a seven year period
ending 2001. The total transaction cost will be $825,000 including stock,
non-competition and consulting fees. In 1995, 1996, and 1997, the Company
purchased and retired 15,600 shares each year and in 1998, the Company
purchased and retired 26,000 shares of the Company's Common Stock in
accordance with the agreement. In addition, the Company has also received an
option to purchase Mr. Bisch's one-third interest in the partnership which
owns the building and land which the Company leases as its corporate office
facility in Pomona, California for a purchase price based on a formula
requiring a minimum payment of $100,000 and a maximum payment of $150,000.
The agreement was unanimously approved by the Company's Board of Directors
with Mr. Bisch abstaining. A copy of the agreement, the terms of which are
summarized herein, was filed as an exhibit (10.9) to the Company's Annual
Report to the SEC on Form 10-K as of December 31, 1994.
ADDITIONAL INFORMATION
Upon request of any shareholder, the Company will furnish without charge a
copy of the Company's latest Annual Report to the SEC on Form 10-K. All
such requests should be directed to the Chief Financial Officer at the
above corporate headquarters' address.
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 on
April 30, 1998.
AUTO-GRAPHICS, INC.
(Registrant)
By ss/ Daniel E. Luebben
Daniel E. Luebben, Secretary and
Chief Financial Officer
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