<PAGE> 1
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Information Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14c-5(d)(2))
/X/ Definitive Information Statement
</TABLE>
FAIR GROUNDS CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant As Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
/ / Fee computed on table below per Exchange Act Rules 14c-5(g) 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 paid
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:
(4) Date Filed:
<PAGE> 2
FAIR GROUNDS CORPORATION
1751 GENTILLY BOULEVARD
NEW ORLEANS, LOUISIANA 70119
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Fair Grounds Corporation:
Please take notice that the annual meeting of shareholders of Fair
Grounds Corporation (the "Company") will be held on Tuesday, May 16, 1995, at
2:00 p.m., Central Time, at the Fair Grounds Race Course, 1751 Gentilly
Boulevard, New Orleans, Louisiana, for the following purposes:
1. To elect seven directors;
2. To consider and vote upon a proposal to ratify the action of the
Board of Directors in selecting Rebowe & Company to serve as independent
accountants to audit the financial statements of the Company for the fiscal
year ending October 31, 1995; and
3. To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on April 13,
1995 as the record date for the determination of shareholders entitled to
notice of and to vote at the annual meeting and at any adjournment thereof. A
list of such shareholders will be available for inspection at the time and
place of the meeting.
All shareholders are cordially invited to attend the meeting at which
sandwiches and refreshments will be served.
By Order of the Board of Directors
JoAn B. Stewart
Secretary
April 26, 1995
<PAGE> 3
FAIR GROUNDS CORPORATION
1751 Gentilly Boulevard
New Orleans, Louisiana 70119
INFORMATION STATEMENT
This Information Statement is furnished to the shareholders of Fair
Grounds Corporation (the "Company") in connection with the annual meeting of
shareholders which is to be held on Tuesday, May 16, 1995, at 2:00 p.m.,
Central Time, at the Fair Grounds Race Course, 1751 Gentilly Boulevard, New
Orleans, Louisiana. This Information Statement and the Company's 1994 Annual
Report to Shareholders are being first sent or given to shareholders on or
about April 26, 1995.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
At the annual meeting, the Company's shareholders will consider and
vote upon (i) the election of seven directors to serve until the next annual
meeting of shareholders and until their respective successors are duly elected
and qualified and (ii) a proposal to ratify the action of the Board of
Directors in selecting Rebowe & Company to serve as independent accountants to
audit the financial statements of the Company for the fiscal year ending
October 31, 1995.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY
VOTING SECURITIES AND VOTING RIGHTS; RECORD DATE
Common shares, without par value, are the only voting securities of
the Company. Holders of record of common shares outstanding at the close of
business on April 13, 1995 will be entitled to one vote for each common share
held of record on such date upon each matter presented to the shareholders to
be voted upon at the annual meeting. At the close of business on April 13,
1995, the Company had outstanding 468,180 common shares. The presence, in
person or by proxy, of a majority of the common shares of the Company
outstanding on the record date will constitute a quorum for the transaction of
business at the annual meeting. Pursuant to the Company's Bylaws the
affirmative vote of the holders of a majority of the common shares which are
present in person or by proxy at the annual meeting is required to elect
directors and to ratify the selection of auditors. Ballots, together with any
proxies sent to the Company, which are marked to "withhold authority" for the
election of any one or more nominees for election as directors and ballots,
together with any proxies sent to the Company, which are marked "abstain" with
respect to the ratification of the Company's selection of independent
accountants will be counted for the purpose of determining the number of common
shares represented at the meeting, and will have the same effect as a negative
vote for the
<PAGE> 4
purpose of determining whether the requisite vote has been obtained with
respect to any matter voted upon at the meeting.
ELECTION OF DIRECTORS
Directors of the Company are elected annually to serve until the next
annual meeting of shareholders and until their respective successors are
elected and qualified. Although the number of directors has been fixed at
nine, the Board of Directors has nominated only seven persons for election as
directors at the annual meeting. The Board of Directors has not yet recruited
suitable replacements to fill the remaining positions; however, at some time
after the annual meeting the Board of Directors may elect additional directors,
thereby filling such vacancies. Common shares of the Company represented at
the annual meeting may only be voted for seven nominees. Each of the nominees
for election as a director currently is serving as a member of the Board of
Directors of the Company and previously was elected by the shareholders. If
any of the nominees, each of whom has indicated his or her willingness to serve
as a director if elected, is unable or declines to serve, a replacement nominee
will be designated at the annual meeting or, in lieu thereof, the Board of
Directors may reduce the number of persons to be elected as directors at the
annual meeting. The Articles of Incorporation of the Company provide that each
director must have actual ownership or all legal or constructive control of at
least 400 common shares of the Company.
The following table shows each nominee for election as a director of
the Company, his or her age, present positions and offices with the Company,
principal occupation and the name and principal business of the corporation or
other organization in which such occupation has been carried on, the year he or
she first became a director of the Company and directorships in certain other
corporations, based upon information furnished to the Company by each nominee
or otherwise available to the Company. Unless otherwise indicated, each
nominee for election as a director of the Company has engaged in the
occupations stated below for at least the last five years. No family
relationships exist between or among any nominee, director or executive officer
of the Company, except that Bryan G. Krantz is the son of Marie G. Krantz.
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE
- ------- --- --------
<S> <C> <C>
Katherine F. Duncan 67 1991
Director of Planned Giving of Audubon Institute,
Inc., which owns and operates the Audubon Zoo
and the Aquarium of the Americas, since July 1991;
Vice President and Secretary of Foster Company, a
company engaged in the sale and rental of decorative
awnings and special-event tents, prior to July 1991.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
DIRECTOR
NOMINEE AGE SINCE
- ------- --- --------
<S> <C> <C>
Richard Katcher 76 1994
Practicing Attorney with Baker and Hostetler, Cleveland,
Ohio.
Bryan G. Krantz 34 1990
President and General Manager of the Company since April
1990; Vice President of Jefferson Downs Corporation, a
company which owns a horse racing track that was used until
1992 to conduct live horse racing in Louisiana; General Manager
of Jefferson Downs Corporation prior to May 1990; President of
Finish Line Management Corporation, which operates certain off-
track betting facilities in Louisiana.
Marie G. Krantz 59 1990
Chairman of the Board of Directors and Treasurer of the
Company since April 1990; President of Jefferson Downs
Corporation; Secretary-Treasurer of Finish Line Management
Corporation.
Ronald J. Maestri 54 1991
Athletic Director, University of New Orleans.
Charmaine R. Morel 60 1987
Assistant to the Financial Manager, Fennelly & Bayley, Inc.,
d/b/a Mike's on the Avenue, a restaurant in New Orleans, since
October 1991; Secretary of Victory Management Group, a company
providing management services, since January 1993; Secretary-
Treasurer of Empire Land Corporation, a corporation engaged in oil
and gas production, prior to October 1991.
Donald L. Peltier 68 1977
Practicing attorney with Peltier, Morvant & Cavell (or its pre-
decessor); Chairman of the Board of ArgentBank (or its pre-
decessors, First Interstate Bank of Southern Louisiana and
Citizens Bank & Trust Company), a banking institution.
</TABLE>
3
<PAGE> 6
INFORMATION REGARDING BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held five meetings during the
fiscal year ended October 31, 1994. Each incumbent director attended at least
75% of the aggregate of the meetings of the Board of Directors and the meetings
of all committees on which he or she served held during such fiscal year.
The Board of Directors has two standing committees, the Executive
Committee and the Compensation Committee. The Executive Committee, which is
currently comprised of Marie G. Krantz, Bryan G. Krantz and Ronald J. Maestri,
has the authority to exercise the power of the Board of Directors in the
management of the business and affairs of the Company during intervals between
meetings of the Board of Directors. The Executive Committee did not meet
during the fiscal year ended October 31, 1994. The Compensation Committee,
which is currently comprised of Charmaine R. Morel and Donald L. Peltier,
reviews executive compensation, makes recommendations to the Board of Directors
concerning the same, and administers the Fair Grounds Corporation Stock Option
Plan, including the selection of key employees to participate therein and the
determination of options to be granted thereunder. The Compensation Committee
met one time during the fiscal year ended October 31, 1994.
The Company pays each director (including directors who are employees
of the Company) a retainer of $3,600 annually, payable quarterly.
INFORMATION CONCERNING EXECUTIVE OFFICERS
The following paragraphs set forth certain information concerning the
executive officers of the Company other than Bryan G. Krantz and Marie G.
Krantz, with respect to whom similar information is provided in the table of
nominees for election as directors of the Company. The Company's executive
officers are elected annually at the regular meeting of the Board of Directors
immediately following the annual meeting of shareholders.
William A. Hof, age 61, has been a Vice President of the Company since
February 1992 and Director of Operations of the Company since August 1990. He
also served as Director of Operations of Jefferson Downs Corporation
("Jefferson Downs") prior to the closing of its live racing facility in
November 1992.
Mervin Muniz, Jr., age 52, has been a Vice President of the Company
since August 1990 and has served as Racing Secretary for more than the past
five years.
Gordon M. Robertson, age 54, has been a Vice President of the Company
since February 1992 and has served as Chief Financial Officer since August
1990. He was General Manager of Jefferson Downs from May 1990 to November 1992
and Assistant General Manager of Jefferson Downs prior to May 1990.
4
<PAGE> 7
JoAn B. Stewart, age 62, has served as Secretary of the Company for
more than the past five years.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's directors, executive officers and holders of more
than 10% of the common shares of the Company to file with the Securities and
Exchange Commission (the "Commission") initial reports of ownership and reports
of changes in ownership of common shares of the Company. Based upon a review
of these filings and written representations from the applicable reporting
persons, the Company believes that its directors and executive officers
complied with all applicable Section 16(a) filing requirements during the
fiscal year ended October 31, 1994.
BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table sets forth certain information regarding the
beneficial ownership of common shares of the Company, as of April 1, 1995, of
(i) each person who, to the knowledge of the Company, owns beneficially more
than 5% of the outstanding common shares of the Company, (ii) each director and
nominee for election as a director, (iii) each of the current executive
officers of the Company listed in the summary compensation table below and (iv)
all directors and executive officers of the Company as a group. The
information set forth in the following table is based upon statements filed by
such persons with the Commission and information otherwise available to the
Company. Unless otherwise indicated, each person has sole voting and
investment power of the common shares of the Company beneficially owned by him
or her.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENTAGE
OF BENEFICIAL OF
BENEFICIAL OWNER OWNERSHIP CLASS(A)
- ---------------- ----------------- ----------
<S> <C> <C>
Katherine F. Duncan 480 *
Richard Katcher 339,604 (b)(e) 72.5%
Bryan G. Krantz 1,000 (c)(e) *
Marie G. Krantz 340,604 (d)(e) 72.8%
Ronald J. Maestri 480 *
Charmaine R. Morel 480 *
Donald L. Peltier 2,513 (f) *
All Directors and Executive
Officers as a Group 345,057 (g) 73.7%
</TABLE>
5
<PAGE> 8
- ------------------------
* Less than 1% of Class
(a) The percentage of class beneficially owned has been computed on the
basis of 468,180 common shares outstanding on April 1, 1995.
(b) Richard Katcher, as Trustee u/t/a between John G. Masoni and John G.
Masoni, Trustee, pursuant to a restatement of his Trust Agreement
dated April 19, 1991 as modified on October 24, 1992 (the "Trust"),
has reported to the Commission that, as Trustee of the Trust, he is
the beneficial owner of 339,604 common shares, constituting
approximately 72.5% of the common shares issued and outstanding, which
are held by Marie G. Krantz as Voting Trustee under a Voting Trust
Agreement dated as of October 1, 1993 (the "Voting Trust Agreement"),
and that, as Trustee of the Trust, he has the sole power to dispose or
to direct the disposition of such common shares. Mr. Katcher's
address is 3200 National City Center, Cleveland, Ohio.
(c) Bryan G. Krantz has reported to the Commission that he is the
beneficial owner of 500 common shares held by Marie G. Krantz as
Voting Trustee under the Voting Trust Agreement, and of 500 common
shares held directly by him, constituting less than 1% of the common
shares issued and outstanding. Mr. Krantz has the sole power to
dispose or to direct the disposition of the 500 common shares held by
Marie G. Krantz as Voting Trustee, and the sole power to vote or to
direct the vote and to dispose or to direct the disposition of the 500
common shares held directly by him. Mr. Krantz's address is 1751
Gentilly Boulevard, New Orleans, Louisiana 70119.
(d) Marie G. Krantz has reported to the Commission that she is the
beneficial owner of 500 common shares held directly by her,
constituting less than 1% of the common shares issued and outstanding,
and that she may be deemed to be the beneficial owner of the 340,104
common shares held by her as Voting Trustee under the Voting Trust
Agreement. In her capacity as Voting Trustee, Ms. Krantz has the sole
power to vote or to direct the vote of the 340,104 common shares held
by her as Voting Trustee. She also has the sole power to vote or to
direct the vote and the sole power to dispose or to direct the
disposition of the 500 common shares held by her in her individual
capacity. The Voting Trust Agreement, to which Bryan G. Krantz,
Richard Katcher and Marie G. Krantz are parties, provides that title
to 340,104 common shares is vested in Marie G. Krantz as Voting
Trustee during the term of the Voting Trust Agreement, and that in
such capacity she may exercise all rights of a holder of common shares
of the Company, including the right to vote such common shares.
Bryan G. Krantz and Richard Katcher are not entitled during the term
of the Voting Trust Agreement to vote the common shares subject to the
Voting Trust Agreement or to take any other action that holders of
common shares are entitled to take in their capacities as
shareholders; however, they do have the right to receive any and all
dividends and distributions made by the Company to the holders of
common shares. The Voting Trust Agreement is for an initial term of
15 years, is irrevocable during its term, and is to survive the death
of the grantors under the Voting Trust Agreement. It may be extended
for an additional 10 years at the written request of such grantors.
The common shares which are subject to the Voting Trust Agreement may
not be transferred, sold, assigned or otherwise disposed of by Marie
G. Krantz during the term of the Voting Trust Agreement, other than in
connection with any corporate event or action which affects common
shares other than the common shares subject to the Voting Trust
Agreement. Ms. Krantz's address is 1751 Gentilly Boulevard, New
Orleans, Louisiana 70119.
(e) Richard Katcher, Bryan G. Krantz and Marie G. Krantz, who together are
the beneficial owners of an aggregate of 341,104 common shares,
constituting approximately 72.8% of the common shares outstanding,
have reported to the Commission that they constitute a "group" within
the meaning of section 13(d)(3) of the Exchange Act. By virtue of
their beneficial ownership of common shares of the Company and the
6
<PAGE> 9
matters set forth in filings made by them under Section 13(d) of the
Exchange Act, Richard Katcher as Trustee of the Trust, Marie G. Krantz
and Bryan G. Krantz may be deemed to be controlling persons of the
Company.
(f) Includes 679 common shares held directly by Mr. Peltier and 1,834
common shares of the Company held by members of Mr. Peltier's family
who have given Mr. Peltier powers of attorney to vote and dispose of
such common shares.
(g) The number of common shares shown as beneficially owned includes any
directors qualifying shares held by each director and nominee for
election as a director.
EXECUTIVE COMPENSATION
SUMMARY OF EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
annual and long-term compensation for services in all capacities to the Company
for the fiscal years ended October 31, 1994, October 31, 1993 and October 31,
1992 of the chief executive officer of the Company. No executive officer of
the Company received salary and bonus totalling more than $100,000 for the
fiscal year ended October 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
------------------------------
Other
Annual All Other
Name and Compen- Compen-
Principal Position Year Salary Bonus sation(1) sation
- ------------------ ---- ------ ----- --------- ---------
<S> <C> <C> <C> <C> <C>
BRYAN G. KRANTZ 1994 $ 75,000 $ 0 -- $3,600(2)
President and 1993 75,000 0 -- 3,600(2)
General Manager 1992 150,000 0 -- 3,600(2)
</TABLE>
- ---------------------------
(1) For each of the fiscal years listed, Mr. Krantz did not receive
perquisites or other personal benefits in excess of the amounts
required to be disclosed under the revised rules on executive
compensation disclosure adopted by the Commission; accordingly, such
amounts are omitted from this column.
(2) Consists of the annual retainer paid to Mr. Krantz as a director of
the Company.
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Board of Directors of the Company has designated a Compensation
Committee (the "Compensation Committee") to review and make recommendations
regarding the compensation for executive officers of the Company and to
administer the Stock Option Plan. The Compensation Committee is currently
composed of two directors who have never served as officers of the Company.
The Compensation Committee, which first began functioning in fiscal
1993, has continued certain annual and long term compensation policies earlier
developed by the Board of Directors which are intended to motivate, retain and
attract management and to enhance the profitability of the Company and, thus,
shareholder value. The Compensation Committee believes that the components of
compensation for the Company's executive officers should be annual salaries
and, where appropriate, bonuses and stock options.
Annual salaries for executive officers of the Company have generally
been set at levels intended to be comparable to those which are paid to persons
serving in similar capacities at racing facilities throughout the United
States. Salaries have generally been reviewed on an annual basis and may be
increased based upon an increase in such comparative pay levels or upon the
determination that the individual's performance and contribution to the Company
merit such an increase. No objective, performance-based criteria have been
established for use in determining executive compensation. The Compensation
Committee has noted, however, that since the Company is in a highly competitive
industry and continues to operate in a difficult competitive environment in
Louisiana, any review of, and decisions with respect to, executive compensation
must be made in light of other Company policies which are designed to control
costs and improve operating performance.
The Compensation Committee has recognized the outstanding performance
of the Company's executive officers after the December 17, 1993 fire, both in
the days immediately subsequent to the fire when they led the efforts to
install temporary facilities and bring live racing back to Fair Grounds Race
Course and in the weeks and months thereafter as they have sought to obtain
legislation and financing to enable the Company to rebuild its facilities.
However, in light of the uncertainties resulting from the fire and the
difficult competitive environment in Louisiana, the Compensation Committee
concluded that the annual salaries of Marie G. Krantz, the Chairman of the
Board, and Bryan G. Krantz, the Company's President and Chief Executive
Officer, in fiscal 1994 should remain at $75,000 each, which was the level to
which these executive officers voluntarily reduced their annual salaries in
fiscal 1993, and Ms. Krantz and Mr. Krantz agreed that their annual salaries
should continue at that reduced level.
The Compensation Committee recognizes that bonuses can be an important
component of executive compensation and can be increased or decreased based on
corporate and individual performance. While, the Compensation Committee may
propose the implementation of a new bonus program at some time in the future,
it concluded that no such proposal would be made
8
<PAGE> 11
in fiscal 1994 in view of the above-stated uncertainties and difficulties. The
Compensation Committee has also confirmed that in the future it may recommend
the payment of bonuses to officers on the basis of corporate or individual
performance, in the absence of a bonus program and without necessarily having
established performance-based criteria.
Long-term incentive compensation has been available through the Stock
Option Plan, the purpose of which is to provide an incentive and inducement to
key employees of the Company to remain in the Company's employment and to
participate in the ownership and successful operation of the Company's
business. No specific performance criteria have been followed in making option
grants; rather, eligibility for grants has been determined on a case-by-case
basis in light of overall performance and contribution to the Company. No
grants of options were made during the 1994 fiscal year. The Compensation
Committee continues to believe, however, that in the future grants of stock
options can be used to (i) encourage and facilitate personal stock ownership by
key executives; (ii) strengthen the personal commitment of such officers to the
Company; and (iii) provide a direct link between the interests of the officers
and those of the Company's other shareholders.
In its meeting in fiscal 1994 the Compensation Committee discussed
further the implementation of more specific compensation policies. However, in
view of the difficulties caused by the fire and the uncertainties resulting
therefrom and because of the continued difficult competitive environment in the
Louisiana gaming industry, the Compensation Committee concluded that the
adoption of more specific compensation policies or criteria, or any attempt to
relate them to corporate performance, would be further deferred.
Members of the Compensation Committee
Charmaine R. Morel
Donald L. Peltier
PERFORMANCE OF COMMON SHARES
The following compares the cumulative total shareholder return on
investment (the change in year-end stock price plus reinvestment of dividends),
for each of the last five fiscal years, assuming that $100 was invested on
October 31, 1989 in each of (i) Fair Grounds Corporation, (ii) a group of
stocks consisting of all domestic companies whose stocks are listed on Nasdaq
and (iii) a group of stocks consisting of non-financial industry stocks listed
on Nasdaq. The Total Return Index for the Nasdaq Stock Market and the Total
Return Index for Nasdaq Non-Financial Stocks were prepared by the Center for
Research in Securities Prices at the University of Chicago.
9
<PAGE> 12
(GRAPH)
<TABLE>
<CAPTION>
CRSP Total CRSP Total
Return Index Return Index
for Nasdaq for Nasdaq
Measurement Period Fair Grounds (U.S. Non-Financial
(Fiscal Year Covered) Corporation Companies) Stocks
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 87.55 74.24 78.74
1991 77.47 125.53 132.72
1992 99.14 141.49 141.07
1993 58.14 181.23 180.73
1994 58.14 182.21 179.43
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended October 31, 1994, the following
non-employee directors served on the Compensation Committee: Ronald J. Maestri
(until May 1994), Charmaine R. Morel, Herman S. Kohlmeyer, Sr. and Donald L.
Peltier (since May 1994). During the fiscal year ended October 31, 1994, the
Company had certain funds invested with or through Prudential Securities, Inc.,
a securities brokerage firm of which Herman S. Kohlmeyer, Sr. was a Senior Vice
President. No such funds were invested with or through such firm as of October
31, 1994.
CERTAIN TRANSACTIONS
The Company is a party to a Management Agreement (the "Management
Agreement") with Finish Line Management Corporation ("Finish Line") pursuant to
which Finish Line operates the Company's tele-track facilities in Terrebone,
St. Tammany and Jefferson Parishes, Louisiana, the operation of which was
transferred to the Company by Jefferson Downs effective May 27, 1993. The
initial term of the Management Agreement ends on October 31, 2002, and Finish
Line has two options to extend the term of the Management Agreement for two
additional five-year periods. The Management Agreement provides that Finish
Line is to have the exclusive responsibility for the direction, supervision,
management and operation of such facilities, is to collect all monies from such
operation and is to pay all expenses in connection therewith. The Company is
to receive 0.1% of the gross pari-mutuel handle at such facilities, and Finish
Line is to receive monthly compensation equal to the difference between the
gross receipts collected at such facilities less all expenses (including the
payment to the Company described above) paid by Finish Line. In addition,
Finish Line is to indemnify the Company for,
10
<PAGE> 13
among other things, all obligations under the leases for such facilities.
During the fiscal year ended October 31, 1994, Finish Line paid the Company
host track fees in the amount of $483,294, and purse expense in the amount of
$3,619,292. As of October 31, 1994, the Company had accounts receivable from
Finish Line in the amount of $272,248.
In March 1994, the Company sold all of its interests in certain
partnerships that operate or intended to operate off-track tele-tracks (the
"Intertrack Partnerships"), including interests acquired from Jefferson Downs
effective May 27, 1993, to Delta Downs Racing Association, Inc. for cash
consideration of $425,000. The sale included not only the Company's equity
interests in the Intertrack Partnerships but also certain notes receivable, in
the aggregate amount of approximately $533,000 at the time of the sale.
Jefferson Downs also had notes receivable from such partnerships in
approximately the same amount. In July 1994, the Company and Jefferson Downs
agreed that in consideration for the cancellation of such notes by Jefferson
Downs, the Company would pay to Jefferson Downs $170,000 out of the proceeds
received from Delta Downs Racing Association, Inc. The Company and Jefferson
Downs further agreed that any rights or obligations to or against each other
arising out of such partnership interests have been satisfied, and each agreed
to indemnify and hold harmless the other from any action arising out of such
agreement. Neither the Company nor Jefferson Downs owns any further rights or
interest in any of the Intertrack Partnerships. During the 1994 fiscal year,
the Company received host track fees of $81,288 and purse supplements of
$237,887 from such partnerships.
In fiscal 1994, Intertrack Partners of Avoyelles Parish sold all of
its assets and the Company received proceeds totalling $110,000. According to
an agreement between the Company and Jefferson Downs, $44,000 of such sale
proceeds were allocated to Jefferson Downs.
The Company, Jefferson Downs and Finish Line are parties to an
agreement with Video Services, Inc. ("VSI"), whereby VSI was granted the
exclusive right and license to install, maintain and operate video draw poker
devices at the Fair Grounds Race Course and Jefferson Downs Race Course and at
the tele-tracks operated by the Company, Jefferson Downs and Finish Line. Such
agreement is for a term ending in January 1997, with an option by VSI to extend
the term for an additional five years. The agreement provides that the Company
is to receive a percentage of the revenues from the operation of the devices
installed at the Company's facilities. Such percentage is to be calculated on
the basis of the average amount collected daily from each device during each
month, after the payment of prizes, taxes and fees. The devices which have
been installed and are to be installed by VSI pursuant to such agreement remain
the property of VSI. As of October 31, 1994, there were a total of 182 devices
in operation at all of the Company's facilities (excluding the tele-tracks
operated for the Company by Finish Line) and 508 devices in operation at
facilities managed by Finish Line. In fiscal 1994, the Company received gross
revenue of $1,354,792, including amounts to be paid as purse supplements of
$540,258. In addition, such agreement provides that the Company, Jefferson
Downs and Finish Line are entitled to receive an annual promotional allowance
from VSI in the aggregate amount of $270,000, which for the fiscal year ended
October 31, 1994 was paid in full to the Company. The agreement also provides
for advances from VSI against future revenues of up to $1 million
11
<PAGE> 14
in the aggregate to the Company, Jefferson Downs and Finish Line. The Company
received all of such advance during the year ended October 31, 1994 and has
also received such an advance during the current fiscal year. The Company
anticipates that it will continue to receive revenues pursuant to the agreement
with VSI.
Marie Krantz is a director, the President and the owner of 66 2/3% of
the outstanding common stock, and Bryan Krantz is a director, Vice President
and the owner of 33 1/3% of the outstanding common stock, of Jefferson Downs.
Marie Krantz is a director, executive officer and the owner of 66 2/3% of the
outstanding common stock, and Bryan Krantz is a director, executive officer and
the owner of 33 1/3% of the outstanding common stock, of Finish Line. By
virtue of such positions and ownership and their positions with and
relationship with such entities, the Company, Finish Line and Jefferson Downs
may be deemed to be affiliates.
Marie Krantz and Bryan Krantz each own 50% of the outstanding common
stock of Continental Advertising, Inc. ("Continental"), an advertising agency
which provided advertising services to the Company during the last fiscal year.
During the 1994 fiscal year, the Company paid $273,551 for advertising services
through Continental and advanced funds to Continental during the fiscal year in
order for Continental to pay for such advertising services. As of October 31,
1994, the Company was due $120,449 from Continental for funds advanced in
excess of advertising services purchased during the 1994 fiscal year. The
Company expects to continue to utilize Continental's services during the
current fiscal year.
From time to time, persons who are officers, directors or principal
shareholders of the Company own or have interests in horses racing at the
Company's race track. Such races are conducted under the rules and regulations
of the Louisiana Racing Commission, and no officer, director or principal
shareholder receives any extra or special benefits not shared by all others so
racing.
RATIFICATION OF SELECTION OF AUDITORS
The Board of Directors has selected the firm of Rebowe & Company to
audit the financial statements of the Company for the fiscal year ending
October 31, 1995, and, in accordance with the Board of Directors' policy of
seeking annual shareholder ratification of the selection of auditors, requests
that such selection be ratified. Rebowe & Company or its predecessor has
audited the Company's financial statements for the past several fiscal years;
however, due to the destruction of records at the Fair Grounds Race Course as a
result of the fire on December 17, 1993, the financial statements for the
fiscal year ended October 31, 1993 were not audited.
A representative of Rebowe & Company will be present at the annual
meeting, will have an opportunity to make a statement if he so desires and will
be available to answer appropriate questions from shareholders.
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THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE FOR THE PROPOSAL TO
RATIFY THE SELECTION OF REBOWE & COMPANY TO AUDIT THE FINANCIAL STATEMENTS OF
THE COMPANY FOR THE FISCAL YEAR ENDING OCTOBER 31, 1995.
SHAREHOLDER PROPOSALS
SHAREHOLDER PROPOSALS TO BE PRESENTED AT MEETINGS
The Company's Bylaws provide that a shareholder who desires to propose
any business at a meeting of shareholders must give the Company written notice,
which must be received by the Company not later than ten days following the
date on which the Company first gives written or printed notice to shareholders
of such meeting, or, if the meeting is adjourned and the Company is required by
Louisiana law to give notice of the adjourned meeting date, within five days
after the date on which the Company first gives written or printed notice to
shareholders of such adjourned meeting, setting forth (a) a brief description
of the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting; (b) the name and address of the
shareholder who intends to propose such business; (c) a representation that the
shareholder is a holder of record of shares of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at such meeting to
propose such business; and (d) any material interest of the shareholder in such
business. The Chairman of the meeting may refuse to transact any business
presented at any meeting without compliance with the foregoing procedure. The
ten-day period referred to above will expire ten days after the date on which
the accompanying notice of annual meeting of shareholders is first mailed to
shareholders of the Company.
SHAREHOLDER NOMINATIONS FOR DIRECTORS
The Company's Bylaws provide that a shareholder who desires to
nominate directors at a meeting of shareholders must give the Company written
notice, which must be received by the Company not later than ten days following
the date on which the Company first gives written or printed notice to
shareholders of such meeting, or, if the meeting is adjourned and the Company
is required by Louisiana law to give notice of the adjourned meeting date,
within five days after the date on which the Company first gives written or
printed notice to shareholders of such adjourned meeting, setting forth (a) the
name and address of the shareholder who intends to make the nomination and of
the person or persons to be nominated; (b) a representation that the
shareholder is a holder of record of shares of the Company entitled to vote at
such meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; (d) such other
information regarding each nominee proposed by such shareholder as would have
been
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required to be included in an information statement filed pursuant to the rules
of the Securities and Exchange Commission had each nominee been nominated, or
intended to be nominated, by the Board of Directors; and (e) the consent of
each nominee to serve as a director of the Company if so elected. The Chairman
of the meeting may refuse to acknowledge the nomination of any person if a
shareholder has failed to comply with the foregoing procedure. The ten-day
period referred to above will expire ten days after the date on which the
accompanying notice of annual meeting of shareholders is first mailed to
shareholders of the Company.
OTHER MATTERS
The Board of Directors does not intend to bring any business before
the annual meeting other than that stated herein and is not aware of any other
matters that may be presented for action at the meeting.
By Order of the Board of Directors
JoAn B. Stewart
Secretary
April 26, 1995
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