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(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based upon convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
The amendment also provides (i) that the portion of the annual performance bonus up to amount equal to 200% of that year’s base salary shall be paid in cash, and any excess over 200% of such base salary shall be paid in shares of restricted stock vesting in equal quarterly installments with the initial installment vesting upon grant and the balance over three years following the award date; (ii) for a life insurance policy of $5 million or such lesser amount we can obtain for an annual premium of up to $10,000; (iii) for the reimbursement of legal fees in negotiating this amendment of up to $25,000, (iv) that the full amount of the payments and benefits payable in the event of a Change in Control (as defined in the employment agreement) shall be paid, even if it triggers an excise tax imposed by the tax code if the net after-tax amount would still be greater than reducing the total payments and benefits to avoid such excise tax, and (vi) the term “Good Reason Event” has been expanded to include a change in the composition of our board of directors where the majority of the directors were not in office on September 15, 2012. |
Mr. McGrath’s employment agreement has been amended as follows: (i) the term has been extended by two years to December 31, 2015; (ii) it provides for two annual grants of $75,000 worth of restricted shares of common stock of the Company (A) the first such grant to be made on January 1, 2014, which grant shall vest in three annual equal installments as set forth on Exhibit B to the amendment, provided that Adjusted EPS (as defined in the employment agreement) for the 2014 fiscal year is equal to the greater of $1.05 or an amount that is 3% higher than the actual Adjusted EPS for the 2014 fiscal year; (B) the second grant to be made on January 1, 2015, which grant shall vest in two annual equal installments as set forth on Exhibit B to the amendment, provided that Adjusted EPS for the 2015 fiscal year is equal to the greater of $2.10 or an amount that is 3% higher than the actual Adjusted EPS for the 2015 fiscal year; and (iii) in each of 2014 and 2015 Mr. McGrath can earn an annual performance bonus of up to 125% of his then base salary based upon such financial (e.g., growth in EPS, return on equity, growth in the Common Stock price) and non-financial (e.g., organic growth, personnel development) factors determined annually by the Compensation Committee of the Board of Directors during the first quarter of the relevant calendar year for which the annual performance bonus criteria are being established; one-half of such bonus shall be paid in cash, and one-half in shares of restricted common stock, which shall vest in two equal annual installments, the first installment of which shall vest on the Annual Performance Bonus Award Date (as defined in the employment agreement) and thereafter on January 1 in each subsequent year until the final vesting date on January 1, 2017. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2012 and 2013 ● Consolidated Statements of Operations for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2012 and 2013 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.7.1 Continuation and Extension of Term of Employment Agreement Between JAKKS Pacific, Inc. and Joel M. Bennett dated February 18, 2014 (15) 10.8 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (16) 10.8.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (16) 10.8.2 Second Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated May 15, 2013 (17) Code of Ethics (18) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Director and March 17, 2014 Stephen G. Berman Chief Executive Officer Chief Financial Officer /s/ JOEL M. BENNETT (Principal Financial Officer and March 17, 2014 Joel M. Bennett Principal Accounting Officer) /s/ REX H. POULSEN Director March 17, 2014 Rex H. Poulsen /s/ ROBERT E. GLICK Director March 17, 2014 Robert E. Glick /s/ MICHAEL G. MILLER Director March 17, 2014 Michael G. Miller /s/ MURRAY L. SKALA Director March 17, 2014 Murray L. Skala /s/ PETER F. REILLY Director March 17, 2014 Peter F. Reilly EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.7.1 Continuation and Extension of Term of Employment Agreement Between JAKKS Pacific, Inc. and Joel M. Bennett dated February 18, 2014 (15) 10.8 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (16) 10.8.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (16) 10.8.2 Second Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated May 15, 2013 (17) Code of Ethics (18) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based upon convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
The amendment also provides (i) that the portion of the annual performance bonus up to amount equal to 200% of that year’s base salary shall be paid in cash, and any excess over 200% of such base salary shall be paid in shares of restricted stock vesting in equal quarterly installments with the initial installment vesting upon grant and the balance over three years following the award date; (ii) for a life insurance policy of $5 million or such lesser amount we can obtain for an annual premium of up to $10,000; (iii) for the reimbursement of legal fees in negotiating this amendment of up to $25,000, (iv) that the full amount of the payments and benefits payable in the event of a Change in Control (as defined in the employment agreement) shall be paid, even if it triggers an excise tax imposed by the tax code if the net after-tax amount would still be greater than reducing the total payments and benefits to avoid such excise tax, and (vi) the term “Good Reason Event” has been expanded to include a change in the composition of our board of directors where the majority of the directors were not in office on September 15, 2012. |
Mr. McGrath’s employment agreement has been amended as follows: (i) the term has been extended by two years to December 31, 2015; (ii) it provides for two annual grants of $75,000 worth of restricted shares of common stock of the Company (A) the first such grant to be made on January 1, 2014, which grant shall vest in three annual equal installments as set forth on Exhibit B to the amendment, provided that Adjusted EPS (as defined in the employment agreement) for the 2014 fiscal year is equal to the greater of $1.05 or an amount that is 3% higher than the actual Adjusted EPS for the 2014 fiscal year; (B) the second grant to be made on January 1, 2015, which grant shall vest in two annual equal installments as set forth on Exhibit B to the amendment, provided that Adjusted EPS for the 2015 fiscal year is equal to the greater of $2.10 or an amount that is 3% higher than the actual Adjusted EPS for the 2015 fiscal year; and (iii) in each of 2014 and 2015 Mr. McGrath can earn an annual performance bonus of up to 125% of his then base salary based upon such financial (e.g., growth in EPS, return on equity, growth in the Common Stock price) and non-financial (e.g., organic growth, personnel development) factors determined annually by the Compensation Committee of the Board of Directors during the first quarter of the relevant calendar year for which the annual performance bonus criteria are being established; one-half of such bonus shall be paid in cash, and one-half in shares of restricted common stock, which shall vest in two equal annual installments, the first installment of which shall vest on the Annual Performance Bonus Award Date (as defined in the employment agreement) and thereafter on January 1 in each subsequent year until the final vesting date on January 1, 2017. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2012 and 2013 ● Consolidated Statements of Operations for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2011, 2012 and 2013 ● Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2012 and 2013 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.7.1 Continuation and Extension of Term of Employment Agreement Between JAKKS Pacific, Inc. and Joel M. Bennett dated February 18, 2014 (15) 10.8 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (16) 10.8.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (16) 10.8.2 Second Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated May 15, 2013 (17) Code of Ethics (18) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Director and March 17, 2014 Stephen G. Berman Chief Executive Officer Chief Financial Officer /s/ JOEL M. BENNETT (Principal Financial Officer and March 17, 2014 Joel M. Bennett Principal Accounting Officer) /s/ REX H. POULSEN Director March 17, 2014 Rex H. Poulsen /s/ ROBERT E. GLICK Director March 17, 2014 Robert E. Glick /s/ MICHAEL G. MILLER Director March 17, 2014 Michael G. Miller /s/ MURRAY L. SKALA Director March 17, 2014 Murray L. Skala /s/ PETER F. REILLY Director March 17, 2014 Peter F. Reilly EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.7.1 Continuation and Extension of Term of Employment Agreement Between JAKKS Pacific, Inc. and Joel M. Bennett dated February 18, 2014 (15) 10.8 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (16) 10.8.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (16) 10.8.2 Second Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated May 15, 2013 (17) Code of Ethics (18) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based upon convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
The amendment also provides (i) that the portion of the annual performance bonus up to amount equal to 200% of that year’s base salary shall be paid in cash, and any excess over 200% of such base salary shall be paid in shares of restricted stock vesting in equal quarterly installments with the initial installment vesting upon grant and the balance over three years following the award date; (ii) for a life insurance policy of $5 million or such lesser amount we can obtain for an annual premium of up to $10,000; (iii) for the reimbursement of legal fees in negotiating this amendment of up to $25,000, (iv) that the full amount of the payments and benefits payable in the event of a Change in Control (as defined in the employment agreement) shall be paid, even if it triggers an excise tax imposed by the tax code if the net after-tax amount would still be greater than reducing the total payments and benefits to avoid such excise tax, and (vi) the term “Good Reason Event” has been expanded to include a change in the composition of our board of directors where the majority of the directors were not in office on September 15, 2012. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2011 and 2012 ● Consolidated Statements of Operations for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (15) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (15) Code of Ethics (16) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Director and March 15, 2013 Stephen G. Berman Chief Executive Officer /s/ JOEL M. BENNETT Chief Financial Officer (Principal Financial Officer and March 15, 2013 Joel M. Bennett Principal Accounting Officer) /s/ REX H. POULSEN Director March 15, 2013 Rex H. Poulsen /s/ ROBERT E. GLICK Director March 15, 2013 Robert E. Glick /s/ MICHAEL G. MILLER Director March 15, 2013 Michael G. Miller /s/ MURRAY L. SKALA Director March 15, 2013 Murray L. Skala /s/ MARVIN W. ELLIN Director March 15, 2013 Marvin W. Ellin /s/ LEIGH ANNE BRODSKY Director March 15, 2013 Leigh Anne Brodsky /s/ PETER F. REILLY Director March 15, 2013 Peter F. Reilly EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (15) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (15) Code of Ethics (16) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based upon convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
The amendment also provides (i) that the portion of the annual performance bonus up to amount equal to 200% of that year’s base salary shall be paid in cash, and any excess over 200% of such base salary shall be paid in shares of restricted stock vesting in equal quarterly installments with the initial installment vesting upon grant and the balance over three years following the award date; (ii) for a life insurance policy of $5 million or such lesser amount we can obtain for an annual premium of up to $10,000; (iii) for the reimbursement of legal fees in negotiating this amendment of up to $25,000, (iv) that the full amount of the payments and benefits payable in the event of a Change in Control (as defined in the employment agreement) shall be paid, even if it triggers an excise tax imposed by the tax code if the net after-tax amount would still be greater than reducing the total payments and benefits to avoid such excise tax, and (vi) the term “Good Reason Event” has been expanded to include a change in the composition of our board of directors where the majority of the directors were not in office on September 15, 2012. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2011 and 2012 ● Consolidated Statements of Operations for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2010, 2011 and 2012 ● Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2011 and 2012 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (15) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (15) Code of Ethics (16) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Director and March 15, 2013 Stephen G. Berman Chief Executive Officer /s/ JOEL M. BENNETT Chief Financial Officer (Principal Financial Officer and March 15, 2013 Joel M. Bennett Principal Accounting Officer) /s/ REX H. POULSEN Director March 15, 2013 Rex H. Poulsen /s/ ROBERT E. GLICK Director March 15, 2013 Robert E. Glick /s/ MICHAEL G. MILLER Director March 15, 2013 Michael G. Miller /s/ MURRAY L. SKALA Director March 15, 2013 Murray L. Skala /s/ MARVIN W. ELLIN Director March 15, 2013 Marvin W. Ellin /s/ LEIGH ANNE BRODSKY Director March 15, 2013 Leigh Anne Brodsky /s/ PETER F. REILLY Director March 15, 2013 Peter F. Reilly EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.4.1 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (11) 10.4.2 Clarification Letter dated October 20, 2011 with respect to Mr. Berman’s Second Amended and Restated employment agreement (12) 10.4.3 Amendment Number One to Mr. Berman’s Second Amended and Restated Employment Agreement dated September 21, 2012 (13) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (14) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (15) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (15) Code of Ethics (16) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Segment information with respect to revenues, assets and profits or losses attributable to each segment is contained in Footnote 3 to the audited financial statements contained below in Item 8, Our products include: Traditional Toys and Electronics ● Action figures and accessories, including licensed characters, principally based on Ultimate Fighting Champion (UFC), Total Non-Stop Action (TNA) wrestling, Pokémon® franchises; ● Toy vehicles, including Road Champs®, Fly Wheels® and MXS® toy vehicles and accessories; ● Electronics products, including SpyNet spy products, EyeClops™ Bionic Eye products, Laser Challenge® and Plug It In & Play TV Games ™ based on Disney® brands and other popular brands; ● Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Princess®, Disney Fairies®, Cabbage Patch Kids®, Hello Kitty®, Graco® and Fisher Price® plush, infant and pre-school toys; ● Private label products as “exclusives” for a myriad of retail customers in many product categories; and ● Pet products, including toys, consumables, and accessories, branded JAKKS Pets®, some of which also feature licenses, including Kong®. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2010 and 2011 ● Consolidated Statements of Operations for the years ended December 31, 2009, 2010 and 2011 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2009, 2010 and 2011 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2009, 2010 and 2011 ● Consolidated Statements of Cash Flows for the years ended December 31, 2009, 2010 and 2011 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (12) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (13) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN March 14, 2012 Stephen G. Berman Director and Chief Executive Officer /s/ JOEL M. BENNETT March 14, 2012 Joel M. Bennett Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ DAN ALMAGOR March 14, 2012 Dan Almagor Director /s/ ROBERT E. GLICK March 14, 2012 Robert E. Glick Director /s/ MICHAEL G. MILLER March 14, 2012 Michael G. Miller Director /s/ MURRAY L. SKALA March 14, 2012 Murray L. Skala Director /s/ MARVIN W. ELLIN March 14, 2012 Marvin W. Ellin Director EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2 Amended and Restated By-Laws of the Company (2) 4.1 Rights Agreement dated as of March 5, 2012 between the Company and Computershare Trust Company, N.A., as Rights Agent (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated October 21, 2011 (2) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (12) 10.9 Employment Agreement between the Company and John a/k/a Jack McGrath, dated March 4, 2010 (13) 10.9.1 First Amendment to Employment Agreement between the Company and John a/k/a Jack McGrath, dated August 23, 2011 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products include: Traditional Toys and Electronics ● Action figures and accessories, including licensed characters, principally based on Ultimate Fighting Champion (UFC), Total Non-Stop Action (TNA) wrestling, Pokémon® and until December 31, 2009 World Wrestling Entertainment® (“WWE”) franchises; ● Toy vehicles, including Road Champs®, Fly Wheels® and MXS® toy vehicles and accessories; ● Electronics products, including SpyNet spy products, EyeClops™ Bionic Eye products, Laser Challenge® and Plug It In & Play TV Games ™ based on Disney® brands and other popular brands; ● Dolls and accessories, including small dolls, large dolls, fashion dolls and baby dolls based on licenses, including Disney Princess®, Disney Fairies®, Cabbage Patch Kids®, Taylor Swift, Fancy Nancy, Hello Kitty®, Graco® and Fisher Price®; plush, infant and pre-school toys; ● Private label products as “exclusives” for a myriad of retail customers in many product categories; and ● Pet products, including toys, consumables, and accessories, branded JAKKS Pets®, some of which also feature licenses, including American Kennel Club® and The Cat Fanciers’ Association™. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
On February 26, 2010, our board approved the following with respect to Mr. Friedman’s retirement: (i) the Board waived the requirement under his employment agreement that we be given 60 days notice of his election to retire; (ii) in addition to serving as non-executive Chairman Emeritus as provided in his employment agreement, Mr. Friedman agreed to serve in the role of Chief Strategist to advise the Board and the Company on acquisitions and other strategy; (iii) Mr. Friedman agreed to waive any cash bonus for 2010 that he would otherwise have been entitled to under his employment agreement (he would have been entitled to receive a pro-rata portion of any cash bonus awarded under the provisions of Section 1(c) of the employment agreement); (iv) Mr. Friedman will receive a car allowance during the period he receives the Retirement Benefit comparable to what he receives now; (v) we will provide Mr. Friedman with an office and use of a secretary part time; (vi) the 120,000 shares of restricted stock granted to him on January 1, 2010 will continue to vest on January 1, 2011 provided the $2 million Pre-Tax Income test required for vesting under Section 2.2 of the Restricted Stock Agreement is met. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 7): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2009 and 2010 ● Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 7): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) ______________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Stephen G. Berman Director and Chief Executive Officer March 4, 2011 /s/ JOEL M. BENNETT Joel M. Bennett Chief Financial Officer (Principal Financial Officer and March 4, 2011 Principal Accounting Officer) /s/ DAN ALMAGOR Dan Almagor Director March 4, 2011 /s/ ROBERT E. GLICK Robert E. Glick Director March 4, 2011 /s/ MICHAEL G. MILLER Michael G. Miller Director March 4, 2011 /s/ MURRAY L. SKALA Murray L. Skala Director March 4, 2011 /s/ MARVIN W. ELLIN Marvin W. Ellin Director March 4, 2011 EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) ____________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
(4) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company (or any subsidiary); (B) violated, or caused our Company (or any subsidiary) or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
On February 26, 2010, our board approved the following with respect to Mr. Friedman’s retirement: (i) the Board waived the requirement under his employment agreement that we be given 60 days notice of his election to retire; (ii) in addition to serving as non-executive Chairman Emeritus as provided in his employment agreement, Mr. Friedman agreed to serve in the role of Chief Strategist to advise the Board and the Company on acquisitions and other strategy; (iii) Mr. Friedman agreed to waive any cash bonus for 2010 that he would otherwise have been entitled to under his employment agreement (he would have been entitled to receive a pro-rata portion of any cash bonus awarded under the provisions of Section 1(c) of the employment agreement); (iv) Mr. Friedman will receive a car allowance during the period he receives the Retirement Benefit comparable to what he receives now; (v) we will provide Mr. Friedman with an office and use of a secretary part time; (vi) the 120,000 shares of restricted stock granted to him on January 1, 2010 will continue to vest on January 1, 2011 provided the $2 million Pre-Tax Income test required for vesting under Section 2.2 of the Restricted Stock Agreement is met. |
If the minimum EPS vesting condition for the first tranche is not met, then the $500,000 grant lapses, but if the vesting condition is satisfied for the first tranche of the $500,000 grant, then each subsequent tranche of the $500,000 grant will vest; (iii) an annual performance bonus as follows: (x) 2010 bonus (previously established in March 2010) remains unchanged except that 20% of the bonus will be paid in restricted stock which will vest in six equal annual installments of 14.5% of the number of shares, the first on the date in 2011 that the bonus is determined to have been earned, and a seventh and final installment of 13% of the shares on January 1, 2017, and (y) for years commencing January 1, 2011, an amount equal to up to 200% of base salary, to be paid in stock and cash (20-40% in stock, in the percentages set forth on Exhibit E to the agreement), bonus criteria using “Adjusted” EPS growth (as defined in the agreement) to be determined by our Compensation Committee in the first quarter of each fiscal year, except that Adjusted EPS criteria (but not vesting) for 2011 shall range from $1.37 - $1.78 as stated in Exhibit D to the agreement, and shares will vest in equal annual installments commencing with the date the Bonus for a fiscal year is determined to have been earned and thereafter on January 1 in each subsequent year until the final installment on January 1, 2017, and (z) an additional bonus equal to 100% of base salary to be paid entirely in restricted stock; the criteria and vesting schedules to be determined by our Compensation Committee in the first fiscal quarter of each year, using criteria to be selected by such Committee which are in its discretion such as grown in net sales, return on invested capital, growth in free cash flow, total shareholder return (or any combination); (iv) restrictions on sale of our securities such that he cannot sell any shares of our common stock if his shares remaining after a sale are not equal to at least three times his then base salary; (v) life insurance in the amount of $1.5 million; (vi) severance if we terminate the agreement without cause (as defined in the agreement) or Mr. Berman terminates it for Good Reason (as defined in the agreement), in an amount equal to the base salary at termination date multiplied by the number of years and partial years remaining in the term; and (vii) restrictive covenants, change of control provisions and our ownership of certain intellectual property. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 7): ● Reports of Independent Registered Public Accounting Firm ● Consolidated Balance Sheets as of December 31, 2009 and 2010 ● Consolidated Statements of Operations for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2008, 2009 and 2010 ● Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2009 and 2010 ● Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 7): ● Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) ______________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ STEPHEN G. BERMAN Stephen G. Berman Director and Chief Executive Officer March 4, 2011 /s/ JOEL M. BENNETT Joel M. Bennett Chief Financial Officer (Principal Financial Officer and March 4, 2011 Principal Accounting Officer) /s/ DAN ALMAGOR Dan Almagor Director March 4, 2011 /s/ ROBERT E. GLICK Robert E. Glick Director March 4, 2011 /s/ MICHAEL G. MILLER Michael G. Miller Director March 4, 2011 /s/ MURRAY L. SKALA Murray L. Skala Director March 4, 2011 /s/ MARVIN W. ELLIN Marvin W. Ellin Director March 4, 2011 EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 1999 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 2000 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 2001 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 2002 Stock Award and Incentive Plan (8) 10.2.1 2008 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) 10.8 Second Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of November 11, 2010 (13) Code of Ethics (14) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Stephen G. Berman (*) 32.2 Section 1350 Certification of Joel Bennett (*) ____________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products include: Traditional Toys • Action figures and accessories, including licensed characters, principally based on Ultimate Fighting Champion (“UFC), Pokemon® and until December 31, 2009 World Wrestling Entertainment® (“WWE”) franchises; • Toy vehicles, including Road Champs®, NASCAR® and MXS® toy vehicles and accessories; • Electronics products, including Plug It In & Play TV Games™, EyeClops™ Bionic Eye products, and Laser Challenge®, as well as others based on Disney® and Discovery Kids® brands; • Role-play, dress-up, pretend play and novelty products for boys and girls based on well known brands and entertainment properties such as Black & Decker®, McDonalds®, Dirt Devil®, Subway®, Pizza Hut® Disney Princess®, Disney Fairies®, Hannah Montana™, Barbie® and Dora the Explorer®, as well as those based on our own proprietary brands; • Dolls and accessories, plush, infant and pre-school toys based on our Child Guidance®, TollyTots brands, as well as licenses, including Barney®, The Wiggles®, Disney Fairies®, Cabbage Patch Kids®, Taylor Swift, Fancy Nancy, Hello Kitty®, Hannah Montana, Puppy in My Pocket and Friends™, Disney Princess®, Disney Babies, Graco® and Fischer Price®; • Indoor and outdoor kids’ furniture, room décor; kiddie pools and pool toys, kites, seasonal and outdoor products, including Kids Only!, Go Fly A Kite®, Funnoodle® and Laser Challenge; • Halloween and everyday costumes for all ages based on licensed and proprietary non-licensed brands, including Spiderman® , Iron Man, Toy Story®, Sesame Street®, Power Rangers® and Disney Princesses® , and related Halloween accessories; • Private label products as “exclusives” for a myriad of retail customers in many product categories. |
(6) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company; (B) violated, or caused us or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
On February 26, 2010, our board approved the following with respect to Mr. Friedman’s retirement: (i) the Board waived the requirement under his employment agreement that we be given 60 days notice of his election to retire; (ii) in addition to serving as non-executive Chairman Emeritus as provided in his employment agreement, Mr. Friedman agreed to serve in the role of Chief Strategist to advise the Board and the Company on acquisitions and other strategy; (iii) Mr. Friedman agreed to waive any cash bonus for 2010 that he would otherwise have been entitled to under his employment agreement (he would have been entitled to receive a pro-rata portion of any cash bonus awarded under the provisions of Section 1(c) of the employment agreement); (iv) Mr. Friedman will receive a car allowance during the period he receives the Retirement Benefit comparable to what he receives now; (v) we will provide Mr. Friedman with an office and use of a secretary part time; (vi) the 120,000 shares of restricted stock granted to him on January 1, 2010 will continue to vest on December 31, 2010 provided the $2 million Pre-Tax Income test required for vesting under Section 2.2 of the Restricted Stock Agreement is met. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 7): • Reports of Independent Registered Public Accounting Firm • Consolidated Balance Sheets as of December 31, 2008 and • Consolidated Statements of Operations for the years ended December 31, 2007, 2008 and • Consolidated Statements of Other Comprehensive Income (Loss) for the years ended December 31, 2007, 2008 and 2009 • Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2007, 2008 and 2009 • Consolidated Statements of Cash Flows for the years ended December 31, 2007, 2008 and • Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 7): • Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.2.1 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) Code of Ethics (13) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.3 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Stephen G. Berman (*) 32.3 Section 1350 Certification of Joel Bennett (*) ______________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ JACK FRIEDMAN Jack Friedman Chairman of the Board of Directors and March 16, 2010 Co-Chief Executive Officer (Co-Principal Executive Officer) /s/ JOEL M. BENNETT Joel M. Bennett Chief Financial Officer (Principal Financial Officer and March 16, 2010 Principal Accounting Officer) /s/ STEPHEN G. BERMAN Stephen G. Berman Director and Co-Chief Executive Officer (Co-Principal Executive Officer) March 16, 2010 /s/ DAN ALMAGOR March 16, 2010 Dan Almagor Director /s/ DAVID C. BLATTE March 16, 2010 David C. Blatte Director /s/ ROBERT E. GLICK March 16, 2010 Robert E. Glick Director /s/ MICHAEL G. MILLER March 16, 2010 Michael G. Miller Director /s/ MURRAY L. SKALA March 16, 2010 Murray L. Skala Director EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.2.1 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) Code of Ethics (13) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Stephen G. Berman (*) 31.3 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Stephen G. Berman (*) 32.3 Section 1350 Certification of Joel Bennett (*) ____________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products are typically lower-priced toys and accessories, and include: Traditional Toys • Action figures and accessories, including licensed characters, principally based on World Wrestling Entertainment ® (“WWE”), The Chronicles of Narnia: Prince Caspian™ and Pokemon® franchises; • Toy vehicles, including Road Champs®, RC Racers ™ and MXS® toy vehicles and accessories, as well as those based on Nascar®; • Electronics products, including Plug It In & Play TV Games™, EyeClops™ Bionic Eye products, and Laser Challenge®, as well as others based on Disney® and Discovery Kids® brands; • Role-play, dress-up and novelty products featuring entertainment and consumer products properties such as Dirt Devil®, Subway®, Pizza Hut® and McDonalds® pretend play products, Disney Princess® , Hannah Montana™, Barbie® and Dora the Explorer® playsets for girls and Black & Decker® and Pirates of the Caribbean™ playsets for boys; • Infant and pre-school toys and plush toys featuring Care Bears®, Barney®, The Wiggles®, and slumber bags; • Dolls including large, fashion and mini dolls and related accessories based on Cabbage Patch Kids®, Hannah Montana, Puppy in My Pocket and Friends™ and Disney Princess® dolls and private label fashion dolls for other retailers; • Seasonal and outdoor toys and leisure products, including Go Fly A Kite®, Air Creations®, and other kites, Funnoodle® pool toys, The Storm® water guns and Fly Wheels® XPV® and Flight™ vehicles; and • Junior sports and toy paintball products, including Gaksplat® and The Storm; • Baby dolls and baby doll pretend play accessories based on well-known licensed brands including Graco®, Fischer Price® and Disney Princess®; • Licensed and non-licensed indoor and outdoor kids’ furniture, accessories and room décor; and • Innovative Halloween and everyday costumes based on licensed and non-licensed brands including Spiderman®, Power Rangers® and Disney Princesses®, and stylized Home Décor product lines for Halloween. |
(6) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company; (B) violated, or caused us or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
Signature Title Date /s/ JACK FRIEDMAN Jack Friedman Chairman of the Board of Directors and February 27, 2009 Co-Chief Executive Officer (Principal Executive Officer) /s/ JOEL M. BENNETT Joel M. Bennett Chief Financial Officer (Principal Financial Officer and February 27, 2009 Principal Accounting Officer) /s/ STEPHEN G. BERMAN Stephen G. Berman Director and Co-Chief Executive Officer February 27, 2009 /s/ DAN ALMAGOR February 27, 2009 Dan Almagor Director /s/ DAVID C. BLATTE February 27, 2009 David C. Blatte Director /s/ ROBERT E. GLICK February 27, 2009 Robert E. Glick Director /s/ MICHAEL G. MILLER February 27, 2009 Michael G. Miller Director /s/ MURRAY L. SKALA February 27, 2009 Murray L. Skala Director EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.2.1 Amendment to 2002 Stock Award and Incentive Plan (9) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (10) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (10) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (11) 10.6 Form of Restricted Stock Agreement (10) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, 2007 (12) Code of Ethics (13) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Joel Bennett (*) ____________ (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products are typically lower-priced toys and accessories, and include: Traditional Toys • Action figures and accessories, including licensed characters, principally based on World Wrestling Entertainment® (“WWE”), The Chronicles of Narnia: Prince Caspian™ and Pokemon® franchises; • Toy vehicles, including Road Champs®, RC Racers™ and MXS® toy vehicles and accessories, as well as those based on Nascar®; • Electronics products, including Plug It In & Play TV Games™, EyeClops™ Bionic Eye products, and Laser Challenge®, as well as others based on Disney® and Discovery Kids® brands; • Role-play, dress-up and novelty products featuring entertainment and consumer products properties such as Dirt Devil®, Subway®, Pizza Hut® and McDonalds® pretend play products, Disney Princess®, Hannah Montana™, Barbie® and Dora the Explorer® playsets for girls and Black & Decker® and Pirates of the Caribbean™ playsets for boys; • Infant and pre-school toys and plush toys featuring Care Bears®, Barney®, The Wiggles®, Curious George®, and slumber bags; • Dolls including large, fashion and mini dolls and related accessories based on Cabbage Patch Kids®, Hannah Montana, The Cheetah Girls™, Puppy in My Pocket and Friends™, Hairspray™ the movie and Disney Princess® dolls and private label fashion dolls for other retailers; • Seasonal and outdoor toys and leisure products, including Go Fly A Kite®, Air Creations®, and other kites, Funnoodle® pool toys, The Storm® water guns and Fly Wheels® XPV® and Flight™ vehicles; and • Junior sports and toy paintball products, including Gaksplat® and The Storm. |
(6) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company; (B) violated, or caused us or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): • Reports of Independent Registered Public Accounting Firms • Consolidated Balance Sheets as of December 31, 2006 and 2007 • Consolidated Statements of Operations for the years ended December 31, 2005, 2006 and • Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2005, 2006 and 2007 • Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2005, 2006 and 2007 • Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and • Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8): • Schedule II - Valuation and Qualifying Accounts (3) Exhibits: Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (10) 10.6 Form of Restricted Stock Agreement (9) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, (11) Code of Ethics (11) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ JACK FRIEDMAN Chairman of the Board February 29, 2008 Jack Friedman of Directors and Chief Executive Officer (Principal Executive Officer) /s/ JOEL M. BENNETT Chief Financial Officer February 29, 2008 Joel M. Bennett (Principal Financial Officer and Principal Accounting Officer) /s/ STEPHEN G. BERMAN Director February 29, 2008 Stephen G. Berman /s/ DAN ALMAGOR Director February 29, 2008 Dan Almagor /s/ DAVID C. BLATTE Director February 29, 2008 David C. Blatte /s/ ROBERT E. GLICK Director February 29, 2008 Robert E. Glick /s/ MICHAEL G. MILLER Director February 29, 2008 Michael G. Miller /s/ MURRAY L. SKALA Director February 29, 2008 Murray L. Skala EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (10) 10.6 Form of Restricted Stock Agreement (9) 10.7 Employment Agreement between the Company and Joel M. Bennett, dated July 17, (11) Code of Ethics (11) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products are typically lower-priced toys and accessories and include: Traditional Toys · Action figures and accessories, including licensed characters, principally based on World Wrestling Entertainment® (“WWE”) and the Dragon Ball® and Pokemon® franchises, and toy vehicles, including Road Champs® die-cast collectibles, Fly Wheels™ and RC Racers & MXS™ toy vehicles and accessories; · Electronics products, including Plug It In & Play TV Games™, Vmigo® virtual pet gaming system and Laser Challenge®; · Role-play and dress-up products featuring entertainment and consumer products properties such as Disney Princesse®s and Dora the Explorer for girls and Black & Decker® and Pirates of the Caribbean® for boys; · Infant and pre-school toys, TV activities and plush toys featuring Care Bears®, Barney® and Doodle Bears®and slumber bags; and · Dolls including fashion and mini dolls and related accessories, includes Disney Princess dolls sold to Disney Stores and Disney Parks and Resorts and private label fashion dolls for other retailers, and soft body dolls featuring Cabbage Patch Kids®. |
(5) Defined as (i) the Named Officer’s conviction of, or entering a plea of guilty or nolo contendere (which plea is not withdrawn prior to its approval by the court) to, a felony offense and either the Named Officer’s failure to perfect an appeal of such conviction prior to the expiration of the maximum period of time within which, under applicable law or rules of court, such appeal may be perfected or, if he does perfect such an appeal, the sustaining of his conviction of a felony offense on appeal; or (ii) the determination by our Board of Directors, after due inquiry, based on convincing evidence, that the Named Officer has: (A) committed fraud against, or embezzled or misappropriated funds or other assets of, our Company; (B) violated, or caused us or any of our officers, employees or other agents, or any other individual or entity to violate, any material law, rule, regulation or ordinance, or any material written policy, rule or directive of our Company or our Board of Directors; (C) willfully, or because of gross or persistent inaction, failed properly to perform his duties or acted in a manner detrimental to, or adverse to our interests; or (D) violated, or failed to perform or satisfy any material covenant, condition or obligation required to be performed or satisfied by him under his employment agreement with us; and that, in the case of any violation or failure referred to in clause (B), (C) or (D), above, such violation or failure has caused, or is reasonably likely to cause, us to suffer or incur a substantial casualty, loss, penalty, expense or other liability or cost. |
Exhibits and Financial Statement Schedules The following documents are filed as part of this Annual Report on Form 10-K: (1) Financial Statements (included in Item 8): · Reports of Independent Registered Public Accounting Firms · Consolidated Balance Sheets as of December 31, 2005 and 2006 · Consolidated Statements of Operations for the years ended December 31, 2004, 2005 and · Consolidated Statements of Other Comprehensive Income for the years ended December 31, 2004, 2005 and 2006 · Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2004, 2005 and 2006 · Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2005 and · Notes to Consolidated Financial Statements (2) Financial Statement Schedules (included in Item 8) · Schedule II - Valuation and Qualifying Accounts (3) Exhibits Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (10) 10.6 Form of Restricted Stock Agreement (9) Code of Ethics (11) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Signature Title Date /s/ JACK FRIEDMAN Jack Friedman Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) March 15, 2007 /s/ JOEL M. BENNETT Joel M. Bennett Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) March 15, 2007 /s/ STEPHEN G. BERMAN Stephen G. Berman Director March 15, 2007 /s/ DAN ALMAGOR Dan Almagor Director March 15, 2007 /s/ DAVID C. BLATTE David C. Blatte Director March 15, 2007 /s/ ROBERT E. GLICK Robert E. Glick Director March 15, 2007 /s/ MICHAEL G. MILLER Michael G. Miller Director March 15, 2007 /s/ MURRAY L. SKALA Murray L. Skala Director March 15, 2007 EXHIBIT INDEX Exhibit Number Description 3.1 Amended and Restated Certificate of Incorporation of the Company (1) 3.2.1 By-Laws of the Company (2) 3.2.2 Amendment to By-Laws of the Company (3) 10.1.1 Third Amended and Restated 1995 Stock Option Plan (4) 10.1.2 Amendment to Third Amended and Restated 1995 Stock Option Plan (5) 10.1.3 Amendment to Third Amended and Restated 1995 Stock Option Plan (6) 10.1.4 Amendment to Third Amended and Restated 1995 Stock Option Plan (7) 10.2 Stock Award and Incentive Plan (8) 10.3 Amended and Restated Employment Agreement between the Company and Jack Friedman, dated as of March 26, 2003 (9) 10.4 Amended and Restated Employment Agreement between the Company and Stephen G. Berman dated as of March 26, 2003 (9) 10.5 Office Lease dated November 18, 1999 between the Company and Winco Maliview Partners (10) 10.6 Form of Restricted Stock Agreement (9) Code of Ethics (11) Subsidiaries of the Company (*) 31.1 Rule 13a-14(a)/15d-14(a) Certification of Jack Friedman (*) 31.2 Rule 13a-14(a)/15d-14(a) Certification of Joel Bennett (*) 32.1 Section 1350 Certification of Jack Friedman (*) 32.2 Section 1350 Certification of Joel Bennett (*) (1) Filed previously as Appendix 2 to the Company’s Schedule 14A Proxy Statement, filed August 23, 2002, and incorporated herein by reference. |
Our products are typically lower-priced toys and accessories and include: • Action figures and accessories including licensed characters, principally based on World Wrestling Entertainmenttm (“WWE”) and the Dragon Ball® franchise, and toy vehicles, including Road Champs® die-cast collectibles and Remco® toy vehicles and role-play toys and accessories; • Craft, activity and stationery products, including Flying Colors Toys® activity sets, compounds, playsets and lunch boxes, and Colorworkshop® craft products such as the Blopen® and Pentech® writing instruments, stationery and activity products; • Infant and pre-school electronic toys, TV activities, toy foam puzzle mats and blocks, activity sets, outdoor products, plush toys featuring Care Bears and Teletubbies, soft body dolls featuring Cabbage Patch Kids and slumber bags; • Seasonal toys and leisure products, including kites, Funnoodle® pool toys, and Stormtm water guns; • Electronics products, including Plug it in & Play TV Gamestm and Laser Challengetm; • Junior sports, including Disney products, Gaksplattm and Stormtm; and • Fashion and mini dolls and related accessories, including Disney Princesses sold in The Disney Store chain. |
Our products are typically simpler, lower-priced, toys and accessories and include: • Action figures and accessories including licensed characters, principally based on World Wrestling EntertainmentTM (“WWE”) and the Dragon Ball® franchise, and toy vehicles, including Road Champs® die-cast collectibles and Remco® toy vehicles and role-play toys and accessories; • Craft, activity and stationery products, including Flying Colors Toys® activity sets, compounds, playsets and lunch boxes, and Colorworkshop® craft products such as the Blopen® and Pentech® writing instruments, stationery and activity products; • Child Guidance® infant and pre-school electronic toys, toy foam puzzle mats and blocks, activity sets, outdoor products, plush toys and slumber bags; • Seasonal toys and leisure products, including kites, Funnoodle® pool toys, and StormTM water guns; • Toy candy through our creation of Tongue TapeTM; • Electronics products, including plug and play TV Games and Laser ChallengeTM; • Junior sports, including Disney products, GaksplatTM and StormTM; and • Fashion and mini dolls and related accessories, including Disney Princesses sold in The Disney Store chain. |
Our products are typically simpler, lower-priced, toys and accessories and include: • Action figures and accessories including licensed characters, principally based on World Wrestling Entertainment® and the Dragon Ball® franchise, and toy vehicles, including Road Champs® die-cast collectibles, infrared radio controlled vehicles and Mighty Mo’s® and RemcoTM toy and activity vehicles; • Craft, activity and stationery products, including Flying Colors® activity sets, compounds, candy, playsets and lunch boxes, and Pentech® writing instruments, stationery and activity products; • Seasonal toys and leisure products, including kites, Funnoodle® pool toys, and StormTM water guns; • Electronics products, including karaoke machines, Laser ChallengeTM and TV games; • Junior sports, including Disney products, GaksplatTM and Storm; • Child Guidance® toy foam puzzle mats and blocks, activity sets, outdoor products, plush toys and slumber bags; and • Fashion and mini dolls and related accessories, including Disney® Princesses sold exclusively in The Disney Store chain. |
If so determined by the Committee, to avoid the limitations on deductibility under Section 162(m) of the Code, the business criteria used by the Committee in establishing performance goals applicable to performance Awards to named executives will be selected from among the following: (1) growth in revenues or assets; (2) earnings from operations, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items; (3) net income or net income per common share (basic or diluted); (4) return on assets, return on investment, return on capital, or return on equity; (5) cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (6) interest expense after taxes; (7) economic profit; (8) operating margin or gross margin; (9) stock price or total stockholder return; and (10) strategic business criteria, consisting of one or more objectives based on meeting environmental or safety standards, market penetration, geographic business expansion goals, cost targets, customer satisfaction, employee satisfaction, management of employment practices and employee benefits, supervision of litigation and information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE To the best of our knowledge, all Forms 3, 4 or 5 required to be filed pursuant to Section 16(a) of the Exchange Act during or with respect to the fiscal year ended December 31, 2000 were filed on a timely basis, except that Forms 4 reporting the increase in the number of shares of our common stock beneficially owned by Messrs. Friedman, Berman, Glick, Miller, Skala and Bennett as a result of the 3-for-2 stock split which became effective on November 4, 1999 were not filed until January 7, 2000; amended Forms 4 reporting the grant of options to Messrs. Glick, Miller and Skala (correcting earlier filed Forms 4 to reflect the 3-for-2 stock split) were filed on February 15, 2000; and Forms 4 reporting the changes in beneficial ownership of our common stock by Messrs. Friedman, Berman, Glick, Miller, Skala and Bennett effected by option repricing in December 2000 and, as to Mr. Friedman, two charitable gifts of 10,000 and 500 shares, respectively, in December 2000 were not filed until January 16, 2001. |
These factors include, but are not limited to: the ability to integrate newly acquired companies, clients and businesses; strains on resources as a result of growth, the volatility and stability of global securities markets, including declines in equity or fixed income returns impacting the buying power of investment management clients; the ability to hire and retain qualified personnel; the maintenance of our leading technological position and reputation; failure to maintain or improve our competitive position in the marketplace; fraudulent, misappropriation or unauthorized data access, including cyber-security and privacy breaches; failures or disruptions of telecommunications, data centers, network systems, facilities, or the Internet; uncertainty, consolidation and business failures in the global investment banking industry; the continued shift from active to passive investing, the negotiation of contract terms with vendors, data suppliers and landlords; the retention of clients and the attraction of new ones; the absence of U.S. or foreign governmental regulation restricting international business; the unfavorable resolution of tax assessments and legal proceedings; and legislative and regulatory changes in the environments in which we and our clients operate. |
These factors include, but are not limited to: the ability to integrate newly acquired companies, clients and businesses; strains on resources as a result of growth, the volatility and stability of global securities markets, including declines in equity or fixed income returns impacting the buying power of investment management clients; the ability to hire and retain qualified personnel; the maintenance of our leading technological position and reputation; failure to maintain or improve our competitive position in the marketplace; fraudulent, misappropriation or unauthorized data access, including cyber-security and privacy breaches; failures or disruptions of telecommunications, data centers, network systems, facilities, or the Internet; uncertainty, consolidation and business failures in the global investment banking industry; the continued shift from active to passive investing, the negotiation of contract terms with vendors, data suppliers and landlords; the retention of clients and the attraction of new ones; the absence of U.S. or foreign governmental regulation restricting international business; the unfavorable resolution of tax assessments and legal proceedings; and legislative and regulatory changes in the environments in which we and our clients operate. |
About FactSet ● Founded in 1978, public since 1996 ● Dual listed on the New York Stock Exchange and the NASDAQ Stock Market under the symbol “FDS” ● $5.3 billion market capitalization as of August 31, 2014 ● 35 office locations in 18 countries with 6,639 employees ● Named one of the “100 Best Companies to Work For” by FORTUNE for the sixth time in the last seven years ● Consistently recognized as one of the UK’s “Best Workplaces” by the Great Places to Work Institute UK and included in the “2014 Best Places to Work in France” list for the third consecutive year ● Named as one of the “20 Great Workplaces in Technology” for the first time by Great Place to Work ● Content offerings from more than 190 data suppliers, 90 news sources and 80 exchanges ● Upholds key corporate values such as innovating within the financial industry, providing a friendly work environment, offering exceptional client service, being thought leaders, having smart people, developing long-term growth strategies, performing community service and embracing global diversity. |
● 34 consecutive years of revenue growth ● 18 consecutive years of positive earnings growth as a public company ● Operating margins of 31% or greater since 2002 Fiscal 2014 Highlights ● Revenues grew 7% and diluted earnings per share grew by 11% ● Annual subscription value (“ASV”) of $964 million as of August 31, 2014 ● 200 net new clients, the Company’s highest growth total during one single year ● 2,743 clients and 54,596 users as of August 31, 2014, an increase of 10% and 7%, respectively from a year ago ● Generated $247 million in free cash flow ● $300 million expansion to the Company’s existing share repurchase program ● 3-year average return of equity of 37% ● Increased the regular quarterly dividend by 11% ● Named Philip Snow as President, effective July 1, 2014 ● Acquired Revere Data, LLC and Matrix Data Limited during fiscal 2014 as the Company continues to enhance its content offerings and analytical applications ● Opened a new office in Singapore to meet the needs of its growing international client base ● Held its U.S. |
Highlights ● Founded in 1978, public since 1996 ● Dual listed on the New York Stock Exchange and the NASDAQ Stock Market under the symbol “FDS” ● $4.8 billion market capitalization ● 29 office locations in 15 countries with 6,258 employees ● 33 consecutive years of revenue growth ● 17 consecutive years of positive earnings growth as a public company ● 11 consecutive years of operating margins greater than 31% ● Clients can access information from more than 170 data suppliers, 100 exchanges and 90 news sources ● Annual subscription value (“ASV”) of $888 million as of August 31, 2013 ● 2,500 clients and 50,925 users, both metrics up over the prior year ● Revenues were up 6% and diluted earnings per share grew by 8% in fiscal 2013 ● $251 million in free cash flow generated during fiscal 2013, up 20% from the prior year ● Employee count rose 9% to 6,258, up 523 employees from a year ago ● Lowered the Company’s effective tax rate for the full fiscal 2013 year to 26.7% ● Recognized as one of Fortune’s “100 Best Companies to Work For” ● Increased the regular quarterly dividend by 13% Business Strategy For over 35 years, the Company’s business strategy has been built on the creative use of technology and an unwavering dedication to client service. |
● Hedge Funds - Solutions for alternative investments, including long/short positions, equity options and futures ● Wealth Managers - Solutions that allow a wealth manager to stay on top of their clients’ portfolios, streamline communication and internal research, create account review documents and analyze multiple asset classes ● Private Equity and Venture Capital - Screening technology and links between funds and their portfolio companies to help the user uncover new investment opportunities, with everything from high-level company snapshot reports to tools that create presentation and deal-ready books ● Research - Information and tools needed to enhance the research analysts workflow and provides differentiated ideas and opportunities to their clients ● Sales - News and trends to monitor the markets, consolidate company and industry research, and manage and strengthen client relationships ● Buy and Sell-Side Traders - Real-time market data quotes, StreetAccount news, and analytics alongside portfolios ● Plans Sponsors and Pension Funds - Solutions for fund managers specifically designed for selecting, analyzing, and incorporating external managers into an overall plan. |
The following are some of the key solutions offered to the sell-side professionals through the FactSet platform: · Models and Presentations - Combine the latest market data with numbers, all in firm standard formats and branding, to quickly create flexible models and presentations · Company and Industry Analytics - Track, in real-time, the global public and private companies, industries, and events that make an impact on market performance · Idea Screening - Enables research on public and private companies to target clients, partners, buyers and investors and searches deals and IPOs of interest · Deal Analytics - Provides insight into the global deal market with a suite of deal intelligence tools designed to meet M&A and corporate governance research needs · People Intelligence - Searches leads by connecting to others by business, charitable interests, education and other non-corporate relationships · Accountability - Audits global financials to their underlying SEC filings · Corporate Governance - Follows hot topics surrounding corporate governance matters · Wireless Connectivity - Access key reports via wireless handheld devices Other Global Professionals Not only is FactSet designed to enhance the workflows of investment managers and bankers, but it is also able to be customized to meet the needs of many more professionals involved in hedge funds, private equity, sell-side research, equity sales, trading, consulting, investor relations, law firms and academic institutions. |
Exhibits EXHIBIT NUMBER DESCRIPTION 3.1 Restated Certificate of Incorporation (1) 3.2 Amendment to the Restated Certificate of Incorporation (2) 3.3 Second Amendment to the Restated Certificate of Incorporation (3) 3.4 By-laws of FactSet Research Systems Inc. (4) 3.5 Amended and Restated By-laws of FactSet Research Systems Inc. (5) Form of Common Stock (1) 10.1 Severance Agreement dated September 20, 1999 between FactSet Research Systems Inc. and Peter G. Walsh 10.2 The FactSet Research Systems Inc. 1994 Stock Option Plan and 1996 Stock Option Plan (6) 10.3 The FactSet Research Systems Inc. 2000 Stock Option Plan (7) 10.4 The FactSet Research Systems Inc. 2004 Stock Option and Award Plan, as Amended and Restated (8) 10.5 The FactSet Research Systems Inc. 1998 Non-Employee Directors’ Stock Option Plan (9) 10.6 The FactSet Research Systems Inc. 2008 Non-Employee Directors’ Stock Option Plan (10) 10.7 The FactSet Research Systems Inc. 2001 Employee Stock Purchase Plan (11) 10.8 The FactSet Research Systems Inc. 2008 Employee Stock Purchase Plan (10) Subsidiaries of the Registrant Consent of Independent Registered Public Accounting Firm 31.1 Section 302 Certification of Principal Executive Officer 31.2 Section 302 Certification of Principal Financial Officer 32.1 Section 906 Certification of Principal Executive Officer 32.2 Section 906 Certification of Principal Financial Officer 101.INS* XBRL Instance Document 101.SCH* XBRL Taxonomy Extension Schema 101.CAL* XBRL Taxonomy Extension Calculation Linkbase 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document 101.LAB* XBRL Taxonomy Extension Label Linkbase 101.PRE* XBRL Taxonomy Extension Presentation Linkbase (1) Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. |
FactSet believes it is well-positioned to maintain its competitive position in the longer term for the following reasons: • A wide range of deployment options to suit clients of nearly any size and strategy • Provider of client service including a 24 hour consulting support desk • Strong operating metrics and financial results have allowed FactSet to reinvest in future growth • FactSet is committed to investing in product development in order to deliver new technology and applications • The Company’s geographic footprint spans 24 offices throughout the world and allows FactSet to serve clients of all sizes and deliver advanced technology and excellent services regardless of the complexity or number of locations • Empowers the global investment professional to transform information into intelligence • FactSet is the owner of premier global proprietary datasets that include some of the latest, most accurate fundamentals, estimates and ownership data available • The Company’s continued investment in employees to achieve growth strategies • As a provider of global financial data for over 33 years, clients will attempt to minimize risk and therefore favor FactSet’s stability, reliability and scalability • FactSet is a strong and well-recognized brand that is known in the financial industry worldwide for delivering workflow solutions Vision for Future Growth In fiscal 2012, the Company’s vision is to continue its ongoing efforts while making key investments in its operations to position the business for sustainable growth. |
FactSet expects to strengthen and grow its business by focusing on the following strategic objectives: • Continue to Integrate Accurate and Timely Financial Information into its Applications - provide timely and accurate financial data to the global investment community through powerful analytics on a single platform including additional content and more speed for the FactSet Fixed Income Portfolio Analysis tool and its related Risk and Quantitative Analysis applications • Further Invest in Product Development to Deliver Innovative Products - invest in product development to enhance the Company’s competitive advantage, make FactSet applications the fastest in the industry and migrate all commercial content and selected applications to the new, distributed computations environment • Enhance Proprietary Content - improve the accuracy and timeliness of its content collection operation because the ability to offer proprietary datasets that include the latest, most accurate information available is critical to FactSet • Drive Loyalty, Growth and Brand Strength through Client Service - stay committed to excellent client service through its 24 hour consulting support desk, informative client symposiums and frequent visits to clients • Invest Globally in Key Markets - grow FactSet globally and expand its client base by utilizing its existing offices located in 24 different cities around the world FactSet views success over the long run, which requires the Company to make new investments in its products, technology and people in every quarter of every year. |
The following are some of the key solutions offered to the sell-side professionals through the FactSet platform: • Models and Presentations - Combine the latest market data with numbers, all in firm standard formats and branding, to quickly create flexible models and presentations • Company and Industry Analytics - Track, in real-time, the global public and private companies, industries, and events that make an impact on market performance • Deal Analytics - Provides insight into the global deal market with a suite of deal intelligence tools designed to meet M&A and corporate governance research needs • Idea Screening - Enables research on public and private companies to target clients, partners, buyers and investors and searches deals and IPOs of interest • People Intelligence - Searches leads by connecting to others by business, charitable interests, education and other non-corporate relationships • Accountability - Audits global financials to their underlying SEC filings • Corporate Governance - Follows hot topics surrounding corporate governance matters • Wireless Connectivity - Access key reports via wireless handheld devices Other Global Professionals Not only is FactSet designed to enhance the workflows of investment managers and bankers, but it is also able to be customized to meet the needs of many more professionals involved in hedge funds, private equity, sell-side research, equity sales, trading, consulting, investor relations, law firms and academic institutions. |
• Hedge Funds - Solutions for alternative investments, including long/short positions, equity options and futures • Private Equity and Venture Capital - Screening technology and links between funds and their portfolio companies to help the user uncover new investment opportunities, with everything from high-level company snapshot reports to tools that create presentation and deal-ready books • Sell-Side Research - Offers a straight path from the research provider to the buy-side firm so a user can have total control over their ideas • Equity Sales - Follow breaking news and trends, proactively monitor the markets, consolidate company and industry research, and manage and strengthen client relationships • Trading and Managing Market Data - View market data quotes, news, and analytics alongside portfolios to inform portfolio managers of the ramifications of volatility on stock selection and alpha • Consultants and Advisors - Combine the latest market data, all in firm standard formats and branding, to quickly create flexible models and presentations • Investor Relations and Corporate Strategy - Access analytics to research comparable companies, manage business development and M&A, access raw and edited transcripts and listen to call audio from company meetings • Legal, Accounting, Management Consulting and Other Professionals - Receive accurate, fast updates in order to monitor companies, analyze transactions, and advise clients • Academia - Professors and Students - Access the same tools used by global investment professionals to monitor global markets, public and private companies, equities and fixed income assets Client Support FactSet differentiates itself from others in the care and attention it provides to its users. |
The components of the provision for income taxes consist of the following (in thousands): The following table provides the effective tax rate for the twelve months ended August 31, 2011, 2010 and 2009 (in thousands, except percentages): The provision for income taxes differs from the amount of income tax determined by applying the U.S. statutory federal income tax rate to income before income taxes as a result of the following factors (expressed as a percentage of income before income taxes): Deferred Tax Assets and Liabilities The significant components of deferred tax assets that are recorded in the Consolidated Statements of Financial Condition were as follows (in thousands): The significant components of deferred tax liabilities that are recorded in the Consolidated Statements of Financial Condition were as follows (in thousands): A provision has not been made for additional U.S. Federal taxes as of August 31, 2011 on undistributed earnings of foreign subsidiaries, except for France, because the Company intends to reinvest these funds indefinitely to support foreign growth opportunities. |
FactSet believes the following competitive advantages have resulted in the Company being successful in the global financial information services industry during fiscal 2010: • The new FactSet which is a highly customizable application that can be used to address the needs of thousands of users; • Continued investment in its product suite; • Expansion of data collection centers in Asia to populate FactSet proprietary content databases; • The hundreds of FactSet consultants working around the clock to help clients with existing workflows; • Timely and reliable delivery and the quality and breadth of coverage associated with its data and related services compared with those of competitors; • The ability to expand and customize the Company’s data content offerings to meet the current and evolving needs of its clients; • Expertise and experience in its core business, which further enhances the Company’s ability to deliver global financial information using its FactSet platforms and technology, and to cost-effectively integrate this content into the operational processes of its clients; and • The ability to adapt and address the needs of its clients in a timely manner. |
International operations are subject to inherent risks that could have a material adverse effect on the Company’s revenue or results of operations including: • The impact of recessions and market fluctuations in economies outside the U.S.; • Adverse changes in foreign currency exchange rates; • Difficulty of enforcement of contractual provisions in local jurisdictions; • Unexpected changes in foreign laws and regulatory requirements; • U.S. and foreign trade-protection measures and export and import requirements; • Difficulties in successfully adapting our products and services to the language, regulatory and technology standards of other countries; • Resistance of local cultures to foreign-based companies and difficulties establishing local partnerships or engaging local resources; • Difficulties in and costs of staffing and managing foreign operations; • Inadequate protection for intellectual property rights in some countries and local jurisdictions; • Inflation; • Natural disasters in developing countries; • Foreign tax structures and potentially adverse tax consequences; and • Political and economic instability. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Index to Consolidated Financial Statements Page(s) Consolidated Financial Statements: Report of Independent Registered Public Accounting Firm 35-36 Consolidated Statements of Income for the years ended August 31, 2006, 2005 and 2004 Consolidated Statements of Financial Condition as of August 31, 2006 and 2005 38-39 Consolidated Statements of Cash Flows for the years ended August 31, 2006, 2005 and 2004 Consolidated Statements of Changes in Stockholders’ Equity for the years ended August 31, 2006, 2005 and 2004 Notes to Consolidated Financial Statements 42-70 Financial Statement Schedule: Schedule II-Valuation and Qualifying Accounts Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of FactSet Research Systems Inc. We have completed integrated audits of FactSet Research Systems Inc.’s 2006 and 2005 consolidated financial statements and of its internal control over financial reporting as of August 31, 2006, and an audit of its 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). |
Name Title Date /s/ PHILIP A. HADLEY Chairman of the Board of Directors, November 10, 2006 Philip A. Hadley Chief Executive Officer and Director /s/ CHARLES J. SNYDER Vice Chairman of the Board of November 10, 2006 Charles J. Snyder Directors and Director /s/ MICHAEL F. DICHRISTINA President, Chief Operating Officer and November 10, 2006 Michael F. DiChristina Director /s/ TOWNSEND THOMAS Senior Vice President and Chief November 10, 2006 Townsend Thomas Content Officer /s/ MICHAEL D. FRANKENFIELD Senior Vice President and Director of November 10, 2006 Michael D. Frankenfield U.S. Investment Management Services /s/ PETER G. WALSH Senior Vice President, Chief Financial November 10, 2006 Peter G. Walsh Officer and Treasurer /s/ JAMES J. MCGONIGLE Director, Lead Independent Director November 10, 2006 James J. McGonigle /s/ JOSEPH E. LAIRD, JR. Director November 10, 2006 Joseph E. Laird, Jr. /s/ SCOTT A. BILLEADEAU Director November 10, 2006 Scott A. Billeadeau /s/ WALTER F. SIEBECKER Director November 10, 2006 Walter F. Siebecker |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: The following information from FactSet Research Systems Inc.’s fiscal year 2002 Annual Report to Stockholders is incorporated by reference under Items 1, 2, 5, 6, 7, 7A, and 8 and are filed as part of this report as part of Exhibit 13.1: Five-Year Summary of Selected Financial Data Management’s Discussion and Analysis pages 10-16 Consolidated Statements of Income Consolidated Statements of Financial Condition pages 18-19 Consolidated Statements of Changes in Stockholders’ Equity pages 20-21 Consolidated Statements of Cash Flows pages 22-23 Notes to Consolidated Financial Statements pages 24-36 Report of Independent Accountants Quarterly Financial Data, Common Stock and Quarterly Stock Prices The following information from FactSet Research Systems Inc.’s definitive Proxy Statement dated November 26, 2002 is incorporated by reference under Items 10, 11, 12 and 13: Information Regarding the Board of Directors and Related Committees pages 1-4 Section 16(a) Beneficial Ownership Reporting Compliance Information Regarding Beneficial Ownership of Principal Stockholders, Directors and Management pages 6-7 Information Regarding Named Executive Officer Compensation Compensation Pursuant to Stock Options Employment Agreements (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of fiscal 2002. |
(c) Exhibit Listing EXHIBIT NUMBER DESCRIPTION 3.1 Restated Certificate of Incorporation (1) 3.12 Amendment to Restated Certificate of Incorporation (10) 3.2 By-laws (2) 4.1 Form of Common Stock (1) 10.1 Form of Consulting Agreement between the Company and Charles J. Snyder (3) 10.2 Letter of Agreement between the Company and Ernest S. Wong (1) 10.31 Amendment to 364-Day Credit Agreement, dated March 29, 2002 (4) 10.32 Amendment to the Three-Year Credit Agreement (10) 10.33 Retirement Agreement between the Company and Howard E. Wille (2) 10.4 The FactSet Research Systems Inc. 1994 Stock Option Plan and 1996 Stock Option Plan (6) 10.5 The FactSet Research Systems Inc. Non-Employee Directors’ Stock Option Plan (7) 10.6 The FactSet Research Systems Inc. 2000 Stock Option Plan (8) 10.7 The FactSet Research Systems Inc. 2001 Employee Stock Purchase Plan (9) 13.1 The Company’s fiscal 2002 Annual Report to Stockholders Subsidiaries of the Company Consent of PricewaterhouseCoopers LLP (1) Incorporated by reference to the Company’s Registration Statement on Form S-1 (File No. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: The following information from FactSet Research Systems Inc.’s fiscal year 2001 Annual Report to Stockholders is incorporated by reference under Items 1, 2, 5, 6, 7, 7A, and 8 and are filed as part of this report as part of Exhibit 13.1: Five-Year Summary of Selected Financial Data Management’s Discussion and Analysis pages 9-12 Consolidated Statements of Income Consolidated Statements of Financial Condition pages 14-15 Consolidated Statements of Changes in Stockholders’ Equity pages 16-17 Consolidated Statements of Cash Flows pages 18-19 Notes to Consolidated Financial Statements pages 20-30 Report of Independent Accountants Quarterly Financial Data, Common Stock and Quarterly Stock Prices The following information from FactSet Research Systems Inc.’s definitive Proxy Statement dated November 20, 2001 is incorporated by reference under Items 10, 11, 12 and 13: Information Regarding the Board of Directors and Related Committees pages 1-3 Section 16(a) Beneficial Ownership Reporting Compliance pages 5-6 Information Regarding Beneficial Ownership of Principal Stockholders, Directors and Management Information Regarding Named Executive Officer Compensation Compensation Pursuant to Stock Options Employment Agreements pages 10-11 (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of fiscal 2001. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: The following information from FactSet Research Systems Inc.'s fiscal year 2000 Annual Report to Stockholders is incorporated by reference under Items 1, 2, 5, 6, 7 and 8 and are filed as part of this report as part of Exhibit 13.1: Five-Year Summary of Selected Financial Data..................... page 12 Management's Discussion and Analysis............................. pages 13-18 Consolidated Statements of Income................................ page 19 Consolidated Statements of Financial Condition................... pages 20-21 Consolidated Statements of Changes in Stockholders' Equity....... pages 22-23 Consolidated Statements of Cash Flows............................ pages 24-25 Notes to Consolidated Financial Statements....................... pages 26-39 Report of Independent Accountants................................ page 40 Quarterly Financial Data, Common Stock and Quarterly Stock Prices pages 41-42 The following information from FactSet Research Systems Inc.'s definitive Proxy Statement dated November 22, 2000 is incorporated by reference under Items 10, 11, 12 and 13: (b) Reports on Form 8-K No reports on Form 8-K were filed during the fourth quarter of fiscal 2000. |
SIGNATURE TITLE /s/ HOWARD E. WILLE Chairman of the Board of Directors Howard E. Wille and Chief Executive Officer and Director /s/ CHARLES J. SNYDER Vice Chairman of the Board of Charles J. Snyder Directors and Director /s/ MICHAEL F. DICHRISTINA President Michael F. DiChristina /s/ ERNEST S. WONG Senior Vice President, Chief Financial Officer, Ernest S. Wong and Secretary /s/ JOHN D. CONNOLLY Director John D. Connolly /s/ DAVID R. KORUS Director David R. Korus /s/ JOSEPH E. LAIRD, JR. Director Joseph E. Laird, Jr. /s/ JOHN C. MICKLE Director John C. Mickle /s/ WALTER F. SIEBECKER Director Walter F. Siebecker EXHIBIT 10.3 Form of Consulting Agreement between the Company and Charles J. Snyder CONSULTING AGREEMENT THIS CONSULTING AGREEMENT (the "Agreement"), made as of this 1st day of September, 1999, is entered into by FACTSET RESEARCH SYSTEMS INC., a Delaware corporation with its principal offices at One Greenwich Plaza, Greenwich, CT 06830 (the "Company"), and Charles J. Snyder, with an address at 700 Waverly Road, Ridgewood, NJ 07450(the appointed Vice Chairman and the "Consultant"). |
INTRODUCTION WHEREAS, the Consultant is one of the founders of the Company, and currently serves as a Director, the President, and the Chief Technology Officer of the Company and possesses an intimate knowledge of the business, affairs, policies, methods and personnel of the Company; WHEREAS, the Company has appointed the Consultant as its Vice Chairman of the Board of the Directors; WHEREAS, the Consultant desires to terminate employment with the Company; WHEREAS, the Company and the Consultant recognize that the continued application of the Consultant's experience, abilities and services to the business of the Company and its affiliates would be extremely beneficial to the Company and its affiliates and that application of such experience, abilities and services to the business of any competitor of the Company or its affiliates would cause irreparable damage to the Company; WHEREAS, subject to the provisions hereof, the Company wishes to be assured that following the termination of the Consultant's current employment with the Company, the Consultant will be available to consult with the Company and will be restricted from competing with or disclosing certain information concerning the Company; and WHEREAS, the Company and the Consultant are willing to enter into this Agreement; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants herein set forth and for other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. |
PricewaterhouseCoopers LLP New York, New York September 10, 1999 DIRECTORS Howard E. Wille Chairman of the Board Chief Executive Officer Charles J. Snyder Vice Chairman of the Board Retired President FactSet Research Systems Inc. John D. Connolly Retired Partner Miller, Anderson & Sherrerd West Conshohocken, Pennsylvania David R. Korus Managing Member Owenoke Capital Management, LLC New York, New York Joseph E. Laird, Jr. Chairman and Chief Executive Officer Laird Squared, LLC New York, New York John C. Mickle President Sullivan, Morrissey & Mickle Capital Management Corporation New York, New York Walter F. Siebecker Managing Director National Securities Clearing Corporation New York, New York MANAGEMENT Howard E. Wille Chairman of the Board Chief Executive Officer Michael F. DiChristina President Ernest S. Wong Senior Vice President Chief Financial Officer and Secretary Timothy J. Aune Director, Pacific Rim Operations President of FactSet Pacific, Inc. Scott L. Beyer Director of European Operations Managing Director, FactSet Limited Jon D. Carlson Director, Platform Engineering Michael E. Cham Director, Database Engineering William F. Faulkner Director, FactSet Enterprises Michael D. Frankenfield Director, Investment Banking Philip A. Hadley Director, Sales and Marketing Kieran M. Kennedy Director, Consulting Services Edward A. Martin Director, Information Research Adelaide P. McManus Chief Administrative Officer Maurizio Nicolelli Comptroller Townsend Thomas Chief Technology Officer Director, Systems Engineering Peter G. Walsh Director, Planning and Control Susan L. Warzek Director, Marketing Communications Daniel B. Weinstein Director, Applications Engineering Merle E. Yoder Director, Product Development and Strategy CORPORATE INFORMATION Headquarters FactSet Research Systems Inc. One Greenwich Plaza Greenwich, Connecticut 06830 203.863.1500 /203.863.1501 fax Internet Address www.factset.com Offices FactSet Research Systems Inc. One Cummings Point Road Stamford, Connecticut 06902 203.356.3700 FactSet Research Systems Inc. 90 Park Avenue New York, New York 10016 212.476.4300 FactSet Research Systems Inc. One Federal Street Boston, Massachusetts 02110 617.757.1100 FactSet Research Systems Inc. 2600 Campus Drive San Mateo, California 94403 650.286.4900 FactSet Limited One Angel Court London EC2R 7HJ United Kingdom 44.207.606.0001 FactSet Pacific Inc. Daini Okamotoya Building 8F 1-22-16 Toranomon Minato-ku, Tokyo 105-0001 Japan 81.3.5512.7700 FactSet Pacific Inc. Bank of America Tower, Suite 801 12 Harcourt Road Central, Hong Kong 85.2.2584.6278 FactSet Pacific Inc. 14 Martin Place, Level 7 Sydney, NSW 2000, Australia 61.2.9224.8930 Additional information, including the Form 10-K, can be obtained from our Web site at www.factset.com or by contacting Investor Relations at 203.863.1500. |
SIGNATURE TITLE /s/ HOWARD E. WILLE Chairman of the Board of Directors and Howard E. Wille Chief Executive Officer and Director /s/ CHARLES J. SNYDER President, Chief Technology Officer and Director Charles J. Snyder /s/ ERNEST S. WONG Senior Vice President, Chief Financial Officer, Ernest S. Wong and Secretary /s/ DAVID R. KORUS Director David R. Korus /s/ JOSEPH E. LAIRD, JR. Director Joseph E. Laird, Jr. /s/ JOHN C. MICKLE Director John C. Mickle /s/ WALTER F. SIEBECKER Director Walter F. Siebecker EXHIBIT 13.1 The Company's fiscal 1998 Annual Report to Shareholders Contents 1 About FactSet Financial Highlights 3 To Our Shareholders 13 Management's Discussion and Analysis 19 Consolidated Statements of Income 20 Consolidated Statements of Financial Condition 22 Consolidated Statements of Changes in Stockholders' Equity 24 Consolidated Statements of Cash Flows 26 Notes to Consolidated Financial Statements 39 Report of Independent Accountants 40 Directors and Management Corporate Information ABOUT FACTSET FactSet Research Systems Inc. is the leading provider of online integrated database services to the global financial community. |
Day Senior Sales Executive Michael F. DiChristina Director, Software Engineering William F. Faulkner Director, Product Development Michael D. Frankenfield Director, Investment Banking Philip A. Hadley Director, Sales and Marketing Kieran M. Kennedy Director, Consulting Services Edward A. Martin Director, Information Research Kristen L. McCutcheon Director, Quality Assurance Adelaide P. McManus Chief Administrative Officer Townsend Thomas Director, Systems Engineering Daniel A. Viens Director, Human Resources Peter G. Walsh Director, Planning and Control Susan L. Warzek Director, Marketing Communications and Documentation Merle E. Yoder Director, European Operations Managing Director, FactSet Limited CORPORATE INFORMATION HEADQUARTERS FactSet Research Systems Inc. One Greenwich Plaza Greenwich, Connecticut 06830 203.863.1500 /203.863.1501 fax INTERNET ADDRESS www.factset.com OFFICES FactSet Research Systems Inc. 90 Park Avenue New York, New York 10016 212.476.4300 FactSet Research Systems Inc. 2600 Campus Drive San Mateo, California 94403 650.286.4900 FactSet Limited One Angel Court London EC2R 7HJ 44.171.606.0001 FactSet Pacific, Inc. Daini Okamotoya Building 8F 1-22-16 Toranomon Minato-ku Tokyo 105-0001 81.3.5512.7700 FactSet Pacific, Inc. Bank of America Tower, Suite 801 12 Harcourt Road Central Hong Kong 85.2.2584.6278 LEGAL COUNSEL Cravath, Swaine & Moore New York, New York STOCK TRANSFER AGENT/REGISTRAR The Bank of New York 800.524.4458 [email protected] COMMON STOCK INFORMATION FactSet trades on the New York Stock Exchange under the ticker symbol "FDS." |
Management believes that this attribute of the FactSet system, as well as the Company's (i) internally developed, proprietary software that allows extensive manipulation of data, including downloading directly to custom spreadsheets developed by clients for use on the FactSet system: (ii) sophisticated system architecture that allows users to access the computing power of its mainframe computer platform through its easy-to-use Window-based programs: (iii) advanced communications infrastructure, including its wide area network ("WAN"), through which approximately 25% of its clients and 50% of its authorized workstations are now connected to the FactSet system; (iv) proprietary integrated database structure, which facilitates speed and efficiency in data retrieval; (v) superior client services, including its ability to work closely with clients to develop customized data solutions; and (vi) ability to recruit, train and retain highly talented engineering and marketing personnel, have been significant to the Company's growth and profitability and provide competitive advantages over other financial data providers. |
A number of factors serve to increase our competitive risks: ● a number of our competitors have greater financial, technical, marketing and other resources and more personnel than we do; ● some of our funds may not perform as well as competitors’ funds or other available investment products; ● several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities; ● some of our competitors may have a lower cost of capital; ● some of our competitors may have access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities; ● some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we can and/or bear less compliance expense than we do; ● some of our competitors may have more flexibility than us in raising certain types of investment funds; ● some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make; ● some of our competitors may be more successful than we in the development and implementation of new technology to address investor demand for product and strategy innovation; ● there are relatively few barriers to entry impeding new alternative asset fund management firms, and the successful efforts of new entrants into our various businesses is expected to continue to result in increased competition; ● some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do; ● some investors may prefer to invest with an investment manager that is not publicly traded or is of a different size; and ● other industry participants will from time to time seek to recruit our investment professionals and other employees away from us. |
Any past or future acquisition could also involve additional risks, including: ● potential disruption of our ongoing business and distraction of management; ● difficulty integrating the operations and products of the acquired business; ● use of cash to fund the acquisition or for unanticipated expenses; ● limited market experience in new businesses; ● exposure to unknown liabilities, including litigation against the companies that we acquire; ● additional costs due to differences in culture, geographical locations and duplication of key talent; ● delays associated with or resources being devoted to regulatory review and approval and other ongoing compliance matters; ● acquisition-related accounting charges affecting our balance sheet and operations; ● difficulty integrating the financial results of the acquired business in our consolidated financial statements; ● controls in the acquired business; ● potential impairment of goodwill; ● dilution to our current stockholders from the potential issuance of equity securities to consummate a proposed acquisition; and ● potential loss of key employees or customers of the acquired company. |
Any past or future acquisition could also involve additional risks, including: ● potential disruption of our ongoing business and distraction of management; ● difficulty integrating the operations and products of the acquired business; ● use of cash to fund the acquisition or for unanticipated expenses; ● limited market experience in new businesses; ● exposure to unknown liabilities, including litigation against the companies that we acquire; ● additional costs due to differences in culture, geographical locations and duplication of key talent; ● delays associated with or resources being devoted to regulatory review and approval and other ongoing compliance matters; ● acquisition-related accounting charges affecting our balance sheet and operations; ● difficulty integrating the financial results of the acquired business in our consolidated financial statements; ● controls in the acquired business; ● potential impairment of goodwill; ● dilution to our current stockholders from the potential issuance of equity securities to consummate a proposed acquisition; and ● potential loss of key employees or customers of the acquired company. |
A number of factors serve to increase our competitive risks: ● a number of our competitors have greater financial, technical, marketing and other resources and more personnel than we do; ● some of our funds may not perform as well as competitors’ funds or other available investment products; ● several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities; ● some of our competitors may have a lower cost of capital; ● some of our competitors may have access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities; ● some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we can and/or bear less compliance expense than we do; ● some of our competitors may have more flexibility than us in raising certain types of investment funds; ● some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make; ● some of our competitors may be more successful than us in the development and implementation of new technology to address investor demand for product and strategy innovation; ● there are relatively few barriers to entry impeding new alternative asset fund management firms, and the successful efforts of new entrants into our various businesses is expected to continue to result in increased competition; ● some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do; ● some investors may prefer to invest with an investment manager that is not publicly traded or is of a different size; and ● other industry participants will from time to time seek to recruit our investment professionals and other employees away from us. |
Subject to the terms and conditions of the SPA and the ancillary agreements referred to in the SPA (the “Ancillary Agreements”) (i) the Company and NXSN caused the Nexsan Guaranty and all encumbrances on the Nexsan Shares and the assets and business of Nexsan and the Nexsan Subsidiaries, including under the NXSN Security Agreement to be released, (ii) NXSN transferred all right, title and interest in and to the Nexsan Shares to Buyer free and clear of all encumbrances, (iii) Buyer paid off any and all amounts due and owing under the GlassBridge Note out of the purchase price otherwise payable to NXSN in accordance with that certain Pre-Pay Agreement dated as of August 13, 2018 by and among IOENGINE, the Company and Scott McNulty (the “IOENGINE Pre-Payment Agreement”), being Two Million Two Hundred Fifty Thousand Dollars ($2,250,000; (iv) in accordance with that certain Settlement Agreement and Mutual Release dated August 10, 2018 entered into inter alia, by NXSN, Nexsan US and Humilis (the “NTI A/R Settlement Agreement”) regarding the Receivables Litigation (as defined in the SPA), Nexsan US paid the Payment (as defined therein); (v) Buyer paid NXSN the Consideration described in the SPA to NXSN as payment in full for the purchase of the Shares, (vi) the Company delivered a certification that the original signed Drobo Note cannot be located (with appropriate indemnities) to Buyer and the Drobo Note was deemed to be cancelled, and (vii) all obligations of the Nexsan and the Nexsan Subsidiaries toward the Company or NXSN (other than the obligations under the SPA) were extinguished. |
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