SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A-1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(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, 2001
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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 0-16079
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AIR METHODS CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 84-0915893
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
7301 SOUTH PEORIA, ENGLEWOOD, COLORADO 80112
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (303) 792-7400
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Not Applicable
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $.06 PAR VALUE PER SHARE (THE "COMMON STOCK")
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(Title of Class)
NASDAQ STOCK MARKET
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(Name of each exchange on which registered)
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 the common stock held by non-affiliates of
the Registrant as of March 15, 2002, was approximately $60,014,000.(1) The
number of outstanding shares of Common Stock as of March 15, 2002, was
8,906,129.
____________________
1 Excludes 1,112,040 shares of Common Stock held by directors, officers, and
shareholders whose ownership exceeds five percent of the shares outstanding
at March 15, 2002. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or
indirect, to direct or cause the direction of the management of policies of
the Registrant, or that such person is controlled by or under common
control with the Registrant.
TABLE OF CONTENTS
TO FORM 10-K
Page
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PART I - Previously Filed
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
General. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Competition. . . . . . . . . . . . . . . . . . . . . . . . . 3
Contracts in Process . . . . . . . . . . . . . . . . . . . . 3
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Government Regulation. . . . . . . . . . . . . . . . . . . . 3
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . 4
Facilities . . . . . . . . . . . . . . . . . . . . . . . . . 4
Equipment and Parts. . . . . . . . . . . . . . . . . . . . . 4
ITEM 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . 6
PART II - Previously Filed
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . . . 7
ITEM 6. SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . 9
Results of Operations. . . . . . . . . . . . . . . . . . . . 9
Liquidity and Capital Resources. . . . . . . . . . . . . . . 13
Outlook for 2002 . . . . . . . . . . . . . . . . . . . . . . 14
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . 15
Critical Accounting Policies . . . . . . . . . . . . . . . . 17
New Accounting Standards . . . . . . . . . . . . . . . . . . 18
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . 19
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . . . . . . 19
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . 20
ITEM 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . 23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 28
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . 29
PART IV - Previously Filed
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K . . IV-1
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-3
ii
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Summary information concerning the Company's directors and executive officers is
set forth below:
CLASS/YEAR
TERM AS
DIRECTOR
NAME AGE POSITION EXPIRES(1)
- ----------------------------- --- ------------------------------------------------- -----------
George W. Belsey 62 Chairman of the Board and Chief Executive Officer I/2004
- ----------------------------- --- ------------------------------------------------- -----------
Ralph J. Bernstein 43 Director III/2003
- ----------------------------- --- ------------------------------------------------- -----------
Samuel H. Gray 64 Director II/2002 *
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MG Carl H. McNair, Jr. (Ret.) 67 Director I/2004
- ----------------------------- --- ------------------------------------------------- -----------
Lowell D. Miller, Ph.D. 68 Director III/2003
- ----------------------------- --- ------------------------------------------------- -----------
Donald R. Segner 75 ViceChairman of the Board I/2004
- ----------------------------- --- ------------------------------------------------- -----------
Morad Tahbaz 46 Director II/2002 *
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David Dolstein 53 President, Mercy Air Service, Inc. N/A
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Neil Hughes 43 Vice President, Air Medical Services N/A
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Sharon J. Keck 35 Chief Accounting Officer and Controller N/A
- ----------------------------- --- ------------------------------------------------- -----------
Michael G. Prieto 46 Vice President, Products Division N/A
- ----------------------------- --- ------------------------------------------------- -----------
Aaron D. Todd 40 Secretary, Treasurer and Chief Financial Officer N/A
and Chief Operating Officer
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<FN>
____________________
* Director Nominee
(1) Refers to the calendar year in which the annual meeting of stockholders is
contemplated to be held and at which the term of the pertinent director
class shall expire.
MR. GEORGE W. BELSEY was elected Chief Executive Officer effective June 1,
1994, and has served as Chairman of the Company's Board of Directors since April
1994, having been appointed a director of the Company in December 1992. From
February 1992 to June 1994, Mr. Belsey served as Executive Vice President,
Professional Affairs, and the Chief Operating Officer of the American Hospital
Association, a large national trade association and advocacy group for hospitals
and health care organizations, where he was responsible for the association's
activities relating to hospital operations, including medical staff affairs,
nursing, health manpower, quality of care programs and hospital governance.
Prior to joining the American Hospital Association, Mr. Belsey served as Chief
Executive Officer and Executive Director of the University of Utah Hospital and
Clinics, Salt Lake City, Utah (one of the Company's hospital customers) from
March 1989 to February 1992 and was Chief Operating Officer from December 1983
to March 1989. He is a former Vice President of Northwestern Memorial Hospital,
Chicago, and has held administrative positions at Rush-Presbyterian-St. Luke's
Medical Center, Chicago, and MacNeal Memorial Hospital, Berwyn, IL. He received
his Bachelor's Degree in Economics from DePauw University in Greencastle,
Indiana, and holds a Master's Degree in Business Administration from George
Washington University, Washington, D.C.
MR. RALPH J. BERNSTEIN became a Director of the Company in February 1994.
Mr. Bernstein is a co-founder and General Partner of Americas Partners, an
investment and venture capital firm, and, since 1981 has been responsible for
the acquisition, renovation, development and financing of several million square
feet of commercial space. Mr. Bernstein started his career in agribusiness with
a large European multi-national trading and real estate development company,
where he was later responsible for that company's U.S. real estate activities.
He holds a Bachelor of Arts Degree in Economics from the University of
California at Davis.
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MR. SAMUEL H. GRAY was appointed as a director of the Company in March
1991. Since 1989, he has been Chief Executive Officer of The Morris Consulting
Group, Inc., a health care industry consulting firm. From 1983 to 1989, Mr. Gray
served as President and Chief Executive Officer of Kalipharma, Inc., a
multi-source pharmaceutical company. From 1975 to 1983, Mr. Gray served as
Executive Vice President of Sales and Marketing for G.D. Searle and Company,
Inc. ("Searle") where he was responsible for pharmaceutical marketing, the
consumer products division of Searle, and Searle-Canada, Ltd. In addition, his
responsibilities included distribution, customer service, clinical research
management, licensing and acquisitions, public relations and worldwide strategic
marketing planning. He has served as a director of Searle; Searle Canada, Ltd.;
Kalipharma; Kali-Duphar, Inc.; and the National Association of Pharmaceutical
Manufacturers. He is a past member of the National Wholesale Druggist
Association's Industry Advisory Committee and has served on the Advisory Board
of Pharmaceutical Executive magazine. In 1959, Mr. Gray received a Bachelor of
Science Degree from the University of Florida.
MAJOR GENERAL CARL H. MCNAIR, JR. (RET.) was appointed to the Board of Directors
in March 1996. In April 1999, General McNair retired from his position as
Corporate Vice President and President, Enterprise Management, for DynCorp, a
technical and professional services company headquartered in Reston, Virginia,
where he was responsible for the company's core businesses in facility
management, marine operations, test and evaluation, administration and security,
and biotechnology and health services. He currently serves as Special Assistant
to the President for government relations. From 1987 to 1990, General McNair was
Vice President, Army Programs, with Burdeshaw Associates, Ltd., a professional
services firm in Bethesda, Maryland. For more than 32 years he served the United
States Army in Research and Development, Infantry, and Army Aviation in both
command and staff positions, including Deputy for Aviation to the Assistant
Secretary of the Army (Research, Development and Acquisition); Aviation Officer,
U.S. Army; and Commanding General, U.S. Army Aviation Center. Achieving the rank
of Major General, he culminated his military career in 1987 as Chief of Staff,
U.S. Army Training and Doctrine Command, Fort Monroe, Virginia. A Master Aviator
with commercial, fixed wing, rotary wing, and multi-engine instructor ratings,
his aerial combat service spanned six campaigns in the Republic of Vietnam
during which he accrued over 1,500 combat flying hours serving as Commander to
both an Assault Helicopter Company and a Combat Aviation Battalion. General
McNair's academic credentials include a Bachelor of Science Degree in
Engineering from the U. S. Military Academy at West Point, and both a Bachelor
Degree and Master's Degree in Aerospace Engineering from Georgia Institute of
Technology as well as a Master of Science Degree in Public Administration from
Shippensburg University. For academic achievement in aerospace, McNair was
elected to Sigma Gamma Tau, a national honorary engineering fraternity.
DR. LOWELL D. MILLER was named a director of the Company in June 1990.
Since 1989, Dr. Miller has been involved with various scientific endeavors
including a pharmaceutical consulting business. From 1973 to 1989, Dr. Miller
was employed by Marion Laboratories, Inc. ("Marion"), serving as Senior Vice
President - Research and Development (1987 - 1989), Vice President - Research
and Development (1977-1987), and Director of Scientific Affairs (1973-1977).
Until his retirement in late 1989, Dr. Miller was responsible for all research,
development and process development functions, new product opportunities and
management of clinical trials and regulatory affairs, and served as Marion's
Chief Scientist. He also served as a member of Marion's Board of Directors from
November 1981 to November 1982 and as an Advisory Director from November 1982 to
November 1983. The University of Missouri awarded Dr. Miller a Bachelor of
Science Degree in 1957 as well as a Master's Degree in Biochemistry in 1958 and
Biochemistry Doctorate Degree in 1960. Dr. Miller has been named Alumnus of the
Year by the University of Missouri in Columbia, Missouri.
MR. DONALD R. SEGNER has served as a director of the Company since February
1992 and as Vice Chairman since April 1994. Mr. Segner has over 55 years of
aviation and transportation related experience in diversified positions
involving operational, flight testing, aircraft design and development and
senior managerial responsibilities. Entering the military service in 1943, he
was commissioned in the U.S. Marine Corps as a Naval Aviator in 1946. He served
in combat in Korea and later as a military test pilot. Mr. Segner accumulated
over 7,000 flight hours in over 150 types and models of aircraft. After entering
private industry in 1962, Mr. Segner served as Chief Test Pilot, Manager of
Advance Design and Program Manager of a major aerospace firm. In April 1981, Mr.
Segner was appointed by President Reagan to the Federal Aviation Administration
(FAA) as an Associate Administrator. With the advent of the Air Traffic
Controller's strike in September 1981, he was given the additional
responsibilities to develop, direct and control the process of allocating
airspace system use by all airlines and airspace system users. Following the
destruction of Korean Airline Flight 007 in 1983, he was further assigned to the
White House to head the investigation of the KAL 007 shoot down and to act as
Chief Delegate for the U.S.A. to the United Nations International Civil Aviation
Organization (ICAO) on this matter. Later he was assigned as the United States,
Chief of Delegation, by the Secretary of State, to negotiate an agreement, among
the U.S.A., USSR and Japanese governments, to improve and implement future air
travel safety along the North Pacific air routes. Mr. Segner has served as a
director on the Board of several aviation corporations, as an advisor to NASA,
21
and on the Advisory Board to the University of Southern California Institute of
Systems and Safety Management. He is a past president of the Society of
Experimental Test Pilots. Undergraduate education was received at the University
of the Pacific. Graduate work was performed at the U.S. Naval Post Graduate
School, Monterey (Aero) and the University of Southern California School of
Business. He is a graduate of the U.S. Navy Test Pilot School. Mr. Segner has
received numerous awards recognizing his contributions to the aviation
community, including the AIAA's Octave Chanute Award, the SETP's Kincheloe
Award, FAA Administrator's Award, the FAA Superior Achievement Gold Medal, and
the Distinguished Flying Cross for valor in combat. Mr. Segner is a Fellow in
the Society of Experimental Test Pilots.
MR. MORAD TAHBAZ was elected to the Board of Directors in February 1994. He
is a co-founder and General Partner of Americas Partners, an investment and
venture capital firm. Mr. Tahbaz serves as a Managing Director of Americas Tower
Partners, the developer of Americas Tower, a one million square foot, 50-story
office tower in New York City. Since 1983, Mr. Tahbaz has also served as Senior
Vice President of The New York Land Company, a real estate acquisitions and
development firm. From 1980 to 1982, he was the Project Manager for Colonial
Seaboard, Inc., a residential development company in New Jersey. Mr. Tahbaz
received his Bachelor's Degree in Philosophy and Fine Arts from Colgate
University and attended the Institute for Architecture and Urban Studies in New
York City. He holds a Master's Degree in Business Administration from Columbia
University Graduate School of Business. Mr. Tahbaz lectured on real estate
development and finance at the Columbia Graduate School of Business from 1984 to
1988.
MR. DAVID L. DOLSTEIN joined the Company with the July 1997 acquisition of
the wholly owned subsidiary, Mercy Air Service, Inc. Mr. Dolstein's position as
President of Mercy Air Service is a continuation of his responsibilities
preceding the acquisition. Previous experience includes Executive Vice
President, Mercy Air Service, from January 1995 to December 1996. Before Mercy
Air Service, Rocky Mountain Helicopters, Inc. employed Mr. Dolstein in their Air
Medical Division from January 1981 through December of 1994. Positions included:
Executive Director; Vice President, Director of Marketing; Associate Director;
Regional Manager and Air Medical Pilot. Mr. Dolstein received a Bachelor of
Science degree in 1974 from Central Missouri State University with postgraduate
studies in industrial safety. His aviation background includes employment as a
pilot by Bell Helicopter International's Training Command, Isfahan, Iran (1975
to 1979) and United States Army Aviation (1967 to 1975).
MR. NEIL M. HUGHES was named Vice President of the Company's Air Medical
Services Division in April 2000, and has served as Director of Operations since
August 1998. Since 1992, Mr. Hughes has served Air Methods in several other
positions including Line Pilot, Area Manager, Training Captain/Check Airman and
Operations Manager. Prior to joining Air Methods, Mr. Hughes was a commercial
helicopter pilot and for sixteen years served in a number of capacities as an
officer and aviator in the Royal Navy. Mr. Hughes has 21 years of aviation
management experience and holds pilot certificates including Airline Transport
Pilot, Certified Flight Instructor and Helicopter Instrument Instructor. Mr.
Hughes has a Bachelor's Degree in International Affairs and is a graduate of the
Royal Naval College, Dartmouth, England.
MS. SHARON KECK joined the Company as Accounting Manager in October 1993
and was named Controller in July of 1995. She assumed the additional position of
Chief Accounting Officer in January 2002. From 1989 to 1993, Ms. Keck was
employed by KPMG Peat Marwick (now KPMG, LLP), a certified public accounting
firm, in Denver, Colorado. Two of those years included serving on the Company's
account as Senior Auditor. Ms. Keck holds a Bachelor of Science Degree in
Accounting from Bob Jones University.
MR. MICHAEL G. PRIETO was named Vice President of Engineering &
Manufacturing of the Company in January 1994 and subsequently Vice President of
the Products Division in June 1994. From 1988 to 1994, Mr. Prieto served in
various roles with General Dynamics/Lockheed Corp. but primarily as Manager of
Manufacturing Engineering for the F-16 Fighter program. From 1977 to 1988, he
was employed by John Deere Co. with management roles in engineering,
manufacturing, and marketing. Mr. Prieto received a Bachelor of Science degree
in 1977 from the University of Missouri. Mr. Prieto is a member of the American
Society of Mechanical Engineers, the Society of Manufacturing Engineers, the
American Production and Inventory Control Society, the American Management
Association, and the National Management Association.
22
MR. AARON D. TODD joined the Company as Chief Financial Officer in July of
1995 and was appointed Secretary and Treasurer during that same year. He was
appointed Chief Operating Officer in January 2002. From 1994 to 1995, Mr. Todd
served as Vice President of Finance of Centennial Media Corporation, a Colorado
publishing company, where he was responsible for all financial and accounting
functions. From 1986 to 1994, Mr. Todd was employed by KPMG Peat Marwick (now
KPMG, LLP), a certified public accounting firm, in Denver, Colorado. Six of
those years included serving on the Company's account in various capacities,
including Senior Manager. Mr. Todd holds a Bachelor of Science Degree in
Accounting from Brigham Young University.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based on its review of the copies of reports filed and upon written
representations, the Company believes that during 2001, executive officers,
directors and ten percent stockholders of the Company were in compliance with
their filing requirements under Section 16(a) of the Exchange Act of 1934, as
amended, with the exceptions that three Form 4 filings were submitted past the
due date for the period of July 2001. Messrs. Dolstein and McNair each reported
one transaction for the period; Mr. Segner reported two transactions.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash compensation paid by the Company in 2001
to the Chief Executive Officer and each of the other executive officers whose
annual salary and bonus for 2001 exceeded $100,000. The table shows compensation
received during 1999, 2000, and 2001.
ANNUAL COMPENSATION LONG TERM COMPENSATION
--------------------------------- --------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION ($)(1)
- ------------------------- ---------- ---------- --------- ----------- -------------------
George W. Belsey 2001 228,000 -- -- 4,867
Chairman and Chief 2000 227,374 -- -- 9,665
Executive Officer 1999 190,000 47,500 250,000 4,750
David L. Dolstein 2001 162,000 -- -- 4,860
President, Mercy Air 2000 161,555 -- -- 3,618
Service, Inc. 1999 135,000 27,000 75,000 3,375
Neil M. Hughes 2001 162,231 -- 50,000 4,867
Vice-President, Air 2000 146,000(2) -- -- 6,249
Medical Services -- -- -- --
Division
Michael G. Prieto 2001 162,000 32,400 -- 5,335(3)
Vice-President, Products 2000 161,555 -- -- 7,287(3)
Division 1999 135,000 27,000 75,000 3,375
Aaron D. Todd 2001 200,000 -- -- 6,000
CFO and COO 2000 173,247 -- -- 7,393
Secretary and Treasurer 1999 135,000 27,000 75,000 3,375
<FN>
(1) Consists of employer matching contributions under the Company's 401(k) Plan
unless otherwise noted..
(2) Mr. Hughes began his appointment as an executive officer with the Company
in April 2000.
(3) Includes cash in lieu of employer health insurance in the amounts of $420
for 2000 and $475 for 2001.
23
The following table presents for fiscal year 2001 certain information regarding
stock options granted to the named executive officers.
OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL OPTIONS GRANT DATE
NUMBER OF SECURITIES GRANTED TO EMPLOYEES EXERCISE EXPIRATION PRESENT
NAME UNDERLYING OPTIONS GRANTED IN FISCAL YEAR PRICE DATE VALUE(1)
- -------------- -------------------------- --------------------- --------- ---------- ---------
Neil M. Hughes 50,000 71% $ 3.35 4/30/06 $ 1.03
<FN>
(1) The present value is estimated on the date of grant using the Black-Scholes
option-pricing model using the following assumptions: dividend yield of 0%,
expected volatility of 39%, risk-free interest rate of 3.8%, and expected
option life of 3 years.
The following table presents for fiscal year 2001 certain information
regarding stock options held by the named executive officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT FY-END (#) OPTIONS AT FY-END ($)
NAME ON EXERCISE (#) REALIZED ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----------------- --------------------- ----------------------- -------------------------- ----------------------------
George W. Belsey 10,000 21,100 240,000/ -0- 775,200/ -0-
David L. Dolstein 50,000 107,500 75,000/ -0- 265,650/ -0-
Neil M. Hughes 23,500 32,868 25,333/ 16,667 70,255/ 48,001
Sharon J. Keck 10,000 5,513 -0-/ -0- -0-/ -0-
Michael G. Prieto -- -- 75,000/ -0- 265,650/ -0-
Aaron D. Todd 55,000 127,750 50,000/ -0- 177,100/ -0-
<FN>
(1) Amounts represent the fair market value of the underlying Common Stock at
December 31, 2001, of $6.23 per share less the exercise price.
EMPLOYMENT AGREEMENTS
In June 1994, the Company entered into an Employment Agreement with Mr. Belsey
for an initial term of five years, subject to successive one-year extensions by
written agreement of both parties. The Agreement may be terminated by either
party without cause upon 30 days' written notice and provides for a severance
payment equal to one year's base salary in the event of termination by the
Company without cause. During the term of employment and for a period of one
year following the termination of employment with the Company, Mr. Belsey may
not engage in any business which competes with the Company anywhere in the
United States.
The Company entered into an Employment Agreement with Mr. Dolstein effective
July 1997, for an initial term of one year, subject to successive one-year
extensions. The Agreement may be terminated by either party without cause upon
30 days' written notice. In the event of termination by the Company other than
for cause, the Agreement provides for a severance payment to Mr. Dolstein at his
then current salary payable at the Company's regular payment intervals for a
period of one year following termination. During the term of employment and for
a period of one year following termination of employment with the Company, Mr.
Dolstein may not engage in any business which competes with the Company anywhere
in the United States.
In April 2000, the Company entered into an Employment Agreement with Mr. Neil M.
Hughes for an initial term of one year and providing for successive one-year
extension periods. The Agreement may be terminated by either party without cause
provided written notice is delivered on or before February 1 prior to any
renewal date. The Agreement provides for a severance payment equal to one year's
base salary in the event of termination by the Company without cause.
Provisional to a non-compete covenant of the Agreement, during his term of
employment and for a period of two years following the termination of employment
with the Company, Mr. Hughes may not engage in any business which competes with
the Company anywhere in the United States.
24
Effective December 1, 1993, the Company entered into an Employment Agreement
with Mr. Prieto for an initial term of one year, subject to successive one-year
extensions by written agreement of both parties. The Agreement may be terminated
by either party without cause upon 90 days' written notice and provides for a
severance payment in the event of termination by the Company without cause equal
to the balance of Mr. Prieto's salary due for the year of any such termination.
During the term of employment and for a period of two years following the
termination of employment with the Company, Mr. Prieto may not engage in any
business which competes with the Company anywhere in the United States.
The Company entered into an Employment Agreement with Mr. Todd effective July
10, 1995, for an initial term of one year, subject to successive one-year
extensions. The Agreement may be terminated by either party without cause upon
90 days' written notice. In the event of termination by the Company other than
for cause, the Agreement provides for a severance payment to Mr. Todd, payable
at the Company's regular payment intervals and at Mr. Todd's then current salary
for a period of one year following any such termination. During the term of
employment and for a period of two years following termination of employment
with the Company, Mr. Todd may not engage in any business which competes with
the Company anywhere in the United States.
DIRECTOR COMPENSATION
The Company has adopted compensation and incentive benefit plans to enhance its
ability to continue to attract, retain and motivate qualified persons to serve
as directors of the Company. Effective for fiscal year 2002, the Company has
increased payment to its non-employee directors as follows: annual retainer from
$8,000 to $10,000; $1,000 per Board meeting, regardless of venue or format (this
amount was previously $800 for Board meeting attended and $500 for each
telephonic meeting); committee meetings, now $600 per meeting with $900 to
chair, up from $500 and $750, respectively. Each non-employee director may elect
to receive shares of Common Stock in lieu of cash payments pursuant to the
Company's Equity Compensation Plan for Non-employee Directors. The Company also
reimburses its non-employee directors for their reasonable expenses incurred in
attending Board and committee meetings. Board members who are also officers do
not receive any separate compensation nor fees for attending Board or committee
meetings.
The Non-employee Director Stock Option Plan (the "Director Option Plan")
provides for option grants awarded for completion of each year of service if the
director has attended a minimum of 75% of all Board of Directors' and committee
meetings during that fiscal year. A year of service is defined as a fiscal year
of the Company during which the non-employee director served on the Board for
the entire fiscal year. On the final day of each fiscal year, each qualified
non-employee director receives a five-year option to purchase 5,000 shares,
exercisable at the then-current fair market value of the Company's Common Stock.
An aggregate of 300,000 shares of Common Stock are authorized for issuance to
non-employee directors under the Director Option Plan. As of May 8, 2002,
options to purchase a total of 105,000 shares of Common Stock were outstanding
under the Director Option Plan.
COMPENSATION COMMITTEE REPORT
The Compensation/Stock Option Committee (the "Committee") is responsible for
recommending and administering the Company's guidelines governing employee
compensation. The Committee evaluates the performance of management, recommends
compensation policies and levels, and makes recommendations concerning salaries
and incentive compensation.
COMPENSATION PHILOSOPHY. The Company's executive compensation program is
designed to attract and retain executives capable of leading the Company to meet
its business and development objectives and to motivate them to actions which
will have the effect of increasing the long-term value of stockholder investment
in the Company. The Committee considers a variety of factors, both qualitative
and quantitative, in evaluating the Company's executive officers and making
compensation decisions. These factors include the compensation paid by
comparable companies to individuals in comparable positions, the individual
contributions of each officer to the Company, and most important, the progress
of the Company towards its long-term objectives. At this point in the Company's
development, objectives against which executive performance is gauged include
the addition and retention of aeromedical service contracts, growth of its
independent services model and Products Division, and the securing of necessary
capital and financing to fund business expansion. Annual compensation for the
Company's executive officers for 2001 consisted of base salary, 401(k) match,
and in the case of Mr. Neil Hughes, a stock option grant in conjunction with his
promotion a year ago to Vice President of Air Medical Services.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER. In determining the compensation to
be awarded to Mr. Belsey for his services to the Company, the Committee
considered salaries paid to chief executive officers at competitive companies
and the base salary initially set for Mr. Belsey in his employment agreement.
25
BASE SALARY. The base salary for each executive officer, including the Chief
Executive Officer, was established initially by the Committee pursuant to
written employment agreements. Base salaries are reviewed annually by the
Committee and adjusted based on the Committee's review of salaries paid to
executives at competitive companies, the particular executive officer's
performance and length of time in a certain position and the Company's financial
condition and overall performance and profitability.
SECTION 162(M) COMPLIANCE. Under Section 162(m) of the Code, federal income tax
deductions of publicly traded companies may be limited to the extent total
compensation (including base salary, annual bonus, restricted stock awards,
stock option exercises and non-qualified benefits) for certain executive
officers exceeds $1 million in any one year. The Committee intends to design the
Company's compensation programs so that the total compensation paid to any
employee will not exceed $1 million in any one year.
Lowell D. Miller, Ph.D., Chairman
Samuel H. Gray
Members of the Compensation/Stock Option Committee
26
STOCK PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder return
for the period from December 31, 1997 through December 31, 2001 against the
Standard & Poors 500 ("S&P 500") index and "peer group" companies in industries
similar to those of the Company. The S&P 500 is a widely used composite index
reflecting the returns of five hundred publicly traded companies in a variety of
industries. Peer Group Index returns reflect the transfer of the value on that
date of the initial $100 investment into a peer group consisting of all publicly
traded companies in SIC Group 4522: "Non-scheduled Air Transport." The Company
believes that this Peer Group is its most appropriate peer group for stock
comparison purposes due to the limited number of publicly traded companies
engaged in medical air or ground transport and because this Peer Group contains
a number of companies with capital costs and operating constraints similar to
those of the Company.
ANNUAL RETURN PERCENTAGE
YEARS ENDING
COMPANY NAME / INDEX DEC97 DEC98 DEC99 DEC00 DEC01
=================================================================================
AIR METHODS CORP 30.00 -17.31 16.28 24.00 60.77
S&P 500 INDEX 33.36 28.58 21.04 -9.10 -11.89
PEER GROUP -15.59 4.87 -10.01 28.42 -34.85
INDEXED RETURNS
BASE
PERIOD YEARS ENDING
COMPANY NAME / INDEX DEC96 DEC97 DEC98 DEC99 DEC00 DEC01
=================================================================================
AIR METHODS CORP 100 130.00 107.50 125.00 155.00 249.20
S&P 500 INDEX 100 133.36 171.48 207.56 188.66 166.24
PEER GROUP 100 84.41 88.52 79.66 102.30 66.65
PEER GROUP COMPANIES (SIC = 4522)
=================================================================================
AIR METHODS CORP
ATLAS AIR WORLDWIDE HLDG INC
CHC HELICOPTER CORP -CL A
DIA MET MINERALS LTD -CL B
OFFSHORE LOGISTICS
PETROLEUM HELICOPTERS
WORLD AIRWAYS INC
[GRAPHIC OMITTED
TOTAL SHAREHOLDER RETURNS]
27
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of May 8, 2002, the beneficial ownership of
the Company's outstanding Common Stock: (i) by each person who owns of record
(or is known by the Company to own beneficially) more than 5% of the Common
Stock, (ii) by each director and named executive officer of the Company, and
(iii) by all directors and executive officers as a group.
Number Percentage of
Name and Address of Shares Common Stock
- ---------------- -------------- -------------
George W. Belsey 208,346(1) 2.3
7301 South Peoria
Englewood, CO 80112
Ralph J. Bernstein 654,115(2) 7.1
77 E. 77th St.
New York, NY 10021
David L. Dolstein 53,074(3) *
1670 Miro Way
Rialto, CA 92376
Samuel H. Gray 25,000(4) *
95 Madison Avenue
Morristown, NJ 07960
Neil M. Hughes 25,727(5) *
7301 South Peoria
Englewood, CO 80112
Sharon J. Keck 394(6) *
7301 South Peoria
Englewood, CO 80112
MG Carl H. McNair, Jr. (Ret.) 69,867(7) *
11710 Plaza America Drive
Reston, VA 20190-6010
Lowell D. Miller, Ph.D. 36,775(8) *
16940 Stonehaven
Belton, MO 64012
Michael G. Prieto 47,659(9) *
7301 South Peoria
Englewood, CO 80112
Donald R. Segner 20,299(10) *
290 Arch Street
Laguna Beach, CA 92651
Morad Tahbaz 63,683(11) *
77 E. 77th St.
New York, NY 10021
Aaron D. Todd 12,500(12) *
7301 South Peoria
Englewood, CO 80112
All Directors and Executive Officers as a group (12 persons) 1,117,439(13) 12.1
28
Number Number Percentage of
Name and Address of Shares Common Stock
- ---------------- -------------- -------------
Bear Stearns Securities Corporation 462,000(14) 5.0
One Metrotech Center North
Dept. C Cashiers Dept
Brooklyn, NY 11201-3862
<FN>
___________________
* Less than one percent (1%) of Common Stock outstanding on May 8, 2002.
(1) Includes (i) 150,000 shares subject to stock options exercisable within 60
days; and (ii) 58,346 shares directly owned by George and Phyllis Belsey.
(2) Includes (i) 35,000 shares subject to stock options exercisable within 60
days; (ii) 538,615 shares directly owned; and (iii) 80,500 shares owned by
Yasmeen Bernstein, Mr. Bernstein's spouse.
(3) Includes (i) 50,000 shares subject to stock options exercisable within 60
days; and (ii) 3,074 shares directly owned.
(4) Consists of 25,000 shares subject to stock options exercisable within 60
days.
(5) Consists of 25,333 shares subject to stock options exercisable within 60
days and 394 shares directly owned.
(6) Consists of 394 shares directly owned.
(7) Includes (i) 34,867 shares directly owned; and (ii) 35,000 shares subject
to stock options exercisable within 60 days.
(8) Includes: (i) 21,775 shares owned directly; and (ii) 15,000 shares subject
to stock options exercisable within 60 days.
(9) Includes (i) 12,500 shares subject to stock options exercisable within 60
days; (ii) 3,900 shares owned by Debra Prieto, Mr. Prieto's spouse; and
(iii) 31,259 shares directly owned
(10) Includes 10,000 shares subject to stock options exercisable within 60 days;
and (ii) 10,299 shares held in a trust as to which Mr. Segner holds shared
voting and investment power.
(11) Includes (i) 5,000 shares subject to stock options exercisable within 60
days; and (ii) 58,683 shares directly owned.
(12) Consists of (i) 10,233 shares directly owned; and (ii) 2,267 shares
beneficially owned by Mr. Todd in the Company's 401(k) plan.
(13) Includes aggregate 212,833 shares subject to stock options exercisable
within 60 days.
(14) Per information provided by the Company's transfer agent, American Stock
Transfer and Trust Company as of May 8, 2002.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective in July 2001, the Company engaged Mr. Morad Tahbaz, a non-employee
director of the Company, to actively identify, research, analyze and recommend
candidates for merger and acquisition. In recognition of the additional time
commitment required for this effort, the Company agreed to compensate Mr. Tahbaz
$5,000 per month. At fiscal year end, the aggregate amount paid to Mr. Tahbaz
for this purpose was $30,000.
29
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.
AIR METHODS CORPORATION
Date: May 15, 2002 By \s\ Aaron D. Todd
-----------------------------------
On behalf of the Company,
and as Principal Financial Officer
Date: May 15, 2002 By \s\ Sharon J. Keck
-----------------------------------
Principal Accounting Officer
IV-3