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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM 10-K
ON FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 OF THE
SECURITIES ACT OF 1934
FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1999
COMMISSION FILE NO. 0-20508
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MTR GAMING GROUP, INC.
(exact name of Company as specified in its charter)
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<S> <C>
DELAWARE IRS NO. 84-1103135
(State of Incorporation) (IRS Employer
Identification)
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STATE ROUTE 2, SOUTH, P.O. BOX 356, CHESTER, WEST VIRGINIA 26034
(Address of principal executive offices)
(304) 387-5712
(Company's telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Title of each Class: COMMON STOCK $.00001 PAR VALUE
Name of each exchange on which registered: NASDAQ STOCK MARKET
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Indicate by check mark whether the Company (1) has filed reports required to
be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the Company was required to
file such reports) and (2) has been subject to such filing requirements for the
past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K of Section 299.405 of this chapter) is not contained
herein, and will not be contained, to the best of Company'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 Company's common stock held by
non-affiliates (all persons other than executive officers or directors) of the
Company on March 22, 2000 (based on the closing sale price per share on the
NASDAQ Stock Market on that date) was $52,635,296.
The Company's common stock outstanding at March 22, 2000 was
21,337,401 shares.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the compensation awarded, paid to or
earned by the most highly compensated executive officers of the Company whose
compensation exceeded $100,000 in the fiscal year ended December 31, 1999.
SUMMARY COMPENSATION TABLE
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<CAPTION>
LONG TERM COMPENSATION
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ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- ---------------------- -------
NAME YEAR SALARY BONUS OTHER RESTRICTED OPTIONS LTIP PAYOUTS ALL OTHER COMP.
---- ---- ($) ($)(1) ANNUAL STOCK AWARDS SARS ($) ($)(5)
------ ------ COMP. ($) (#)(3) ------------ ---------------
($)(2) ------------ ------
------
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Edson R. Arneault(4)......... 1999 447,461 100,000 35,164 - 500,000 - 21,142
Chairman, President and 1998 384,525 92,750 38,028 - 1,000,000 - -
Chief Executive Officer of 1997 300,643 67,500 5,523 - 150,000 - -
MTR Gaming Group, Inc.
Bruce E. Dewing(4)........... 1999 178,461 - 6,120 - 50,000 - -
Vice President and Chief 1998 128,846 - 3,060 - - - -
Operating Officer of
Speakeasy Las Vegas and
Speakeasy Reno
Robert A. Blatt, Vice 1999 132,328 - 150,000 - 3,115
President(4)
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(1) Mr. Arneault's bonus paid in 1998 includes $52,000 earned by Mr. Arneault
in 1997.
(2) As to Mr. Arneault for 1999 includes $33,864 toward performance bonus and
an estimated pension plan contribution of $1,300; for 1998 includes
$36,922 vacation pay and $1,106 pension plan contribution. As to Mr.
Dewing, consists of car allowance.
(3) All grants in 1999 consisted of non-qualified stock options for a term of
five years. The options are fully vested and have an exercise price of
$2.00 per share.
(4) See "Employment Agreements" below. Mr. Dewing commenced employment with
the Company in 1998; Mr. Blatt commenced employment with the Company in
1999, having previously acted as a consultant.
(5) Consists of premiums for life insurance pursuant to a qualified plan in
accordance with Section 419 of the Internal Revenue Code
OPTION GRANTS IN 1999
The following table contains information concerning the grant of stock
options during fiscal year 1999 to the Company's executive officers named in the
Summary Compensation Table.
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NAME NUMBER OF SECURITIES % OF TOTAL EXERCISE PRICE EXPIRATION 5% 10%
---- UNDERLYING OPTIONS OPTIONS GRANTED -------------- DATE -- ---
GRANTED(#)(1) IN FISCAL YEAR ---- POTENTIAL
-------------------- --------------- REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM(1)
-------------------
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Edson R. Arneault............. 500,000 42.0% $2.00 Feb. 2004 276,282 610,510
Bruce Dewing.................. 50,000 4.2% 2.00 Feb. 2004 27,628 61,051
Robert A. Blatt............... 150,000 13.2% 2.00 Feb. 2004 82,884 183,153
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(1) In accordance with the rules of the Securities and Exchange Commission,
"Potential Realizable Value" has been calculated assuming an aggregate
five year appreciation of the fair market value of the Company's common
stock on the date of the grant at annual compounded rates of 5% and 10%,
respectively. These amounts represent hypothetical gains that could be
achieved. Actual gains, if any, on the exercise of stock options will
depend on the future performance of the Company's stock and the date on
which the options are exercised. Moreover, the gains shown are net of the
option exercise price, but do not include deductions for taxes or other
expenses associated with the exercise of the option or the sale of the
underlying shares.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
The following table sets forth information regarding the number and
value of options held by each of the Company's executive officers named in the
Summary Compensation Table as of December 31, 1999.
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<CAPTION>
NAME SHARES ACQUIRED VALUE EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ON EXERCISE(#) REALIZED($) ----------- ------------- ----------- -------------
-------------- ----------- NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT YEAR
AT FISCAL YEAR END END($)(1)
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Edson R. Arneault............ 141,334 269,771 1,950,000 - $2,268,250 -
Robert A. Blatt.............. - - 475,000 - 714,812 -
Bruce E. Dewing.............. - - 50,000 - 53,125 -
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(1) Based on the market price of the Company's Common Stock of $3.0625 on
December 31, 1999, as reported by Nasdaq.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the provisions of Section 16(a) of the Exchange Act, the Company's
officers, directors and 10% beneficial stockholders are required to file reports
of their transactions in the Company's securities with the Commission. Based
solely on a review of the Forms 3 and 4 and amendments thereto furnished to the
Company during its most recent fiscal year and Forms 5 and amendments thereto
furnished to the Company with respect to its most recent fiscal year, the
Company believes that as of March 22, 2000, all of its executive officers,
directors and greater than 10% beneficial stockholders, complied with all filing
requirements applicable to them during 1999.
EMPLOYMENT AGREEMENTS
In February of 1999, the Company entered into an employment agreement with
its President and CEO, Edson R. Arneault. The agreement is for a term of five
(5) years, calls for an annual base salary of $450,000 (subject to automatic
annual cost of living increases of 5%), semi-annual cash bonuses of $50,000, and
a performance bonus for each year equal to 1% of the gross operating revenue
increase over 1998 operating revenue (provided, however, that
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EBITDA, as defined, for such year exceeds 1998 EBITDA). The employment
agreement also entitles Mr. Arneault to participate in the Company's various
benefit plans for health insurance, life insurance and the like. The
employment agreement likewise permits Mr. Arneault to lease at the Company's
expense, or have the Company lease, reasonable living quarters for use by Mr.
Arneault and other executives of the Company in the State of Nevada and in
any other state or jurisdiction in which the Company is pursuing substantial
business opportunities such that Mr. Arneault is required, as a practical
matter, to spend a substantial portion of his time in such jurisdiction.
In the event Mr. Arneault's employment is terminated by him for good
reason, as defined, or by the Company other than for cause or a permanent and
total disability, he will be entitled to the compensation otherwise payable to
him under the employment agreement. In the event Mr. Arneault's employment is
terminated in connection with a change in control of the Company, Mr. Arneault
would be entitled to a cash severance payment equal to three times his annual
base salary and payment by the Company of the next five annual premium payments
for the insurance policy called for by the deferred compensation plan described
below.
In January of 1999, the Company entered into a deferred compensation
agreement with Mr. Arneault. Pursuant to the agreement, the Company has
purchased a life insurance policy on Mr. Arneault's life (face amount of
$2,250,000 and annual premium of $100,000). The owner of the policy is the
Company. The agreement entitles Mr. Arneault or his beneficiary to an annual
benefit, as defined, upon retirement, death or termination out of the cash value
of the insurance policy, after the Company has recouped the aggregate amount of
premiums paid. The benefits provided by the agreement were granted as additional
benefits and not as part of any salary reduction plan or arrangement deferring a
bonus or a salary increase.
In February of 1999, the Company entered into an employment agreement with
Robert A. Blatt. The agreement is for a term of five (5) years, calls for an
annual base salary of $46,000 (subject to automatic annual cost of living
increases of 5%) and additional compensation of $2,500 per day in the event Mr.
Blatt performs additional services. The employment agreement also entitles Mr.
Blatt to participate in the Company's various benefit plans for health
insurance, life insurance and the like.
In the event Mr. Blatt's employment is terminated by him for good reason,
as defined, or by the Company other than for cause or a permanent and total
disability, he will be entitled to the compensation otherwise payable to him
under the employment agreement. In the event Mr. Blatt's employment is
terminated in connection with a change in control of the Company, Mr. Blatt
would be entitled to a cash severance payment equal to three times his annual
base salary and payment by the Company of the next five annual premium payments
for the insurance policy called for by the deferred compensation plan described
below.
In June of 1999, the Company entered into a deferred compensation
agreement with Mr. Blatt. Pursuant to the agreement, the Company has
purchased a life insurance policy on Mr. Blatt's life (face amount of
$390,000 and annual premium of $25,000). The owner of the policy is the
Company. The agreement entitles Mr. Blatt or his beneficiary to an annual
benefit, as defined, upon retirement, death or termination out of the cash
value of the insurance policy, after the Company has recouped the aggregate
amount of premiums paid. The benefits provided by the agreement were granted
as additional benefits and not as part of any salary reduction plan or
arrangement deferring a bonus or a salary increase.
The Company entered an employment agreement with Bruce E. Dewing, the
Chief Operating Officer of Speakeasy Las Vegas and Speakeasy Reno. The agreement
is for a term ending May 31, 2001 and calls for an annual base salary of
$180,000 and entitles Mr. Dewing to the use of a Company car as well as to
participate in the Company's various employee benefit plans. In the event Mr.
Dewing's employment is terminated by the Company other than for cause or a
permanent and total disability, he will be entitled to the compensation
otherwise payable to him under the employment agreement. Mr. Dewing's employment
agreement does not provide for any additional compensation in the event of
termination in connection with a change in control.
COMPENSATION OF DIRECTORS
On February 18, 1998, the Company entered into separate agreements with
Mr. Stanton and Mr. Fugazy to provide certain compensation for their services on
the Company's Board of Directors. Specifically, each agreement
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provided for: (i) the grant of options to purchase 25,000 shares of common stock
of the Company for each year of service (see Item 12-Stock Ownership of Certain
Beneficial Owners and Management; (ii) the registration by the Company, at its
sole cost, of the shares underlying such options by including such shares in any
registration statement the Company determines to file with the Securities and
Exchange Commission with respect to employee compensation; (iii) the adjustment
of the terms of such options in certain events as set forth in the agreement;
and (iv) a fee of $2,500 for each regular meeting of the Board, audit committee
or shareholders attended and reimbursement of expenses for travel, food and
lodging incurred in attending such meetings.
Directors who are employees of the Company do not receive compensation for
attendance at Board meetings, but are entitled to reimbursement for expenses
they incur in attending such meetings.
Compensation Committee Interlocks and Insider Participation
On November 8, 1995, the Board voted to form an executive compensation
committee consisting of Mr. Ruben and Mr. Blatt, (the "Committee"). The
Committee is authorized to review all compensation matters involving directors
and executive officers and Committee approval is required for any compensation
to be paid to executive officers or directors who are employees of the Company.
As a matter of policy and to assure compliance with Rule 16b-3(d)(1) of the
Securities Exchange Act of 1934, the decisions of the Compensation Committee are
subject to ratification by a majority of the Board. Both Messrs. Blatt and Ruben
serve as officers and directors of the Company and of Mountaineer Park.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
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MTR GAMING GROUP, INC.
By: /s/ EDSON R. ARNEAULT
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Edson R. Arneault,
CHAIRMAN, PRESIDENT, CHIEF EXECUTIVE
OFFICER AND CHIEF FINANCIAL OFFICER
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Date: June 16, 2000
