-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KGmae20Bizt3iUXfEButGAIWhheTDLpk+OO6DD8+9jKodroYtEhQ9bh8kAkhv7ic 0oU98ne32fkAzARgdf7kGw== 0000878246-97-000015.txt : 19971029 0000878246-97-000015.hdr.sgml : 19971029 ACCESSION NUMBER: 0000878246-97-000015 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19971028 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARMONY HOLDINGS INC CENTRAL INDEX KEY: 0000878246 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 954333330 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-19577 FILM NUMBER: 97701905 BUSINESS ADDRESS: STREET 1: 1990 WESTWOOD BLVD STREET 2: SUITE 310 CITY: LOS ANGELES STATE: CA ZIP: 90025-4676 BUSINESS PHONE: 3104467700 MAIL ADDRESS: STREET 1: 1990 WESTWOOD INC CITY: LOA ANGLES STATE: CA ZIP: 90025 10-K/A 1 SECOND AMENDMENT TO ANNUAL REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K/A-2 (Mark One) [X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the Fiscal Year ended June 30, 1997; or [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the Transition Period from ______ to ______ Commission File Number 1-19577 HARMONY HOLDINGS, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 95-4333330 (State or Other Jurisdiction (I.R.S. Employer Identification No.) of Incorporation or Organization) 1990 Westwood Boulevard, Suite 310 Los Angeles, California 90025-4676 (Address of Principal Executive (Zip Code) Offices) Registrant's Telephone Number, Including Area Code: (310) 446-7700 Securities Registered Pursuant to Section 12(b) of the Act: NONE Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, $.01 par value (Title of Class) 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. [ ] State the aggregate market value of the voting stock held by non-affiliates of the Registrant (based upon the average of the closing bid and asked prices of such stock as reported on the National Association of Securities Dealers Automated Quotation System as of September 24, 1997): Common Stock, $.01 par valueC$13,312,604 Indicate the number of shares outstanding of each of the Registrant's classes of Common Stock, as of the latest practicable date. Class Outstanding at October 28, 1997 Common Stock, par value 6,487,429 shares $.01 per share DOCUMENTS INCORPORATED BY REFERENCE None 1 ITEM 11. EXECUTIVE COMPENSATION Summary of Executive Officer Compensation. The following table sets forth the total compensation paid or accrued by the Company to the Chief Executive Officer and the other most highly compensated executive officer of the Company who served in such capacities during fiscal 1997 ("Named Executive Officers") whose aggregate cash compensation exceeded $100,000 for all services rendered to the Company and its subsidiaries during each of the last three fiscal years:
Summary Compensation Table Long Term Compensation Awards Fiscal Year Salary Bonus Other Annual Options/SARs Name and Position Ended Amount Amount Compensation (Number) Harvey Bibicoff, Chief Executive Officer 1997 247,200 -- -- 350,000 1996 165,000 -- -- -- 1995 165,288 -- -- -- Brian Rackohn, Chief Financial Officer 1997 133,900 -- -- 75,000 (1) 1996 114,900 -- -- 25,000 1995 101,923 -- -- 25,000
-------------------- (1) In connection with the issuance of 75,000 options exercisable at a price of $1.50, 25,000 options were cancelled that had been issued at an exercise price of $3.00 in fiscal 1996 and 25,000 options were cancelled that had been issued at an exercise price of $3.30 in fiscal 1995. 2 Stock Option Grants in Fiscal Year ended June 30, 1997. The following table contains information concerning the grant of stock options under the Stock Option Plan to the Named Executive Officers in the fiscal year ended June 30, 1997:
Stock Option Grants in Fiscal Year ended June 30, 1997 Potential Realizable Value at Assumed Annual Rates of Stock Price Appreciation Individual Grants for Option Term % of Total Options Options Granted in Exercise Expiration Name Granted Fiscal Year Price Date 5% (2) 10% (2) Harvey Bibicoff 350,000 36% $1.50 10/01/01 $145,048 $320,518 Brian Rackohn 75,000(1) 8% 1.50 01/02/02 31,082 68,682
(1) In connection with the issuance of 75,000 options, 25,000 options were cancelled that had been issued at $3.00 in fiscal 1996 and 25,000 options were cancelled that had been issued at $3.30 in fiscal 1995. (2) Potential gains and net of exercise price, but before taxes associated with exercise. The 5% and 10% assumed compounded annual rates of stock price appreciation are mandated by rules of the Securities and Exchange Commission. There can be no assurance provided to any executive officer or any other holder of the Company's securities that the actual stock price appreciation over the ten-year option term will be at the assumed 5% and 10% levels or at any other defined level. Unless the market price of the Common Stock appreciates over the option term, no value will be realized from the option grants made to persons named in this table. Stock Option Exercises in Fiscal Year ended June 30, 1997 and Option Values at June 30, 1997. The following table provides information on the Named Executive Officers' unexercised options at June 30, 1997. None of the Named Executive Officers exercised any options during the fiscal year ended June 30, 1997:
Stock Option Values at June 30, 1997 For the year ended 6/30/97 Name Shares acquired Dollar value Number of Value of from options Realized on unexercised In-the-Money exercised exercise Options/SARs Options/SARs at FY-End (#) at FY-End ($) (1) ------------------- ----------------- ----------------- ----------------- ------ ------------------- ------ ------------------- ----------------- ----------------- ----------------- ------ ------------------- ------ Harvey Bibicoff 0 0 850,000 (e) 670,313 (e) Brian Rackohn 0 0 50,000 (e) 40,625 (e) 25,000 (ue) 20,313 (ue)
Exercisable (e) Unexercisable (ue) (1) Represents the closing price of the Common Stock on June 30, 1997 minus the exercise price of the options. 3
Ten Year Stock Option Repricings Name Date Number of Market Price of Exercise Price at New Length of securities Stock at Time Time of Repricing Exercise Original underlying of Time of or Amendment ($) Price ($) Option Term Stock Options Repricing or Remaining at Repriced or Amendment ($) Date of Amended (#) Repricing or Amendment ------------------- ------------ ----------------- ----------------- -------------------- ---------- -------------- Brian Rackohn 01/02/97 25,000 1.25 3.30 1.50 2.1years Brian Rackohn 01/02/97 25,000 1.25 3.00 1.50 3.25years
Compensation of Directors No fees are paid to Directors of the Company who are also officers or employees of the Company for their services as members of the Board of Directors. Harry Shuster and Ivan Berkowitz both of whom resigned as Board of Director members on July 22, 1997 had been issued five year stock options to acquire 25,000 shares at an exercise price of $2.00 during the fiscal year ended June 30, 1997 and paid $250 for work on the audit committee. The Company reimbursed all Directors for reasonable travel and lodging expenses incurred in attending meetings of the Board of Directors. Concurrently with his election as a Director and Chairman of the Board of the Company on July 22, 1997, Christopher T. Dahl was appointed the Company's President. Mr. Dahl presently receives an annual salary of $75,000 for his services as President. On August 1, 1997 the Company entered into an independent contractor agreement with William Cameron, a Director of the Company. Under the agreement Mr. Cameron will be providing non-exclusive services to the Company including, without limitation, the initiation, promotion, development and maintenance of business and investment contacts relating to increasing the Company's sales , marketing and investment opportunities. The contract is at will and compensation under the contract is $3,000 for every month that it is in force. COMPENSATION REPORT During the fiscal year ended June 30, 1997, the Company did not have a Compensation Committee and therefore, the entire Board acted on the matters that would have been acted on by Compensation Committee. The Compensation Report set forth below described the compensation policies of the Board of Directors for the fiscal year ended June 30, 1997 and reflects the salaries and bonuses paid during that fiscal year. The current Board of Directors assumed their positions in July 1997 and established a Compensation Committee in October 1997. Accordingly, the policies described below may not reflect the policies of the Compensation Committee or the current Board of Directors. The Compensation Report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such act. Overview and Philosophy The Board of Directors establishes the general compensation policies of the Company, determines the compensation levels for the Chief Executive Officer ("CEO") and other senior Company officers, and administers and/or provides oversight on all short-term (annual) incentive plans, all long-term incentive plans, including the Stock Option Plan, and approves any grants of stock options, stock and/or stock warrants to Company officers. The Company applies a consistent philosophy to compensation for all employees, including the officers. This philosophy is based upon the premise that the achievements of the Company result from the coordinated efforts of all individuals working toward common, defined objectives. The Company strives to attain these objectives through teamwork that is focused upon meeting the expectations of customers and stockholders. 4 Compensation Policy The Company's compensation policy is to ensure that a substantial portion of potential aggregate annual compensation be contingent upon the performance of the Company. The goals of the compensation programs are to align compensation with performance and to enable the Company to attract, retain and reward personnel who contribute to the success of the Company. The Company's compensation program for officers is based on the same guidelines that apply to all Company employees. The Company is committed to providing incentive opportunities that, together with base salaries (where appropriate), provide for competitive and equitable total cash compensation opportunities. Additionally, future base salary increases or incentive pay opportunities are directly linked to the achievement of key financial objectives. The variable compensation plans focus respective employees on the immediate objectives of the business and their job; encourage employees to work together as a team to achieve Company success; and, recognize and reward the sustained contribution of outstanding performers within the Company. Components of Compensation The Company has compensation programs that include both cash and equity components. The Board has established base salary, short and long-term incentive compensation mix targets for each officer and for all employees, where applicable, of the Company. The compensation mix targets define the desired percentage for each component of total compensation. With respect to cash compensation for officers, the Company sets base salaries and target incentive opportunities for each officer by reviewing the cash compensation provided to comparable positions and through assessing the internal equity of cash compensation opportunities based on position responsibilities, the performance of each incumbent, and overall levels of contribution to the Company. When considering competitive pay practices, the Board reviews compensation levels in both the entertainment industry and general industry at firms comparable in size and revenue to the Company. With regard to equity-based compensation for officers, the Company considered and granted stock options for the reported year. Stock option grants were based on relative position, responsibilities and/or historical and expected contribution to the Company. Compensation of the Chief Executive Officer Mr. Bibicoff has been Chief Executive Officer of the Company since January 19, 1996. Based on a thorough review, it was determined that Mr. Bibicoff's base salary was within a competitive range of pay, as compared with companies of similar size and scope. In determining Mr. Bibicoff's compensation, the Board considered various factors particularly Mr. Bibicoff's guidance in the Company=s turnaround. See "Employment Agreements" herein. The Board of Directors (at June 30, 1997): Harvey Bibicoff Ivan Berkowitz Harry Shuster Compensation Committee Interlocks and Insider Participation During the fiscal year ended June 30, 1997, the Company had no Compensation Committee or other Board Committee performing equivalent functions. Mr. Bibicoff, the Company=s Chief Executive Officer, served as a Director of the Company until July 22, 1997 and participated in deliberations of the Board concerning the compensation of all executive officers other than himself. Employment Agreements On January 1, 1997, Brian Rackohn, Chief Financial Officer, of the Company, entered into a two-year employment contract with the Company, which contract expires on December 31, 1998. Under the contract, Mr. Rackohn is entitled to a salary of $132,000 in year one and $141,000 in year two. He was also granted five-year options to purchase 75,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. In addition 50,000 existing five-year options previously granted to Mr. Rackohn, to purchase shares of the Company's Common Stock were canceled. See "Executive Compensation" herein. 5 On May 2, 1994, Harvey Bibicoff, Chief Executive Officer entered into a four-year employment contract with the Company, which was to expire on June 30, 1998. Under such agreement, Mr. Bibicoff earned an annual salary of $165,000 and was granted five-year options to purchase 250,000 shares of the Company's Common Stock at an exercise price of $2.50 per share. On October 1, 1996, Mr. Bibicoff entered into an amendment to his May 1994, employment contract that provided for a revised expiration date of August 19, 2000. Mr. Bibicoff then became entitled to an annual salary of $265,000 per year and was granted additional five-year options to purchase 350,000 shares of the Company's Common Stock at an exercise price of $1.50 per share. On July 22, 1997, Mr. Bibicoff entered into an amended and restated employment agreement, which expires on July 21, 1999. Mr. Bibicoff continues to be entitled to a salary of $265,000 per year. However, the Company, at the sole discretion of its Board of Directors, can terminate Mr. Bibicoff's obligations to perform as the Company's Chief Executive Officer upon furnishing ten days written notice. Commencing September 20, 1997, Mr. Bibicoff also obtained the right to resign his obligations and authority as the Company's Chief Executive Officer upon furnishing ten days written notice. Upon either event Mr. Bibicoff would continue to receive all remuneration due him for the remaining term of the agreement. On October 22, 1997, Mr. Bibicoff submitted to the Company the ten days written notice to resign his obligations and authority as the Company's Chief Executive Officer. 6 Comparison of Five Preceding Year Cumulative Stockholder Return The following graph shows the cumulative return experienced by the Company's stockholders during the period July 1, 1992 through June 30, 1997 as compared with the NASDAQ Total Return Index (U.S.) And the NASDAQ Tele-communications Stock Index. The graph assumes $100 on July 1, 1992 in the Company's Common Stock and each of the indices. Total return calculations assume the reinvestment of all dividends. The Company has never paid dividends.
---------------------------------------------------------------------------------------------------------- Fiscal Year End ---------------------------------------------------------------------------------------------------------- 7/01/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97 Harmony Holdings, Inc. 100 200 88 112 68 74 NASDAQ Total return Index (US) 100 126 127 170 218 265 NASDAQ Financial 100 131 148 169 220 322 --------------------------------- ----------- ----------- ----------- ----------- ------------ -----------
7 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. Harmony Holdings, Inc. By:/s/Brian Rackohn Dated: October 28, 1997 Brian Rackohn Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----