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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM TO
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COMMISSION FILE NUMBER 0-22662
UNITED VIDEO SATELLITE GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 73-1290412
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7140 SOUTH LEWIS AVENUE
TULSA, OKLAHOMA 74136-5422
(Address of principal executive offices) (Zip code)
(918) 488-4000
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: none
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 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 (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 voting stock held by non-affiliates of
the registrant was $353,652,697 as of March 8, 1998.
Number of shares outstanding of each of the registrant's classes of
common stock as of March 8, 1998:
TITLE OF CLASS NUMBER OF SHARES
Class A Common Stock $.01 Par Value 24,242,620
Class B Common Stock $.01 Par Value 12,373,294
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1
<PAGE>
The Registrant hereby amends the following items of Part III of
its Form 10-K for the fiscal year ended December 31, 1997 filed with
the Securities and Exchange Commission on March 11, 1998:
PART III
Item 10. Directors and Executive Officers of the Registrant
Executive Officers and Directors
The following table identifies executive officers and directors of
the Company as of April 28, 1998 and sets forth their respective ages
and positions with the Company.
Gary S. Howard . . . . . 47 Chairman of the Board of
Directors and Chief Executive
Officer
Peter C. Boylan III . . . 34 President, Chief Operating
Officer and Director
Charles B. Ammann . . . . . 43 Senior Vice President and
General Counsel
Craig M. Waggy . . . . . . 39 Senior Vice President and
Chief Financial Officer
Toby DeWeese . . . . . . . 37 Vice President Corporate
Development
Lawrence Flinn, Jr. . . . . 62 Chairman Emeritus of the
Board of Directors
Robert R. Bennett . . . . . 40 Director
Leo J. Hindery, Jr. . . . . 50 Director
Larry E. Romrell . . . . . 58 Director
J. David Wargo . . . . . . 44 Director
Set forth below is a description of the backgrounds of the
executive officers and directors of the Company:
Gary S. Howard joined the Company in June 1997 as Chairman of the
Board of Directors and Chief Executive Officer. Mr. Howard was named
an Executive Vice President of TCI and President and Chief Executive
Officer of TCI Ventures Group, LLC ("Ventures LLC"), a subsidiary of
TCI, in December 1997 and has served as Chief Executive Officer of TCI
Satellite Entertainment, Inc. ("TSAT") since December 1996. Mr. Howard
served as President of the Company from June 1997 to August 1997,
President of TSAT from February 1995 through August 1997, a Senior Vice
President of TCI Communications, Inc. ("TCIC") from October 1994 to
December 1996, and a Vice President of TCIC from December 1991 through
October 1994. Mr. Howard is a director of TCI Satellite Entertainment,
Inc.
Peter C. Boylan III joined the Company in October 1994 as
Executive Vice President and Chief Financial Officer. He was elected a
Director in July 1995, Chief Operating Officer in December 1996 and
President in August 1997. Beginning in 1992, Mr. Boylan served with
Hallmark Cards, Inc. in its Corporate Development and Strategy Group,
focusing primarily on the communications and entertainment industries.
Charles B. Ammann joined the Company in January 1996 as Senior
Vice President and General Counsel. Mr. Ammann is responsible for the
Company's legal, human resources, risk management, facilities and
legislative affairs. From 1990 until he joined the Company, Mr. Ammann
served as Vice President of Administration and General Counsel for
Flint Industries, Inc., a privately-held company engaged in general
contracting of commercial and industrial construction, oil and gas
pipeline construction, oilfield services and construction management
services.
Craig M. Waggy joined the Company in 1995 as Vice President of
Finance and Treasurer and in 1997 was promoted to Senior Vice President
and Chief Financial Officer. Mr. Waggy is responsible for the
Company's accounting, finance and information technology functions.
Prior to joining the Company, he was a Senior Manager with Ernst &
Young LLP.
Toby DeWeese joined the Company in September 1997 as Vice
President of Corporate Development. From 1990 until he joined the
Company, Mr. DeWeese held several positions at TCI, including Director
of Primestar Development from November 1991 to March 1993, Vice
President of Sales and Distribution for Primestar by TCI from April
1993 to October 1995, Vice President of Business Development and
Technology for Netlink from November 1995 to May 1997 and Vice
President of Operations for the National Digital Television Center from
May 1997 to September 1997.
2
<PAGE>
Lawrence Flinn, Jr. assumed the position Chairman Emeritus in June
1997. Prior to that time, Mr. Flinn had been Chairman of the Board of
Directors and Chief Executive Officer since he acquired a majority
ownership interest in the Company in 1976. Mr. Flinn has been a
full-time professional participant in the cable television industry for
nearly 30 years. Mr. Flinn is a director of LodgeNet Entertainment
Corporation.
Robert R. Bennett has been an Executive Vice President of TCI and
President and Chief Executive Officer of Liberty since April 1997.
From June 1995 through March 1997, Mr. Bennett was an Executive Vice
President and the Chief Financial Officer, Secretary and Treasurer of
Liberty. Mr. Bennett served as Senior Vice President of Liberty from
September 1991 through June 1995. Mr. Bennett was elected a director
of the Company in February 1998. Mr. Bennett is a director of BET
Holdings, Inc. and TCI Music, Inc.
Leo J. Hindery, Jr. has been President and Chief Operating Officer
of TCI and President and Chief Executive Officer of TCIC since
March 1997 and has served as President and Chief Executive Officer of
TCI Pacific Communications, Inc. ("TCI Pacific"), a subsidiary of TCI
since September 1997. Mr. Hindery was elected a director of TCI in
May 1997 and of the Company in November 1997. In addition, Mr. Hindery
is President, Chief Executive Officer and/or a director of many of
TCI's subsidiaries. From 1988 until he joined TCI, Mr. Hindery was
founder, Managing General Partner and Chief Executive Officer of
Intermedia Partners and its affiliates. Mr. Hindery is Chairman of the
Board of TCI Music, Inc. and is a director of TCIC, TCI Pacific, At
Home Corporation, TSAT and Cablevision Systems Corporation.
Larry E. Romrell has been an Executive Vice President of TCI since
January 1994. Mr. Romrell has served as the Executive Vice President
and Chief Executive Officer of TCI Business Alliance and Technology
Co., Inc., a subsidiary of TCI, a Senior Vice President of Ventures LLC
since December 1997, and President of TCI Technology Ventures, Inc., a
subsidiary of TCI, from September 1994 to October 1997. Mr. Romrell
served as a Senior Vice President of TCIC from 1991 to September 1994.
Mr. Romrell is a director of General Communication, Inc. and Teleport
Communications Group, Inc.
J. David Wargo has been President of Wargo & Company, a private
investment company specializing in the communications industry, since
January 1993. Mr. Wargo was a Managing Director of The Putnam
Companies from December 1989 to December 1992.
There are no family relationships among any of the directors and
executive officers of the Company.
3
<PAGE>
Stockholder Agreement with TCI
On January 25, 1996, TCI acquired a controlling interest in the
Company from Mr. Flinn, the Company's Chairman and Chief Executive
Officer, when the Company merged (the "Merger") with a wholly owned
subsidiary of TCI pursuant to an Agreement and Plan of Merger dated as
of July 10, 1995, as amended (the "Merger Agreement"), among the
Company, TCI and TCI Merger Sub, Inc. In connection with the Merger,
the Company and TCI entered into a Stockholder Agreement dated as of
January 25, 1996, which currently requires TCI to vote its shares of
the Company's equity securities in any general election of directors in
favor of the election of Mr. Boylan as a director so long as he is an
executive officer of the Company. The Stockholder Agreement in certain
circumstances also limits TCI's ability to vote its equity securities
of the Company at a stockholders' meeting in favor of certain
transactions requiring stockholder approval.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange Act of 1934 requires the
Company's executive officers and directors and persons who own more
than ten percent of a registered class of the Company's equity
securities (collectively, the "reporting persons") to file reports of
ownership and changes in ownership with the Securities and Exchange
Commission and to furnish the Company with copies of these reports.
Based solely upon a review of copies of such reports filed with the
Company, and written representations received from the reporting
persons, the Company believes that all filings required to be made by
the reporting persons for the last fiscal year were made on a timely
basis except as follows: Mr. Gary S. Howard, Chairman of the Board and
Chief Executive Officer of the Company was late in filing the initial
Form 3, which reported no beneficial ownership of shares of Class A
Common Stock.
Item 11. Executive Compensation
Summary Compensation Table
The following Summary Compensation Table sets forth a summary of
the compensation paid by the Company during each of the fiscal years
ended December 31, 1997, 1996 and 1995, to the chief executive officer
and four other most highly compensated executive officers ("the Named
Executive Officers"). During the last three fiscal years, none of the
Named Executive Officers received any restricted stock awards or
long-term incentive payouts nor did any of the Named Executive Officers
receive any other annual compensation.
4
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
AWARDS
SECURITIES
ANNUAL ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPENSATION COMPENSATION OPTIONS/ COMPENSATION
POSTION (1) YEAR SALARY ($) BONUS ($) SARS (2) ($) (3)
<S> <C> <C> <C> <C> <C>
Gary S. Howard (4) 1997 $215,480 $174,300 100,000 $ --
Chairman of the Board 1996 $ -- $ -- -- $ --
and Chief Executive Officer 1995 $ -- $ -- -- $ --
Lawrence Flinn, Jr. (5) 1997 $250,000 $ -- -- $16,491
Chairman Emeritus of the 1996 $646,875 $212,710 -- $35,711
Board 1995 $568,750 $351,000 -- $49,970
Peter C. Boylan III 1997 $323,091 $256,300 86,000 $16,025
President and 1996 $259,721 $212,710 150,000 $21,571
Chief Operating Officer 1995 $230,644 $200,000 -- $49,529
Charles Butler Ammann (6) 1997 $180,000 $ 78,000 -- $ 7,843
Senior Vice President and 1996 $166,000 $ 25,000 14,000 $ 260
General Counsel 1995 $ -- $ -- -- $ --
Craig M. Waggy (7) 1997 $115,667 $ 77,000 18,000 $ 5,371
Senior Vice President and 1996 $ 99,117 $ 46,170 14,000 $ 3,276
Chief Financial Officer 1995 $ 51,154 $ 30,000 -- $ 17
</TABLE>
(1) The positions shown represent the positions held by such persons
at the end of 1997.
(2) All grants for 1997 and 1996 represent stock options to acquire
Class A Common Stock under the Company's Equity Incentive Plan.
(3) Includes contributions under (i) the Company's SERP and 401(k)
Plans and, (ii) the compensation component of term life insurance
premiums, respectively, as follows for 1997: Mr. Flinn, $12,570
and $3,832; Mr. Boylan, $15,493 and $393; Mr. Ammann, $7,456 and
$372; and Mr. Waggy, $5,222 and $149.
(4) Mr. Howard joined the Company on June 1, 1997.
(5) Mr. Flinn served as Chairman of the Board and Chief Executive
Officer until June 1997.
(6) Mr. Ammann joined the Company on January 1, 1996.
(7) Mr. Waggy joined the Company on June 19, 1995.
5
<PAGE>
The following table sets forth information concerning options
granted in 1997 to the Named Executive Officers:
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
PERCENT
NUMBER OF OF TOTAL POTENTIAL REALIZABLE POTENTIAL REALIZABLE
SECURITIES OPTIONS/SARS EXERCISE VALUE AT ASSUMED ANNUAL VALUE AT ASSUMED ANNUAL
UNDERLYING GRANTED TO OF BASE RATES OF STOCK PRICE RATES OF STOCK PRICE
OPTIONS/ EMPLOYEES PRICE APPRECIATION FOR APPRECIATION FOR
SARS IN FISCAL PER EXPIRATION OPTION TERM - OPTION TERM -
NAME GRANTED(#) YEAR (1) SHARE DATE 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Gary S. Howard (2) 100,000 21.8% $16.63 05-27-07 $1,045,537 $2,649,597
Lawrence Flinn, Jr. -- -- -- -- -- --
Peter C. Boylan III (2) 86,000 18.8% $15.75 04-30-07 $ 851,838 $2,158,724
Charles Butler Ammann -- -- -- -- -- --
Craig M. Waggy (2) 18,000 3.9% $15.75 04-30-07 $ 178,292 $ 451,826
</TABLE>
(1) Computation includes 15,000 options granted under the United Video
Satellite Group, Inc. Stock Option Plan for Non-Employee
Directors.
(2) Incentive and non-qualified stock options to acquire shares of the
Company's Class A Common Stock.
6
<PAGE>
The following table sets forth information concerning options
exercised in 1997 and outstanding options held by the Named Executive
Officers as of December 31, 1997:
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN
LAST FISCAL YEAR AND YEAR-END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED IN-
SHARES UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
ACQUIRED ON VALUE DECEMBER 31, 1997 (#) DECEMBER 31, 1997 ($)(1)
NAME EXERCISE (#) REALIZED ($) EXERCISABLE / UNEXERCISABLE EXERCISABLE / UNEXERCISABLE
<S> <C> <C> <C> <C>
Gary S. Howard -- -- -- / 100,000 -- / $1,212,500
Lawrence Flinn, Jr. -- -- -- / -- -- / --
Peter C. Boylan III -- -- 220,244 / 206,000 $3,699,514 / $1,838,000
Charles Butler Ammann -- -- 2,800 / 11,200 $ 45,500 / $ 182,000
Craig M. Waggy -- -- 2,800 / 29,200 $ 45,500 / $ 416,000
</TABLE>
(1) The value of unexercised in-the-money options is calculated based
upon the last reported sales price per share of the Company's
Class A Common Stock on the Nasdaq National Market on December 31,
1997 ($28 3/4), less the exercise price.
7
<PAGE>
Directors' Compensation
Directors who are not also employees of the Company or its
subsidiaries receive a fee of $4,000 per meeting attended in person and
a fee of $2,000 per committee meeting attended in person, unless such
committee meeting is held on the same day as a meeting of the full
Board of Directors. Telephonic meetings of boards and committees are
compensable at the rate of $400. Directors who are also employees of
the Company or its subsidiaries receive no additional compensation for
serving as directors. The Company reimburses all of its directors for
reasonable travel and out-of-pocket expenses in connection with their
attendance at meetings of the Board of Directors.
The Company adopted the United Video Satellite Group, Inc. Stock
Option Plan for Non-Employee Directors (the "Directors Plan") on March
8, 1996, subject to stockholder approval, which was given on May 15,
1996. The Company has reserved 165,000 shares of Class A Common Stock
to be issued pursuant to the exercise of options granted under the
Directors Plan. The Directors Plan provided each non-employee director
as of May 15, 1996, an option to purchase 15,000 shares of Class A
Common Stock. Each non-employee director who is newly elected to the
Board of Directors will be granted an option to purchase 15,000 shares
of Class A Common Stock if sufficient shares are then available for
grant thereunder or, if not, an option to purchase the number of shares
then available for grant thereunder. Options granted under the
Directors Plan vest at the rate of 20% per year, beginning one year
after the date of grant; however, upon a change in control of the
Company, as defined in the Directors Plan, the options fully vest.
Employment Agreements
The Company has employment agreements with Messrs. Flinn and
Boylan. The agreements have terms ending on January 25, 1999, and
provide for 1998 base salaries of $698,625 and $400,000 for Messrs.
Flinn and Boylan, respectively, with annual increases of 8% in base
salary for Mr. Flinn and 12.5% in base salary for Mr. Boylan. Bonuses
may be granted from time to time at the discretion of the Compensation
Committee. Messrs. Flinn and Boylan have each agreed they will not
compete against the Company during the period they are employed by the
Company and for three years after termination of the agreement.
Employment may be terminated by the Company at any time, with or
without cause. If employment is terminated without cause, the
terminated individual is entitled to (i) a continuation of certain
employee benefits, (ii) a severance payment equal to the amount of the
base salary that would have been receivable through the later of the
remainder of the agreement's term or one year from the date of
termination, and (iii) payment of one-half of the base salary for the
balance of the three-year period of the agreement not to compete
(unless the terminated individual is employed or engaged as a full-time
consultant). If employment is terminated by the Company or if the
individual resigns after being assigned to a position of lesser
responsibility, in either case within a six-month period after a change
of control, the individual is entitled to a continuation of certain
employee benefits and a severance payment equal to the amount of their
base salary for the remainder of a two-year period following the change
in control.
Mr. Flinn resigned as Chairman of the Board and Chief Executive
Officer of the Company during 1997 due to health concerns but continues
to serve on the Board of Directors, Executive Committee and
Compensation Committee and as an advisor to the Company at a reduced
salary of $250,000 with no bonus.
8
<PAGE>
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
The Compensation Committee was established to make recommendations
regarding compensation, including incentive compensation, stock bonus,
stock option, and other incentive or stock plans, and previously
administered the Company's Equity Incentive Plan. The Compensation
Committee also reviews and approves, subject to ratification by the
Board of Directors, all compensation to the executive officers. The
Compensation Committee currently consists of Messrs. Wargo (Chairman),
Bennett, Flinn and Hindery.
The Special Compensation Committee was established to grant awards
under the Company's Equity Incentive Plan and to make other
compensation awards where necessary in order to comply with the
requirements of Section 162(m) of the Code. The Special Compensation
Committee currently consists of two members of the Compensation
Committee, Messrs. Bennett and Wargo.
Mr. Flinn was the Chairman of the Board of Directors and Chief
Executive Officer of the Company through June 1997.
Mr. Hindery is President and Chief Operating Officer of TCI and
Mr. Bennett is an Executive Vice President of TCI. TCI purchased $8.1
million of video, program promotion and guide services and subscriber
management services from the Company during 1997. Additionally, TCI
purchased system integration services from the Company totaling $1.2
million during 1997. The Company purchased $36.8 million of
programming and production services from TCI during 1997.
On February 17, 1998, the Company announced plans to acquire
Liberty's approximate 40% interest in SNG as part of a transaction
subject to, among other things, stockholder approval. The transaction,
which also includes Liberty's business that distributes to cable
television systems and other multi-channel video distributors, four
network affiliates, one public broadcast station and one independent
television station, collectively known as Denver 6, and certain other
programming interests will be effected on a tax-free basis by UVSG
issuing 6,375,000 shares of Class A Common Stock.
9
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information as of April 28,
1998, regarding ownership of UVSG Common Stock by (1) each person
believed by UVSG to be the beneficial owner of more than five percent
of its outstanding Common Stock; (2) each Director and the Named
Executive Officers, and (3) all current executive officers and
directors of UVSG as a group. Shares of UVSG Class B Common Stock are
convertible immediately into shares of UVSG Class A Common Stock on a
one-for-one basis and, accordingly, holders of UVSG Class B Common
Stock are deemed to own beneficially the same number of shares of UVSG
Class A Common Stock. The table below does not reflect such beneficial
ownership of UVSG Class A Common Stock.
UVSG Class A UVSG Class B
Common Stock Common Stock
---------------- ---------------
Percent of
Vote of All
Number Percent Number Percent Outstanding
of of of of UVSG Common
Beneficial Owner Shares Class Shares Class Stock
- ---------------- ------ ------- ------ ------- -----------
Tele-Communications,
Inc. (1)(2) 14,518,760 59.8% 12,373,294 100% 93.4%
Wanger Capital
Management (3) 1,483,400 6.1% -- -- 1.0%
Robert R. Bennett -- -- -- -- *
Leo J. Hindery, Jr. -- -- -- -- *
Larry E. Romrell (4) 6,000 * -- -- *
J. David Wargo (4) 93,500 * -- -- *
Lawrence Flinn, Jr.(5) 59,001 * -- -- *
Gary S. Howard -- * -- -- *
Peter C. Boylan III
(6) 267,444 * -- -- *
Charles Butler Ammann
(7) 5,600 * -- -- *
Craig M. Waggy (8) 9,200 * -- -- *
All Directors and
Executive Officers
as a Group
(10 persons)(9) 440,745 1.8% -- -- *
10
<PAGE>
* Less than 1%
(1) The address of Tele-Communications, Inc. is 5619 DTC Parkway,
Englewood, Colorado 80111-3000.
(2) TCI is party to a Stockholder Agreement with the Company
providing for certain matters relating to the voting of equity
securities of the Company held by it. See "Stockholder Agreement
with TCI".
(3) The address of Wanger Capital Management is 227 West Monroe
Street, Suite 3000, Chicago, Illinois 60606-5016.
(4) Includes 3,000 shares of Class A Common Stock subject to
presently exercisable options and 3,000 shares of Class A Common
Stock subject to options that will become exercisable within 60
days.
(5) Includes 59,001 shares of Class A Common Stock owned by the
Lawrence Flinn, Jr., Charitable Trust of which Mr. Flinn is
Trustee. Mr. Flinn disclaims beneficial ownership of such
shares.
(6) Includes 206,092 shares of Class A Common Stock subject to
presently exercisable options and 47,200 shares of Class A Common
Stock subject to options that will become exercisable within 60
days.
(7) Includes 5,600 shares of Class A Common Stock subject to
presently exercisable options.
(8) Includes 5,600 shares of Class A Common Stock subject to
presently exercisable options and 3,600 shares of Class A Common
Stock subject to options that will become exercisable within 60
days.
(9) Includes 223,292 shares of Class A Common Stock subject to
presently exercisable options and 56,800 shares of Class A Common
Stock subject to options that will become exercisable within 60
days.
11
<PAGE>
Item 13. Certain Relationships and Related Transactions
TCI purchased $8.1 million of video, program promotion and guide
services and subscriber management services from the Company during
1997. Additionally, TCI purchased system integration services from the
Company totaling $1.2 million during 1997. The Company purchased $36.8
million of programming and production services from TCI during 1997.
On February 17, 1998, the Company announced plans to acquire
Liberty's approximate 40% interest in SNG as part of a transaction
subject to, among other things, stockholder approval. The transaction,
which also includes Liberty's business that distributes to cable
television systems and other multi-channel video distributors, four
network affiliates, one public broadcast station and one independent
television station, collectively known as Denver 6, and certain other
programming interests will be effected on a tax-free basis by UVSG
issuing 6,375,000 shares of Class A Common Stock.
12
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
UNITED VIDEO SATELLITE GROUP, INC.
a Delaware corporation
Dated: April 30, 1998 By: /s/ Peter C. Boylan III
-----------------------------
Peter C. Boylan III
President and
Chief Operating Officer
13
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