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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 10549
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c)
or Section 240.14a-12
ACRES GAMING INCORPORATED
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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ACRES GAMING INCORPORATED
815 N.W. NINTH STREET
CORVALLIS, OREGON 97330
OCTOBER 12, 1998
Dear Stockholder:
You are cordially invited to attend the 1998 Annual Meeting of Stockholders
(the "Annual Meeting") of Acres Gaming Incorporated (the "Company").
Place: Company Headquarters
815 NW 9th Street
Corvallis, OR 97330
Date: Wednesday, November 18, 1998
Time: 3:00 p.m. local time
The Notice of the Annual Meeting and Proxy Statement accompany this letter.
The Proxy Statement describes the business to be transacted at the meeting and
provides other information concerning the Company.
The principal business to be transacted at the Annual Meeting will be
election of directors and ratification of the appointment of Arthur Andersen LLP
as the Company's independent public accountants for the fiscal year ending June
30, 1999. The Board of Directors recommends that stockholders vote for election
of the nominated directors and ratification of Arthur Andersen LLP as the
Company's independent public accountants.
We know that many of our stockholders will be unable to attend the Annual
Meeting. Proxies are therefore solicited so that each stockholder has an
opportunity to vote on all matters that are scheduled to come before the
meeting. Whether or not you plan to attend the Annual Meeting, we hope that you
will have your stock represented by marking, signing, dating and returning your
proxy card in the enclosed envelope as soon as possible. Your stock will be
voted in accordance with the instructions you have given in your proxy card. You
may, of course, attend the Annual Meeting and vote in person even if you have
previously returned your proxy card.
Sincerely,
Robert W. Brown
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
IMPORTANT
A proxy card is enclosed herewith. All stockholders are urged to complete and
mail the proxy card promptly. The enclosed envelope for return of the proxy card
requires no postage. Any stockholder attending the Annual Meeting may personally
vote on all matters that are considered, in which event the signed proxy will be
revoked.
IT IS IMPORTANT THAT YOUR STOCK BE VOTED
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ACRES GAMING INCORPORATED
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 18, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the "Annual
Meeting") of Acres Gaming Incorporated, a Nevada corporation (the "Company"),
will be held on Wednesday, November 18, 1998, at 3:00 p.m. local time, at
Company Headquarters, 815 NW 9th Street, Corvallis, OR 97330 for the following
purposes:
1. To elect five (5) directors to the Company's Board of Directors.
2. To ratify the appointment of Arthur Andersen LLP as independent
public accountants for the fiscal year ending June 30, 1999.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of record at the close of business on September 30, 1998,
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment thereof.
ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT AS PROMPTLY AS POSSIBLE IN
THE ENCLOSED POSTAGE PREPAID ENVELOPE IN ORDER THAT THE PRESENCE OF A QUORUM MAY
BE ASSURED. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO REVOKE IT
LATER OR VOTE YOUR SHARES IN PERSON IN THE EVENT THAT YOU SHOULD ATTEND THE
ANNUAL MEETING.
By Order of the Board of Directors
Robert W. Brown
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
Corvallis, Oregon
October 12, 1998
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ACRES GAMING INCORPORATED
815 N.W. NINTH STREET
CORVALLIS, OREGON 97330
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, NOVEMBER 18, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
This Proxy Statement is furnished by the Board of Directors of Acres Gaming
Incorporated, a Nevada corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the Company's
Annual Meeting of Stockholders (the "Annual Meeting") to be held at 3:00 p.m.
local time, on Wednesday, November 18, 1998, at Company Headquarters, 815 NW 9th
Street, Corvallis, OR 97330.
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about October 12, 1998.
RECORD DATE AND OUTSTANDING SHARES
Only holders of record of the Company's Common Stock and Series A
Convertible Preferred Stock at the close of business on September 30, 1998, are
entitled to notice of and to vote at the Annual Meeting. On that date, 8,913,281
shares of the Company's Common Stock (the "Outstanding Shares") and 519,481
shares of Series A Convertible Preferred Stock (the "Preferred Stock") were
outstanding.
SOLICITATION OF PROXIES
The cost of preparing, printing and mailing this Proxy Statement and the
proxies solicited hereby has been or will be borne by the Company. In addition
to the use of the mails, proxies may be solicited by directors, officers and
other employees of the Company, without additional remuneration, in person or by
telephone or facsimile transmission. The Company will also request brokerage
firms, bank nominees, custodians, and fiduciaries to forward proxy materials to
the beneficial owners of the Common Stock as of the record date and will provide
reimbursement for the cost of forwarding the proxy materials in accordance with
customary practice. Your cooperation in promptly completing, signing, dating and
returning the enclosed proxy card will help avoid additional expense.
QUORUM AND VOTING
Each Outstanding Share entitles the holder thereof to one vote upon each
matter to be presented at the Annual Meeting. A quorum, consisting of a majority
of the Outstanding Shares, must be present in person or by proxy for the
transaction of business. If a quorum is present:
(i) each nominee for election to the Board of Directors to be voted on
by the Outstanding Shares will be elected by a plurality of the votes cast
by holders of the Outstanding Shares;
(ii) the appointment of Arthur Andersen, LLP, will be ratified if this
proposal receives the affirmative vote of a majority of the Outstanding
Shares represented at the meeting.
Abstentions and other non-votes are counted for purposes of determining
whether a quorum exists at the Annual Meeting, but have no effect on the
determination of whether a plurality exists with respect to a given nominee. An
abstention or other non-vote has the effect of a vote against a proposal.
Proxies and ballots will be received and tabulated by Norwest Bank Minnesota,
N.A., the Company's transfer agent.
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REVOCABILITY OF PROXIES
Any proxy delivered pursuant to this solicitation is revocable at the
option of the person giving it at any time before it is exercised. A proxy may
be revoked prior to its exercise by delivering to the Company's Secretary a
written notice of revocation or a duly executed proxy card bearing a later date,
or by attending the Annual Meeting and voting in person. Attendance at the
Annual Meeting will not constitute a revocation of a proxy.
Each proxy returned to the Company will be voted in accordance with the
instructions indicated thereon. If no instructions are indicated, the shares
will be voted "FOR" (i) election of each of the nominees to the Board of
Directors named in this Proxy Statement; and (ii) ratification of the
appointment of Arthur Andersen LLP as independent public accountants for the
fiscal year ending June 30, 1999. While the Board of Directors knows of no other
matters to be presented at the Annual Meeting or any adjournment thereof, all
proxies returned to the Company will be voted on any such matter in accordance
with the judgment of the proxy holders.
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of
its Board of Directors. The Company's Bylaws provide that the Board of Directors
shall consist of not less than one nor more than 15 members. The Board of
Directors currently consists of five members. Members of the Board of Directors
are elected for a term of one year or until their successors are elected.
The Board of Directors has nominated John F. Acres, Jo Ann Acres, Richard
A. Carone, Floyd W. Glisson and Donald J. Massaro to serve as directors of the
Company (the "Common Stock Nominees"). Unless authority is withheld, all proxies
received in response to this solicitation will be voted for the election of each
Common Stock Nominee. If any Common Stock Nominee becomes unable to serve prior
to the Annual Meeting, the proxies received in response to this solicitation
will be voted for a replacement nominee selected in accordance with the best
judgment of the proxy holders named therein.
International Game Technology ("IGT") is the owner of all of the 519,481
outstanding shares of the Preferred Stock. During fiscal 1998, the Company's
sales to IGT amounted to approximately $13.1 million or 75% of the Company's
revenues. So long as there are 130,000 shares of Preferred Stock outstanding,
holders of Preferred Stock have the right to elect one director (the "Preferred
Stock Director"). Albert J. Crosson, who served as the Preferred Stock Director,
resigned from the Board of Directors in September 1998. IGT has indicated it
does not currently plan to nominate a replacement Preferred Stock Director.
Holders of the Preferred Stock do not have voting rights with respect to other
directors, or on any other matter scheduled to come before the meeting.
Information about the Common Stock Nominees and Other Management Personnel:
DIRECTOR
NAME POSITIONS WITH THE COMPANY AGE SINCE
---- -------------------------- --- --------
John F. Acres Chairman of the Board of Directors 44 1985
Jo Ann Acres Director 44 1997
Richard A. Carone Director 50 1997
Floyd W. Glisson President, Chief Executive Officer and 51 1997
Director
Donald J. Massaro Director 54 1998
Robert W. Brown Executive Vice President, Chief Financial 43 N/A
Officer, Treasurer and Secretary
John F. Acres, the founder of the Company, has served as a director of the
Company since its inception in 1985. Mr. Acres served as Chief Executive Officer
from January 1985 until July 1998. He also served as
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President of the Company from January 1985 to January 1996 and from February
1998 to July 1998 and as Secretary from January 1985 to January 1997. Mr. Acres
has been involved in the gaming industry since 1972, and has designed slot data
collection systems, player tracking systems, and equipment for progressive
jackpot systems that are widely used in the industry.
Jo Ann Acres. Mrs. Acres was the office manager and accountant of the
Company from 1991 to June 1993. Since 1993, Mrs. Acres has been a private
investor. Mrs. Acres is married to Mr. Acres.
Richard A. Carone. Mr. Carone has been general manager of Accufab Systems,
a robotics company based in Corvallis, Oregon since 1985.
Floyd W. Glisson became President and Chief Executive Officer of the
Company in July 1998. Mr. Glisson was senior vice president, finance and
administration and chief financial officer for ConAgra Grocery Products Company,
a unit of ConAgra, Inc., from June 1993 to July 1998.
Donald J. Massaro was elected to the Board of Directors effective October
1, 1998. From 1995 to September 1998, Mr. Massaro was President and Chief
Executive Officer of Silicon Gaming Inc., a manufacturer of gaming machines. Mr.
Massaro was Executive Vice President and General Manager of Worldwide Sales and
Marketing for Conner Peripherals Inc., a disk drive manufacturer, from July 1994
to May 1995. From January 1991 to June 1994, Mr. Massaro was Chief Executive
Officer of Inversion Development Corporation, a manufacturer of environmental
products.
Robert W. Brown joined the Company in July 1993 as Chief Financial Officer
and Treasurer. He was elected Executive Vice President and Secretary in January
1997. Mr. Brown is a certified public accountant.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES.
BOARD ACTIONS AND COMPENSATION OF DIRECTORS
During the fiscal year ended June 30, 1998, the Board of Directors met
seven times. Each meeting was attended by all directors.
Non-employee directors receive an annual fee of $7,500 and $1,000 per board
meeting or committee meeting (other than meetings held in connection with a
board meeting) plus expenses. Non-employee directors also receive options to
purchase 7,500 shares of the Company's Common Stock at a price equal to fair
market value on the date they are first elected to the board; 25 percent of
those options vest immediately; the balance over three years. In addition,
non-employee directors are granted options to purchase an additional 2,500
shares of Common Stock at each annual meeting of stockholders after such
director has served a full year. Those options vest over three years on the same
basis as the initial option grants. Mr. Massaro will receive an option to
purchase 7,500 shares of the Company's Common Stock and Mrs. Acres and Mr.
Carone will each receive options to purchase 2,500 shares of the Company's
Common Stock in connection with the 1998 annual meeting of stockholders. Mr.
Crosson never received any compensation from the Company for his services as a
director.
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MANAGEMENT INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth certain information for each of the fiscal
years ended June 30, 1998, 1997 and 1996 regarding compensation accrued or paid
to the Company's Chief Executive Officer and each officer who accrued or was
paid compensation in excess of $100,000 in the fiscal year ended June 30, 1998
(the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
---------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
--------------------------- ---- -------- -------- ------------
John F. Acres................................................. 1998 $300,000 --
Chairman and Chief Executive Officer(1) 1997 $250,000 $132,867
1996 $180,000 --
Robert W. Brown............................................... 1998 $115,833 --
Executive Vice President, Chief Financial Officer 1997 $107,500 --
Treasurer and Secretary 1996 $100,000 --
Joseph A. Huseonica........................................... 1998 $103,893 -- $84,375(2)
Chief Operating Officer, President and Director(2) 1997 $200,000 $ 25,000
1996 $ 87,500 $ 25,000
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(1) In July 1998, Mr. Glisson was elected as the Company's President and Chief
Executive Officer relieving Mr. Acres of these duties.
(2) Mr. Huseonica's employment with the Company terminated in December 1997. The
amount included in "All Other Compensation" represents compensation paid to
Mr. Huseonica upon his termination.
OPTION GRANTS IN LATEST FISCAL YEAR
No options were granted to, or exercised by, the Named Executive Officers
during the fiscal year ended June 30, 1998. The following table sets forth the
number of securities underlying unexercised options and the value of unexercised
in-the-money options at fiscal year end.
AGGREGATED FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS AT FY-END OPTIONS AT FY-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- ------------------------------- ---------------------------------
John F. Acres................. 106,664/53,336 $159,996/$80,004
Robert W. Brown............... 113,950/51,050 $120,891/$1,809
Joseph A. Huseonica........... 113,300/0 $116,625/$0
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(1) The market price of the Company's Common Stock was $5.00 at June 30, 1998.
RETIREMENT SAVINGS PLAN
The Company maintains a profit sharing and savings plan (the "401(k) Plan")
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"), which allows employees to contribute up to 15 percent of their pre-tax
income to the 401(k) Plan. The 401(k) Plan includes a discretionary matching
contribution by the Company and provides that the Company may make an additional
discretionary contribution out of profits at the end of any year. The Company
has not made any discretionary matching contributions nor any additional
discretionary contributions under the 401(k) Plan.
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STOCK OPTIONS
The Acres Gaming Incorporated 1993 Stock Option and Incentive Plan (the
"1993 Plan") was adopted by the Board of Directors of the Company and approved
by the stockholders in 1993. The 1993 Plan permits the granting of awards to
employees and consultants of the Company in the form of stock options and grants
of restricted stock. Stock options granted under the 1993 Plan may be "incentive
stock options" meeting the requirement of Section 422 of the Code or
non-qualified options which do not meet the requirements of Section 422. A total
of 1,750,000 shares of the Company's Common Stock has been reserved for issuance
pursuant to awards granted under the 1993 Plan. As of August 31, 1998, an
aggregate of 1,338,575 shares were subject to outstanding stock options, and
158,275 shares were available for grant. The exercise prices for currently
outstanding stock options range from $3.00 to $16.88 per share. Options for
253,150 shares have been exercised under the 1993 Plan. No grants of restricted
stock have been made under the 1993 Plan.
The 1993 Plan is administered by the Compensation Committee of the Board of
Directors. The 1993 Plan gives broad powers to the Committee to administer and
interpret the 1993 Plan, including the authority to select the individuals to be
granted options and to prescribe the particular form and conditions of each
option granted. Options may be granted pursuant to the 1993 Plan through July
2003. The 1993 Plan may be terminated earlier by the Board of Directors in its
sole discretion.
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with Mr. John F. Acres
effective July 1, 1996 (the "Acres Employment Agreement"). The initial term of
the Acres Employment Agreement runs through June 30, 2001, subject to prior
termination. The Company may terminate Mr. Acres' employment for cause at any
time. After February 1, 1999, either the Company or Mr. Acres may terminate Mr.
Acres' employment without cause. Mr. Acres may terminate employment in the event
of certain breaches by the Company or in the event of certain changes in control
of the Company or changes in the Company's business. The Base Salary for the
fiscal year ended June 30, 1998 is $300,000 and escalates at the rate of $50,000
per year thereafter. The Acres Employment Agreement also provides for bonuses
based upon the Company's pre-tax income, the thresholds for which escalate from
year to year. The Acres Employment Agreement provides that during his employment
and upon termination, provided the Company makes certain termination payments to
Mr. Acres, Mr. Acres will not, directly or indirectly, be connected in any
manner with any business that competes with the Company or solicit or entice or
divert any customer or supplier from the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee and a Compensation Committee but
no Nominating Committee. In fiscal 1998, the Audit Committee consisted of Mr.
Glisson, Chairman, and Mr. Crosson and the Compensation Committee consisted of
Mr. Carone, Chairman, and Mr. Glisson. Upon his election as President, Mr.
Glisson resigned from the Audit Committee and the Compensation Committee. The
Audit Committee currently consists of Mr. Massaro, Chairman, and Mr. Carone. The
Compensation Committee currently consists of Mr. Carone, Chairman, and Mr.
Massaro.
The Audit Committee reviews and makes recommendations to the Board
regarding services provided by the independent accountants, reviews with the
independent accountants the scope and results of their annual examination of the
Company's consolidated financial statements and any recommendations they may
have, and makes recommendations to the Board with respect to the engagement or
discharge of the independent accountants. The Audit Committee also reviews the
Company's procedures with respect to maintaining books and records, the adequacy
and implementation of internal auditing, accounting and financial controls, and
the Company's policies concerning financial reporting and business practices.
The Audit Committee met once in fiscal 1998.
The Compensation Committee makes recommendations to the Board regarding
officers' compensation, management incentive compensation arrangements and
administers the Company's Stock Option and Incentive Plan. The Compensation
Committee met four times in fiscal 1998.
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REPORT ON EXECUTIVE COMPENSATION
The underlying objectives of the Company's compensation strategy are to
attract and retain the best possible executive talent, to motivate those
executives to achieve optimum operating performance for the Company, to link
executive and stockholder interests through equity-based plans and to provide a
compensation package that recognizes individual contributions as well as overall
business results. There are three components to the Company's executive
compensation: base salary, long-term incentives in the form of stock options,
and incentive (bonus) payments.
Base Salary. Base salary for each executive officer, other than those for
Mr. Acres and Mr. Huseonica, was subjectively determined by an assessment of his
or her sustained performance, advancement potential, experience, responsibility,
scope and complexity of the position, and current salary in relation to salary
levels for comparable positions in the industry, based on the Company's general
awareness of such salary levels. Mr. Huseonica's base salary was based on his
employment agreement entered into in January 1996. Mr. Acres' compensation is
based on his employment contract entered into effective July 1, 1996.
Long-Term Incentives. Stock options have been granted to the Chairman and
other executive officers to encourage management of the Company from the
perspective of an owner with an equity interest in the Company. Vesting is used
to encourage key employees to continue in the employ of the Company.
Annual Incentives. Mr. Acres' employment contract provides for bonuses, the
thresholds for which escalate from year to year. Under his employment agreement,
Mr. Huseonica was eligible to receive a performance bonus targeted at $50,000
per year upon successful completion of certain objectives agreed upon by Mr.
Huseonica and the Board of Directors.
Compensation Committee Chairman
Richard A. Carone
Floyd W. Glisson
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PERFORMANCE GRAPH
The following graph compares total cumulative return to holders of the
Company's Common Stock with the cumulative total return of the Nasdaq US Stock
Market and a peer group index created by the Company for the period beginning
October 27, 1993, the first trading day of the Common Stock, and ending June 30,
1998. The Company uses a peer group (the "Peer Group") which consists of the
following companies: Shuffle Master, Alliance Gaming Corporation, Casino Data
Systems, International Game Technology, Mikohn Gaming Corporation, WMS
Industries, Anchor Gaming and Innovative Gaming Corp. of America.
PERFORMANCE GRAPH
ACRES GAMING NASDAQ COMPOSITE
INCORPORATED PEER GROUP (US)
10/27/93 100.00 100.00 100.00
6/30/94 110.00 55.00 91.46
6/30/95 155.00 52.00 120.93
6/30/96 187.50 100.00 153.52
6/30/97 174.99 119.00 186.83
6/30/98 100.00 166.13 245.47
Assumes $100 invested in the Company's Common Stock (at the initial public
offering price of $5.00 per share), the Nasdaq US Stock Market and the Peer
Group, with all dividends reinvested. Stock price shown above for the Common
Stock is historical and not necessarily indicative of future price performance.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires that the Company's officers, directors and persons who
own more than 10 percent of the Common Stock of the Company file with the
Securities and Exchange Commission (the "SEC") initial reports of beneficial
ownership on Form 3 and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company on Form 4 and Form 5. Officers,
directors and holders of more than 10 percent of the Company's Common Stock are
required by SEC regulations to furnish to the Company copies of all Section
16(a) reports that they file. To the Company's knowledge, based solely on a
review of copies of such reports furnished to the Company and written
representation that no other reports are required, during the
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1998 fiscal year all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with by such persons.
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding the beneficial
ownership of shares of the Company's Common Stock by each director of the
Company, by each Named Executive Officer, by all directors and executive
officers of the Company as a group, and by each stockholder who is known by the
Company to own more than 5 percent of the Company's Common Stock as of August
31, 1998.
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
---------------- --------------------- --------------
John F. Acres....................................... 2,252,378(3) 25.1%
Jo Ann Acres........................................ 2,252,378(3) 25.1
Richard A. Carone................................... 18,750(4) *
Floyd W. Glisson.................................... 129,749(5) 1.5
Donald J. Massaro................................... 10,000 *
Joseph A. Huseonica................................. 118,450(6) 1.3
Robert W. Brown..................................... 115,950(7) 1.3
All directors and executive officers as a group (7
persons).......................................... 2,645,277(8) 28.6
IGT................................................. 1,179,895(9) 11.8
Wanger Asset Management, L.P........................ 481,500(10) 5.5
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* Less than 1%.
(1) "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the Exchange
Act, and generally means any person who directly or indirectly has or
shares voting or investment power with respect to a security. A person
shall be deemed to be the beneficial owner of a security if that person has
the right to acquire beneficial ownership of such security within 60 days,
including, but not limited to, any right to acquire such security through
the exercise of any option or warrant or through the conversion of a
security. Any securities not outstanding that are subject to such options
or warrants shall be deemed to be outstanding for the purpose of computing
the percentage of outstanding securities of the class owned by such person,
but shall not be deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person. Each person has sole
voting and sole dispositive power with respect to all outstanding shares,
except as noted.
(2) Based on 8,819,981 shares outstanding at August 31, 1998.
(3) Includes 1,838,866 shares held by a revocable trust established by Mr.
Acres and Mrs. Acres, with respect to which Mr. Acres and Mrs. Acres have
shared voting and shared dispositive powers. Also includes 276,432 shares
beneficially owned by Mr. Acres and Mrs. Acres' children who reside in
their household, with respect to which Mr. Acres and Mrs. Acres have no
voting or dispositive powers. Includes 133,330 shares subject to options
exercisable by Mr. Acres and 3,750 shares exercisable by Mrs. Acres within
60 days of October 1, 1998.
(4) Includes 3,750 shares subject to options exercisable within 60 days of
October 1, 1998.
(5) Includes 81,000 shares owned jointly with Mr. Glisson's wife as trustees of
the Glisson Family Trust, with respect to which Mr. Glisson has shared
voting and shared dispositive powers and 48,749 shares subject to options
exercisable by Mr. Glisson within 60 days of October 1, 1998.
(6) Includes 5,000 shares owned jointly with Mr. Huseonica's wife, with respect
to which Mr. Huseonica has shared voting and shared dispositive powers and
150 shares held by Mr. Huseonica as custodian for Mr. Huseonica's minor
grandchildren with respect to which he has sole voting and dispositive
powers. Includes 113,300 shares subject to options exercisable within 60
days of October 1, 1998.
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(7) Includes 2,000 shares Mr. Brown holds as trustee for the benefit of his
minor children, with respect to which he has sole voting and dispositive
powers. Includes 113,950 shares subject to options exercisable within 60
days of October 1, 1998.
(8) Includes 416,829 shares subject to options exercisable within 60 days of
October 1, 1998.
(9) Shares issuable on conversion of Series A Convertible Preferred Stock owned
by IGT based on the conversion price in effect on August 31, 1998.
(10) This information is based solely on a Schedule 13G filed with the
Securities and Exchange Commission on February 9, 1998, by Wanger Asset
Management, L.P., and its general partner, Wanger Asset Management Ltd.
PROPOSAL NO. 2 -- RATIFICATION OF THE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify the
appointment of Arthur Andersen LLP as independent public accountants to examine
the financial statements of the Company for the fiscal year ending June 30,
1999. The firm of Arthur Andersen LLP has served as the Company's public
accountants since 1993. A representative of Arthur Andersen LLP will be present
at the Annual Meeting, will have an opportunity to make a statement if he or she
desires to do so, and will be available to respond to appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE
COMPANY.
PROPOSALS OF SHAREHOLDERS
Any stockholder wishing to have a proposal considered for inclusion in the
proxy materials for the Company's 1999 Annual Meeting of Stockholders must set
forth such proposal in writing and file it with the Secretary of the Company no
later than June 12, 1999. In addition, if the Company receives notice of a
shareholder proposal after August 15, 1999, the persons named as proxies in the
proxy statement and accompanying proxy will have discretionary authority to vote
on that shareholder proposal.
OTHER BUSINESS
At the date of this Proxy Statement, management knows of no other business
that may properly come before the Annual Meeting. However, if any other matters
properly come before the meeting, the persons named in the enclosed form of
proxy will vote the proxies received in response to this solicitation in
accordance with their best judgment on such matters.
INCORPORATION BY REFERENCE
The Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the Company's Annual
Report to Stockholders for the fiscal year ended June 30, 1998, transmitted with
the Proxy Statement, are hereby incorporated by reference. No other portions of
the Annual Report shall be deemed incorporated herein.
9
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FINANCIAL INFORMATION
THE COMPANY'S 1998 ANNUAL REPORT TO STOCKHOLDERS ACCOMPANIES THESE
MATERIALS. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED JUNE 30, 1998 MAY BE OBTAINED FROM THE COMPANY WITHOUT CHARGE UPON
WRITTEN REQUEST TO THE COMPANY. REQUESTS SHOULD BE DIRECTED TO THE CHIEF
FINANCIAL OFFICER, ACRES GAMING INCORPORATED, 815 NW NINTH STREET, CORVALLIS,
OREGON 97330.
By Order of the Board of Directors
Robert W. Brown
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
October 12, 1998
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PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 18, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Floyd W. Glisson and John F. Acres, and each
of them, as Proxies, with full power of substitution, and hereby authorizes them
to represent and to vote, as designated below, all the shares of Common Stock of
Acres Gaming Incorporated held of record by the undersigned on September 30,
1998, at the Annual Meeting of Stockholders to be held on November 18, 1998 or
at any adjournment thereof.
1.ELECTION OF DIRECTORS. Election of the following nominees to serve as
directors each for a one-year term or until his or her successor is duly
elected.
[ ] FOR
(a) JOHN F. ACRES nominee [ ] WITHHOLD AUTHORITY to vote for nominee
[ ] FOR
(b) JO ANN ACRES nominee [ ] WITHHOLD AUTHORITY to vote for nominee
[ ] FOR
(c) RICHARD A. CARONE nominee [ ] WITHHOLD AUTHORITY to vote for nominee
[ ] FOR
(d) FLOYD W. GLISSON nominee [ ] WITHHOLD AUTHORITY to vote for nominee
[ ] FOR
(e) DONALD J. MASSARO nominee [ ] WITHHOLD AUTHORITY to vote for nominee
- --------------------------------------------------------------------------------
2. RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS. Ratify the selection of
Arthur Andersen LLP as the Company's independent public accountants for
the fiscal year ending June 30, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed herein by the undersigned. IF NO
DIRECTION IS MADE, THIS PROXY WILL BE VOTED "FOR" EACH NOMINEE IN ITEM 1 AND
"FOR" ITEM 2.
Please sign below exactly as your
name appears on your stock
certificate. When shares are held
jointly, each person should sign.
When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. An authorized
person should sign on behalf of
corporations, partnerships and
associations and give his or her
title.
Dated: , 1998
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Signature
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Signature if held jointly
YOUR VOTE IS IMPORTANT. PROMPT RETURN OF THIS PROXY CARD WILL HELP SAVE THE
EXPENSE OF ADDITIONAL SOLICITATION EFFORTS.