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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 sec.240.14a-11(c) or 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
7115 AMIGO STREET, SUITE 150
LAS VEGAS, NEVADA 89119
OCTOBER 25, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
(the "Annual Meeting") of Acres Gaming Incorporated (the "Company").
Place: Company Headquarters
7115 Amigo, Suite 150
Las Vegas, Nevada 89119
Date: Friday, December 3, 1999
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, 2000. 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,
Reed M. Alewel
Vice President, Chief Financial
Officer,
Treasurer and Assistant 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 DECEMBER 3, 1999
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 Friday, December 3, 1999 at 3:00 p.m. local time, at Company
Headquarters, 7115 Amigo Street, Suite 150, Las Vegas, Nevada 89119 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, 2000.
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 October 18, 1999,
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
Reed M. Alewel
Vice President, Chief Financial
Officer, Treasurer and
Assistant Secretary
Las Vegas, Nevada
October 25, 1999
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ACRES GAMING INCORPORATED
7115 AMIGO STREET, SUITE 150
LAS VEGAS, NEVADA 89119
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, DECEMBER 3, 1999
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 Friday, December 3, 1999, at Company Headquarters, 7115 Amigo
Street, Suite 150, Las Vegas, Nevada 89119.
This Proxy Statement and the enclosed form of proxy are being mailed to
stockholders on or about October 25, 1999.
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 October 18, 1999, 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 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, 2000. 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 1999, the Company's
sales to IGT amounted to approximately $3.2 million or 23% 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"). IGT has not indicated it plans to nominate a 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 45 1985
Jo Ann Acres......................... Director 45 1997
Richard A. Carone.................... Director 51 1997
Donald J. Massaro.................... Director 55 1998
Floyd W. Glisson..................... President, Chief Executive Officer and 52 1997
Director
Reed M. Alewel....................... Vice President, Chief Financial 35 N/A
Officer, Treasurer and Assistant
Secretary
Richard J. Schneider................. Vice President and Chief Operating 42 N/A
Officer
Gerald D. Haynes..................... Vice President, General Counsel and 41 N/A
Secretary
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John F. Acres is founder of the Company and served as Chief Executive
Officer from January 1985 until July 1998. He also served as 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 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 has been general manager of Accufab Systems, a robotics
company based in Corvallis, Oregon, since 1985.
Donald J. Massaro was president and chief executive officer of Silicon
Gaming Inc., a manufacturer of gaming machines, from 1995 to September 1998. 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.
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.
Reed M. Alewel joined the Company in October 1996 as Controller and
Assistant Secretary and was elected Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary in July 1999. Mr. Alewel was the manager of
financial planning and analysis for the American Italian Pasta Company, a food
manufacturing company, from May 1992 to October 1996.
Richard J. Schneider joined the Company in December 1997 as the Vice
President of Game Development and was elected Vice President and Chief Operating
Officer in July 1999. From July 1997 to December 1997, Mr. Schneider was the
vice president of game engineering for Casino Data Systems. From 1992 to 1997,
Mr. Schneider was the director of engineering for United Coin Machine Company.
Gerald D. Haynes joined the Company in December 1997 as Vice President,
Corporate Counsel. In February 1999, Mr. Haynes was promoted to Vice President
and General Counsel and in July 1999, Mr. Haynes was also elected Secretary of
the Company. From January 1997 to December 1997, Mr. Haynes was general counsel
and vice president of Oxis International, Inc., a biopharmaceutical company.
From November 1994 to January 1997, Mr. Haynes, as a sole practitioner,
functioned, among other things, as patent counsel for Kaiser Aluminum & Chemical
Corp. and general counsel for Oxis International, Inc.
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, 1999, the Board of Directors met 6
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, Mrs. Acres and Mr. Carone will
each receive options to purchase 2,500 shares of the Company's Common Stock in
connection with the 1999 annual meeting of stockholders.
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MANAGEMENT INFORMATION
EXECUTIVE COMPENSATION
The following table sets forth certain information for each of the fiscal
years ended June 30, 1999, 1998 and 1997 regarding compensation accrued or paid
to the Company's Chief Executive Officer and each Executive Officer who accrued
or was paid compensation in excess of $100,000 in the fiscal year ended June 30,
1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-------------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION
--------------------------- ---- -------- -------- ------------
John F. Acres.......................................... 1999 $350,000 -- --
Chairman and Chief Executive Officer(1) 1998 $300,000 -- --
1997 $250,000 $132,867 --
Floyd W. Glisson....................................... 1999 $ 28,750 -- $40,531(2)
President and Chief Executive Officer
Robert W. Brown........................................ 1999 $144,909 -- --
Executive Vice President, Chief Financial 1998 $107,500 -- --
Officer, Treasurer and Secretary(3) 1997 $100,000 -- --
Roy D. Lytle........................................... 1999 $121,272 -- --
Vice President and Chief Operating Officer(3) 1998 $ 93,532 -- --
1997 $ 66,728 -- --
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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. Glisson received a reimbursement of certain expenses incurred by Mr.
Glisson in conjunction with his relocation to Las Vegas.
(3) Mr. Brown and Mr. Lytle elected to not relocate to Las Vegas in connection
with the Company's relocation of its headquarters, and terminated their
employment with the Company effective July 1, 1999.
The following table sets forth certain information regarding options
granted during the fiscal year ended June 30, 1999, to the Named Executive
Officers.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OPTION TERM(2)
UNDERLYING EMPLOYEES IN PRICE EXPIRATION ------------------------------
NAME OPTIONS FISCAL YEAR ($/SHARE) DATE(1) 5% 10%
---- ---------- ------------- --------- ---------- ------------- -------------
Floyd W. Glisson....... 300,000(1) 71% $4.875 7/16/2008 $2,382,000 $3,793,000
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(1) With respect to 135,000 options, 11,250 options vested monthly for the first
12 months following the date of grant. With respect to the remaining 165,000
options, 33,000 vest annually, commencing July 16, 1999, until all options
are vested. The options expire ten years from the date of grant.
(2) Future value of current year grants assuming appreciation of 5% and 10% per
year over the ten-year option period. The actual value realized may be
greater than or less than the potential realizable values set forth in the
table.
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There were no exercises of stock options by the Named Executive Officers
during the fiscal year ended June 30, 1999. 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 FISCAL YEAR END OPTIONS AT FISCAL YEAR END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
---- -------------------------------------- ---------------------------------
John F. Acres...................... 160,000/0 $0/$0
Floyd W. Glisson................... 129,374/178,126 $0/$0
Robert W. Brown.................... 131,000/34,000 $0/$0
Roy D. Lytle....................... 20,667/30,333 $0/$0
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(1) The market price of the Company's Common Stock was $2.00 at June 30, 1999.
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.
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 September 30, 1999, an
aggregate of 1,148,817 shares were subject to outstanding stock options, and
254,733 shares were available for grant. The exercise prices for currently
outstanding stock options range from $1.56 to $15.00 per share. Options for
346,450 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, and amended effective July 1, 1999 (the "Acres
Employment Agreement"). The initial term of the Acres Employment Agreement runs
through June 30, 2001, subject to prior termination. The Company or Mr. Acres
may terminate the Acres Employment Agreement at any time. Upon the appointment
of Mr. Glisson as President and Chief Executive Officer in fiscal 1999, Mr.
Acres voluntarily agreed to reduce his Base Salary for the fiscal year ending
June 30, 2000 from $400,000 plus a bonus based on the Company's pre-tax income
to a Base Salary of $50,000 with no opportunity for a bonus. In addition to his
Base Salary, Mr. Acres will receive consulting fees commensurate with the level
of services Mr. Acres provides to the Company but in no case will the amount of
Base Salary plus consulting fees exceed $400,000. Consulting fees payable to Mr.
Acres for fiscal year ending June 30, 2000 are estimated to be $300,000. The
Acres Employment Agreement provides that during his employment and upon
termination, provided the Company makes certain
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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.
The Company has entered into an employment arrangement with Floyd W.
Glisson pursuant to which Mr. Glisson received a base salary of $30,000 for the
fiscal year ended June 30, 1999, and was awarded options to purchase 300,000
shares of the Company's common stock that vest over a five-year period. For the
fiscal year ending June 30, 2000, Mr. Glisson's base salary increased to
$300,000, plus a $50,000 bonus paid ratably over the fiscal year.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has a standing Audit Committee and a Compensation Committee but
no Nominating Committee. In fiscal 1999, the Audit Committee consisted of Mr.
Massaro, Chairman, and Mr. Carone and the Compensation Committee consisted 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 Compensation Committee makes recommendations to the Board regarding
officers' compensation, management incentive compensation arrangements and
administers the Company's Stock Option and Incentive Plan.
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. Glisson, 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. Acres' compensation is based on his
employment contract entered into effective July 1, 1996, as amended. Mr.
Glisson's compensation for the fiscal year ending June 30, 2000 is based on his
employment arrangement effective July 1, 1999.
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.
Compensation Committee Chairman
Richard A. Carone
Donald J. Massaro
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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 five year period
ended June 30, 1999. 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 INCORPORATED PEER GROUP NASDAQ COMPOSITE
------------------------- ---------- ----------------
6/30/94 100.00 100.00 100.00
6/30/95 140.90 94.55 132.23
6/30/96 170.45 181.82 168.68
6/30/97 159.09 216.36 205.92
6/30/98 90.91 302.05 271.68
6/30/99 36.36 206.46 386.53
Assumes $100 invested in the Company's Common Stock, the Nasdaq 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 1999 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.
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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 September
30, 1999.
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OUTSTANDING(2)
---------------- ---------------------- --------------
John F. Acres...................................... 2,215,029(3) 24.4%
Jo Ann Acres....................................... 2,215,029(3) 24.4%
Richard A. Carone.................................. 21,875(4) *
Donald J. Massaro.................................. 13,750(5) *
Floyd W. Glisson................................... 254,625(6) 2.8%
Roy D. Lytle....................................... 20,792(7) *
Robert W. Brown.................................... 133,000(8) 1.5%
All directors and executive officers as a group (10
persons)......................................... 2,695,805(9) 28.5%
IGT................................................ 2,228,320(10) 20.0%
Wanger Asset Management, L.P....................... 455,500(11) 5.1%
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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 8,913,281 shares outstanding at September 30, 1999.
(3) Includes 1,863,866 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 184,288 shares
beneficially owned by their children who reside in their household, with
respect to which Mr. Acres and Mrs. Acres have no voting or dispositive
powers. Includes 160,000 shares subject to options exercisable by Mr. Acres
and 6,875 shares subject to options exercisable by Mrs. Acres within 60
days of October 1, 1999.
(4) Includes 6,875 shares subject to options exercisable within 60 days of
October 1, 1999.
(5) Includes 3,750 shares subject to options exercisable within 60 days of
October 1, 1999.
(6) 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 173,625 shares subject to options
exercisable within 60 days of October 1, 1999.
(7) Includes 125 shares owned by Mr. Lytle's wife and 20,667 shares subject to
options exercisable within 60 days of October 1, 1999.
(8) 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 131,000 shares subject to options exercisable within 60
days of October 1, 1999.
(9) Includes 534,592 shares subject to options exercisable within 60 days of
October 1, 1999.
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(10) Shares issuable on conversion of Series A Convertible Preferred Stock owned
by IGT based on the conversion price in effect on September 30, 1999
subject to ownership limitations contained in the Stock Purchase Agreement.
(11) Based solely on a Schedule 13G filed with the Securities and Exchange
Commission on February 5, 1999, 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,
2000. 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 2000 Annual Meeting of Stockholders must set
forth such proposal in writing and file it with the Secretary of the Company no
later than June 27, 2000. In addition, if the Company receives notice of a
shareholder proposal after August 10, 2000, 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, 1999, transmitted with
the Proxy Statement, are hereby incorporated by reference. No other portions of
the Annual Report shall be deemed incorporated herein.
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FINANCIAL INFORMATION
THE COMPANY'S 1999 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, 1999 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, 7115 AMIGO STREET, SUITE 150, LAS
VEGAS, NEVADA 89119.
By Order of the Board of Directors
Reed M. Alewel
Vice President, Chief Financial
Officer, Treasurer and
Assistant Secretary
October 25, 1999
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PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 3, 1999
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 October 18, 1999,
at the Annual Meeting of Stockholders to be held on December 3, 1999 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.
(a) JOHN F. ACRES [ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
(b) JO ANN ACRES [ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
(c) RICHARD A. CARONE [ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
(d) FLOYD W. GLISSON [ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
(e) DONALD J. MASSARO [ ] FOR nominee [ ] WITHHOLD AUTHORITY to vote for nominee
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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, 2000.
[ ] 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: , 1999
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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.