<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
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 240.14a-11(c) or 240.14a-12
ALLIANCE GAMING CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
---------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[ALLIANCE GAMING CORPORATION LOGO]
6601 SOUTH BERMUDA RD
LAS VEGAS, NEVADA 89119
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 19, 1997
------------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Alliance Gaming Corporation (the "Company") will be held at
Caesars Palace, 3570 Las Vegas Boulevard South, Las Vegas, Nevada, on December
19, 1997 at 10:00 a.m., local time, for the following purposes:
1. To elect three directors to serve until the expiration of their
respective terms and until their respective successors shall be elected
and shall qualify, and
2. To consider such other matters as may properly be before the meeting.
The Board of Directors has fixed the close of business on November 21, 1997
as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the Meeting or any adjournment or postponement thereof.
We hope that you are able to attend the Meeting, but, in any event, please
sign, date and return promptly the enclosed proxy in the envelope so that your
shares may be voted at the Meeting.
By Order of the Board of Directors
/s/ DAVID JOHNSON
David Johnson
Senior Vice President, General Counsel
and Secretary
Las Vegas, Nevada
November 21, 1997
<PAGE> 3
ALLIANCE GAMING CORPORATION
------------------------
PROXY STATEMENT
------------------------
INTRODUCTION
GENERAL
The enclosed proxy is solicited by and on behalf of the Board of Directors
of Alliance Gaming Corporation (the "Company") in connection with the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held at 10:00 a.m.,
local time, at Caesars Palace, 3570 Las Vegas Boulevard South, Las Vegas,
Nevada, on December 19, 1997, and any adjournment or postponement thereof. At
the Meeting, stockholders will be asked to vote upon the following matters:
1. To elect three directors to serve until the expiration of their
respective terms and until their respective successors shall be elected
and shall qualify, and
2. To consider such other matters as may properly be before the meeting.
It is expected that this Proxy Statement and accompanying proxy card will
first be mailed to stockholders on or about November 22, 1997.
The Company will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others forwarding the
solicitation material to beneficial owners of shares of Common Stock. In
addition to the use of the mails, directors, officers, employees and certain
stockholders of the Company, none of whom will receive additional compensation
therefor, may solicit proxies on behalf of the Company personally, by telephone
or by facsimile transmission. The Company will also employ Innisfree M&A
Incorporated, 501 Madison Avenue, 20th Floor, New York, New York 10022
(telephone: 1-888-750-5834), to assist in soliciting proxies for a fee of
$25,000, plus out-of-pocket expenses.
Alfred Wilms, a director, abstained from voting on the approval of this
proxy statement.
The Company's executive offices are located at 6601 South Bermuda Road, Las
Vegas, Nevada 89119, telephone (702) 270-7600.
NUMBER OF SHARES OUTSTANDING AND VOTING
All shares represented by the accompanying proxy, if the proxy is properly
executed and returned, will be voted as specified by the stockholder. If no
contrary instructions are given, such shares will be voted to elect the three
director nominees named herein for the terms stated herein. Any stockholder has
the power to revoke his or her proxy at any time before it has been voted by
filing with the Corporate Secretary of the Company an instrument revoking it, by
submitting a substitute proxy bearing a later date or by voting in person at the
Meeting.
Only stockholders of record of shares of Common Stock at the close of
business on November 21, 1997, the record date for the Meeting fixed by the
Board of Directors, are entitled to vote at the Meeting. On that date, there
were outstanding and entitled to vote at the Meeting 32,012,776 shares of Common
Stock, each of which is entitled to one vote at the Meeting.
A majority of the outstanding shares of Common Stock, represented in person
or by proxy, will constitute a quorum at the Meeting. Shares represented by
proxies that reflect abstentions or "broker non-votes" will be counted as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum. The affirmative vote of the holders of a plurality of the votes
cast by the holders of shares entitled to vote thereon present in person or by
proxy at the Meeting is required to elect a director.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October 31, 1997
with respect to the beneficial ownership of the Common Stock, which constitutes
the Company's only outstanding class of voting securities, by (i) each person
who, to the knowledge of the Company, beneficially owned more than 5% of the
Common Stock, (ii) each director and director nominee of the Company, (iii) the
Named Executive Officers of the Company (as defined pursuant to the Securities
Exchange Act of 1934) and (iv) all executive officers and directors of the
Company as a group. Except as indicated, beneficial ownership includes the sole
power to vote and to dispose of the securities in question. Except as indicated,
no director or executive officer of the Company owned any other equity
securities of the Company.
<TABLE>
<CAPTION>
AMOUNT OF PERCENT OF
NAME SHARES(1) CLASS(1)
-------------------------------------------------- ---------- ----------
<S> <C> <C>
Alfred Wilms...................................... 7,034,082(2) 20.7%
FMR Corp.......................................... 3,025,754(3) 9.5%
82 Devonshire Street
Boston, MA 02109
Jacques Andre..................................... 50,500(4) *
Anthony DiCesare.................................. 474,233(5) 1.5%
Michael Hirschfeld................................ 30,000(6) *
Joel Kirschbaum................................... 1,033,476(7) 3.2%
Hans Kloss........................................ 822,654(8) 2.6%
David Scheinman................................... 58,334(9) *
Morris Goldstein.................................. 82,500(10) *
David Johnson..................................... 200,000(11) *
Scott Schweinfurth................................ 62,500(12) *
David Robbins..................................... 179,000(13) *
Morton Topfer..................................... -- --
All executive officers and directors as a group... 10,075,356(14) 26.7%
</TABLE>
- ---------------
* Less than 1%.
(1) Excludes the effect of the issuance of (i) 2,750,000 shares subject to
warrants originally issued to Kirkland-Ft. Worth Investors, L.P. ("KFW");
(ii) 1,250,000 shares subject to warrants originally issued to Gaming
Systems Advisors, L.P. ("GSA") pursuant to an agreement (the "GSA Advisory
Agreement") dated September 21, 1993; and (iii) 2,500,000 shares subject to
warrants originally issued to GSA upon consummation of the acquisition of
Bally Gaming International, Inc. ("BGII") pursuant to the GSA Advisory
Agreement. All of these warrants have an exercise price of $1.50 per share
and become exercisable in equal one-third tranches only when the Common
Stock price reaches $11, $13 and $15, respectively. Pursuant to an
amendment to Schedule 13D filed on October 31, 1996, as part of a
distribution of assets from KFW and GSA to Kirkland Investment Corporation
("KIC") and GSA, Inc. ("GSI") on the one hand and to Kirkland Investors,
L.P. on the other hand, approximately 62% of such warrants were distributed
to Kirkland Investors, L.P. and are no longer deemed owned by Mr.
Kirschbaum, KIC, KFW, GSI or GSA.
(2) Includes 2,000,000 shares subject to warrants exercisable at $2.50 per
share. Mr. Wilms' mailing address is c/o the Company, 6601 S. Bermuda Rd.,
Las Vegas, Nevada 89119. See also "Election of Directors -- Stockholders
Agreement".
(3) Information provided by a representative of FMR Corp.
(4) Includes 5,500 shares owned and 45,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
2
<PAGE> 5
(5) Includes 99,233 shares owned and 375,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days, but
excludes certain additional shares referred to in Note (1) above.
(6) Represents shares subject to options that are currently exercisable or will
become exercisable within 60 days.
(7) Includes 483,476 shares owned and 550,000 shares subject to options that
are currently exercisable or will become exercisable within 60 days, but
excludes certain additional shares referred to in Note (1) above. Based
upon information contained in a Schedule 13D filed by Mr. Kirschbaum on
June 23, 1994, as amended from time to time and most recently on October
30, 1996 and information provided by Mr. Kirschbaum. Of such shares owned,
certain amounts may be sold or distributed to other persons, as set forth
in the Schedule 13D.
(8) Includes 816,736 shares owned and 5,918 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(9) Represents shares subject to options that are currently exercisable or will
become exercisable within 60 days.
(10) Includes 20,000 shares owned and 62,500 shares subject to options that are
currently exercisable or will become exercisable within 60 days, but
excludes options exercisable at $3.875 per share for 250,000 shares which
become exercisable in equal one-third tranches only when the Common Stock
price reaches $11, $13 and $15, respectively.
(11) Represents shares subject to options that are currently exercisable or will
become exercisable within 60 days.
(12) Includes 2,500 shares owned and 60,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(13) Includes 48,000 shares owned and 105,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days; also
includes 26,000 shares subject to options granted to Mr. Robbins by KFW
and/or KIC.
(14) Includes 3,609,829 shares subject to options that are currently exercisable
or will become exercisable within 60 days.
3
<PAGE> 6
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
GENERAL
The Company's By-laws provide that the Board of Directors shall consist of
no fewer than three nor more than nine directors, with the exact number to be
fixed by the Board of Directors. The Company's By-laws provide that the Board of
Directors shall be divided into three classes as nearly equal in number as
possible, with each class having a term of three years. The Board of Directors
has fixed the number of directors at seven, three of whom will be elected at the
Meeting. See "Stockholders Agreement". Directors are elected by a plurality of
the votes cast by the holders of shares entitled to vote thereon.
Morris Goldstein, David Robbins, and Morton Topfer have been nominated to
serve for a term of three years, each to serve until his respective successor
shall have been elected and shall qualify, and each has indicated his
willingness to serve if elected. Proxies received by the Company in favor of
their election will be voted for Mr. Goldstein, Mr. Robbins, and Mr. Topfer.
Although the Company does not anticipate that any nominee will be unavailable
for election, in the event of such occurrence, the proxies will be voted for
such substitute, if any, as the Board of Directors may designate.
The Board of Directors recommends a vote in favor of Mr. Goldstein, Mr.
Robbins, and Mr. Topfer.
The following table sets forth the names of, and certain information with
respect to, the three persons nominated by the Board of Directors at the Meeting
and each other director of the Company who will continue to serve as a director
after the Meeting.
<TABLE>
<CAPTION>
DIRECTOR TERM
NOMINEES FOR DIRECTOR AGE SINCE EXPIRES PRINCIPAL OCCUPATION
- ------------------------- --- --------- ------- ----------------------------------------
<S> <C> <C> <C> <C>
Morris Goldstein 52 N/A 2000 President and CEO
David Robbins 38 See below 2000 Attorney and Private Investor
Morton Topfer 61 N/A 2000 Vice Chairman -- Dell Computer
Corporation
</TABLE>
<TABLE>
<CAPTION>
DIRECTOR TERM
CONTINUING DIRECTORS AGE SINCE EXPIRES PRINCIPAL OCCUPATION
- ------------------------- --- --------- ------- ----------------------------------------
<S> <C> <C> <C> <C>
Jacques Andre(1)(4) 60 1996 1998 Partner -- Ray & Berndtson, Inc.,
an executive search firm
Anthony DiCesare(2)(3) 35 1994 1999 Private Investor
Michael Hirschfeld 47 1997 1998 Partner -- Milbank, Tweed, Hadley &
McCloy
Joel Kirschbaum(3) 46 1994 1999 President -- Kirkland Investment
Corporation
</TABLE>
- ---------------
(1) Member of the Audit Committee
(2) Member of the Executive Committee
(3) Member of the Nominating Committee
(4) Member of the Compensation Committee
MORRIS GOLDSTEIN joined the Company in June 1997 as President and CEO. From
1994 to June 1997 Mr. Goldstein was CEO of Thomson Technology Initiative, a unit
of Thomson Corporation, a global publisher and provider of information services.
From 1982 to 1994 he had been President of Information Access Company ("IAC"),
an electronic information publishing company owned by Ziff Communications. For
six months in early 1994, Mr. Goldstein served as President and CEO of
ImagiNation Network, an interactive computer game provider.
DAVID ROBBINS served as a director from July 1994 to September 1997 and as
Chairman of the Board of Directors of the Company from February 1997 to
September 1997. Mr. Robbins has been a practicing
4
<PAGE> 7
attorney since 1984; he is currently an attorney with Brock, Fensterstock,
Silverstein & McAuliffe, LLC. Mr. Robbins is also a private investor and
managing member of a private investment fund.
MORTON TOPFER has been Vice Chairman of Dell Computer Corporation since May
1994. Mr. Topfer shares the office of the Chief Executive Officer with the
Chairman and CEO of Dell Computer. From 1971 to May 1994, Mr. Topfer held
various positions with Motorola, Inc., the last of which was Executive Vice
President and President of Motorola's Land Mobile Products Sector where he
managed the mobile, portable and data systems businesses. Mr. Topfer is also a
director of Autodesk Inc.
JACQUES ANDRE was appointed a director in August 1996. Mr. Andre has been a
partner with Ray & Berndtson, Inc., an international executive search firm, from
1975 to the present. He also serves on its Board of Directors.
ANTHONY DICESARE was employed by KIC, which is the sole general partner of
KFW, from April 1991 to July 1994. Mr. DiCesare served the Company as Executive
Vice President--Development from July 1994 through June 1997. He is currently a
private investor and serves as a New York-based employee of the Company. He has
been a director since 1994.
MICHAEL HIRSCHFELD was appointed a director in September 1997. Mr.
Hirschfeld has been a partner of Milbank, Tweed, Hadley & McCloy, a New York law
firm, from April 1995 to the present. From December 1990 to April 1995, Mr.
Hirschfeld was a partner of Kelley Drye & Warren, a New York law firm.
JOEL KIRSCHBAUM was appointed a director in July 1994 and served as
Chairman of the Board of Directors from July 1994 to March 1995. Mr. Kirschbaum
is the sole stockholder, director and officer of KIC. He has been engaged in
operating the businesses of KIC and KFW since January 1991 when KIC and KFW were
established, and of GSI and GSA, a financial advisory firm, since June 1993.
Prior to that time, he worked at Goldman, Sachs & Co. for 13 years, during the
last six of which he was a general partner. When he established KIC and KFW, Mr.
Kirschbaum resigned his general partnership interest in Goldman, Sachs & Co. and
became a limited partner. Mr. Kirschbaum resigned his limited partnership
interest in Goldman, Sachs & Co. in November 1993. Mr. Kirschbaum is currently
President of KIC and serves as a New York-based employee of the Company.
VOTE REQUIRED
The election of each director requires the affirmative vote of the holders
of a plurality of the votes cast by the holders of shares entitled to vote
thereon present in person or by proxy at the Meeting. Pursuant to the Company's
Articles of Incorporation, votes for directors may not be cumulated. The Board
of Directors recommends a vote in favor of Messrs. Goldstein, Robbins and
Topfer.
STOCKHOLDERS AGREEMENT
Pursuant to a Stockholders Agreement dated as of September 21, 1993, as
amended on October 20, 1994, by and among the Company, KIC, GSA, KFW and Mr.
Wilms (as amended, the "Stockholders Agreement"), KIC and Mr. Wilms each agreed
to use its best efforts to cause the Company's Board of Directors, from and
after September 21, 1997, to initially be comprised of such number of directors
designated by KIC and such number of directors designated by Mr. Wilms as will
be in the ratio of four to three, but neither KIC nor Mr. Wilms is required to
vote for a particular designee at any regular or special meeting of the
Company's stockholders after September 21, 1997. Notwithstanding the foregoing,
prior to September 21, 2008, KIC is required to vote all of its shares of Common
Stock to cause Mr. Wilms to be elected a director of the Company for so long as
Mr. Wilms owns shares of Common Stock of the Company.
Pursuant to the Stockholders Agreement, after September 21, 1997, Mr. Wilms
designated Mr. Hans Kloss and Dr. David Scheinman as two of his three designees
to the Board of Directors. Following the appointment of these individuals, Mr.
Wilm's designees occupied three of the seven seats on the Board of Directors.
Mr. Wilms has asserted that he has a continuing right under the Stockholders
Agreement to designate three director nominees. The Company has been advised by
its counsel that Mr. Wilms's interpretation of the Stockholders Agreement is
incorrect and that in any event this provision does not bind the
5
<PAGE> 8
Company or its directors. Mr. Wilms has advised that he may initiate legal
action to enforce his claimed rights.
MEETINGS OF THE BOARD OF DIRECTORS; COMMITTEES
During the fiscal year ended June 30, 1997, the Board of Directors held 15
meetings. Each director attended at least 75 percent of the aggregate of all
meetings of the Board of Directors and of all committees on which such person
served during such period. In light of the large number of Board of Directors
meetings during the last fiscal year, the Board of Directors assumed many of the
functions of its committees during this period.
Executive Committee. The Executive Committee of the Board of Directors is
presently comprised of Messrs. DiCesare and Wilms. The Executive Committee may
exercise the powers of the full Board of Directors in the management of the
business and affairs of the Company. The Executive Committee did not meet
separately during the fiscal year ended June 30, 1997.
Audit Committee. The Audit Committee of the Board of Directors is presently
comprised of Messrs. Andre and Wilms. The functions of the Audit Committee
include reviewing and making recommendations to the Board of Directors with
respect to the engagement or re-engagement of an independent accounting firm to
audit the Company's financial statements for the then-current fiscal year; the
policies and procedures of the Company and management in maintaining the
Company's books and records and furnishing information necessary to the
independent auditors; the adequacy and implementation of the Company's internal
controls, including the internal audit function and the adequacy and competency
of the related personnel; and such other matters relating to the Company's
financial affairs and accounts as the Audit Committee may in its discretion deem
desirable. The Audit Committee met one time during the fiscal year ended June
30, 1997.
Nominating Committee. The Nominating Committee of the Board of Directors is
presently comprised of Messrs. Kirschbaum (Chairman), DiCesare and Wilms. This
Committee advises and makes recommendations to the Board of Directors on all
matters concerning the selection of candidates as nominees for election as
directors. The Nominating Committee did not meet separately during the last
fiscal year. The Nominating Committee will in the future consider nominees
recommended by stockholders. Stockholders should submit the names of proposed
nominees in writing to the Corporate Secretary, 6601 South Bermuda Rd., Las
Vegas, Nevada 89119, along with appropriate background information.
Compensation Committee. The Compensation Committee of the Board of
Directors is presently comprised of Messrs. Andre and Wilms. This Committee
makes recommendations concerning the compensation of Alliance's executive
officers. The Compensation Committee met once during the fiscal year ended June
30, 1997.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or to be paid by the
Company to the Company's current and former chief executive officers and its
four other most highly compensated executive officers receiving over $100,000
per year (the "Named Executive Officers") for services rendered in all
capacities to the Company during the fiscal year ended June 30, 1997:
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
FISCAL ANNUAL COMPENSATION LONG-TERM
YEAR --------------------------------------- COMPENSATION
ENDED OTHER ANNUAL AWARDS ALL OTHER
NAME AND PRINCIPAL POSITION JUNE 30, SALARY BONUS COMPENSATION(1) OPTIONS COMPENSATION(2)
- ----------------------------------- -------- -------- ---------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Morris Goldstein(3) 1997 $ 17,300 $ -- 500,000 $ --
President and Chief Executive
Officer
Steve Greathouse(4) 1997 $200,000 $ -- -- $ 667,976
Former Chairman of the Board, 1996 400,000 450,000 -- 12,349
President and Chief Executive 1995 338,462 1,312,500 500,000 4,638
Officer
Anthony DiCesare(5) 1997 $250,000 $ 75,000 375,000 $ 3,985
Former Executive Vice 1996 250,000 375,000 -- 8,652
President --
Development 1995 170,347 -- -- 5,942
David Johnson 1997 $250,000 $ 185,000 -- $ 5,351
Senior Vice President, 1996 200,000 350,000 -- 6,277
General Counsel and Secretary 1995 38,462 50,000 200,000 1,486
Hans Kloss(6) 1997 $406,300 $1,682,400 -- $ 45,543
Managing Director, Alliance 1996 8,450 -- -- --
Automaten GmbH & Co. KG
Scott Schweinfurth(7) 1997 $235,000 $ 400,000 120,000 $ 4,300
Senior Vice President, Chief 1996 6,538 -- -- --
Financial Officer and Treasurer
</TABLE>
- ---------------
* As used in the tables provided under the caption "Executive Compensation",
the character "--" is used to represent "zero".
(1) The aggregate amount of such compensation to be reported herein is less than
the lesser of either $50,000 or 10 percent of the total annual salary and
bonus reported for the Named Executive Officer.
(2) "All Other Compensation" for 1997 includes (i) contributions made by the
Company to the Company's Profit Sharing 401(k) Plan in amounts of $0, $0,
$1,009, $2,375, $0, and $1,663 on behalf of Mr. Goldstein, Mr. Greathouse,
Mr. DiCesare, Mr. Johnson, Mr. Kloss and Mr. Schweinfurth, respectively, and
(ii) payments made in connection with health, life and disability insurance
programs in amounts of $0, $2,976, $2,976, $2,976, $45,543 and $2,637 on
behalf of Mr. Goldstein, Mr. Greathouse, Mr. DiCesare, Mr. Johnson, Mr.
Kloss and Mr. Schweinfurth, respectively. For Mr. Greathouse, includes
amounts paid upon separation from the Company, totaling $440,000, as well as
a post-separation consulting fee of $225,000.
(3) Mr. Goldstein joined the Company in June 1997 as President and Chief
Executive Officer.
(4) Mr. Greathouse stepped down from his position effective December 1996.
(5) Effective June 30, 1997, Mr. DiCesare resigned his position as Executive
Vice President -- Development. Mr. DiCesare continues as a Director and
employee of the Company.
(6) Mr. Kloss joined the Company in June 1996, having previously been employed
by BGII.
(7) Mr. Schweinfurth joined the Company in June 1996, having previously been
employed by BGII. Mr. Schweinfurth's bonus for the fiscal year ended June
30, 1997 was for an 18-month period.
7
<PAGE> 10
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table relates to options granted during the fiscal year ended
June 30, 1997:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
--------------------------------------------------------- RATES OF STOCK
% OF TOTAL PRICE APPRECIATION
GRANTED FOR OPTION TERM
OPTIONS TO EMPLOYEES IN EXERCISE EXPIRATION ----------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
- ------------------------- ------- ---------------- ---------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Morris Goldstein......... 500,000(a) 10.83% $ 3.8750 06/17/02 $536,000 $ 1,184,000
Steve Greathouse......... 250,000(b) 5.41 3.4375(f) 08/29/01 -- 147,000
Anthony DiCesare......... 375,000(c) 8.12 3.4375(f) 08/29/01 -- 221,000
David Johnson............ 200,000(d) 4.30 3.4375(f) 03/20/05 72,000 443,000
Scott Schweinfurth....... 60,000(e) 1.29 3.4375(f) 08/29/06 38,000 183,000
Scott Schweinfurth....... 60,000(e) 1.29 3.7500 10/03/06 142,000 359,000
</TABLE>
- ---------------
(a) Includes 250,000 options of which 62,500 vested on the date of grant and
62,500 which will vest on each of the next three anniversary dates thereof.
Also includes 250,000 contingent options of which 62,500 vested on the date
of grant and 62,500 which will vest on each of the next three anniversary
dates thereof; these contingent options become exercisable in equal
one-third tranches only when the Common Stock price reaches $11, $13, and
$15, respectively.
(b) Represents stock options previously issued for which the exercise price was
adjusted to $3.4375 in August 1996 and are exercisable through August 29,
2001 whether or not the individual is employed by the Company as an
employee, officer, director or consultant.
(c) Options vested on the date of grant and are exercisable through August 29,
2001 whether or not the individual is employed by the Company as an
employee, officer, director or consultant.
(d) Represents stock options previously issued for which the exercise price was
adjusted to $3.4375 in August 1996. These options are exercisable through
August 29, 2001 whether or not the individual is employed by the Company as
an employee, officer, director or consultant and are exercisable through
March 20, 2005 if the individual is employed by the Company as an employee,
officer, director or consultant.
(e) For each of these option grants, 15,000 vested on the date of grant and
15,000 will vest on each of the next three anniversary dates thereof.
Pursuant to his employment contract, the Company is obligated to pay Mr.
Schweinfurth approximately $19,000 upon exercise in full of the options
expiring October 3, 2006.
(f) Market price of the Common Stock on date of grant was $2.50.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
The following table relates to options exercised during the fiscal year
ended June 30, 1997 and options outstanding at June 30, 1997:
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES JUNE 30, 1997 JUNE 30, 1997(A)
ACQUIRED ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ------------ --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Morris Goldstein............ -- -- 62,500 437,500 $ -- $ --
Steve Greathouse............ -- -- 250,000 -- 78,000 --
Anthony DiCesare............ -- -- 375,000 -- 117,000 --
David Johnson............... -- -- 133,333 66,667 42,000 21,000
Hans Kloss.................. -- -- 5,918 -- 22,000 --
Scott Schweinfurth.......... -- -- 30,000 90,000 5,000 14,000
</TABLE>
- ---------------
(a) Represents the amount by which the market value of the underlying stock at
June 30, 1997 ($3.75 per share) exceeds the aggregate exercise price of the
options.
8
<PAGE> 11
DIRECTORS' COMPENSATION
Directors of the Company who are also employees are not separately
compensated for their services as directors. Fee arrangements with other
directors of the Company are as follows: (i) Mr. Andre and Mr. Hirschfeld,
$30,000 each per year for all services as a director and member of various
committees; (ii) Mr. DiCesare and Mr. Kirschbaum, $250,000 each per year for all
services as a director, member of various committees and consultant or employee
(as noted below, Mr. DiCesare and Mr. Kirschbaum have entered into employment
agreements that supersede these arrangements); (iii) Mr. Wilms, $150,000
adjusted for inflation per year for all services as a director and member of
various committees. Mr. David Robbins (who resigned from the Board in September
1997 but remains a consultant to the Company) received $85,000 in fiscal 1997
for all services as a director. Mr. Robbins' consulting arrangements provide for
an annual payment of $135,000 per year. The Company pays Dr. Scheinman $140,000
per year for consulting services provided to the Company. Dr. Craig Fields (who
resigned from the Board effective as of April 1997) received $250,000 in fiscal
1997 for all services as a director and, as a part of his separation from the
Company, Dr. Fields will receive approximately $100,000 in fiscal 1998.
Directors are also reimbursed for their reasonable out-of-pocket expenses
incurred on Company business.
During fiscal 1997, Mr. Andre and Mr. Robbins received stock option grants
covering 30,000 shares and 60,000 shares, respectively, with an exercise price
of $4.00 per share. In addition, in conjunction with his being elected Chairman
of the Board of Directors in February 1997, Mr. Robbins was granted an
additional stock option covering 30,000 shares with an exercise price of $4.375
per share. Under current policy, non-employee directors receive stock option
grants covering 30,000 shares upon appointment to the Board of Directors and
15,000 shares on each anniversary date of their appointment to the Board of
Directors.
During fiscal 1997, the Board of Directors granted Mr. DiCesare and Mr.
Kirschbaum bonuses to be paid upon achievement of specified objectives. Of these
bonuses, $75,000 and $150,000, respectively, were paid during fiscal 1997 and
$75,000 and $150,000 will be paid in future years upon achievement of the
remaining objectives. In August 1996, the Board of Directors granted Mr.
DiCesare and Mr. Kirschbaum 375,000 and 550,000 stock options, respectively,
with an exercise price of $3.4375 per share. These options have five-year terms,
were granted at an exercise price above the market price on the date of grant
(which market price was $2.50 per share) and vested on the date of grant. These
options remain exercisable until August 29, 2001 regardless of whether the
optionee remains an employee, officer, director or consultant of the Company.
Effective July 1, 1997, the Company entered into employment agreements (the
"Agreements") with Mr. DiCesare and Mr. Kirschbaum (each an "Employee" and
collectively the "Employees") pursuant to which each Employee will be a New
York-based employee and will work on major strategic transactions involving the
Company or its affiliates, including mergers, acquisitions, divestitures, joint
ventures, the negotiation of strategic alliances or relationships and financings
and refinancings. The Employees are not expected to be involved in the
day-to-day operations of the Company, are not expected to devote full-time to
the business of the Company and may engage in outside activities, although they
may not directly compete with the Company. The Agreements, which have an initial
term extending through July 1, 2002 (the "Term") and may be terminated
thereafter by either party on notice, provide for each Employee to receive a
base salary of $150,000 (with inflation increases each year) and annual
performance bonuses (each a "Bonus") based upon annual performance goals
determined by the Board of Directors and the Employee (which goals will
generally relate without limitation to transactions of the type mentioned above
involving the Company (and/or one or more of its affiliates)) and a target Bonus
amount (and/or an appropriate minimum amount). More than one Bonus may be paid
with respect to each employment year. If the Board of Directors and the Employee
cannot agree upon reasonable annual performance goals and minimum and/or target
Bonuses with respect to such goals for any year, the performance goals and Bonus
amounts set forth in clauses (ii) and (iii) of the next paragraph will be the
goals and Bonus for such year. If a goal is only partially achieved within a
year, the Board of Directors will determine what amount, if any, will be paid to
the Employee with respect to such goal. If a goal is achieved, the Bonuses will
be payable regardless of the level of the Employee's involvement in the
transaction. Upon termination of any Employee's Agreement for any reason
(including for "cause" (as such term is defined in the Agreements)), the Company
may be required to pay Bonuses to such Employee following such termination upon
achievement of performance goals within specified periods ending
9
<PAGE> 12
up to 21 months after the Term. In addition, if the Company terminates an
Employee without "cause", or an Employee leaves the Company's employ for "good
reason" (as these terms are defined in the Agreements), the Employee will be
entitled to receive for each remaining year of the Term an amount equal to the
highest aggregate Bonuses paid in any previous year as well as the base salary
and other compensation provided for by the Agreements.
For the year beginning July 1, 1997, the performance goals for each
Employee are: (i) the completion by the Company (and/or one or more of its
affiliates) of a significant refinancing transaction, (ii) the closing of at
least one "significant merger" with a value of at least $60 million and (iii)
the closing of a "significant financing" with a value of at least $50 million.
Upon the achievement of the performance goal set forth in clause (i), which goal
was met on August 8, 1997 upon consummation of a $380 million refinancing that
resulted in the retirement of substantially all of the Company's then existing
debt and redeemable preferred stock, each Employee received a Bonus of $950,000.
Upon the achievement of the performance goal set forth in clause (ii), each
Employee will receive a minimum Bonus of $200,000. Upon the achievement of the
performance goal set forth in clause (iii), each Employee will receive a minimum
Bonus of at least $125,000. In addition to the Bonuses, the Agreements provide
that the Board of Directors, in its sole discretion, may grant further
discretionary bonuses to the Employees.
Pursuant to the Agreements, an Employee may elect to restructure his
relationship with the Company into that of a financial consultant or independent
advisor, with compensation arrangements reflecting the nature of such
relationship and the services to be provided in amounts reasonably consistent
with the compensation and Bonuses payable over the term of the Agreements as
contemplated therein, as determined reasonably and in good faith by the Board of
Directors, but calculated and payable in a manner customary for financial
consultant or independent advisor arrangements. The Company and the Employee
will negotiate in good faith to establish a restructured agreement with respect
to the services to be provided hereunder.
At any time prior to January 1, 1999, an Employee may opt to forgo any
Bonuses to which the Employee may thereafter become entitled and in lieu thereof
to extend the expiration date of certain warrants currently beneficially owned
by such Employee from September 21, 1999 to June 18, 2002. The rate at which
such extension will occur will be such number of warrants (not more than three)
for each dollar of Bonuses forgone as the Board of Directors, in its reasonable
and good faith judgment, determines after considering, among other things, the
recommendation of an investment banking, accounting or valuation firm with a
national reputation. At the election of the Employee, all or a portion of this
option to extend may also be effected by a direct cash payment by the Employee
to the Company on or prior to September 21, 1999 at the rate set forth in the
immediately preceding sentence, rather than by the application of Bonuses.
In addition, the Company has agreed to pay KIC over the term of the
Agreements $950,000 (subject to annual inflation increases) annually plus the
cost of reasonable employee benefits to its support staff and reasonable
out-of-pocket expenses incurred by KIC and its officers and employees to the
extent related directly to the Company's business or potential business (the
"KIC Agreement"). The Company will have the right to terminate the KIC Agreement
upon 12 months' notice if Mr. Kirschbaum's employment under his Agreement is
terminated for any reason other than by the Company without "cause" or by the
Employee "for good reason" (as such terms are defined in the Agreements).
EMPLOYMENT AND SEVERANCE ARRANGEMENTS
The Company is party to an employment agreement with Mr. Goldstein which
generally provides for a base salary of $450,000 per year through and including
June 2000, participation in the Company's compensation programs for corporate
officers, participation in the Company's cash bonus program at amounts
determined by the Board of Directors, payment of relocation expenses to Las
Vegas of $90,000, receipt of 250,000 stock options to vest 25% on date of grant
with the balance over a three-year period and 250,000 stock options to vest 25%
on date of grant with the balance over a three-year period but which become
exercisable in equal portions only when the common stock reaches prices of $11,
$13, and $15, and severance benefits of one year's base salary if Mr. Goldstein
is terminated prior to June 2000 without cause.
10
<PAGE> 13
The Company is party to an employment agreement with Mr. Johnson which
generally provides for a base salary of $250,000 per year through and including
March 1998, participation in the Company's compensation programs for corporate
officers, participation in the Company's cash bonus program at amounts
determined by the Board of Directors, receipt of 200,000 stock options to vest
over a three-year period, and severance benefits of one year's base salary if
Mr. Johnson is terminated prior to March 1998 without cause. This agreement also
contains a change in control provision which under certain circumstances allows
the agreement to be terminated at the employee's election resulting in Mr.
Johnson receiving one year's base salary.
The Company is party to an employment agreement with Mr. Kloss which
generally provides for a base salary of $255,075 per year through and including
May 1998, participation in Bally Wulff's compensation programs for executive
officers, and a cash bonus based on 5.3% of pre-tax income as reported on the
respective tax returns of both Bally Wulff Automaten GmbH and Bally Wulff
Vertriebs GmbH.
The Company is party to an employment agreement with Mr. Schweinfurth which
generally provides for a base salary of $235,000 per year through and including
June 1999, participation in the Company's compensation programs for corporate
officers, participation in the Company's cash bonus program at amounts
determined by the Board of Directors and receipt of 120,000 stock options to
vest 25% on date of grant with the balance over a three-year period, and
severance benefits of one year's base salary if Mr. Schweinfurth is terminated
prior to June 1999 without cause.
TEN-YEAR OPTION/SAR REPRICING
The following table sets forth information with respect to the repricing of
stock options granted to any executive officer during the last ten years:
<TABLE>
<CAPTION>
LENGTH OF
ORIGINAL
NUMBER OF OPTION
SECURITIES TERM
UNDERLYING MARKET PRICE OF EXERCISE PRICE AT REMAINING
OPTIONS/SAR'S STOCK AT TIME OF TIME OF AT DATE OF
REPRICED REPRICING OR REPRICING OR NEW EXERCISE REPRICING OR
NAME DATE OR AMENDED AMENDMENT AMENDMENT PRICE AMENDMENT
- ------------------ ------------------- ------------- ---------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Johnann McIlwain November 4, 1996 60,000 $ 3.8750 $ 5.750 $ 3.4375 7.8 Years
Steve Greathouse August 29, 1996 250,000 $ 2.5000 $ 5.750 $ 3.4375 5.0 Years
David Johnson August 29, 1996 200,000 $ 2.5000 $ 6.250 $ 3.4375 8.6 Years
Hans Kloss August 29, 1996 5,918 $ 2.5000 $ 3.800 $ 3.4375 2.8 Years
Robert Miodunski August 29, 1996 85,000 $ 2.5000 $ 5.500 $ 3.4375 7.5 Years
Robert Miodunski August 29, 1996 36,000 $ 2.5000 $ 5.500 $ 3.4375 9.0 Years
Robert Saxton August 29, 1996 18,000 $ 2.5000 $ 3.630 $ 3.4375 1.3 Years
Robert Saxton August 29, 1996 10,000 $ 2.5000 $ 4.000 $ 3.4375 5.4 Years
Robert Saxton August 29, 1996 25,000 $ 2.5000 $ 7.875 $ 3.4375 7.3 Years
Robert Saxton August 29, 1996 85,000 $ 2.5000 $ 5.500 $ 3.4375 7.6 Years
Robert Woodson August 29, 1996 15,000 $ 2.5000 $ 8.375 $ 3.4375 5.7 Years
Robert Woodson August 29, 1996 13,000 $ 2.5000 $ 7.875 $ 3.4375 7.3 Years
Robert Saxton October 17, 1995 85,000 $ 5.0000 $ 7.000 $ 5.5000 8.5 Years
Carole Carter August 31, 1990 15,000 $ 3.8750 $ 9.500 $ 3.8750 (a)
Jerry Flynn August 31, 1990 6,500 $ 3.8750 $ 8.375 $ 3.8750 (a)
Jerry Flynn August 31, 1990 6,500 $ 3.8750 $ 9.000 $ 3.8750 (a)
Ira Levine August 31, 1990 10,000 $ 3.8750 $ 9.750 $ 3.8750 (a)
</TABLE>
- ---------------
(a) Not determinable by the Company at this time.
In August and November 1996, following completion of the acquisition of
BGII, which was considered by the Company to be a key element of its strategy,
the exercise price of options held by BGII employees was decreased part of the
way toward the market price of the Company's stock at that time to create a
better performance incentive for these new Company employees of the type they
would have received had they been
11
<PAGE> 14
granted new options at the time of their employment by the Company. In
connection therewith, the Board of Directors (other than Mr. Greathouse)
determined that it was appropriate to amend the exercise price of options held
by substantially all individuals currently employed by the Company, so that
Alliance's existing employees would have options on the same footing as former
BGII employees. The Company's 1996 Long-Term Incentive Plan prohibits repricing
of stock options granted under that plan. On two other occasions prior to 1996,
the Board of Directors determined it appropriate to amend the exercise price of
options held by certain executive officers, as shown in the table above.
Respectfully submitted,
Jacques Andre
Anthony DiCesare
Michael Hirschfeld
Joel Kirschbaum
Hans Kloss
David Scheinman
Alfred Wilms
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
DECISIONS
During the year ended June 30, 1997, the Compensation Committee of the
Board of Directors of the Company met one time. The Compensation Committee is
currently comprised of Mr. Wilms and Mr. Andre. During such fiscal year, the
entire Board of Directors generally participated in deliberations concerning the
compensation of the Company's executive officers except that Messrs. DiCesare,
Fields, Greathouse and Kirschbaum did not vote on such matters. Mr. Wilms served
as the Company's Chief Executive Officer from December 1984 to July 1994. Other
than current positions disclosed in the previous tables, no other member of the
Company's Board of Directors other than Dr. Fields and Mr. Greathouse was an
officer or employee of the Company or any subsidiary during the fiscal year
ended June 30, 1997 or is a former officer of the Company or any subsidiary.
The Company has hired Ray & Berndtson, Inc., an international executive
search firm, in which Mr. Andre is a partner, to perform certain personnel
searches. The Company paid fees of $252,500 and out-of-pocket expenses of
$70,000 during fiscal year 1997 for the searches conducted by this firm.
The Company has paid fees to Milbank, Tweed, Hadley & McCloy, a law firm in
which Mr. Hirschfeld is a partner, for services rendered during the fiscal year
ended June 30, 1997, and for such services during the current fiscal year.
The Company paid fees to O'Sullivan Graev & Karabell LLP, a law firm that
employed Mr. Robbins, for services during fiscal year 1997.
In March 1992, Mr. Wilms committed to provide a loan to Alliance's
Louisiana subsidiary, Video Services, Inc. (the "VSI Loan"). As consideration
for Mr. Wilms commitment, Alliance issued to Mr. Wilms a warrant to purchase
200,000 shares of Alliance Common Stock at a purchase price of $2.50 per share
and agreed to issue an additional warrant to purchase 1.8 million shares of
Common Stock at a purchase price of $2.50 per share upon funding of the full
amount of such loan. The exercise price of the warrants was determined based on
an analysis of, and a fairness opinion with respect to, the transaction and on
the price range of the Common Stock during a period prior to announcement of
Alliance's expansion into Louisiana. The VSI Loan required quarterly interest
and principal payments with an interest rate equal to 2% above the London
Inter-Bank Offered Rate, adjusted quarterly. The VSI Loan was held by a Belgian
corporation owned by Mr. Wilms and members of his family. During fiscal years
1993 and 1994, a total of $6.5 million was funded under the VSI Loan. All
scheduled principal and interest payments on the VSI Loan were made through
September 1996, at which time the Board of Directors unanimously approved
(except that Mr. Wilms abstained from voting) the early repayment of the
remaining principal balance and accrued interest totaling $2.7 million. Such
payments were made in September 1996.
12
<PAGE> 15
Since July 1, 1996 certain directors have been involved in transactions in
which Alliance was a party and in which the amount involved exceeded $60,000.
See "Directors' Compensation" and "Certain Relationships and Related
Transactions".
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Stockholders Agreement contains certain registration rights running in
favor of Kirkland, KIC, Mr. Wilms and certain of their respective affiliates and
transferees, including up to four demand registration rights each (and
additional demand rights for Mr. Wilms under certain circumstances), at the
expense of the Company, and provisions granting Mr. Wilms the right to
participate in certain offerings of securities by the Company and by KIC and its
transferees.
See also "Directors' Compensation" and "Compensation Committee Interlocks
and Insider Participation in Compensation Decisions".
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
This Board of Directors Report on Executive Compensation shall not be
deemed incorporated by reference by any general statement incorporating by
reference this Proxy Statement in any filing under the Securities Act of 1933 or
under the Securities Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts. Mr. Wilms declined to sign this Report on
Executive Compensation.
The entire Board of Directors generally acts as the Company's Compensation
Committee. At various Board of Directors meetings during the fiscal year ended
June 30, 1997, various Board of Directors members expressed their views as to
executive compensation and the Board of Directors articulated principles for
compensation of its senior executive officers, including the Company's CEO,
which are summarized below. The Board of Directors also retained a compensation
consultant to review and make recommendations concerning certain of the
Company's compensation programs.
The Company's compensation formulas for senior executives during the fiscal
year ended June 30, 1997 were largely determined by pre-existing contractual
arrangements in place from previous fiscal periods. Effective December 31, 1996,
the Company's previous CEO, Steve Greathouse, stepped down from his positions at
the Company and received a severance package that was negotiated by the Board of
Directors. The severance package was determined in light of, among other things,
what Mr. Greathouse would have been entitled to under the terms of his
employment contract with the Company for the remainder of its term and the value
of his agreement to provide consulting services to the Company for one year
after his separation date (which services could be terminated by Mr. Greathouse
without affecting his right to receive payment therefor).
In connection with negotiating the employment contract for Mr. Goldstein as
President and CEO, the Board of Directors considered, among other items, the
compensation arrangements of the Company's former CEO, Mr. Goldstein's
compensation prior to joining the Company and the Company's knowledge of
competitive compensation. As part of Mr. Goldstein's compensation package, he
received stock options as an incentive to create stockholder value. Of such
options, 50%, or 250,000, become exercisable in equal portions only when the
Common Stock reaches prices of $11, $13, and $15, a substantial increase from
current levels.
The Board of Directors' compensation determinations have been and continue
to be affected by various competitive factors including the requirement to
attract top-flight talent to the Company. The Company believes that it will
continue to be constrained by these competitive factors as there continues to be
demand from competing businesses to attract management talent of the type the
Company desires to recruit.
The Board believes as a general matter, but particularly with respect to
senior executive officers, that the most effective method of compensation, and
the method that most closely aligns management's interests with those of the
Company's stockholders, is long-term executive compensation tied to the creation
of stockholder value. The Board of Directors believes that this method of
compensation should constitute a significant portion of an executive's
compensation. Thus, it has been the Company's policy, where feasible and
consistent with
13
<PAGE> 16
competitive market conditions, to attempt to restrain base cash compensation
while providing incentives for management to increase stockholder value. The
Company hopes to achieve this goal through the use of (i) long-term stock
options (that will not result in value to the holder unless the price of Common
Stock has appreciated), and (ii) cash bonuses tied to performance criteria (such
as achievement of specific strategic, operational or financial tasks or targets
(including consummation of acquisitions and refinancings), return on equity and
invested capital, achievement of satisfactory sales and margins targets and
similar measures) which the Board of Directors believes will result in increases
in stockholder value. In the past, stock option grants to management have had
exercise prices equal to or in excess of the share price at the time of grant.
Pursuant to the 1996 Long-Term Incentive Plan, all future option grants are
required to be at prices no lower than the closing price of the Common Stock on
the date of grant, and grants cannot be repriced in the future. The Board of
Directors expects that the compensation philosophy outlined above has the
greatest probability of achieving significant returns to stockholders.
Respectfully submitted,
Jacques Andre
Anthony DiCesare
Michael Hirschfeld
Joel Kirschbaum
Hans Kloss
David Scheinman
14
<PAGE> 17
STOCK PERFORMANCE GRAPH
The following graph compares the Company's cumulative total stockholder
return on its Common Stock (no dividends have been paid thereon) for the five
fiscal years in the period ending June 30, 1997 and for the additional period
through October 31, 1997 with cumulative total return, assuming reinvestment of
dividends, of (i) the Nasdaq Stock Market (U.S.) and (ii) an index of peer
companies that the Company believes are comparable to the Company in terms of
their lines of business. The presentation assumes $100 was invested on June 30,
1992 (the last trading day prior to the end of the Company's 1992 fiscal year).
The company peer group used in the graph below consists of Anchor Gaming, Casino
Data Systems, International Gaming and Technology, Jackpot Enterprises, Video
Lottery Technologies and WMS Industries.
COMPARISON OF 60 MONTH CUMULATIVE RETURN
<TABLE>
<CAPTION>
MEASUREMENT PERIOD ALLIANCE GAMING NASDAQ STOCK
(FISCAL YEAR COVERED) CORPORATION PEER GROUP MARKET - U.S.
<S> <C> <C> <C>
6/92 100 100 100
6/93 114 238 126
6/94 65 124 127
6/95 75 109 169
6/96 42 142 218
6/97 46 139 265
</TABLE>
15
<PAGE> 18
COMPLIANCE WITH SECTION 16(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and persons who own more than ten percent of a registered
class of Alliance's equity securities ("Insiders") to file with the Commission
initial reports of ownership and reports of changes in ownership of the
Company's Common Stock. Insiders are required by the Commission's regulations to
furnish the Company with copies of all Section 16(a) reports filed by such
persons. To the Company's knowledge, based on its review of the copies of such
reports furnished to the Company during the fiscal year ended June 30, 1997, all
Section 16(a) filing requirements applicable to Insiders were complied with,
except that Mr. Goldstein filed a Form 3 and Form 4 which did not meet the
filing deadline.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's auditors for the fiscal year ended June 30, 1997 were KPMG
Peat Marwick LLP. A representative of KPMG Peat Marwick LLP will be present at
the Meeting, will have an opportunity to make a statement if he so desires and
is expected to be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
In order for a stockholder proposal to be included in the Board of
Directors' Proxy Statement for the 1998 Annual Meeting of Stockholders, such
proposal must be received at 6601 South Bermuda Road, Las Vegas, Nevada 89119,
Attention: Corporate Secretary, no later than the close of business on July 24,
1998 and must otherwise comply with the applicable provisions of the Securities
Exchange Act of 1934.
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
brought before the Meeting. However, if any other matter properly comes before
the Meeting, or any adjournment or postponement thereof, which may properly be
acted upon, the proxies solicited hereby will be voted on such matter in
accordance with the discretion of the proxy holders named therein. You are urged
to sign, date and return the enclosed proxy in the envelope provided. No further
postage is required if the envelope is mailed within the United States. If you
subsequently decide to attend the Meeting and wish to vote your shares, you may
do so. Your cooperation in giving this matter your prompt attention will be
appreciated.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID JOHNSON
David Johnson
Senior Vice President, General Counsel
and
Secretary
16
<PAGE> 19
ALLIANCE GAMING CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- DECEMBER 19, 1997
(THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY)
The undersigned stockholder of Alliance Gaming Corporation hereby
appoints David Johnson, Mark Lerner and Scott Schweinfurth, each with full
power of substitution, proxy to vote all shares of stock which the undersigned
could vote if personally present at the Annual Meeting of Stockholders of
Alliance Gaming Corporation to be held at Caesars Palace, 3570 Las Vegas
Boulevard South, Las Vegas, Nevada, on December 19, 1997, at 10:00 a.m. (local
time), or any adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE ELECTION AS DIRECTORS OF THE NOMINEES REFERRED TO HEREIN.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE> 20
___
Please mark your
X votes as in this
___ example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR WITHHOLD
all nominees listed at AUTHORITY
right (except as is marked to vote for all
to the contrary) nominees at right
1. ELECTION OF ___ ___ NOMINEES: Morris Goldstein, 2. IN THEIR DISCRETION UPON SUCH OTHER
DIRECTORS David Robbins, Morton Topfer MATTERS AS MAY PROPERLY COME BEFORE
(for terms as ___ ___ THE MEETING.
described in
the Proxy Statement) UNLESS OTHERWISE SPECIFIED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE
INSTRUCTIONS: To withhold authority to vote for an PERSONS NOMINATED BY THE BOARD OF
individual nominee, write the nominee's name in the DIRECTORS AS DIRECTORS.
space provided below:
----------------------------------------------------
Signature of Stockholder ______________________________________ _________________________________________ Dated: ______________
(Signature if held jointly)
NOTE: Please date and sign exactly as your name appears hereon. If shares are held jointly, each stockholder should sign.
Executors, administrators, trustees, etc., should use full title and, if more than one, all should sign. If the
stockholder is a corporation, please sign full corporate name by an authorized officer.
</TABLE>
