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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-K/A
AMENDMENT NO. 1 TO FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For fiscal year ended September 30, 1999
Commission file number 0-21630
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ACTION PERFORMANCE COMPANIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
ARIZONA 86-0704792
(State of Incorporation) (I.R.S. Employer Identification No.)
4707 E. Baseline Road
Phoenix, Arizona 85040
(602) 337-3700
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, par value $.01 per share
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 X No
--- ---
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. [ ]
The aggregate market value of Common Stock held by nonaffiliates of the
registrant (14,983,545 shares) based on the closing price of the registrant's
Common Stock as reported on the Nasdaq National Market on December 20, 1999, was
$138,597,791. For purposes of this computation, all officers, directors and 10%
beneficial owners of the registrant are deemed to be affiliates. Such
determination should not be deemed to be an admission that such officers,
directors or 10% beneficial owners are, in fact, affiliates of the registrant.
As of December 20, 1999, there were outstanding 16,937,419 shares of
registrant's Common Stock, par value $.01 per share.
Documents incorporated by reference: None
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding our
directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITION HELD
---- --- -------------
<S> <C> <C>
Fred W. Wagenhals 58 Chairman of the Board, President, and
Chief Executive Officer
Tod J. Wagenhals 35 Executive Vice President, Secretary, and Director
David A. Husband 30 Executive Vice President - Finance and Accounting and
Chief Financial Officer
Melodee L. Volosin 35 Executive Vice President - Sales and Marketing and
Director
John S. Bickford, Sr. 53 Vice President - Strategic Alliances and Director
Paul G. Lang 51 Managing Director of MiniChamps and Director
Jack M. Lloyd 50 Director
Robert H. Manschot 56 Director
Edward J. Bauman 75 Director
</TABLE>
Fred W. Wagenhals has served as our Chairman of the Board, President,
and Chief Executive Officer since November 1993 and served as our Chairman of
the Board and Chief Executive Officer from May 1992 until September 1993 and as
President from July 1993 until September 1993.
Tod J. Wagenhals has served as our Executive Vice President since July
1995, as a director since December 1993, and as Secretary since November 1993.
Mr. Wagenhals served as a Vice President of our company from September 1993 to
July 1995. Mr. Wagenhals served in various marketing capacities with our company
from May 1992 until September 1993. Mr. Wagenhals is the son of Fred W.
Wagenhals.
David A. Husband has served as our Executive Vice President - Finance
and Accounting and Chief Financial Officer since December 1999. Mr. Husband
served as Vice President - Finance and Accounting and Chief Accounting Officer
from May 1998 until December 1999. Mr. Husband was employed as an accountant
with Arthur Andersen LLP from July 1992 to May 1998, where he was primarily
engaged in auditing publicly held companies. Mr. Husband is a Certified Public
Accountant.
Melodee L. Volosin has served as our Executive Vice President - Sales
since December 1999 and as a director since January 1997. Ms. Volosin served as
our Vice President - Wholesale Division from September 1997 until December 1999.
Ms. Volosin served as the Director of our Wholesale Division from May 1992 to
September 1997. Ms. Volosin's duties include managing all of our company's
wholesale distribution of die-cast collectibles and other products, including
advertising programs and budgeting.
John S. Bickford, Sr. has served as our Vice President - Strategic
Alliances since July 1997 and as a director of our company since January 1997.
Mr. Bickford also served as a consultant to our company from January 1997 to
June 1997. From 1976 to the present, Mr. Bickford has served as President of MPD
Racing Products, Inc., which manufactures race car parts for distribution
through speed shops and high-performance engine shops. Mr. Bickford served as
President of Bickford Motorsports, Inc., which provided consulting and special
project coordination services to race car drivers, car owners, and other
businesses, from 1990 until 1997. Mr. Bickford also published Racing for Kids
magazine during 1996 and 1997. Mr. Bickford also served as General Manager of
Jeff Gordon, Inc. from 1990 to 1995. Mr. Bickford currently serves as a director
of Equipoise Balancing, Inc., a privately held company.
Paul G. Lang has served as a director of our company since August 1998.
Mr. Lang also serves as Managing Director of Paul's Model Art, GmbH, MiniChamps,
GmbH, Lang Miniaturen, GmbH, and Spielwaren Danhausen, GmbH (collectively,
"MiniChamps"). Mr. Lang co-founded the various MiniChamps entities between
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1988 and 1996 and served as Managing Director of each of those companies prior
to our acquisition of an 80% ownership interest in MiniChamps in August 1998.
Jack M. Lloyd has served as a director of our company since July 1995.
Mr. Lloyd has served as the President and Chief Executive Officer of Phoenix
Restaurant Group, Inc. (formerly DenAmerica Corp.), a publicly held corporation
that owns and franchises Black-eyed Pea restaurants and is the largest
franchisee of Denny's restaurants in the United States, since March 1996 and as
Chairman of the Board of Phoenix Restaurant Group, Inc. since July 1996. Mr.
Lloyd served as the Chairman of the Board and Chief Executive Officer of Denwest
Restaurant Corp., the second largest franchisee of Denny's restaurants in the
United States, from 1987 until its merger with Phoenix Restaurant Group, Inc. in
March 1996. Mr. Lloyd also served as President of Denwest from 1987 until
November 1994. Mr. Lloyd currently serves as a director of Star Buffet, Inc., a
publicly held company.
Robert H. Manschot has served as a director of our company since July
1995. Mr. Manschot currently serves as the Managing Director and Chairman of
Manschot Investment Group L.L.C., an investment fund that is in the business of
identifying and investing in companies that have significant potential for
growth; as Chairman of Silicon Entertainment, Inc., which develops entertainment
centers that employ interactive virtual-reality technology for simulated stock
car racing; as Chairman and Chief Executive Officer of Seceurop Security
Services and GeldNet, which are privately held emergency services companies
operating in Europe; as Chairman of RHEM International Enterprises, Inc., which
engages in business consulting services and venture capital activities; and as
Chairman of Motorsports Promotions, Inc. Mr. Manschot served as President and
Chief Executive Officer of Rural/Metro Corporation, a publicly held provider of
ambulance and fire protection services, from October 1988 until March 1995. Mr.
Manschot joined Rural/Metro in October 1987 as Executive Vice President, Chief
Operating Officer, and a member of its Board of Directors. Mr. Manschot was with
the Hay Group, an international consulting firm, from 1978 until October 1987,
serving as Vice President and a partner from 1984, where he led strategic
consulting practices in Europe, Asia, and the western United States. Prior to
joining the Hay Group, Mr. Manschot spent 10 years with several leading
international hotel chains in senior operating positions in Europe, the Middle
East, Africa, and the United States. Mr. Manschot currently serves as a director
of Phoenix Restaurant Group, Inc., a publicly traded company, and as a director
of First Wave, TouchScape Corporation, WAM Interactive UK, Thomas Pride
Development, Inc., and Sports Southwest, Inc., all of which are privately held
companies.
Edward J. Bauman has served as a director of our company since February
1998. Mr. Bauman is the former owner and director of Richmond International
Raceway. Mr. Bauman also served as Chairman of Draper Corporation, a textile
machinery company, from 1987 until 1995 and as the Senior Advisor of Mergers &
Acquisitions for Bankers Trust, New York from 1987 until 1992. Mr. Bauman served
in various capacities with Blue Bell, Inc., the manufacturer of Wranglers,
Jantzen, and other apparel from 1950 until 1987, most recently as Chairman,
President, and Chief Executive Officer. Mr. Bauman currently serves as Chairman
of the Board of Anderson Bauman Tourtellot Vos & Co., a turnaround management
consulting firm. Mr. Bauman also serves as a director of Elk River Development
Corp. and First Union Corporation, both of which are publicly traded companies,
and Jay Garment Company, Precision Fabrics Group, Inc., and American Emergency
Vehicles, all of which are privately held companies.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and
persons who own more than 10% of a registered class of our equity securities to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Directors, officers, and greater than 10% shareholders are
required by SEC regulations to furnish us with copies of all Section 16(a) forms
they file. Based solely upon our review of the copies of such forms that we
received during the fiscal year ended September 30, 1999 and written
representations that no other reports were required, we believe that each person
who at any time during such fiscal year was a director, officer, or beneficial
owner of more than 10% of our common stock complied with all Section 16(a)
filing requirements during such fiscal year except that (a) John S. Bickford,
Sr. filed a late report on Form 4 covering six transactions; (b) Jack M. Lloyd
filed a late report on Form 4 covering one transaction; (c) Gregory W. Penske, a
former director, filed a late report on Form 3 with respect to his ownership of
our securities as of the date he became a director of our company; and (d) Tod
J. Wagenhals filed a late report on Form 4 covering two transactions and timely
filed a report on Form 5 covering one transaction that was required to have been
reported earlier on Form 4.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth certain information concerning the
compensation for the fiscal years ended September 30, 1997, 1998, and 1999
earned by our Chief Executive Officer and by our other executive officers whose
cash salary and bonus exceeded $100,000 during fiscal 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
SECURITIES ALL OTHER
UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) OPTIONS(#)(2) ($)(3)
- --------------------------- ---- ------------ -------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Fred W. Wagenhals 1999 $ 591,731 $ 250,000 50,000 $3,200
Chairman of the Board, President, 1998 459,616 100,000 60,000(4) 3,200
and Chief Executive Officer 1997 276,923 50,000 16,000 1,952
Tod J. Wagenhals 1999 $ 182,873 $ 70,000 -- $2,875
Executive Vice President, Secretary, 1998 160,962 40,000 40,000(5) 3,200
and Director 1997 112,500 21,000 15,000 2,673
Christopher S. Besing(6) 1999 $ 220,373 $ 60,000 20,000 $3,988
Vice President, Chief Financial 1998 160,962 40,000 40,000(5) 3,200
Officer, Treasurer, and Director 1997 113,462 21,000 15,000 2,535
David A. Husband(7) 1999 $ 123,846 $ 15,000 10,000 $ --
Vice President - Finance and 1998 38,462 -- 20,000 --
Accounting and Chief Accounting
Officer
</TABLE>
- ------------------
(1) Messrs. Wagenhals, Wagenhals, Besing, and Husband also received certain
perquisites, the value of which did not exceed 10% of their salary and
bonus during fiscal 1999.
(2) The exercise price of all stock options granted were equal to the fair
market value of our common stock on the date of grant.
(3) Amounts shown for fiscal 1999 represent matching contributions we made
to our 401(k) Plan.
(4) Includes 30,000 options that were cancelled and reissued in June 1998.
(5) Includes 20,000 options that were cancelled and reissued in June 1998.
(6) Mr. Besing resigned as an officer and director effective as of December
6, 1999.
(7) Mr. Husband served as our Vice President - Finance and Accounting and
Chief Accounting Officer from May 1998 until December 16, 1999. Mr.
Husband became our Executive Vice President - Finance and Accounting
and Chief Financial Officer on December 16, 1999.
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OPTION GRANTS
The following table provides information on stock options granted to
our named executive officers during the fiscal year ended September 30, 1999.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO APPRECIATION
OPTIONS GRANTED EMPLOYEES IN EXERCISE EXPIRATION FOR OPTION TERM(2)
NAME (#)(1) FISCAL YEAR PRICE ($/SH) DATE 5% 10%
- ------------------------- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Fred W. Wagenhals........ 50,000 13.0% $26.38 11/20/04 $448,501 $ 1,017,496
Tod J. Wagenhals......... -- -- -- --
-- --
Christopher S. Besing(3). 20,000 5.2% $26.38 11/20/04 $179,400 $ 406,998
David A. Husband......... 10,000 2.6% $26.38 11/20/04 $ 89,700 $ 203,499
</TABLE>
- ------------------
(1) The options were granted at the fair value of the shares on the date of
grant and have six-year terms. One-third of the options vest and become
exercisable on each of the first, second, and third anniversaries of
the date of grant.
(2) Potential gains are net of the exercise price, but before taxes
associated with the exercise. Amounts represent hypothetical gains that
could be achieved for the respective options if exercised at the end of
the option term. The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with the rules of the
Securities and Exchange Commission and do not represent our estimate or
projection of the future price of our common stock. Actual gains, if
any, on stock option exercises will depend upon the future market
prices of our common stock.
(3) Mr. Besing resigned as an officer and director effective as of December
6, 1999.
FISCAL 1999 OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information on options exercised in the
last fiscal year by our named executive officers, and the value of each such
officer's unexercised options at September 30, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
OPTION VALUES AS OF SEPTEMBER 30, 1999
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE MONEY OPTIONS
ACQUIRED ON VALUE OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Fred W. Wagenhals........ -- -- 110,666 75,334 $ 1,553,790 $ 10,335
Tod J. Wagenhals(2)...... 40,000 $1,250,000 50,474 15,257 $ 629,947 $ 6,865
Christopher S. Besing(3). -- -- 36,665 38,335 $ 224,375 $ 7,813
David A. Husband......... -- -- 6,666 23,334 -- $ --
</TABLE>
- ------------------
(1) Calculated based upon the closing price of our common stock as reported
on the Nasdaq National Market on September 30, 1999 of $21.06 per
share. The exercise prices of certain of the options held by our
executive officers on September 30, 1999 were greater than $21.06 per
share.
(2) In connection with the dissolution of his marriage, Mr. Wagenhals (a)
exercised options to acquire 40,000 shares of common stock and
immediately transferred such shares to his former spouse, and (b)
transferred options to acquire an additional 48,669 shares of common
stock to his former spouse.
(3) Mr. Besing resigned as an officer and director effective as of December
6, 1999.
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RECENT GRANTS OF STOCK OPTIONS
On January 27, 2000, our Board of Directors granted options to acquire
20,000, 5,000, 30,000, 10,000 and 5,000 shares of common stock at an exercise
price of $9.56 per share to Fred W. Wagenhals, Tod J. Wagenhals, David A.
Husband, Melodee L. Volosin, and John S. Bickford, Sr., respectively.
EMPLOYMENT AGREEMENTS
In connection with the acquisition of MiniChamps, in August 1998 our
company, Paul G. Lang, and Mr. Lang's spouse entered into an Operating Agreement
with respect to the management and operations of the MiniChamps entities. We and
Mr. Lang also amended the terms of the then-existing Managing Director's
Contract between Mr. Lang and Paul's Model Art GmbH. Under the Operating
Agreement and the Managing Director's Contract, as amended (the "Service
Agreement"), Mr. Lang serves as a Managing Director of our operations in the
European Community at a base salary of approximately $245,000 per annum, plus
reimbursement for certain costs that Mr. Lang may be obligated to pay under
German law. Mr. Lang also will be eligible to receive an annual bonus of 10% of
the pre-tax profits of the MiniChamps entities, not to exceed approximately
$55,000 per annum. Pursuant to the Service Agreement, in August 1998 we also
granted Mr. Lang options to acquire 10,000 shares of common stock at an exercise
price of $25.00 per share. The terms of the Service Agreement require us to
reimburse Mr. Lang for expenses incurred on business trips and to provide Mr.
Lang with an automobile. The Service Agreement contains provisions that prohibit
Mr. Lang from (a) competing with the business of our company, (b) taking certain
actions intended to hire other employees away from their employment with our
company, and (c) making unauthorized use or disclosure of our confidential
information. The Service Agreement expires in August 2002, subject to automatic
extension for the same length of time as any extension of the Operating
Agreement.
We have no written employment contracts with any of our other executive
officers or directors. We offer our employees, including officers, medical and
life insurance benefits. Our executive officers and other key personnel are
eligible to receive profit sharing distributions and discretionary bonuses, and
are eligible to receive stock options under our stock options plans.
401(k) PROFIT SHARING PLAN
In October 1994, we established a defined contribution plan that
qualifies as a cash or deferred profit sharing plan under Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended. Under the 401(k) plan,
participating employees may defer from 1% to 15% of their pre-tax compensation,
subject to the maximum allowed under the Internal Revenue Code. We will
contribute $.50 for each dollar contributed by the employee, up to a maximum
contribution of 2% of the employee's defined compensation. In addition, the
401(k) plan provides that we may make an employer profit sharing contribution in
such amounts as may be determined by our Board of Directors.
1993 STOCK OPTION PLAN
Our 1993 Stock Option Plan, as amended, provides for the granting of
options to acquire common stock as well as stock-based awards, as described
below. A total of 2,750,000 shares of common stock may be issued under the 1993
Plan. As of January 27, 2000, we have issued an aggregate of 2,049,754 shares of
common stock upon exercise of options granted pursuant to the 1993 Plan, there
were outstanding options to acquire 669,027 shares of common stock, and an
additional 31,219 shares remained available for grant. The 1993 Plan will remain
in effect until September 24, 2001.
Options and awards may be granted only to persons who at the time of
grant are either (a) key personnel, including officers and directors of our
company or our subsidiaries, or (b) consultants and independent contractors who
provide valuable services to our company or to our subsidiaries. Options that
are incentive stock options may only be granted to employees of our company or
our subsidiaries. To the extent that granted options are incentive stock
options, the terms and conditions of those options must be consistent with the
qualification requirements set forth in the Internal Revenue Code. No employee
of our company may receive grants of options or awards representing more than
50% of the shares of common stock issuable under the 1993 Plan.
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The exercise prices, expiration dates, maximum number of shares
purchasable, and the other provisions of the options will be established at the
time of grant. The exercise prices of options that are not incentive stock
options may not be less than 85% of the fair market value of the common stock at
the time of the grant, and the exercise prices of incentive stock options may
not be less than 100% (110% if the option is granted to a shareholder who at the
time the option is granted owns stock possessing more than 10% of the total
combined voting power of all classes of stock of our company) of the fair market
value of the common stock at the time of the grant. Options may be granted for
terms of up to ten years and become exercisable in whole or in one or more
installments at such time as may be determined upon a grant of the options. To
exercise an option, the optionholder will be required to deliver to us full
payment of the exercise price of the shares as to which the option is being
exercised.
The 1993 Plan includes an automatic program that provides for the
automatic grant of stock options to non-employee directors. Under the automatic
program, each newly elected non-employee member of the Board of Directors
automatically receives options to acquire 10,000 shares of common stock on the
date of his or her first appointment or election to the Board of Directors. In
addition, options to acquire 8,000 shares of common stock are automatically
granted to each non-employee director at the meeting of the Board of Directors
held immediately after each annual meeting of shareholders. All automatic
options vest and become exercisable immediately upon grant. A non-employee
member of the Board of Directors is not eligible to receive the 8,000-share
automatic option grant if that option grant date is within 30 days of such
non-employee member receiving the 10,000-share automatic option grant. The
exercise price per share of common stock subject to automatic options granted
under the 1993 Plan will be equal to 100% of the fair market value (as defined
in the 1993 Plan) of our common stock on the date such options are granted. We
believe that the automatic grant of stock options to non-employee directors is
necessary to attract, retain, and motivate independent directors.
We also may grant awards to eligible persons under the 1993 Plan. Stock
appreciation rights, or SARs, entitle the recipient to receive a payment equal
to the appreciation in market value of a stated number of shares of common stock
from the price stated in the award agreement to the market value of the common
stock on the date the SAR is first exercised or surrendered. Stock awards enable
us to make direct grants of common stock to recipients. Cash awards entitle the
recipient to receive direct payments of cash depending on the market value or
the appreciation of our common stock or other securities of our company.
1998 NON-QUALIFIED STOCK OPTION PLAN
Under the our 1998 Non-Qualified Stock Option Plan, the Board of
Directors may from time to time grant to key employees of our company, other
than directors or executive officers, non-statutory options to purchase shares
of our common stock. The exercise price, term, vesting conditions, and other
terms for all options granted under the 1998 Plan will be determined at the time
of grant by the Board of Directors or a board committee appointed to administer
the 1998 Plan. A total of 500,000 shares of common stock may be issued pursuant
to the 1998 Plan. As of January 27, 2000, we have issued an aggregate of 37,833
shares of common stock upon exercise of options granted pursuant to the 1988
Plan, there were outstanding options to acquire 203,499 shares of common stock,
and an additional 258,668 shares remained available for grant. The 1998 Plan
expires in 2008.
EMPLOYEE STOCK PURCHASE PLAN
During 1999 our Board of Directors adopted and our shareholders
approved our 1999 Employee Stock Purchase Plan, or ESPP. The ESPP is intended to
provide an opportunity for our employees to acquire a proprietary interest in
our company by purchasing shares of our common stock through voluntary payroll
deductions. Under the ESPP, eligible employees may purchase shares of our common
stock at a purchase price per share equal to the lower of (a) 85% of the closing
price of our common stock on the offering commencement date, or (b) 85% of the
closing price of our common stock on the offering termination date. The purchase
price is to be paid through periodic payroll deductions not to exceed 15% of the
participant's earnings during each six-month offering period. An employee may
not participate in the ESPP if the purchase would cause him or her to own 5% or
more of our company's combined voting power or value of our common stock. Also,
no participant may purchase more than $25,000 worth of common stock annually.
The ESPP provides for successive six-month offering periods. The first
offering period began on August 1, 1999 and will end on January 31, 2000.
Thereafter, in each of the nine years beginning on February 1, 2000 and
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ending on January 31, 2009, there will be two six-month offerings commencing on
February 1 and August 1 of each year and ending on the following July 31 or
January 31, respectively.
We have reserved 200,000 shares of our common stock for issuance under
the ESPP. That number will automatically increase on the first day of each
fiscal year beginning with the fiscal year beginning on October 1, 2001. The
annual increase will be equal to the lesser of (a) 200,000 shares or (b) 1% of
our outstanding shares on the last day of our prior fiscal year. Our Board of
Directors may reduce the number of shares to be automatically added if the
directors determine that the automatic increase will be too large relative to
the anticipated number of share purchases under the ESPP. Under this formula, a
maximum of 1,800,000 shares of common stock may be issued under the ESPP.
The purchase right of a participant will terminate automatically in the
event the participant ceases to be an employee of our company or one of our
subsidiaries, and any payroll deductions collected from such individual during
the six-month period in which such termination occurs will be refunded. However,
in the event of the participant's disability or death, such payroll deductions
may be applied to the purchase of the common stock on the next purchase date.
DIRECTOR COMPENSATION AND OTHER INFORMATION
Employees of our company do not receive compensation for serving as
members of our Board of Directors. Non-employee directors receive $2,500 for
each meeting attended in person. All directors are reimbursed for their expenses
in attending meetings of the Board of Directors. Directors who are not employees
of our company are eligible to receive automatic grants of stock options
pursuant to the 1993 Plan. Non-employee directors also are eligible to receive
other grants of stock options or awards pursuant to the discretionary program of
the 1993 Plan. See Item 11, "Executive Compensation - 1993 Stock Option Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended September 30, 1999, our Compensation
Committee consisted of Jack M. Lloyd, Robert H. Manschot, and Edward J. Bauman.
None of such individuals had any contractual or other relationships with our
company during such fiscal year except as directors.
LIMITATION OF DIRECTORS' LIABILITY; INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES, AND AGENTS
Our Amended and Restated Articles of Incorporation eliminate the
personal liability of any director of our company to us or our shareholders for
money damages for any action taken or failure to take any action as a director
of our company, to the fullest extent allowed by the Arizona Business
Corporation Act. Under the Business Corporation Act, directors of our company
will be liable to our company or our shareholders only for (a) the amount of a
financial benefit received by the director to which the director is not
entitled; (b) an intentional infliction of harm on our company or our
shareholders; (c) certain unlawful distributions to shareholders; and (d) an
intentional violation of criminal law. The effect of these provisions in the
Restated Articles is to eliminate the rights of our company and our shareholders
(through shareholders' derivative suits on behalf of our company) to recover
money damages from a director for all actions or omissions as a director
(including breaches resulting from negligent or grossly negligent behavior)
except in the situations described in clauses (a) through (d) above. These
provisions do not limit or eliminate the rights of our company or any
shareholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care.
Our Restated Articles require us to indemnify and advance expenses to
any person who incurs liability or expense by reason of such person acting as a
director of our company, to the fullest extent allowed by the Business
Corporation Act. This indemnification is mandatory with respect to directors in
all circumstances in which indemnification is permitted by the Business
Corporation Act, subject to the requirements of the Business Corporation Act. In
addition, we, in our sole discretion, may indemnify and advance expenses, to the
fullest extent allowed by the Business Corporation Act, to any person who incurs
liability or expense by reason of such person acting as an officer, employee or
agent of our company, except where indemnification is mandatory pursuant to the
Business Corporation Act, in which case we are required to indemnify such
persons to the fullest extent required by the Business Corporation Act.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the shares
of our outstanding common stock beneficially owned as of January 20, 2000 by (i)
each of the our directors and executive officers, (ii) all directors and
executive officers as a group, and (iii) each other person who is known by us to
beneficially own or to exercise voting or dispositive control over more than 5%
of our common stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES APPROXIMATE
NAME AND ADDRESS OF AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP(2) OUTSTANDING SHARES(2)
- ------------------- ----------------------- ---------------------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Fred W. Wagenhals........................... 2,040,932 (3) 12.0%
Tod J. Wagenhals............................ 54,430 (4) *
David A. Husband............................ 12,499 (5) *
Melodee L. Volosin.......................... 21,224 (6) *
John S. Bickford, Sr........................ 37,316 (7) *
Paul G. Lang................................ 15,333 (8) *
Jack M. Lloyd............................... 32,000 (9) *
Robert H. Manschot.......................... 29,000 (10) *
Edward J. Bauman............................ 20,000 (11) *
All directors and executive officers
as a group (nine persons)................ 2,262,734 13.1%
NON-MANAGEMENT 5% SHAREHOLDERS
Lisa K. Wagenhals........................... 1,913,600 (12) 11.2%
</TABLE>
- -------------------
* Less than 1% of outstanding shares of common stock
(1) Each person named in the table has sole voting and investment power
with respect to all common stock beneficially owned by him or her,
subject to applicable community property law, except as otherwise
indicated. Except as otherwise indicated, each person may be reached at
4707 East Baseline Road, Phoenix, Arizona 85040.
(2) The percentages shown are calculated based upon 16,937,419 shares of
common stock outstanding on January 20, 2000. The numbers and
percentages shown include the shares of common stock actually owned as
of January 20, 2000 and the shares of common stock that the identified
person or group had the right to acquire within 60 days of such date.
In calculating the percentage of ownership, all shares of common stock
that the identified person or group had the right to acquire within 60
days of January 20, 2000 upon the exercise of options are deemed to be
outstanding for the purpose of computing the percentage of the shares
of common stock owned by such person or group, but are not deemed to be
outstanding for the purpose of computing the percentage of the shares
of common stock owned by any other person.
(3) Represents 1,913,600 shares of common stock and vested options to
acquire 127,332 shares of common stock. Mr. Wagenhals shares voting and
dispositive power with his spouse with respect to the 1,913,600 shares
of common stock. See footnote 12.
(4) Represents 3,956 shares of common stock and vested options to acquire
54,430 shares of common stock.
(5) Represents 2,500 shares of common stock and vested options to acquire
9,999 shares of common stock.
(6) Represents 2,500 shares of common stock and vested options to acquire
18,724 shares of common stock.
(7) Represents 12,318 shares of common stock and vested options to acquire
24,998 shares of common stock.
(8) Represents 12,000 shares of common stock and vested options to acquire
3,333 shares of common stock.
(9) Represents vested options to acquire 32,000 shares of common stock.
(10) Represents 5,000 shares of common stock and vested options to acquire
24,000 shares of common stock.
(11) Represents 2,000 shares of common stock and vested options to acquire
18,000 shares of common stock.
(12) Represents 1,913,600 shares of common stock over which Ms. Wagenhals
shares voting and dispositive power with Fred W. Wagenhals. See
footnote 3.
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<PAGE> 10
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We own a building in Tempe, Arizona, containing approximately 46,000
square feet, which we utilized for our corporate, administrative, sales offices,
and warehouse facilities prior to September 1997. Prior to March 1998, Fred W.
Wagenhals, our Chairman of the Board, President, and Chief Executive Officer,
owned a one-third interest in F.W. Investments, a partnership that owned this
facility. In March 1998, Mr. Wagenhals became the sole owner of this facility.
We paid F.W. Investments or Mr. Wagenhals rent of approximately $183,000,
$175,000, and $120,000 for the fiscal years ended September 30, 1997, 1998, and
1999, respectively. During fiscal 1998, we made a refundable deposit of $900,000
to Mr. Wagenhals towards the purchase of this facility. During fiscal 1999, we
paid the remaining balance of $1.2 million as final payment and purchase of the
facility.
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<PAGE> 11
SIGNATURES
In accordance with 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.
ACTION PERFORMANCE COMPANIES, INC.
Date: January 27, 2000 /s/Fred W. Wagenhals
-----------------------------------------
Fred W. Wagenhals, Chairman of the Board,
President, and Chief Executive Officer
In accordance with 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 date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
- --------- -------- ----
<S> <C> <C>
/s/ Fred W. Wagenhals Chairman of the Board, President, and Chief January 27, 2000
- ------------------------------------ Executive Officer (Principal Executive Officer)
Fred W. Wagenhals
/s/ Tod J. Wagenhals Executive Vice President, and Director January 27, 2000
- ------------------------------------
Tod J. Wagenhals
/s/ David A. Husband Executive Vice President - Finance and Accounting January 27, 2000
- ------------------------------------ and Chief Accounting Officer (Principal Finance
David A. Husband and Accounting Officer)
/s/ Melodee L. Volosin Executive Vice President - Sales and Marketing January 27, 2000
- ------------------------------------ and Director
Melodee L. Volosin
/s/ John S. Bickford, Sr. Vice President - Strategic Alliances and Director January 27, 2000
- ------------------------------------
John S. Bickford, Sr.
/s/ Jack M. Lloyd Director January 27, 2000
- ------------------------------------
Jack M. Lloyd
/s/ Robert H. Manschot Director January 27, 2000
- ------------------------------------
Robert H. Manschot
/s/ Edward J. Bauman Director January 27, 2000
- ------------------------------------
Edward J. Bauman
/s/ Paul G. Lang Managing Director of MiniChamps and Director January 27, 2000
- ------------------------------------
Paul G. Lang
</TABLE>
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