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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A(1)
(MARK ONE)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO .
COMMISSION FILE NUMBER: 0-25674
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SMARTFORCE PUBLIC LIMITED COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
REPUBLIC OF IRELAND NONE
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
900 CHESAPEAKE DRIVE
REDWOOD CITY, CALIFORNIA 94063
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(650) 817-5900
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
ORDINARY SHARES IR9.375p
SUBSCRIPTION RIGHTS
(TITLE OF CLASS)
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Indicate by check mark whether Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period of time that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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The aggregate market value of the voting shares held by non-affiliates of
Registrant was $1.3 billion as of April 26, 2001 (excludes 610,091 shares
which may be deemed to be held by directors, officers and affiliates of
Registrant as of April 26, 2001).
The number of Registrant's equivalent American Depositary Shares, or ADSs,
outstanding as of April 26, 2001 was 52,577,976.
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(1) This Annual Report on Form 10-K is restated to include information required
in Part III, Items 10, 11, 12 and 13, which was filed in Amendment No. 1 to
our Annual Report on Form 10-K.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS
The following table sets forth certain information as of April 24, 2001,
for our current directors:
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
Gregory M. Priest....... 37 President, Chief Executive Officer and Chairman of the Board of Directors
Ronald C. Conway........ 50 Director
David C. Drummond....... 38 Executive Vice President, Finance and Chief Financial Officer and Director
John M. Grillos......... 59 Director
James S. Krzywicki...... 49 Director
Patrick J. McDonagh..... 49 Director
Gregory M. Priest was appointed Chairman of the Board of Directors on
November 13, 2000. Mr. Priest was appointed President and Chief Executive
Officer in December 1998. From February 1998 until December 1998, Mr. Priest was
President and Chief Executive Officer of Knowledge Well Group Limited and of
Knowledge Well Limited (collectively, "Knowledge Well"). Mr. Priest served as
our Vice President, Finance and Chief Financial Officer from December 1995 to
January 1998. Mr. Priest has been a director since June 1996. Prior to joining
SmartForce, Mr. Priest was an attorney with Wilson Sonsini Goodrich & Rosati,
Professional Corporation, a private law firm representing technology companies,
where he was elected to the partnership in 1995. From June 1989 to July 1990,
Mr. Priest served as a law clerk to Justice Thurgood Marshall of the United
States Supreme Court.
Ronald C. Conway was appointed as a director on November 6, 2000.
Mr. Conway is the founder and managing partner of Angel Investors, LP, a venture
capital fund that invests in Internet, e-Commerce, and other information
technology companies. Mr. Conway was director of strategic relations for the
Company from December 1995 to December 1999. Mr. Conway has over 20 years of
management experience, including serving as the president and CEO of Altos
Computer Systems, as well as a variety of marketing positions with National
Semiconductor.
David C. Drummond was appointed as a director on February 1, 2001. Mr.
Drummond was appointed Executive Vice President, Finance and Chief Financial
Officer in July 1999. Prior to joining us, Mr. Drummond was a partner in the
corporate transactions group at Wilson Sonsini Goodrich & Rosati, Professional
Corporation, a private law firm representing technology companies. Mr.
Drummond's career at Wilson Sonsini Goodrich & Rosati spanned a period of nine
years.
John M. Grillos has served as a director since February 1994. Mr.
Grillos is currently CEO of meVC Draper Fisher Jurvetson Fund I, a registered
business development company. Mr. Grillos served as Executive Vice President and
Chief Operating Officer from December 1998 through December 1999. Since June
1996, Mr. Grillos has been the sole General Partner of ITech Partners, L.P., a
venture capital limited partnership focused on seed stage information technology
companies. Prior to joining ITech Partners, Mr. Grillos was employed by
BancBoston Robertson Stephens, an investment banking firm, in its venture
capital group.
James S. Krzywicki was appointed as a director in October 1998. Since
1992 Mr. Krzywicki has held various positions, most recently as a Vice
President, with Lotus Development Corporation, which is now owned by
International Business Machines Corporation. In April 1999, Mr. Krzywicki was
named Director, Distributed Learning, IBM Global Services. In October 1999, Mr.
Krzywicki joined RoweCom as their President of North American Services.
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Patrick J. McDonagh was a founding member of SmartForce and has been a
director since September 1989. He has not taken an active role in our management
since 1991 and is currently a private investor. Mr. McDonagh is Chairman of the
board of directors of Riverdeep Group PLC. Riverdeep Group PLC was listed on
Nasdaq in March 2000.
There are no family relationships among any of our directors or
executive officers.
RECENT DIRECTOR CHANGES
On November 13, 2000, Mr. William G. McCabe, former Chairman of the
board of directors, and John P. Hayes resigned from the board of directors.
Following Mr. McCabe's resignation, Mr. Gregory M. Priest, President and Chief
Executive Officer, was appointed Chairman of the board of directors. On November
6, 2000, Mr. Ronald C. Conway was appointed to the board of directors. On
February 1, 2001, Mr. David C. Drummond, Executive Vice President, Finance and
Chief Financial Officer, was appointed to the board of directors.
EXECUTIVE OFFICERS
In addition to Messrs. Priest and Drummond, our executive officers, and
their respective ages and positions as of April 24, 2001 are as follows:
Name Age Position
---- --- --------
William B. Lewis.......... 45 Executive Vice President, Strategic Development
Thomas F. McKeagney....... 42 Executive Vice President, Research and Development
Jeffrey N. Newton......... 46 Executive Vice President, Global Sales
William B. Lewis was appointed Executive Vice President, Strategic
Development on January 1, 2001. Mr. Lewis served as Executive Vice President,
Global Field Sales from December 1998 until January 1, 2001. Since March 1997,
Mr. Lewis served as Vice President, North American Sales. From January 1996
until March 1997, Mr. Lewis served as Area Vice President of Sales for the
southern region and served as Regional Vice President of Sales for the southern
region from January 1994 to January 1996. Mr. Lewis joined as our sales manager
for the southern region in April 1992 and served in that capacity until January
1994.
Jeffrey N. Newton was appointed Executive Vice President, Global Sales
on January 1, 2001. Mr. Newton served as Executive Vice President, Global
Channel Sales from December 1998 until January 1, 2001. Mr. Newton served as
Vice President, Business Development from March 1997 until June 1998. From
January 1996 until March 1997, Mr. Newton served as Area Vice President of Sales
for the northern region and served as Regional Vice President of Sales for the
northern region from January 1994 to January 1996. Mr. Newton joined as our
sales manager for the northern region in April 1992 and served in that capacity
until January 1994.
Our executive officers are elected by the board of directors on an
annual basis and serve until their successors have been duly elected. There are
no family relationships among our executive officers.
RECENT EXECUTIVE OFFICER CHANGES
Thomas F. McKeagney, 42, was appointed Executive Vice President,
Research and Development on January 1, 2001. From February 1998 to January 2001,
Mr. McKeagney served as Vice President of Research. From January 1995 until
January 1998, Mr. McKeagney served as Director of Research and Development. Mr.
McKeagney joined SmartForce Ireland Limited in 1989 as a design consultant.
During quarter one, 2001, Mr. William A. Beamish resigned his position
as executive officer.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers (as defined in
the rules under Section 16) and directors, and persons who own more than ten
percent of a registered class of our equity securities, to file certain reports
with the SEC and the NASD regarding ownership of, and transactions in, our
securities. Such officers, directors and ten percent holders are also required
by the SEC's rules to furnish to us copies of all Section 16(a) forms that they
file.
Based solely on our review of the copies of such forms received by us
or written representations from certain reporting persons we believe that our
executive officers, directors and ten percent holders complied with all
applicable Section 16(a) filing requirements during the last fiscal year.
DIRECTOR COMPENSATION
No director receives any cash compensation for his services as a member
of our board of directors, although each director is reimbursed for his expenses
in attending board of directors and related committee meetings. Non-executive
directors may receive stock compensation for their services as a member of our
board of directors. Directors who serve on committees of the board of directors
receive no additional compensation.
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ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following tables disclose compensation earned by the Named Executive
Officers for the fiscal years ended December 31, 2000, 1999 and 1998:
ANNUAL COMPENSATION AND LONG-TERM COMPENSATION
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------- OPTIONS TO
NAME AND OTHER ANNUAL PURCHASE ADS ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) EQUIVALENTS COMPENSATION(3)
------------------ ---- --------- -------- --------------- ------------ ---------------
Gregory M. Priest(4) .................. 2000 $250,000 $339,320 $60,000 -- $ --
Chairman of the Board of 1999 250,000 250,000 60,000 540,000 8,379
Directors, President 1998 56,601 -- -- 410,000 --
and Chief Executive Officer
William B. Lewis(5) ................... 2000 200,000 150,000 60,000 -- 7,200
Executive Vice President 1999 200,000 225,000 60,000 400,000 7,200
Strategic Development 1998 280,147 19,500 -- 365,196 --
Jeffrey N. Newton(6) .................. 2000 200,000 150,000 -- -- 7,200
Executive Vice President 1999 200,000 225,000 12,000 400,000 7,200
Global Sales 1998 203,121 86,398 40,000 350,000 --
William A. Beamish(7) ................. 2000 200,000 100,000 -- -- 16,800
Executive Vice President 1999 200,000 135,000 -- 385,000 5,418
Product Strategy 1998 527,500 -- -- 290,000 2,851
David Drummond(8) ..................... 2000 200,000 110,000 -- 50,000 --
Executive Vice President, Finance 1999 100,769 70,000 -- 225,000 --
and Chief Financial Officer 1998 -- -- -- -- --
and Director
(1) Salary includes amount deferred pursuant to our 401(k) plan.
(2) Includes $40,000 paid to Mr. Newton in 1998 for relocation expenses,
$60,000, $60,000 and $12,000 accommodation allowances paid in 1999 to
Messrs. Priest, Lewis and Newton, respectively and $60,000 and $60,000
accommodation allowances paid in 2000 to Messrs. Priest and Lewis,
respectively.
(3) Includes payments of $2,851 in 1998, $5,418 in 1999 and $4,800 in 2000 to
Mr. Beamish, pursuant to a defined contribution pension scheme. Also
includes car allowances of $8,379, $7,200, $7,200 in 1999 paid to Messrs.
Priest, Lewis and Newton, respectively, and payments of $12,000, $7,200
and $7,200 paid in 2000 to Messrs. Beamish, Lewis and Newton, respectively.
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(4) Mr. Priest was elected as an executive officer in December 1995, and
resigned as an executive officer effective January 31, 1998. In December
1998, he was appointed as President and Chief Executive Officer. In
November 2000, Mr. Priest was appointed Chairman of the board of directors.
The amounts shown for 1998 include both payment to Mr. Priest for his
services as our Chief Financial Officer in January of 1998 and payment for
his services as President and Chief Executive Officer during the fourth
quarter of 1998.
(5) Mr. Lewis became Area Vice President of Sales for the southern region in
January 1996 and Vice President, North American Sales in March 1997. Mr.
Lewis was appointed Executive Vice President, Global Field Sales in
December 1998. In January 2001, Mr. Lewis was appointed Executive Vice
President of Strategic Development.
(6) Mr. Newton became Area Vice President for the northern region in January
1996 and Vice President, Business Development in March 1997. He resigned in
June 1998. In December 1998, Mr. Newton was appointed Executive Vice
President, Global Channel Sales. In January 2001, Mr. Newton was appointed
Executive Vice President of Global Sales.
(7) Mr. Beamish was Vice President, Product Strategy and Development from 1993
until he resigned on March 31, 1998. In December 1998, he was appointed
Executive Vice President, Product Strategy. During quarter one, 2001, Mr.
Beamish resigned his position as executive officer. SmartForce had obtained
the benefit of Mr. Beamish's management services through a third party
consulting firm from which he is contracted. Mr. Beamish is compensated for
his management services pursuant to a consulting agreement with this third
party consulting firm. Amounts were paid by SmartForce Ireland Limited to
the consulting firm which compensates its employees, including Mr. Beamish.
We have not reviewed any agreement between the consulting firm and its
employees with respect to compensation amounts. In addition to the amounts
paid to the consulting firm, we paid Mr. Beamish $25,000 pursuant to an
employment agreement, which we entered into with Mr. Beamish in June 1999,
in respect of services provided by him.
(8) On joining the Company in July 1999, Mr. Drummond was appointed Executive
Vice President of Finance and Chief Financial Officer. In February 2001,
Mr. Drummond was appointed a director of the Company.
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OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to options granted during
fiscal 2000 to the Named Executive Officers:
Potential Realizable Value
At Assumed Annual Rates
of Stock Price
Number of Percent of Total Appreciation for Option
Equivalent ADSs Options Granted to Exercise Price Term(1)
Over Which Options Employees in Last Per Equivalent Expiration ----------------------------
Name Were Granted(2)(3) Fiscal Year ADS(4) Date 5% 10%
---- ------------------ ------------------- -------------- ---------- -------- ----------
David C. Drummond 50,000 3.8% $31.00 4/17/10 $974,787 $2,470,301
(1) Potential realizable value assumes that the share price (based on the fair
market value of the ADSs) increases from the date of grant until the end of
the ten-year option term at the annual rate specified (5% and 10%). If the
price of the ADSs were to increase at such rates from $31.00 per ADS, the
price at the date of grant, over the next ten years, the resulting ADS
price at 5% and 10% appreciation would be approximately $50.50 and $80.41
respectively. The assumed annual rates of appreciation are specified in SEC
rules and do not represent the Company's estimate or projection of future
share price. We do not necessarily agree that this method can properly
determine the value of an option.
(2) All options in this table were granted under the 1994 Plan. The options
expire ten years from the date of grant, subject to earlier termination in
the event of the optionee's cessation of service with us. The 1994 Plan is
currently administered by the Stock Option Committee of the board of
directors, which has broad discretion and authority to amend outstanding
options and to reprice options, whether through an exchange of options or
an amendment thereto.
(3) Unless otherwise indicated, options generally vest over four years such
that 1/4th of the equivalent ADSs subject to the option vest one year from
the respective date of grant, 1/4th vest on the second anniversary of the
respective date of grant and 1/48th vest each month thereafter. Options
granted to certain employees are exercisable in full at the date of grant,
provided that if the employment of such employee is terminated, we may
present before our shareholders at the next Annual General Meeting a vote
to approve the repurchase of any shares relating to his or her unvested
options that have been exercised. If our shareholders approve the vote, we
may repurchase any unvested shares at the original price for such shares.
Additionally, until the vote occurs, the terminated employee will be
restricted from disposing of these shares.
(4) Options were granted at an exercise price equal to the fair market value of
our ADSs, as determined by reference to the closing price of the ADSs as
reported on the Nasdaq National Market on the last trading day prior to the
date of grant.
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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
The following table provides information with respect to options
exercised during fiscal 2000 by the Named Executive Officers and the value of
such officers' unexercised options at December 31, 2000:
Number of Equivalent ADSs Value of Unexercised
Equivalent Subject to Unexercised Options In-The-Money Options at
ADSs at Fiscal Year-End(3) Fiscal Year End(4)
Acquired on Value ------------------------------ -----------------------------
Name Exercise(1) Realized(2) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
Gregory M. Priest -- -- 1,233,314 -- $30,129,684 --
William B. Lewis -- -- 874,176 -- $22,098,830 --
Jeffrey N. Newton 10,062 $ 174,198 875,490 -- $22,218,382 --
William A. Beamish 58,500 $2,520,426 773,380 -- $19,150,591 --
David C. Drummond 13,500 $ 455,127 261,500 -- $ 4,795,409 --
(1) Our employees, including the Named Executive Officers, have a choice of
acquiring either ordinary shares or ADSs representing such ordinary shares
upon exercise of options.
(2) Market value of underlying shares based on the closing price of the ADSs on
the Nasdaq National Market on the date of exercise, minus the exercise
price.
(3) Unless otherwise indicated, options generally vest over four years such
that 1/4th of the equivalent ADSs subject to the option vest one year from
the respective date of grant, 1/4th vest on the second anniversary of the
respective date of grant and 1/48th vest each month thereafter. Options
granted to certain employees are exercisable in full at the date of grant,
provided that if the employment of such employee is terminated, we may
present before our shareholders at the next Annual General Meeting a vote
to approve the repurchase of any shares relating to his or her unvested
options that have been exercised. If our shareholders approve the vote, we
may repurchase any unvested shares at the original price for such shares.
Additionally, until the vote occurs, the terminated employee will be
restricted from disposing of these shares.
(4) Market value of shares underlying in-the-money share options is based on
the closing price of $37.56 per ADS on the Nasdaq National Market on
December 29, 2000, which was the last trading day of fiscal 2000, minus the
exercise price.
EMPLOYMENT CONTRACTS AND ARRANGEMENTS
On June 18, 1999, following the acquisition of Knowledge Well, we
entered into an employment agreement with Gregory M. Priest, under which we
agreed to employ Mr. Priest as our President and Chief Executive Officer,
effective as of December 10, 1998. Under the terms of the agreement, Mr. Priest
will be paid a minimum base salary of $250,000 per year. In addition, Mr. Priest
will be eligible to receive an annual performance bonus at 100% achievement of
$200,000 (the "Targeted Bonus") at the discretion of the board of directors. Mr.
Priest's employment is at-will. The employment agreement includes a covenant not
to solicit and a covenant not to compete in the event of a voluntary termination
by Mr. Priest or the termination for cause (as defined in the agreement) by
SmartForce. If Mr. Priest's employment is involuntarily terminated (as defined
in the agreement) or terminated without cause we are required to make a lump sum
payment to Mr. Priest equal to his then base salary plus the then maximum
performance bonus available to Mr. Priest for a period of one (1) year. Mr.
Priest may elect, in the event of an involuntary termination, to be bound by the
covenants not to solicit and not to compete in exchange for continued vesting of
the stock options granted to him by us for the term of the covenants. Otherwise,
Mr. Priest's stock options will discontinue to vest immediately upon termination
of employment.
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On June 18, 1999, following the acquisition of Knowledge Well, we
entered into an employment agreement with William A. Beamish, under which we
agreed to employ Mr. Beamish as our Executive Vice President, Product Strategy,
effective as of December 10, 1998. Under the terms of the agreement, Mr. Beamish
will be paid a minimum base salary of $25,000 per year under this agreement. Mr.
Beamish's employment is at-will. The employment agreement includes covenants not
to solicit and not to compete on termination of Mr. Beamish's employment. If Mr.
Beamish's employment is involuntarily terminated (as defined in the agreement)
or terminated without cause, we are required to make a lump sum payment to Mr.
Beamish equal to his then base salary plus the then maximum performance bonus
available to Mr. Beamish for a period of one (1) year. Mr. Beamish may elect, in
the event of an involuntary termination, to be bound by the covenants not to
solicit and not to compete in exchange for continued vesting of the stock
options granted to him by us for the term of the covenants. Otherwise, Mr.
Beamish's stock options will discontinue to vest immediately upon termination of
employment.
On June 18, 1999, following the acquisition of Knowledge Well, we
entered into an employment agreement with William B. Lewis, under which we
agreed to employ Mr. Lewis as our Executive Vice President, Global Field Sales,
effective as of December 10, 1998. Under the terms of the agreement, Mr. Lewis
will be paid a minimum base salary of $200,000 per year. In addition to the base
salary, Mr. Lewis will be eligible to receive an annual performance bonus at
100% achievement of $150,000 (the "targeted" bonus) at the discretion of the
board of directors. Mr. Lewis's employment is at-will. The employment agreement
includes covenants not to solicit and not to compete in the event of a voluntary
termination by Mr. Lewis or the termination for cause (as defined in the
agreement) by SmartForce. If Mr. Lewis's employment is involuntarily terminated
(as defined in the agreement) or terminated without cause, we are required to
make a lump sum payment to Mr. Lewis equal to his then base salary plus the then
maximum performance bonus available to Mr. Lewis for a period of one (1) year.
Mr. Lewis may elect, in the event of an involuntary termination, to be bound by
the covenants not to solicit and not to compete in exchange for continued
vesting of the stock options granted to him by us for the term of the covenants.
Otherwise, Mr. Lewis's stock options will discontinue to vest immediately upon
termination of employment.
On June 18, 1999, following the acquisition of Knowledge Well, we
entered into an employment agreement with Jeffrey N. Newton, under which we
agreed to employ Mr. Newton as our Executive Vice President, Global Channel
Sales, effective as of December 10, 1998. Under the terms of the agreement, Mr.
Newton will be paid a minimum base salary of $200,000 per year. In addition to
the base salary, Mr. Newton will be eligible to receive an annual performance
bonus at 100% achievement of $150,000 (the "targeted" bonus) at the discretion
of the board of directors. Mr. Newton's employment is at-will. The employment
agreement includes covenants not to solicit and not to compete in the event of a
voluntary termination by Mr. Newton or termination for cause (as defined in the
agreement) by SmartForce. If Mr. Newton's employment is involuntarily terminated
(as defined in the agreement) or terminated without cause we are required to
make a lump sum payment to Mr. Newton equal to his then base salary plus the
then maximum performance bonus available to Mr. Newton for a period of one (1)
year. Mr. Newton may elect, in the event of an involuntary termination, to be
bound by the covenants not to solicit and not to compete in exchange for
continued vesting of the stock options granted to him by us for the term of the
covenants. Otherwise, Mr. Newton's stock options will discontinue to vest
immediately upon termination of employment.
In addition to the employment agreement with Mr. Beamish noted above,
SmartForce Ireland Limited has entered into a consulting agreement with a
third-party consulting firm pursuant to which the consulting firm provides
certain management services to SmartForce Ireland Limited, including the
services of Mr. Beamish. Mr. Beamish was an employee of the consulting firm
during 2000. Amounts due under the consulting agreement are paid by SmartForce
Ireland Limited to the consulting firm. Mr. Beamish is separately compensated by
the consulting firm. During 2000, the consulting firm billed SmartForce Ireland
Limited an aggregate of $291,800 for services provided by Mr. Beamish.
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COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 2000, the Compensation Committee of our board of directors
consisted of Messrs. McCabe, McDonagh and Grillos. During fiscal 2000, the Stock
Option Committee consisted of Messrs. McDonagh and Krzywicki. Mr. Krzywicki was
not one of our officers or employees or an officer or employee of our
subsidiaries during fiscal 2000 or at any time prior to fiscal 2000. Mr.
McDonagh was not one of our officers or employees or an officer or employee of
our subsidiaries during fiscal 2000 or at any time since September 1991. From
our inception to September 1991, Mr. McDonagh was our Chief Executive Officer.
Mr. McCabe served on the Compensation Committee from February 1995 until
November 2000. Mr. McCabe also served as Chief Executive Officer through
December 1996, President through September 1996 and Chairman of the board of
directors through August 12, 1998. From October 1, 1998 through December 10,
1998, Mr. McCabe was a member of the interim management committee of the board
of directors. From December 10, 1998 to November 13, 2000, Mr. McCabe was the
Chairman of the Board of Directors. Mr. Grillos was not one of our officers or
employees or an officer or employee of our subsidiaries at any time prior to
October 1, 1998. From October 1, 1998 through December 10, 1998, Mr. Grillos was
a member of the interim management committee of the board of directors. From
December 10, 1998 to December 31, 1999, Mr. Grillos was our Executive Vice
President and Chief Operating Officer.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of our ADSs (or their equivalents) as of March 30, 2001 (unless
otherwise stated) by:
- each director;
- each Named Executive Officer, as defined below in "Executive Compensation
and Other Matters--Summary Compensation Table";
- each person who is the beneficial owner of more than five percent (5%) of
our ADSs; and
- all current directors and executive officers as a group.
The number and percentage of ADSs beneficially owned is determined under
the rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any equivalent ADSs as to which the individual has sole or
shared voting power or investment power and also any equivalent ADSs that the
individual has the right to acquire within sixty (60) days of March 30, 2001
through the exercise of share options or other rights. Unless otherwise
indicated, each person has sole voting and investment power (or shares such
powers with his spouse) with respect to the shares shown as beneficially owned.
EQUIVALENT ADSs APPROXIMATE
NAME OF PERSON OR IDENTITY OF GROUP BENEFICIALLY OWNED PERCENTAGE OWNED(1)
----------------------------------- ------------------ -------------------
Putnam Investments, LLC ..................................... 5,205,403 9.9%
One Post Office Square, Boston, MA 02109(2)
Pilgrim Baxter & Associates, Ltd. ........................... 3,736,100 7.1%
825 Duportail Road, Wayne, PA 19087(3)
Invesco Funds Group, Inc. ................................... 3,361,250 6.4%
7800 East Union Ave., Denver, CO 80237(4)
William G. McCabe(5) ........................................ 4,107,768 7.3%
Gregory M. Priest(6) ........................................ 1,397,694 2.6%
William A. Beamish(7) ....................................... 1,043,372 1.9%
William B. Lewis(8) ......................................... 872,921 1.6%
Jeffrey N. Newton(9) ........................................ 854,614 1.6%
John M. Grillos(10) ......................................... 391,120 *
Patrick J. McDonagh(11) ..................................... 330,208 *
David C. Drummond(12) ....................................... 243,695 *
James S. Krzywicki(13) ...................................... 63,416 *
Ronald C. Conway(14) ........................................ 39,480 *
All current directors and executive officers
as a group (9 people)(15) ................................. 4,269,325 7.5%
* less than 1%
(1) Based on 52,542,730 of our ADSs (or their equivalents) outstanding as of
March 30, 2001.
(2) Based on information contained in the Schedule 13G filed with the SEC for
the fiscal year ended December 31, 2000 by Putnam Investments, LLC. Certain
shares are beneficially owned by non-reporting entities as well as by
Putnam Investments, LLC.
(3) Based on information contained in the Schedule 13G/A filed with the SEC for
the fiscal year ended December 31, 2000 by Pilgrim Baxter & Associates Ltd.
(4) Based on information contained in the Schedule 13G/A filed with the SEC for
the fiscal year ended December 31, 2000 by Invesco Funds Group Inc.
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(5) Includes 1,277,882 equivalent ADSs issuable upon the exercise of share
options held by Mr. McCabe, which options are exercisable within sixty (60)
days of March 30, 2001. Also includes 1,528,199 ADSs held in the name of
Peregrine Company Managers Ltd., a Company controlled by a family trust
established by Mr. McCabe. Mr. McCabe disclaims beneficial ownership of
these shares held on behalf of Bentico Trading Ltd. within the meaning of
Rule 13d-3 of the Exchange Act.
(6) Includes 1,233,314 equivalent ADSs issuable upon the exercise of share
options held by Mr. Priest, which options are exercisable within sixty (60)
days of March 30, 2001.
(7) Includes 689,780 equivalent ADSs issuable upon the exercise of share
options held by Mr. Beamish, which options are exercisable within sixty
(60) days of March 30, 2001. Also includes 314,304 ADSs held in the name of
Peregrine Company Managers Ltd. on behalf of Mr. Beamish.
(8) Includes 829,239 equivalent ADSs issuable upon the exercise of share
options held by Mr. Lewis, which options are exercisable within sixty (60)
days of March 30, 2001. Also includes 42,459 ADSs held in a trust. Under
the rules of the Securities and Exchange Commission, Mr. Lewis may be
deemed to be the beneficial owner of these shares. Mr. Lewis disclaims
beneficial ownership of these securities except to the extent of his
pecuniary interest therein.
(9) Includes 819,824 equivalent ADSs issuable upon the exercise of share
options held by Mr. Newton, which options are exercisable within sixty (60)
days of March 30, 2001. Also includes 31,955 ADSs held in a trust. Under
the rules of the Securities and Exchange Commission, Mr. Newton may be
deemed to be the beneficial owner of these shares. Mr. Newton disclaims
beneficial ownership of these securities except to the extent of his
pecuniary interest therein.
(10) Includes 332,376 equivalent ADSs issuable upon the exercise of share
options held by Mr. Grillos, which options are exercisable within sixty
(60) days of March 30, 2001. Also includes 35,920 ADSs held by Itech
Partners L.P. in which Mr. Grillos is the sole General Partner. Mr. Grillos
disclaims beneficial ownership of these securities except to the extent of
his pecuniary interest therein.
(11) Includes 30,208 equivalent ADSs issuable upon the exercise of share options
held by Mr. McDonagh, which options are exercisable within sixty (60) days
of March 30, 2001.
(12) Includes 242,200 equivalent ADSs issuable upon the exercise of share
options held by Mr. Drummond, which options are exercisable within sixty
(60) days of March 30, 2001.
(13) Includes 60,416 equivalent ADSs issuable upon the exercise of share options
held by Mr. Krzywicki, which options are exercisable within sixty (60) days
of March 30, 2001.
(14) Includes 39,480 equivalent ADSs issuable upon the exercise of share options
held by Mr. Conway, which options are exercisable within sixty (60) days of
March 30, 2001.
(15) Includes 4,349,014 equivalent ADSs issuable upon the exercise of options
held by current directors and executive officers as a group, which options
are exercisable within sixty (60) days of March 30, 2001.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Approximately 9% of the issued share capital of CBT (Technology) Limited,
one of our Irish subsidiaries, representing a special non-voting class, is owned
by Stargazer Productions ("Stargazer"), an unlimited company which is
wholly-owned by certain of our key employees. All of the voting securities of
CBT (Technology) Limited are owned by us and, except for the securities owned by
Stargazer, there are no other outstanding securities of CBT (Technology)
Limited. CBT (Technology) Limited has in the past and may in the future declare
and pay dividends to Stargazer, and Stargazer may pay dividends to its
shareholders out of such amounts. Except for the fact that Stargazer is wholly
owned by certain of our key employees, we have no relationship with Stargazer.
In March 2000, we acquired the net assets of Advanced Educational Systems
Limited ("AES"), a provider of secure e-Testing solutions and services to
organizations to support their internal certification and compliance
initiatives. We have issued 103,129 ADSs to AES as consideration for those
assets. One of our directors, Patrick J. McDonagh, was a director of AES and he
was deemed to be the beneficial owner of approximately 29% of the outstanding
shares of AES.
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In August 1999, Gregory M. Priest, our Chairman, President and Chief
Executive Officer, received a loan in the amount of $450,000 which is repayable
in four equal annual installments, commencing in August 2000. Interest accrues
on the principal amount at a rate of 5.96%, to be paid annually. As of December
31, 2000, the balance outstanding under the loan, inclusive of accrued interest,
was $347,420.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act
of 1934, the Company has duly caused this Form 10-K/A to the Registrant's Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized
on the 30th day of April, 2001.
SMARTFORCE PUBLIC LIMITED COMPANY
/s/ Gregory M. Priest
-------------------------------------
Gregory M. Priest
Chairman of the board
President and Chief Executive Officer
/s/ David C. Drummond
-------------------------------------
David C. Drummond
Executive Vice President,
Finance Chief Financial Officer and
Director
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