U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A No. 1
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No. 0-20243
VALUEVISION INTERNATIONAL, INC.
(Exact Name of Issuer in Its Charter)
Minnesota 41-1673770
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
6740 Shady Oak Road, Minneapolis, MN 55344 - 3433
(Address of Principal Executive Offices) (Zip Code)
612-947-5200
(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.01 par value
Check whether the issuer: (1) 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 checkmark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained in this form, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [x]
Issuer's revenues for its most recent fiscal year: $88,909,853.
As of April 23, 1996, 29,371,748 shares of the Registrant's Common Stock
(the "shares") were outstanding. The aggregate market value of the Common Stock
held by non-affiliates of the registrant on such date, based upon the last sale
price of the Common Stock as reported by Nasdaq on April 23, 1996, was
approximately $198,950,000. For purposes of this computation, affiliates of the
registrant are deemed only to be the registrant's executive officers and
directors.
DOCUMENTS INCORPORATED BY REFERENCE
None
1 of 14
VALUEVISION INTERNATIONAL, INC.
ANNUAL REPORT ON FORM 10-K/A NO. 1
FOR THE FISCAL YEAR ENDED
JANUARY 31, 1996
TABLE OF CONTENTS
PART III
Page
Item 10. Directors and Executive Officers of the Registrant;
Compliance with Section 16(a) 3
Item 11. Executive Compensation 6
Item 12. Security Ownership of Certain Beneficial Owners and Management 11
Item 13. Certain Relationships and Related Transactions 13
SIGNATURES
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
COMPLIANCE WITH SECTION 16(A)
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names, ages and titles at ValueVision
International, Inc., principal occupations and employment for the past five
years of the persons serving as executive officers and directors of the Company.
NAME AGE POSITION(S) HELD
Robert L. Johander 50 Chairman of the Board and Chief Executive Officer
Nicholas M. Jaksich 51 President, Chief Operating Officer and Director
Edward A. Karr 48 Executive Vice President, Merchandising and Programming
Mark A. Payne 36 Senior Vice President, Business Development and Acquisitions
and Secretary
Stuart R. Romenesko 33 Vice President Finance, Chief Financial Officer, Treasurer and
Assistant Secretary
Michael L. Jones 37 Vice President, Television Broadcasting
Gary G. Kazmer 37 Vice President, Warehouse and Telemarketing Operations
Scott A. Lindquist 49 Vice President, Administration
Robert J. Korkowski 55 Director
Marshall S. Geller 57 Director
Arthur B. Laffer 55 Director
John Workman 45 Director
Robert L. Johander, a founder of the Company, has served as Chairman of
the Board and Chief Executive Officer of the Company since June 1990. Mr.
Johander's experience in television home shopping began in 1984 as president of
Telethon Marketing Company, where he was responsible for the creation,
production, and management of Morey's Markdown Market, a half-hour national
cable television home shopping program, which was subsequently acquired by
C.O.M.B. Co. ("C.O.M.B."), a Minneapolis-based mail order liquidator of consumer
merchandise. In early 1986, Mr. Johander, as General Manager of C.O.M.B.'s Value
Network, conceived and managed the launch of Cable Value Network, Inc., a
joint-venture television home shopping network formed by C.O.M.B. and several
national cable television system operators. In 1987, C.O.M.B. changed its name
to CVN Companies, Inc. ("CVN"), which was subsequently acquired by QVC Network,
Inc.
Nicholas M. Jaksich, a founder of the Company, has served as President
and Chief Operating Officer and as a director of the Company since June 1990.
From February 1984 to June 1986, Mr. Jaksich was Vice President, Distribution
and Operations for Lillian Vernon Corporation, a national direct mail
merchandising firm. In July 1986, Mr. Jaksich joined C.O.M.B. to assist in the
launch of its television activities. His responsibilities included the direct
day-to-day supervision of television production and merchandising activities;
the development of various television order response, inventory, and sales
tracking systems, and supervision of on-air hosts. In 1987, Mr. Jaksich
succeeded Mr. Johander as divisional Senior Vice President of CVN-Television, a
division of CVN.
Edward A. Karr has served as the Company's Executive Vice President,
Merchandising and Programming since July 1993. Mr. Karr served as the Senior
Vice President of Sales and Marketing for Ravel Inc., a manufacturer of gold
jewelry from June 1992 to July 1993. Mr. Karr served in various management
positions with QVC Network, Inc. from March 1987 to June 1992, most recently as
the Senior Vice President of Merchandising.
Mark A. Payne has served the Company as Senior Vice President, Business
Development and Acquisitions since August 1995. Mr. Payne served the Company as
Vice President, Finance and Chief Financial Officer from December 1990 until
August 1995 and has served the Company as Secretary since December 1993.
Stuart R. Romenesko has served the Company as Vice President Finance,
Chief Financial Officer, Treasurer and Assistant Secretary since August 1995.
Mr. Romenesko joined the Company in March 1994 as Vice President, Chief
Accounting Officer. From December 1991 to March 1994, Mr. Romenesko, a Certified
Public Accountant, was a Senior Manager in the Accounting and Audit Division of
Shinners, Hucovski & Company, S.C. From July 1985 to November 1991, Mr.
Romenesko served in a variety of capacities at Arthur Andersen LLP, an
international accounting firm, leaving in 1991 as an experienced manager in the
firm's Audit and Business Advisory Practice.
Michael L. Jones joined the Company as Vice President, Television
Broadcasting in September 1993. From September 1992 to July 1993, Mr. Jones
served as Vice President, Broadcasting of Corridor Broadcast. From October 1990
to September 1992, Mr. Jones served as Vice President and General Sales Manager
of WDAS AM/FM in Philadelphia.
Gary G. Kazmer has served as the Company's Vice President, Warehouse and
Telemarketing Operations since June 1994. Prior to joining the Company, Mr.
Kazmer served in various management positions with QVC Network, Inc. from
November 1988 through May 1994, most recently as Director of Engineering and
Facilities.
Scott A. Lindquist has served as the Company's Vice President,
Administration since November 1995. Prior to joining the Company, Mr. Lindquist
served as County Assessor for St. Louis County, Minnesota, from May 1984 to
November 1995.
Robert J. Korkowski has been a director of the Company since 1993. From
1989 to 1996 Mr. Korkowski was the Senior Vice President of Finance and a
Director of Opus Corporation, a privately held real estate developer and
construction company. From 1986 to 1989 Mr. Korkowski was the Vice President and
Chief Financial Officer of National Computer Systems, Inc., a publicly held
information system company based in Minneapolis, and from 1974 to 1986 he was
Executive Vice President and Chief Financial Officer of G. Heileman Brewing
Company.
Marshall S. Geller has been a director of the Company since May 1993 and
Vice Chairman of the Board since August 1994. Mr. Geller is currently the
Chairman, CEO, and Founding Partner of Geller & Friend Capital Partners, Inc.,
which was formed in November 1995. From 1991 to October 1995, Mr. Geller was the
Senior Managing Partner and founder of Golenberg and Geller, Inc., a merchant
banking investment company. From 1988 to 1990, he was Vice-Chairman of Gruntal &
Co., a New York Stock Exchange investment banking firm. Prior to 1988, Mr.
Geller spent 21 years with Bear Stearns & Co., an investment banking firm, where
he served as senior managing director of the Los Angeles, San Francisco, Chicago
and Hong Kong offices and specialized in the areas of corporate finance, public
finance, and institutional equities and debt. Marshall Geller formerly served as
Interim Co-Chairman of Hexcel Corporation and is still currently on the Board of
Directors. Mr. Geller was also Interim President and Chief Operating Officer of
Players, Inc., and now serves on their board and is Chairman of their Investment
Committee. Mr. Geller also serves on the Boards of the following companies:
Ballantyne of Omaha, Inc., Styles-on-Video, Inc. and Dycam, Inc.
Dr. Arthur B. Laffer has been a director of the Company since June 1994.
Dr. Laffer is the Chief Executive Officer of A.B. Laffer, V.A. Canto &
Associates (formerly A.B. Laffer Associates) and has held such position since
1989. Since 1981, Dr. Laffer has served as Chief Executive Officer of Laffer
Advisors Incorporated and since 1992, he has served as Chairman of Calport Asset
Management, Inc. From 1993 through May 1994, Dr. Laffer also served as President
of Canto Advisors Incorporated. Dr. Laffer formerly was a Distinguished
University Professor at Pepperdine University and a member of the Pepperdine
Board of Directors. He was the Charles B. Thornton Professor of Business
Economics at the University of Southern California from 1976 through 1984 and
Associate Professor of Business Economics at the University of Chicago from 1970
through 1976, and had been on the Chicago faculty since 1967. Dr. Laffer served
as chief economist in the Office of Management and Budget from October 1970
through July 1972, was a consultant to the Secretaries of Treasury and Defense
during the years 1972 through 1977 and was a member of President Reagan's
Economic Policy Advisory Board and of the Policy Committee and the Board of
Directors of the American Council for Capital Formation (Washington, D.C.). Dr.
Laffer also serves as a director of U.S. Filter Corp. and Mastec, Inc., which
are public companies, and is a director of the Nicholas Applegate Mutual Funds
and Nicholas Applegate Growth Equity Funds.
John Workman has been a director of the Company since August 1995. Mr.
Workman has been Executive Vice President, Chief Financial Officer and Assistant
Secretary of Montgomery Ward Hold Corp. since January 1994. Prior thereto, he
served as Senior Vice President, Chief Financial Officer and Assistant Secretary
of Montgomery Ward Holding Corp. since August 1992 and Vice President and
Assistant Secretary since May 1992. Mr. Workman has been Executive Vice
President and Chief Financial Officer of Montgomery Ward since January 1994 and
served as Senior Vice President and Chief Financial Officer of Montgomery Ward
from August 1992 to January 1994. Prior thereto, he served as Vice President and
Corporate Controller of Montgomery Ward from January 1991 through August 1992
and Corporate Controller of Montgomery Ward from August 1988 through January
1991. Mr. Workman is also a director of Montgomery Ward Holding Corp.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) reports they file. To the Company's
knowledge, based solely on review of the copies of such reports furnished to the
Company during fiscal 1996, all Section 16(a) filing requirements applicable to
its officers, directors and greater than ten percent beneficial owners were
complied with, except with respect to Scott Lindquist, the Company's Vice
President, Administration, who filed one late report.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth certain summary information with respect
to compensation paid or accrued during the fiscal years ended January 31, 1996,
1995 and 1994 for the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers who were serving
as executive officers on January 31, 1996, and whose salary and bonus exceeded
$100,000 during fiscal year ended January 31, 1996:
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
---------------------------------------- ---------------
Awards
Securities
Fiscal Other Annual Underlying
Name and Principal Position Year Salary Compensation Options/SARs
- --------------------------- ---- ------ ------------ ------------
($) ($) (#)
Robert L. Johander 1996 181,442 6,000 (1) 0
Chief Executive Officer 1995 125,000 6,000 (1) 0
and Chairman of the Board 1994 126,261 8,346 (1) 750,000 (3)
Nicholas M. Jaksich 1996 165,635 6,000 (1) 0
Chief Operating Officer 1995 115,000 6,000 (1) 0
and President 1994 115,358 6,000 (1) 750,000 (3)
Edward A. Karr 1996 134,231 5,400 (1) 100,000
Executive Vice President, 1995 125,000 3,150 (1) 50,000
Merchandising & Programming 1994 47,115 0 100,000
Mark A. Payne 1996 129,616 55,400 (2) 100,000
Senior Vice President Business 1995 90,000 2,250 (1) 50,000
Development and Acquisitions 1994 90,000 0 0
Michael L. Jones 1996 120,000 5,400 (1) 0
Vice President, Broadcast Television 1995 108,462 3,150 (1) 115,000
1994 57,692 0 0
- ------------------------------------
(1) Automobile allowance.
(2) Includes a $50,000 bonus and a $5,400 automobile allowance.
(3) In fiscal year 1994, pursuant to employment agreements with Messrs.
Johander and Jaksich, the Company granted to each of Messrs. Johander and
Jaksich options to purchase an aggregate of 1,000,000 shares of the
Company's common stock, which were to vest in specified amounts based
upon the Company achieving certain specified financial goals. In August
1995, the Company and Messrs. Johander and Jaksich amended such
employment agreements to, among other things, adjust the exercise price
of such options and reduce the aggregate number of shares of the
Company's common stock issuable upon exercise of such options to 750,000.
The options still vest according to the Company achieving the same
specified financial goals or in September 2003, assuming that either
Messrs. Johander or Jaksich is still an employee of the Company. See
"Employment Agreements."
OPTION GRANTS DURING FISCAL YEAR ENDED JANUARY 31, 1996
The following table sets forth information with respect to options to
purchase shares of the Company's common stock granted during the fiscal year
ended January 31, 1996 to each of the executive officers in the Summary
Compensation Table above. No stock appreciation rights ("SARs") were granted to
any of the persons listed on the table below during fiscal 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options/ Annual Rates of Stock
Underlying SARs Granted Exercise or Prices Appreciation for
Options/SARs to Employees Base Price Expiration Option Term(1)
Name Granted (#) in Fiscal Year (3) ($/Sh) Date (2) 5%($) 10%($)
- ---- ----------- ------------------ ------ -------- --------- ---------
Robert L. Johander 0 0% -- --
Nicholas M. Jaksich 0 0% -- --
Edward A. Karr 100,000 29.7% $6.00 August 2005 $377,337 $956,246
Mark A. Payne 100,000 29.7% $5.625 March 2005 $353,753 $896,480
Michael L. Jones 0 0% -- --
(1) The amounts shown in these columns are the result of calculations at
assumed annual rates required by the Securities and Exchange Commission
and are not intended to forecast possible future appreciation, if any, of
the price of the Company's common stock. The Company did not use an
alternative formula for a grant date valuation, as the Company is not
aware of any formula that will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
(2) Options were granted at an exercise price equal to the Fair Market Value
of the Company's common stock on the date of grant and vest over a five
year term in increments of 20% each on the anniversary of the date of
grant. Such options will expire five years after vesting.
(3) Percentage calculations in this column are based solely on the number of
options granted to employees of the Company and do not take into account
options granted to non-employee consultants or directors of the Company.
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table sets forth information with respect to the unexercised
options held by each of the executive officers named in the Summary Compensation
Table above, as of January 31, 1996. None of such persons exercised any options
during fiscal 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
Value of
Number of Securities Unexercised
Underlying Unexercised In-The-Money
Options/SARs Options/SARs
at January 31, 1996 (#) at January 31, 1996 ($)
(Exercisable/ (Exercisable/
Name Unexercisable) Unexercisable) (1)
Robert L. Johander 300,000/450,000 0/0
Nicholas M. Jaksich 300,000/450,000 0/0
Edward A. Karr 0/100,000 0/12,500
20,000/ 30,000 32,500/48,750
66,667/ 33,333 33,333/16,667
Mark A. Payne 0/100,000 0/50,000
50,000/0 68,750/0
5,000/0 22,812/0
Michael L. Jones 28,137/0 0/0
86,863/0 119,437/0
(1) The dollar amount represents the positive spread between the exercise
price of the options and the closing price per share of the Company's
common stock on the Nasdaq National Market of $6.125 on January 31, 1996.
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with each of Robert L.
Johander and Nicholas M. Jaksich which expire on January 31, 1999. Effective
July 1, 1995, the annual base salaries for Messrs. Johander and Jaksich were
$220,000 and $200,000 respectively. Messrs. Johander and Jaksich are eligible to
receive discretionary bonuses, as determined by the Board of Directors. Their
base salaries will be increased by 5% annually, or by a higher amount if the
Company achieves certain pre-tax net income goals. The base salaries of both
Messrs. Johander and Jaksich were increased to $237,500 on January 31, 1996, due
to the Company achieving minimum pre-tax income of at least $7.25 million, for
the fiscal year ended on such date (the "Fiscal 1996 Net Income Goals"). The
base salaries of Messrs. Johander and Jaksich will be increased to $293,750 and
$350,000 on January 31, 1997 and 1998, respectively, if the Company achieves
minimum pre-tax income of at least $8.5 million and $11.75 million in the fiscal
year ending on such date (together with the fiscal 1996 Net Income Goals, the
"Net Income Goals"). Messrs. Johander and Jaksich cannot be terminated except
for disability or cause. Messrs. Johander and Jaksich have agreed not to compete
in the television home shopping business or in any other business in which the
Company has engaged during the six months prior to the employee's termination,
during the term of the employment agreement and for the period ending (i) one
year after the expiration of the employment agreement and any extension thereof,
(ii) two years after termination for cause due to a willful failure to perform
under the terms of the employment agreement, or (iii) five years after
termination for any other reason other than cause, including the employee's
voluntary termination.
In September 1993 and in connection with entering into employment
agreements with Messrs. Johander and Jaksich, the employment agreements provided
the grant of options to purchase 100,000 shares of common stock at $15.00 (in
excess of the then fair market value) per share exercisable until January 31,
2002 and 100,000 shares of common stock at $25.00 (in excess of the then fair
market value) per share exercisable until January 31, 2005 on each of January
31, 1995, 1996, 1997, 1998 and 1999 if the Company achieved certain pre-tax
income goals, as defined. In the event that the Company fails to achieve a Net
Income Goal in any year, Messrs. Johander and Jaksich will vest in the options
attributable to such "missed" year if in a subsequent year the Company's pre-tax
net income is greater than or equal to such subsequent year's Net Income Goal
plus the Net Income Goal for the missed year. In August 1995, pursuant to an
independent compensation study, the Compensation Committee, consisting of
non-employee Directors, recommended and with the approval of the Board of
Directors, approved and repriced the exercise price of the granted options with
original exercise prices of $15.00 and $25.00 per share to $8.50 and $10.50 per
share (in excess of the then fair market value), respectively. In addition, the
number of shares available per each respective grant was reduced from 100,000 to
75,000 options and the options vest and become exercisable at the earlier of
meeting the Net Income Goal or in September 2003, assuming that either of
Messrs. Johander or Jaksich is still an employee of the Company. The Board of
Directors repriced the exercise price of the options granted because the Board
of Directors believed that, due to the decline in the Company's stock price
since the grant of the options, the options did not provide sufficient long-term
stock based incentive and such incentive would be provided by the repricings.
The Board of Directors believes that the option grants with deferred vesting to
executive officers are important in retaining executive officers and providing
them with incentives consistent with the shareholders' objections for
appreciation in the value of the Company's stock.
On September 1, 1995 the Company entered into an employment agreement
with Edward A. Karr (the "Karr Employment Agreement") and continuing on a
full-time basis for a period of thirty-six (36) months. Pursuant to the Karr
Employment Agreement, the Company has agreed to pay Mr. Karr $150,000 annually,
reimburse him for reasonable and necessary business expenses and granted him
options to purchase 100,000 shares of the Company's common stock. Mr. Karr has
agreed not to compete with the Company in the television home shopping business
for a period of thirty-six (36) months following termination of Mr. Karr's
employment by the Company.
The Company has also entered into any employment agreement with Michael
L. Jones (the "Jones Employment Agreement") commencing on September 1, 1993 and
continuing on a full time basis for a period of twenty-one (21) months. Pursuant
to the Jones Employment Agreement, the Company has agreed to pay Mr. Jones
$120,000 annually, reimburse him for certain office expenses and granted him
options to purchase 115,000 shares of the Company's common stock. Mr. Jones may
not be terminated during the term of the Jones Employment Agreement except for
cause. Mr. Jones has agreed not to compete in the television home shopping
business for a period commencing on June 1, 1995 and ending on the last day of
the twelve (12) full months after the date on which Mr. Jones ceases to be
employed by the Company. Such non-compete period may be extended for up to six
(6) months based upon the number of stock options of the Company exercised by
Mr. Jones.
DIRECTOR COMPENSATION
During the first quarter of the fiscal year ended January 31, 1996, the
Company paid non-employee directors $500 for each board of directors and
committee meetings attended, and $250 for each board of directors and committee
meeting in which such director participated by telephone. Commencing in the
second quarter of the fiscal year ended January 31, 1996, the Company paid
non-employee directors (except the Montgomery Ward nominees) a $20,000 annual
retainer (paid quarterly on a pro rata basis), plus $1,000 for each board of
directors and committee meeting attended, and $750 for each board of directors
and committee meeting in which such director participates by telephone. The
Company also reimburses directors for costs and expenses they incur to attend
board of directors and committee meetings. The Company does not intend to pay
any cash compensation or issue any stock options to directors named by
Montgomery Ward. On August 8, 1995 the Company granted each of Messrs. Geller,
Korkowski and Laffer, options to purchase 10,000 shares at an exercise price of
$6.1875. Such options vest on August 8, 1996 and expire on August 8, 2005.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of May 18, 1996, certain information
regarding the beneficial ownership of securities of the Company by (i) each
person known by the Company to be the beneficial owner of more than 5% of the
outstanding shares, (ii) each of the directors of the Board of Directors of the
Company, (iii) the Chief Executive Officer and each of the executive officers
named in the Summary Compensation Table, and (iv) all directors and executive
officers of the Company as a group. Each shareholder possesses sole voting and
investment power with respect to the Shares listed opposite the holder's name
except as otherwise indicated herein. As of May 18, 1996 there were 29,374,248
shares of Common Stock outstanding.
Number of Shares
Name and Address Beneficially Owned Percent
Robert L. Johander (1) 1,511,011 5.09
6740 Shady Oak Road
Eden Prairie, MN 55344
Nicholas M. Jaksich (2) 1,446,762 4.88
6740 Shady Oak Road
Eden Prairie, MN 55344
Robert J. Korkowski (3) 212,066 *
8000 W. 78th St.
Edina, MN 55439
Mark A. Payne (4) 174,700 *
6740 Shady Oak Road
Eden Prairie, MN 55344
Marshall S. Geller (5) 159,600 *
1875 Century Park East
Los Angeles, CA 90067
Edward A. Karr (6) 130,000 *
6740 Shady Oak Road
Eden Prairie, MN 55344
Arthur B. Laffer (7) 50,000 *
4275 Executive Square
LaJolla, CA 02937
Michael L. Jones (8) 115,000 *
6740 Shady Oak Road
Eden Prairie, MN 55344
John Workman (9) - *
One Montgomery Ward Plaza
Chicago, IL 60671
All directors and executive
officers as a group 3,844,656 12.56
(twelve persons)(9)(10)
*Less than 1%
(1) Such shares include 437,632 shares beneficially owned by Mr. Johander in
his capacity as General Partner to the Robert L. Johander Limited
Partnership. Includes 300,000 shares that are issuable upon exercise of
stock options within 60 days.
(2) Such shares include 423,632 shares beneficially owned by Mr. Jaksich in
his capacity as General Partner to the Nicholas M. Jaksich Limited
Partnership. Includes 300,000 shares that are issuable upon exercise of
stock options within 60 days.
(3) Includes 90,000 shares that are issuable upon exercise of stock options
within 60 days. Includes 2,250 shares owned by Mr. Korkowski's daughter,
as to which shares Mr. Korkowski disclaims beneficial ownership.
(4) Includes 75,000 shares that are issuable upon exercise of stock options
within 60 days. Includes 10,000 shares held by trust of minor children of
Mr. Payne, as to which shares Mr. Payne disclaims beneficial ownership.
(5) Includes 150,000 shares that are issuable upon exercise of stock options
within 60 days.
(6) Includes 120,000 shares that are issuable upon exercise of stock options
within 60 days.
(7) Represents 50,000 shares that are issuable upon exercise of stock options
within 60 days.
(8) Represents 115,000 shares that are issuable upon exercise of stock
options within 60 days.
(9) Does not include the 1,280,000 shares or the Warrants to purchase an
additional 25,000,000 Shares, subject to adjustment (as of May 18, 1996,
the Warrants would be adjusted to purchase 25,799,860 shares), purchased
by Montgomery Ward pursuant to a Securities Purchase Agreement dated
August 8, 1995. Such shares and the Warrants may be deemed to be
beneficially owned by Montgomery Ward. The schedule 13D filed by
Montgomery Ward, Montgomery Ward Holding Corp., and Bernard F. Brennan,
who is the Chairman and Chief Executive Officer of Montgomery Ward
(collectively, the "MW Filers") states that, pursuant to Rule 13d-3 (1)
(i) promulgated under the Securities Exchange Act of 1934, as amended
(the "Act"), the MW Filers may be deemed to have acquired beneficial
ownership of the shares and Warrants to purchase shares reported therein
on March 13, 1995, pursuant to the execution of the Securities Purchase
Agreement. Notwithstanding the foregoing, each of the MW Filers
disclaimed in such Schedule 13D, as of the date thereof, beneficial
ownership of all such shares. Mr. Workman is a designated director by
Montgomery Ward and is an executive officer of Montgomery Ward.
(10) Includes 1,244,667 shares that are issuable upon exercise of stock
options within 60 days and 12,250 Shares as to which the reporting person
disclaims beneficial ownership.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT INDEBTEDNESS
During the year ended January 31, 1996 the Company lent $550,000 to
Nicholas M. Jaksich, the Company's President and Chief Operating Officer, in the
form of two promissory notes. The first promissory note of $50,000 in principal
is due May 15, 1997 and bears interest at 6.80%. Mr. Jaksich has pledged stock
as collateral against the note. The second promissory note of $500,000 in
principal is due November 20, 1996, bears interest at 5 7/8% and the promissory
note is secured by a security interest in certain shares of common stock of the
Company owned by Mr. Jaksich and by a Mortgage on certain real property. As of
April 30, 1996 principal and accrued interest thereon of approximately $567,000
was due the Company by Mr. Jaksich.
As of January 31, 1996 the Company lent $206,000 in the form of various
promissory notes to Mark A. Payne, Senior Vice President of Business Development
and Acquisitions. The promissory notes bear interest of 6.80% to 8.0% and are
due no later than April 15, 1997. As collateral for the promissory notes, Mr.
Payne has pledged all current and future vested but unexercised stock options
and all common stock of the Company owned by him personally. As of April 30,
1996, principal and accrued interest thereon of approximately $226,000 was due
the Company by Mr. Payne.
OTHER TRANSACTIONS
Telethon Television, Inc. ("Telethon") and Television Interests, Inc.
(Television, Inc.") are corporations controlled by each of Messrs. Johander and
Jaksich, respectively, who are directors and officers of the Company. The
Company has previously entered into financing and affiliation agreements (the
"Financing Agreements") for the construction of an aggregate of four lower power
television stations (the "LPTV Stations) with Telethon and Television, Inc. Each
Financing Agreement provides among other things, that the Company: (1) will have
the right, but not he obligation, to finance the cost of construction of and
equipment for the LPTV Stations, not to exceed $86,000 or certain lessor
amounts, (2) will make its programming available to such station, which has the
right, but not the obligation to carry the Company's programming, (3) will pay
such station a programming fee up to $4,600 per month for broadcast of the
Company's programming, (4) for three stations, has an option to purchase the
station for $5,000 each, together with assumption of any construction debt owed
by such station to the Company, and for the fourth station, a right of first
refusal to purchase such station, and (5) will provide for termination by the
holder of the construction permit if the Company does not commit to finance
construction of such station within the time period set forth in the Financing
Agreement. In the case of the station subject to a right of first refusal, the
Company may be required to pay a substantial amount to purchase a station for
which it has already financed construction costs, which may result in
substantial profit to the owner of the station. The Company's acquisition of a
station pursuant to the exercise of an option or right of first refusal be
subject to FCC approval. In the event of a default by Telethon or Television,
Inc., the Company's only recourse will be against the station equipment, which
generally represents approximately 75% of the construction loan. Accordingly,
the event of a default by Telethon or Television, Inc., the Company may not
recover 25% or more of its construction loan.
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized on May 28,
1996.
ValueVision International, Inc.
(registrant)
By: /s/ Stuart R. Romenesko
Stuart R. Romenesko
Vice President Finance and Chief
Financial Officer
(Principal Financial and Accounting Officer)