UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A-1
Amendment No. 1 to Form 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from _____ to _____
Commission File Number 0-4281
ALLIANCE GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0104066
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
6601 S. Bermuda Rd
Las Vegas,Nevada 89119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 270-7600
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.10 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $76,697,000 as of September 21, 1998.
The number of shares of Common Stock, $0.10 par value, outstanding as of
September 21, 1998 according to the records of registrant's registrar and
transfer agent was 34,261,167.
Documents incorporated by reference - None
<PAGE>
GENERAL
Alliance Gaming Corporation ("Alliance", the "Company" or the
"Registrant") hereby amends its Annual Report on Form 10-K for the fiscal year
ended June 30, 1998 by deleting its responses to Items 10 through 13 contained
in its original filing and replacing such sections with the following:
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age and position with the Company of each of the directors and
executive officers of Alliance as of October 21, 1998 is set forth below. No
director or executive officer is related by blood, marriage or adoption to any
other director or executive officer.
Name Age Position with the Company
---- --- --------------------------
Morris Goldstein 53 President and Chief Executive Officer
Hans Kloss 57 Executive Vice President
David Johnson 47 Senior Vice President, General Counsel and
Secretary
Scott Schweinfurth 44 Senior Vice President, Chief Financial
Officer and Treasurer
Robert Miodunski 47 Senior Vice President- Route Group (Nevada)
Robert Saxton 45 Senior Vice President- Casino Operations
Jacques Andre 61 Director
Anthony DiCesare 36 Director
Michael Hirschfeld 48 Director
Joel Kirschbaum 47 Director
David Robbins 39 Director, Chairman of the Board of Directors
Morton Topfer 62 Director
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 or until their successors
are duly qualified. The size of the Board has been fixed at seven. The Directors
are elected by a plurality of the votes cast by the holders of shares entitled
to vote thereon. The officers of the Company each serve at the pleasure of the
Board of Directors.
The following table sets forth committee assignments and the terms of the
directors:
Director Term
Since Expires
----- -------
Morris Goldstein (2)(3) 1997 2000
Jacques Andre (1)(2) 1996 1998
Anthony DiCesare (2)(3) 1994 1999
Michael Hirschfeld(1)(2)(4) 1997 1998
Joel Kirschbaum (2)(3) 1994 1999
Morton Topfer (2)(4) 1997 2000
David Robbins (1)(2)(4) 1994(a) 2000
- --------------
(1) Member of the Audit Committee
(2) Member of the Executive Committee
(3) Member of the Nominating Committee
(4) Member of the Compensation Committee
(a) Member of the Board of Directors since 1994, except for months of September
1997 to December 1997
Morris Goldstein joined the Company in June 1997 as President and Chief
Executive Officer and was elected to the Board of Directors in December 1997.
Mr. Goldstein previously was Chief Executive Officer of Thomson Technology
Initiative, a unit of Thomson Corporation, a global publisher and provider of
information services. For six months in early 1994, Mr. Goldstein served as
President and Chief Operating Officer of ImagiNation Network, an interactive
computer game provider. Prior to that, he had been President of Information
Access Company ("IAC"), an electronic information publishing company owned by
Ziff Communications, since 1982. In late 1994, Mr. Goldstein also assisted in
the sale of IAC by the Ziff family interests to the Thomson Corporation.
Hans Kloss joined Alliance in June 1996 and served as the Managing Director
of Alliance Automaten GmbH & Co. KG from June 1996 to June 1998. As of July 1,
1998, Mr. Kloss became Executive Vice President of Alliance Gaming Corporation.
Mr. Kloss was a director of Bally Gaming International, Inc. ("BGII") from
August 1991 to June 1996 and President and Chief Operating Officer of BGII from
May 1993 to August 1997. Mr. Kloss was the Managing Director of the Bally Wulff
entities from 1981 through June 30, 1998 and had been employed by those
companies since 1970. Mr. Kloss served on the Company's Board of Directors from
September 1997 until December 1997.
David Johnson joined Alliance as Senior Vice President, General Counsel and
Secretary in April 1995. Previously, Mr. Johnson represented a diverse group of
casino clients as a Senior Partner at Schreck Morris, a Nevada law firm where he
was employed from January 1987 to March 1995. Prior to joining Schreck Morris,
Mr. Johnson served as Chief Deputy Attorney General for the gaming division of
the Nevada Attorney General's Office. Mr. Johnson serves as Vice Chairman of the
Executive Committee of the Nevada State Bar's Gaming Law Section and is an
officer and founding member of the Nevada Gaming Attorneys Association.
Scott Schweinfurth joined Alliance in June 1996 as Senior Vice President,
Chief Financial Officer and Treasurer. Prior to joining the Company, Mr.
Schweinfurth had served as the Senior Vice President, Chief Financial Officer
and Treasurer of BGII since March 1995. Prior to joining BGII, Mr. Schweinfurth
had been a partner at the accounting firm of Ernst & Young LLP from October
1988, having joined the audit staff of the firm in September 1976. Mr.
Schweinfurth is a Certified Public Accountant.
Robert Miodunski joined Alliance as Senior Vice President-Route Group
(Nevada) in March 1994. From January 1991 to March 1994, Mr. Miodunski was
President of Mulholland-Harper Company, a sign manufacturing and service
company. From 1984 through 1990, Mr. Miodunski held various positions with
Federal Signal Company, the last of which was Vice President and General Manager
of the Midwest Region of the Sign Group.
Robert Saxton joined Alliance in 1982 as Corporate Controller and was elected
Vice President-Casino Operations in December 1993 and Senior Vice
President-Casino Operations in June 1996. Since joining Alliance, Mr. Saxton has
held various management positions with the Route Operations business unit and is
currently responsible for Casino Operations. He also serves as President of
Alliance's Louisiana subsidiaries.
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 Kirkland Investment Corporation ("KIC"),
which was the sole general partner of Kirkland-Ft. Worth Investment Partners,
L.P. ("KFW"), an investment partnership, from April 1991 to July 1994. Mr.
DiCesare served as Executive Vice President-Development of the Company from July
1994 through June 1997. While he is currently a New York-based employee of the
Company his principal occupation is as a private investor. 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 Kelly 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 of the Company from July 1994 to March 1995.
Mr. Kirschbaum is the sole stockholder, director and officer of Kirkland
Investment Corporation ("KIC"). He has been engaged in operating the businesses
of KIC and Kirkland-Ft. Worth Investment Partners, L.P. ("KFW") since January
1991 when KIC and KFW were established, and of GSA, Inc. ("GSI"), the general
partner of Gaming Systems Advisors, L.P. ("GSA"), 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. While Mr. Kirschbaum is currently a New
York-based employee of the Company his principal occupation is as President of
KIC.
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. In December 1997 he was again elected to the Board of Directors
and since that time has served as Chairman of the Board. Mr. Robbins has been a
practicing attorney since 1984; he was formerly an attorney with Kramer, Levin,
Naftalis, Kamin & Frankel from May 1993 to September 1995, with O'Sullivan,
Graev & Karabell, LLP from September 1995 to February 1997, and since February
1997 he has been a member of Brock 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 Chief Executive Officer 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.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of Alliance's equity securities ("Insiders"), to file with the
Securities and Exchange 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, 1998, all Section 16(a) filing requirements applicable to
Insiders were complied with, except that Mr. Andre filed two Form 4's which did
not meet the filing deadline; Mr. Goldstein, Mr. Miodunski and Mr. Robbins each
filed a Form 4 which did not meet the filing deadline; and Mr. Topfer filed a
Form 3 which did not meet the filing deadline.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or to be paid by the
Company to the Company's chief executive officer 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, 1998:
Summary Compensation Table *
<TABLE>
<CAPTION>
Fiscal Annual Compensation Long-Term
Year -------------------- Compensation
Name and Ended Other Annual Awards All Other
Principal Position June 30, Salary Bonus Compensation Options Compensation (1)
------------------ ------- ------ ----- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Morris Goldstein (2) 1998 $450,000 $ - (3) - $90,000
President and 1997 17,300 - 500,000 -
Chief Executive Officer
Hans Kloss (4) 1998 $234,000 $477,500 (3) 25,000 $ -
Executive Vice President 1997 406,300 1,682,400 - -
1996 8,450 - - -
David Johnson 1998 $250,000 $ - (3) 27,902 $2,019
Senior Vice President, 1997 250,000 185,000 - 5,351
General Counsel 1996 200,000 350,000 - 6,277
and Secretary
Scott Schweinfurth (5) 1998 $250,000 $ - $53,245(6) 101,998 $1,710
Senior Vice President, 1997 235,000 400,000 120,000 4,300
Treasurer and Chief 1996 6,538 - - -
Financial Officer
Robert Miodunski 1998 $235,000 $55,000 (3) 45,461 $1,778
Senior Vice President- 1997 212,400 96,750 - 1,700
Route Group (Nevada) 1996 194,800 70,000 - 2,375
</TABLE>
- ----------------
* As used in the tables provided under the caption "Executive Compensation,"
the character " - " is used to represent "zero."
(1) "All Other Compensation" for fiscal year 1998 includes (i) payments made
for relocation costs for Mr. Goldstein of $90,000, and (ii) contributions
made by the Company to the Company's Profit Sharing 401(k) Plan in amounts
of $0, $0, $2,019, $1,710, and $1,778 on behalf of Mr. Goldstein, Mr.
Kloss, Mr. Johnson, Mr. Schweinfurth and Mr. Miodunski, respectively.
(2) Mr. Goldstein joined the Company in June 1997 as President and Chief
Executive Officer.
(3) The aggregate amount of such compensation to be reported herein is less
than the lesser of $50,000 or 10 percent of the total annual salary and
bonus reported for the Named Executive Officer.
(4) Mr. Kloss joined the Company in June 1996, having previously been employed
by Bally Gaming International, Inc. ("BGII").
(5) Mr. Schweinfurth joined the Company in June 1996, having previously been
employed by BGII. Mr. Schweinfurth's bonus for the fiscal year 1997 was for
an 18-month period.
(6) Includes amounts paid for club initiation fees and quarterly dues totaling
$34,140 plus reimbursement for quarterly dues totaling $4,140 and related
tax reimbursement payments of $19,105.
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table reflects options granted to Named Executive Officers during
the fiscal year ended June 30, 1998:
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at
----------------- Assumed Annual Rates
% of Total of Stock
Granted Price Appreciation for
Options to Employees in Exercise Expiration Option Term
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ----------- ----- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Hans Kloss 25,000 (a) 1.70% $4.1250 9/02/02 $28,000 $63,000
Scott Schweinfurth 60,000 (a) 4.09% 4.1250 9/02/02 68,000 151,000
Scott Schweinfurth 1,075 (b)(c) .07% 4.6875 1/14/03 1,000 3,000
Robert Miodunski 25,000 (a)(c) 1.70% 4.1250 9/02/02 28,000 63,000
</TABLE>
- ------------
(a)Options will vest one third on each of the next three anniversary dates
thereof.
(b)Of the options, 537 vested on grant date and 269 will vest on each
of the next two anniversary dates thereof.
(c)Excludes 40,923 options and 20,461 options granted to Mr. Schweinfurth and
Mr. Miodunski, respectively, in September 1998 in lieu of cash bonuses for
fiscal year 1998.
Aggregate Fiscal Year-End Option/SAR Values
The following table reflects outstanding options held by Named Executive
Officers at June 30, 1998:
Number of Unexercised Value of Unexercised
Options at In-the-Money Options at
June 30, 1998 June 30, 1998 (a)
--------------------------- --------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
Morris Goldstein 125,000 375,000 $16,000 $16,000
Hans Kloss 5,918 25,000 22,000 -
David Johnson 200,000 - 113,000 -
Scott Schweinfurth 50,600 130,500 22,000 27,000
Robert Miodunski 113,250 37,750 64,000 4,000
- ---------
(a) Represents the amount by which the market value of the underlying stock at
June 30, 1998 ($4.00 per share) exceeds the aggregate exercise prices of the
options.
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, Mr. Hirschfeld and Mr. Topfer, $30,000
each per year for all services as a director and member of various committees
and (ii) Mr. Robbins, $135,000 for all services as Chairman of the Board and
member of various committees. Directors are also reimbursed for their reasonable
out-of-pocket expenses incurred on Company business.
During fiscal year 1998, the following stock option grants were made to
directors: (i) Mr. Andre received 15,000 stock options with an exercise price of
$4.125 and 2,079 stock options with an exercise price of $4.6875; (ii) Mr.
Hirschfeld received 30,000 stock options with an exercise price of $4.1875;
(iii) Mr. Robbins received 15,000 stock options with an exercise price of $4.125
and 7,751 stock options with an exercise price of $4.6875; and (iv) Mr. Topfer
received 30,000 stock options with an exercise price of $4.4375. Under current
policy, non-employee directors receive grants of 30,000 shares upon appointment
to the Board of Directors and 15,000 shares on each anniversary date of their
original appointment to the Board of Directors. All of these options are granted
at fair market value on grant date, vest immediately and have a five-year term.
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 in fiscal 1998 based upon
achievement of the last of such specified objectives.
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 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
were: (i) the completion by the Company (and/or one or more of its affiliates)
of a refinancing transaction or substantially similar transaction, (ii) the
closing of a "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, each Employee received a Bonus of $950,000. Upon the
achievement of the performance goal set forth in clause (ii), each Employee was
to receive a minimum Bonus of $200,000. Upon the achievement of the performance
goal set forth in clause (iii), each Employee was to receive a minimum Bonus of
at least $125,000. No bonuses were paid in respect to clause (ii) or clause
(iii) for the fiscal year 1998. The Board has carried over the goals from fiscal
1998 to fiscal 1999. 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. No discretionary bonuses were earned during fiscal
1998.
Pursuant to the Agreements, each 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 Agreement 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. If the Employee makes such
election, 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 elect to pay in cash, or
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. In
September 1998, with Mr. DiCesare and Mr. Kirschbaum abstaining, the Board of
Directors, upon reviewing a valuation study performed by an investment banking
firm, voted unanimously to fix the number of warrants to be extended for each
dollar of cash paid, or Bonuses forgone. Prior to September 21, 1999, Mr.
DiCesare and Mr. Kirschbaum would be required to pay approximately $0.2 million
and $0.8 million, respectively, in cash or forgo cash Bonuses of an equal amount
in order to extend the warrants held of approximately 314,700 and 1,085,000,
respectively.
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, 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.
The Company is party to an employment agreement with Mr. Kloss which generally
provides for a base salary of DM954,600 (or approximately $525,000 using current
exchange rates) per year through and including December 2000, and participation
in the Company's cash bonus program at amounts determined by the Board of
Directors, and severance benefits of one year's base salary and benefits if Mr.
Kloss is terminated prior to December 31, 2000 without cause.
The Company is party to an employment agreement with Mr. Schweinfurth which
generally provides for a base salary of $250,000 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 severance benefits of one year's base
salary if Mr. Schweinfurth is terminated prior to June 1999 without cause.
The Company is party to an employment agreement with Mr. Miodunski which
generally provides for a base salary of $235,000 per year through and including
December 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, and severance benefits of one year's base
salary if Mr. Miodunski is terminated prior to December 2000 without cause.
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
During the fiscal year ended June 30, 1998, the Compensation Committee of the
Board of Directors of the Company met two times. The Compensation Committee is
currently comprised of Messrs. Hirschfeld, Robbins and Topfer. During such
fiscal year, the entire Board of Directors generally participated in
deliberations concerning the compensation of the Company's executive officers.
Other than current positions previously described elsewhere herein, no other
member of the Company's Board of Directors was an officer or employee of the
Company or any subsidiary during fiscal year ended June 30, 1998 or is a former
officer of the Company or any subsidiary.
The Company has hired Ray & Berndtson, Inc., an international executive search
firm, of which Mr. Andre is a partner, to perform certain personnel searches.
The Company paid fees totaling $195,000 during fiscal year 1998 for the searches
conducted by this firm. The final fee for the searches will be based on a
percentage of the first-year compensation paid to certain personnel if and when
hired.
The Company paid fees to Milbank, Tweed, Hadley & McCloy, a law firm in which
Mr. Hirschfeld is a partner, for services rendered during fiscal year 1998.
The Company paid fees to Brock Silverstein McAuliffe LLC, a law firm in which
Mr. Robbins is a member, for services during fiscal year 1998.
Since July 1, 1997 certain directors have been involved in transactions in which
Alliance was a party and in which the amount involved exceeded $60,000. See
"Certain Relationships and Related Transactions" and "Directors' Compensation".
<PAGE>
ITEM 12 . SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of October [21], 1998 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 of the Company, (iii) the Named Executive Officers of
the Company as listed in the compensation table 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 below, no director or executive officer of the
Company beneficially owned any other equity securities of the Company.
Amount of Percent of
Name Shares (1) Class (1)
Alfred H. Wilms 7,034,082 (2) 20.5%
FMR Corp. 3,390,438 (3) 9.9%
82 Devonshire Street Boston, MA 02109
Jacques Andre 75,000 (4) *
Anthony DiCesare 596,787 (5) 1.7%
Michael Hirschfeld 45,000 (6) *
Joel Kirschbaum 1,229,568 (7) 3.5%
David Robbins 217,751 (8) *
Morton Topfer 138,043 (9) *
Morris Goldstein 190,808 (10) *
Hans Kloss 830,986 (11) 2.4%
David Johnson 209,301 (12) *
Scott Schweinfurth 136,582 (13) *
Robert Miodunski 141,820 (14) *
All executive officers and directors as a group 4,095,843 (15) 11.2%
----------
* Less than 1%.
(1) Excludes the effect of the issuance of up to (i) 2,750,000 shares subject
to warrants originally issued to KFW and (ii) 1,250,000 shares subject to
warrants originally issued to GSA pursuant to an agreement ("the GSA
Advisory Agreement") on September 21, 1993 and (iii) 2,500,000 shares
subject to additional warrants originally issued to GSA upon consummation
of the BGII acquisition pursuant to the GSA Advisory Agreement. All of such
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 for a designated period of time. Pursuant to
information provided by Mr. Kirschbauman, as part of a distribution of
assets from KFW and GSA to KIC and GSI on the one hand and to Kirkland
Investors, L.P. on the other hand, approximately 600,000 and 1,867,000 of
such warrants were distributed to Mr. DiCesare and Mr. Kirschbaum,
respectively. As a result, Mr. DiCesare and Mr. Kirschbaum disclaim
beneficial ownership of any other of these warrants.
(2) Mr. Wilms' mailing address is 2, St. Jansvliet, bus 6-2000 Antwerp,
Belgium.
(3) Information provided by a representative of FMR Corp. (4) Includes 15,000
shares owned and 60,000 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
(5) Includes 221,787 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 underlying the warrants 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 679,568 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 underlying the warrants referred to in
Note (1) above. This disclosure is based upon information provided by Mr.
Kirschbaum. Mr. Kirschbaum has advised that of such shares, certain amounts
may be sold or distributed to other persons.
(8) Includes 64,000 shares owned and 127,751 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 or
KIC, based upon information provided by Mr. Kirschbaum.
(9) Includes 108,043 shares owned and 30,000 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(10) Includes 65,808 shares owned and 125,000 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 (only
125,000 of which are vested) which become exercisable in equal one-third
tranches only when the Common Stock price reaches $11, $13 and $15,
respectively.
(11) Includes 816,736 shares owned and 14,250 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(12) Represents shares subject to options that are currently exercisable or will
become exercisable within 60 days.
(13) Includes 12,403 shares owned and 124,179 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(14) Includes 4,000 shares owned and 137,820 shares subject to options that are
currently exercisable or will become exercisable within 60 days.
(15) Includes 2,082,498 shares subject to options that are currently exercisable
or will become exercisable within 60 days.
ITEM 13 . CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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 the Company's
largest shareholder, Mr. Alfred Wilms (as amended, the "Stockholders
Agreement"), KIC is required to vote all of its shares of Common Stock to cause
Mr. Wilms to be elected a director of the Company if so nominated for so long as
Mr. Wilms owns shares of Common Stock of the Company. The Stockholders Agreement
contains certain registration rights running in favor of KFW, KIC, GSA and
certain of their respective affiliates and transferees and Mr. Wilms, including
up to four demand registration rights each (and additional demand rights for Mr.
Wilms under certain circumstances), at the Company's expense, and provisions
granting Mr. Wilms the right to participate in certain offerings of securities
by the Company and by KIC and its transferees.
Mr. Alfred Wilms serves as a consultant to the Company and received consulting
fees which totaled $164,000 during the fiscal year ended June 30, 1998, and
$41,000 for the three months ended September 30, 1998.
See also "Directors' Compensation" and "Compensation Committee Interlocks and
Insider Participation in Compensation Decisions".
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 to Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
ALLIANCE GAMING CORPORATION
Date: October 28 , 1998 By /s/ Scott D. Schweinfurth
------------------------------
Name: Scott D. Schweinfurth
Title:Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting
Officer)
