UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 1 on Form 10-K/A to
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For The Fiscal Year Ended October 31, 1996
Commission File Number 1-12119
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
(Exact Name of Registration business as Specified in Its Charter)
Bermuda 72-1323940
(Jurisdiction of incorporation) (I.R.S. Employer Identification Number)
One Galleria Boulevard, Suite 1714, Metairie, Louisiana 70001
(Address, including zip code, of Principal Executive Offices)
(504) 849-2739
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Common Stock: Redeemable Common Stock
Boston Stock Exchange Purchase Warrants:
Boston Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by a check mark whether the registrant: (1) has filed all
reports required to be filed by Section 12 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 10-K or any amendment
to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant on December 31, 1996, based on the closing price on that date of
$2.375 on the Nasdaq SmallCap Market was $4,262,830.50.*
The number of shares outstanding of the registrant's common stock as of
January 21, 1996 was 3,696,876.
American Craft Brewing International Limited
Amendment No. 1 on Form 10-K/A to Annual Report
on Form 10-K for the Fiscal Year Ended October 31, 1996
* The aggregate market value of the voting stock held by non-affiliates was
estimated by excluding only those shares held by directors, officers and
principal shareholders filing Schedules 13D and/or 13G.
Part III
Items 10, 11, 12 and 13 of Part III of the Registrant's Annual Report on Form
10-K for the fiscal year ended October 31, 1996 are hereby amended and restated
in their entirety as follows:
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are members of the Company's the Board of
Directors. Also set forth below as to each director is his age, the year in
which such person was first elected a director, a brief description of such
director's principal occupation and business experience during the past five
years, directorships of certain companies presently held by such persons, and
certain other information, which information has been furnished by the
respective individuals
Peter W. H. Bordeaux
Age 48
Mr. Bordeaux has been Chairman of the Board of Directors of
AmBrew International since June 5, 1996 and has been associated with its
subsidiaries since August 9, 1994. Mr. Bordeaux has been President and Chief
Executive Officer of AmBrew International since February 12, 1997. Prior to his
employment in these positions and since 1982, Mr. Bordeaux was President and
Chief Executive Officer of New Orleans-based Sazerac Company, Inc. ("Sazerac"),
the tenth largest United States producer, importer and exporter of spirits as
well as a large U.S. distributor of wine, beer and non-alcohol beverages. Mr.
Bordeaux had been with Sazerac since 1980. In addition, Mr. Bordeaux has served
as Chairman of Concorde Holdings Limited (Beijing), a distributor of alcohol and
non-alcohol beverages ("Concorde"), since November 1994, and as President, since
1992, of Leestown Company, Inc., which owns the world's largest bourbon
distillery. Mr. Bordeaux is Vice Chairman of the Board of the National
Association of Beverage Importers, a Board Member, Vice President and member of
the Executive Committee of the Board of the World Trade Center, New Orleans,
Chairman of the International Advisory Council of Hibernia National Bank (New
Orleans) and a Board Member and Treasurer of Episcopal Housing for Seniors, Inc.
John F. Beaudette
Age 40
Mr. Beaudette has been a director of AmBrew International since
June 5, 1996 and has been associated with its subsidiaries since April 27, 1995.
Mr. Beaudette has been President of BPW Holding LLC ("BPW"), a beverage
investment and consulting company, and its predecessor, since February 1995. Mr.
Beaudette was Executive Vice President and General Manager of MHW, Ltd., a
beverage alcohol importer distributor and service company located in Manhasset,
New York, since 1994. Mr. Beaudette has been the President of MHW since
September 1996. From 1992 to 1994, Mr. Beaudette was Vice President and Chief
Financial Officer of Monsieur Henri Wines, Ltd. and from
2
1988 to 1992, he was Director of Planning at PepsiCo Wines and Spirits
International. Both companies were involved in the United States and Canadian
marketing and distribution of imported wines and spirits from around the world.
Norman H. Brown
Age 49
Mr. Brown has been a director of AmBrew International since June
5, 1996 and has been associated with its subsidiaries since August 9, 1994. Mr.
Brown has been a Managing Director of Donaldson, Lufkin & Jenrette in the
Investment Banking Group since 1985. In this capacity, Mr. Brown acts as Head of
the Metals and Mining Industrial Coverage Group and as Co-Head of Industrial New
Business in Canada. Mr. Brown has served as a director of Gaylord Container
Corporation ("Gaylord"), a manufacturer of paper, box board and corrugated
cardboard. Mr. Brown's term as a director of Gaylord expired on July 31, 1996.
Federico G. Cabo Alvarez
Age 52
Mr. Cabo has been Deputy Chairman of the Board of Directors since
June 3, 1996 and has been associated with the Company's subsidiaries since
August 9, 1994. Since 1970, Mr. Cabo has been Chief Executive Officer and
President of Cabo Distributing Company, Inc., formerly the largest distributor
of Mexican beers in the United States and currently a producer of beer and
spirits.
Wyndham H. Carver
Age 53
Mr. Carver has been a director of AmBrew International since June 5,
1996. Since 1995, Mr. Carver has been on a two-year secondment from Grand
Metropolitan PLC ("Grand Met"), an international producer, distributor,
wholesaler and retailer of spirits, wines and foods, to the British Department
of Trade and Industry where Mr. Carver is a Latin American export promoter. Mr.
Carver has served in a variety of capacities on behalf of International
Distillers & Vintners, Ltd., an international producer and distributor of
spirits and wine and a subsidiary of Grand Met ("IDV"), since 1965, including
Managing Director of Wyvern International, the marketing division of IDV, and
Regional Director for IDV in the Caribbean and Central America.
3
David K. Haines
Age 31
Mr. Haines was the Managing Director of Hong Kong Operations of AmBrew
International from June 5, 1996 until December 31, 1996. Since January 1, 1997,
Mr. Haines has been employed as a Consultant to the Company and the South China
Brewery. Since 1994, Mr. Haines has devoted his efforts to establishing and
developing the South China Brewery. Before his involvement with the Company, Mr.
Haines practiced clinical psychology for one year in Vail, Colorado and was in
private practice as a psychologist for two years in Hong Kong.
Joseph E. Heid
Age 50
Mr. Heid has been a director of AmBrew International since June 5, 1996.
Mr. Heid has been Senior Vice President of Sara Lee Corporation ("Sara Lee"), an
international food and consumer products company, and Chief Executive Officer of
Sara Lee Personal Products North and South America, a line of business
responsible for Sara Lee's brands in apparel and accessories in North and South
America, since 1996, President and Chief Executive Officer of Sara Lee Personal
Products - Pacific Rim, a line of business responsible for Sara Lee's brands in
apparel and accessories in the Pacific Rim, since 1994 and Vice President of
Sara Lee since 1992. From 1988 to 1992, Mr. Heid served as President of Guinness
America ("Guinness"), a holding company of Guinness PLC's United States
ventures, and Executive Vice President and Chief Operating Officer of United
Distillers - North America, a subsidiary of Guinness that imports, produces,
markets and sells beverage alcohols.
Set forth below as to Mr. Ake and certain significant employees
of the Company who are not members of the Board of Directors is his or her age,
a brief description of the principal occupation and business experience during
the past five years, directorships of certain companies presently held by such
persons, and certain other information, which information has been furnished by
the respective individuals.
James L. Ake, age 52, has been the Executive Vice President and
Chief Operating Officer of AmBrew International since June 5, 1996 and has been
associated with its subsidiaries since August 9, 1994. Mr. Ake has been
President of AmBrew USA, AmBrew International's U.S. subsidiary, since December
1996. Before joining the Company, Mr. Ake had been the Director of Financial
Analysis and Planning for Sazerac since 1993 where he was responsible for
expansion of operations overseas with emphasis on ventures in the Pacific Rim
countries. In addition, since November 1994, Mr. Ake has served as Managing
Director of Concorde. Prior to joining Sazerac, Mr. Ake was a director in
Zapata-Haynie Corporation in Hammond, Louisiana, the largest fishing company in
the United States, where Mr. Ake was responsible for corporate planning and
oversaw profitability and development of various departments. Mr. Ake is a
registered engineer and is a member of the Board of Directors of the
Japan-Louisiana Friendship Foundation.
4
Edward Cruise Miller, age 27, has been the Head Brewer at the
South China Brewery since May 15, 1995. From June 1994 through May 1995, Mr.
Miller was one of the five brewers at the Thomas Kemper Brewery, a subsidiary of
Hart Brewing Company, in Poulsbo, Washington. From November 1990 through May
1994, Mr. Miller was employed at Broad Ripple Brew Company, a brew pub in
Indianapolis, Indiana. He was an Assistant Brewer at Broad Ripple from November
1990 through December 1992 and was Head Brewer from January 1993 through May
1994.
Scott Ashen, age 28, has been General Manager of the South China
Brewery since January of 1997, and has an employee of the South China Brewery
since 1995. Before joining the Company and since April, 1994, Mr. Ashen opened
and operated, as Managing Partner, The Pour House, a pub on the upper East side
of Manhattan, New York. Mr. Ashen was a manager of Nichimen America Inc., a
Japanese trading company, from June of 1990 until December, 1993.
Stephen B. Armstrong, age 34, joined the Company in connection
with the Company's acquisition of AmBrew USA (formerly Atlantis Import Company
("Atlantis")). Mr. Armstrong is the Executive Vice President and General Manager
of AmBrew USA. Before joining the Company, Mr. Armstrong was the founder and
President of Atlantis, a national beer importer, from 1994 through 1996. From
1992 to 1996, Mr. Armstrong served as President and Director of Sales and
Marketing for Dixie Brewing Company, a regional brewery located in New Orleans,
Louisiana.
Nancy R. Hernandez, age 28, joined the Company in December of
1996 as the Company's Controller. Before joining the Company, Ms. Hernandez was
the Accounting Manager for Tropical Export Co., a global exporter of industrial
and automotive parts and equipment, from 1993 to 1996 Ms. Hernandez had been
with Tropical Export since 1986. During 1995 and 1996. Ms. Hernandez also served
as Treasurer for Tropical Sales Ltd., a truck parts and equipment retail store.
Dean McGuiness, age 24, is the General Manager of Celtic Brew,
LLC, the Company's majority-owned brewery in Enfield, Ireland. Mr. McGuiness
has completed the intensive brewing program at the Siebel Brewing Institute.
Before joining the Company in August of 1996, Mr. McGuiness acted as consultant
and Marketing Manager for TourIT Ltd, a market research firm, where he developed
and implemented numerous marketing strategies utilizing the Internet for
promotional efforts, travel reservations, market research and integrated
information management. During 1994 and 1995 Mr. McGuiness acted as consultant
to various service management companies, including Market Research Consultancy
and the Centre for Quality Service Management. Mr. McGuiness earned his Bachelor
of Commerce and Masters of Business Studies during 1989-1994. Mr. McGuiness is
the son of Mr. Adian McGuiness, the Company's joint venture partner.
5
Item 11. EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth the cash compensation
earned by or paid to the Company's Chief Operating Officer for the fiscal year
ended October 31, 1996. None of the Company's employees had individual salary
and bonus in excess of $100,000 during the fiscal year ended October 31, 1996,
and the Company did not have a Chief Executive Officer during the fiscal year
then ended.
Summary Compensation Table
Annual Compensation Long Term Compensation(1)
------------------- -------------------------
Name Option Long
and & Term
Principal Warrant Incentive All Other
Year Salary(2) Bonus(3) Other(4) Position Awards Payouts Compensation
---- --------- -------- -------- --------- ------- --------- ------------
James L. Ake 1996 $22,916.67(5) __ __ __ __ __ __
Executive Vice __ __ __ __ __ __
President and __ __ __ __ __ __
Chief Operating
Officer
- ----------
(1) The Company has no long-term incentive compensation plans other than the
Stock Option Plan. No options were granted under the plan in 1996.
(2) Amounts shown include compensation deferred pursuant to Section 401(k) of
the Internal Revenue Code of 1986, as amended.
(3) The Company has no formal bonus plan and does not provide for deferred
awards. The Company may pay bonuses based on individual and Company
performance.
(4) The aggregate amount of Other Annual Compensation for Mr. Ake did not equal
or exceed the lesser of $50,000 or 10% of his base salary and bonus for the
year ended October 31, 1996.
(5) Includes $14,250 received as compensation by Mr. Ake prior to the effective
date of his Employment Agreement with the Company, and $8,667.67 received
after the effective date of the Employment Agreement. Mr. Ake's annual
salary is currently $72,000.
6
Performance Graph
Set forth below is a line graph comparing the percentage change
in the cumulative return to the shareholders of the Company's Common Stock with
the cumulative return of the Nasdaq Composite and of a Peer Group for the period
commencing September 11, 1996 (the date of the Company's initial public
offering) and ending on October 31, 1996. Returns for the indicies are weighted
based on market capitalization.
TOTAL RETURN TO STOCKHOLDERS
(Assumes $100 investment on 9/11/96)
[PERFORMANCE GRAPH]
Total Return Analysis 9/11/96 9/18/96 10/1/96 10/8/96 10/22/96 10/31/96
American Craft Brewing Int'l $100 $ 99 $101 $101 $ 94 $ 67
Peer Group $100 $ 97 $ 99 $ 88 $ 79 $ 75
Nasdaq Composite (US) $100 $105 $106 $107 $106 $106
Source: Carl Thompson Associates www.ctaonline.com (303) 494-5472. Data from
Bloomberg Financial Markets
The Company's peer group, selected by the Company in good faith,
is comprised of six other publicly traded craft brewing companies: Nor'Wester
Brewing Company, Inc.; Pyramid Breweries, Inc.; Frederick Brewing Co.; Michigan
Brewery Inc.; Loin Brewery Inc.; and Redhook Ale Brewery Incorporated.
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Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Common Stock as of January 25, 1997 (i) of each
person (or group of affiliated persons) who is known by the Company to own
beneficially more than 5% of the Common Stock, (ii) of the Company's directors
and named executive officers and (iii) of all directors and executive officers
as a group.
Number of Shares Percent of
Beneficial Owner Beneficially Owned(1) Total
- ---------------- --------------------- -----------
John F. Beaudette(2) 152,000 4.1%
MHW, Ltd.
1165 Northern Boulevard
Manhasset, New York 11030
Peter W. H. Bordeaux(3) 272,067 7.2
One Galleria Boulevard, Suite 1714
Metairie, Louisiana 70001
Norman H. Brown, Jr. 152,000 4.1
277 Park Avenue
New York, New York 10172
Federico G. Cabo Alvarez(4) 914,400 24.7
Cabo Distributing Co.
9657 East Rush Street
South Elmonte, California 91733
David K. Haines 380,000 10.3
J.P. Walsh & Co. Ltd.
Block F (8th Floor)
3-3G Robinson Road
Hong Kong
All executive officers and
directors as a group 1,972,067 50.4%
(eight persons)(2)(3)(5)
- ------------------------------
(1) Applicable percentage ownership, except as described in note 3 to this
table, is based on 3,696,876 shares of Common Stock outstanding as of the
date hereof. Beneficial ownership is determined in accordance with the rules
of the Commission and generally includes voting or investment power with
respect to securities, subject to community property laws, where applicable.
(2) Represents shares of Common Stock held of record by BPW. Messrs. Beaudette
(a director of the Company), Edmund Piccolino (former Vice President of
Human Resources for Pepsi-Co. International, a division of PepsiCo Inc.) and
Peter Warren (former President of Pepsi-Co. International and a former
director of Pepsi-Co. Inc.) each own one third of the membership interest of
BPW.
(3) Includes Mr. Bordeaux's vested options to purchase 66,667 shares of Common
Stock. Mr. Bordeaux's percentage of outstanding shares was calculated by
adding to the number of outstanding shares 66,667 shares deemed to be issued
pursuant to Securities Exchange Act Rule 13d-3(d)(1).
(4) Excludes warrants to purchase 5,700 shares of Common Stock held by Diane
Elizabeth Cabo. Ms. Cabo is Mr. Cabo's daughter. Mr. Cabo disclaims
beneficial ownership of the shares underlying Ms. Cabo's warrants.
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(5) Neither Messrs. Carver and Heid, directors of AmBrew International, nor Mr.
Ake, the Executive Vice President and Chief Operating Officer of AmBrew
International, beneficially own any shares of Common Stock.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 31, 1995, the South China Brewery borrowed $565,000 from
Hibernia National Bank. The loan was evidenced by a promissory note with
principal payments due on September 30, 1996 and March 31, 1997 bearing a
Citibank prime plus 0.5% interest rate. Sazerac provided a $250,000 guarantee
for the Hibernia Loan. Norman H. Brown, Jr. and Federico G. Cabo Alvarez, each
directors of AmBrew International, provided standby letters of credit in the
total amount of $315,000. Peter W. H. Bordeaux is President and Chief Executive
Officer of Sazerac and Chairman of the Board of Directors of the Company as well
as Chairman of the International Advisory Council of Hibernia National Bank (New
Orleans). The amount due had been reduced to $452,000 through principal
repayments by AmBrew International. The loan was repaid with proceeds from the
Offering.
The South China Brewery borrowed $65,000 from BPW evidenced by a Limited
Recourse Promissory Note dated as of March 5, 1996 and due ten days after the
date of the Prospectus bearing an interest rate of 5.5%. John F. Beaudette, a
director of AmBrew International, is President of BPW. The note was repaid with
proceeds from the Offering.
In May 1996, Craft issued $370,000 principal amount of convertible
Bridge Notes to certain investors in Singapore and Hong Kong bearing an interest
rate of 12%. Holders of $250,000 principal amount of the Bridge Notes converted
such Bridge Notes, upon the consummation of the Offering, into 94,255 Shares of
Common Stock. The holder of the remaining $120,000 principal amount of Bridge
Notes received 22,621 Shares of Common Stock at no cost. Each holder of a Bridge
Note received a Bridge Warrant entitling such holder to purchase that number of
shares of Common Stock as such holder received. Micro Brew Systems held $20,000
principal amount of the Bridge Notes.
In January, 1997, the Company entered into a lease at a current monthly
rent of $6,625 with Corporation Calfik, a company wholly-owned by Federico G.
Cabo Alvarez, one of AmBrew International's directors and principal
shareholders, to lease a 21,443 square foot facility near the Mexico-United
States border at which the Company intends to operate the Tecate expansion
brewery and warehouse facility. The lease term is five years with yearly
incremental rent increases ending on September 12, 2001 for a total operating
lease commitment over the five-year period ending September 11, 2001 of
$417,323.
Pursuant to the Employment Agreement between Mr. Bordeaux and the
Company dated February 12, 1997, the Company agreed to loan to Mr. Bordeaux an
amount equal to $200,000 with interest payable quarterly in arrears at a rate
per annum equal to the prime rate of interest as reported in The Wall Street
Journal changing as and when such prime rate shall change. Mr. Bordeaux will be
required to repay this amount, including accrued interest, on the fifth
anniversary of the date of his Employment Agreement or upon termination of his
employment by
9
the Company for Cause (as defined in the Employment Agreement) or if terminated
by Mr. Bordeaux, unless his employment has been constructively terminated. As of
the date hereof, the Company has loaned Mr. Bordeaux $25,000 on such terms.
The Company has adopted a policy whereby transactions between the
Company and its officers, directors, principal stockholders and any affiliates
of the foregoing persons are made on terms no less favorable to the Company than
could reasonably be obtained in an arms length transaction with independent
third parties, and that any such transactions also be approved by a majority of
the Company's disinterested outside directors.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Amendment No. 1 on Form 10-K/A to be signed on
its behalf by the undersigned, thereunto duly authorized.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
Date: February 26, 1997 /s/ James L. Ake
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James L. Ake
Executive Vice President,
Chief Operating Officer
and Secretary