<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended June 30, 2000
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_____________to_____________
Commission File Number 0-23124
ANCHOR GAMING
-------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Nevada 88-0304253
--------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
815 Pilot Road, Suite G
Las Vegas, Nevada 89119
--------------------------- ----------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code - (702) 896-7568
---------------
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
------------------------ -------------------------------------------
Common Stock Nasdaq National Market
$.01 par value
Securities registered pursuant to Section 12(g) of the Act:
None
--------------------------------------------------------------------------------
(Title of Class)
Indicated 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. Yes X 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. / / Not Applicable.
<PAGE>
As of October 25, 2000, the market value for the voting and non-voting
common equity held by non-affiliates of the registrant had a market value of
$621,918,616.
As of October 25, 2000, 7,067,257 shares of common stock, par value
$0.01 per share, were issued and outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information about the current
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION WITH COMPANY
---- -------- ---------------------
<S> <C> <C>
Thomas J. Matthews........................ 35 Chairman of the Board, Chief Executive
Officer and President
John C. Beach............................. 53 President and Chief Operating Officer,
Automated Wagering International Inc.
David D. Johnson.......................... 49 General Counsel
Joseph Murphy............................. 49 Vice President,
Chief Operating Officer--Gaming
Operations and Director
Geoffrey A. Sage.......................... 41 Chief Financial Officer, Treasurer and
Secretary
Richard R. Burt........................... 53 Vice Chairman of the Board and Director
Stuart D. Beath........................... 41 Director
Glen J. Hettinger......................... 43 Director
Donald R. Fuller.......................... 61 President, United Tote Company
Christer S.T. Roman....................... 49 Senior Vice President Planning and
Development
</TABLE>
THOMAS J. MATTHEWS. Mr. Matthews was appointed Chairman of the Board in
October 2000. Mr. Matthews was named President and Chief Executive Officer in
March 2000. From February 1994 to March 2000, Mr. Matthews served as
Executive Vice President and from February 1994 to November 1999, Mr.
Matthews served as Treasurer. From November 1994 to March 2000, he also
served as Secretary. Mr. Matthews previously served as President of Global
Distributors, Inc., (until its acquisition by the Company in 1994) and Sales
Director of Mikohn Gaming Corporation.
JOHN C. BEACH. Mr. Beach was appointed President of our AWI subsidiary in
January 1999. Mr. Beach joined AWI in 1997 as Chief Operating Officer. Prior to
that time, Mr. Beach had several years' experience at Electronic Data Systems
Corporation as an executive and account manager both in the United States and
overseas.
DAVID D. JOHNSON. Mr. Johnson has served as our General Counsel since
June 2000. From February 1995 through June 2000, he served as Senior Vice
President, General Counsel and Secretary of Alliance Gaming Corporation. From
1987 to 1995, Mr. Johnson was a partner with the law firm of Schreck, Jones,
Bernhard, Wolfson & Godfrey, and, prior to that, was Chief Deputy Attorney
General for the Gaming Division of the Nevada Attorney General's Office. In that
capacity, served as Chief Legal Counsel to the Nevada Gaming Commission and the
Nevada State Gaming Control Board.
JOSEPH MURPHY. Mr. Murphy was appointed Chief Operating Officer--Gaming
Operations in September 2000 and a Director in October 2000. Since February
1996, he has served as Vice President in charge of both casino and route
operations. Mr. Murphy served as General Manager of Gaming Operations from
January 1994 until February 1996. Prior to that time, he managed the gaming
operations of Global Distributors, managed International Game Technology,
Inc.'s gaming machine route operations and held similar positions with Sunset
Coin and United Gaming.
GEOFFREY A. SAGE. Mr. Sage was appointed Secretary in March 2000 and
Treasurer in November 1999, having served as Chief Financial Officer since
November 1998. Mr. Sage, a certified public accountant, joined the Company
in July 1989 as Chief Financial Officer and served as Corporate Controller
from June 1994 through November 1998. Prior to that time, Mr. Sage held
positions as the Controller for Frontier Savings and Loan Association in Las
Vegas and senior auditor at Citibank (Nevada), N.A.
RICHARD R. BURT. Mr. Burt became a Director and Vice Chairman of the Board
in June 1999. Since 1994, he had served as director and chairman of Powerhouse
Technologies, Inc. Mr. Burt is a founder and the chairman of IEP Advisors, Inc.
in Washington D.C. At various times between 1981 and 1994, he was a partner in
McKinsey & Co., the Chief Negotiator in the Strategic Arms Reduction Talks
(START) with the former Soviet Union, the U.S. Ambassador to the Federal
Republic of Germany, the Assistant Secretary of State for European and Canadian
Affairs and Director of Politico-Military Affairs. Mr. Burt also serves as the
Chairman of the Board of Weirton Steel, Inc. and as a director of Paine Webber
Mutual Funds, Hollinger International, Archer Daniels Midland, and Homestake. In
addition, he is a member of the Textron Corporation's International Advisory
Council and a board member of the National Capitol Area Council, Boy Scouts of
America.
STUART D. BEATH. Mr. Beath was elected as a Director in April 1994 and has
been a managing director at Burcor Capital, LLC since January 1999. He was a
private consultant from March 1997 until January 1999. Mr. Beath served as First
Vice President at Stifel, Nicolas & Company, Inc. from April 1993 until
March 1997. Prior to that time, Mr. Beath served in the corporate finance
department at A.G. Edwards & Sons, Inc. in various capacities, with the most
recent being as an officer of the firm.
GLEN J. HETTINGER. Mr. Hettinger was elected as a Director in August 1997.
Mr. Hettinger is a partner with the law firm of Hughes & Luce, L.L.P. in Dallas,
Texas, where he has practiced corporate and securities law since 1984.
DONALD R. FULLER. Mr. Fuller was appointed President and Chief Operating
Officer of the Company's subsidiary, United Tote Company ("United Tote") in
September 1999. Before that, he served as United Tote's Chief Operating Officer
since 1997. Mr. Fuller joined United Tote in July 1994 as Senior Vice
President--Customer Service. Prior to joining United Tote, Mr. Fuller was the
Executive Vice President at AmTote, where he served 26 years in various sales,
marketing and customer service positions.
CHRISTER S.T. ROMAN. Mr. Roman joined the Company as a Senior Vice
President of Product Development. He had been employed by Powerhouse as a Senior
Vice President of Product and Business Development since December 3, 1998. Prior
to that time, Mr. Roman served five years as the managing director of EssNet AB,
a Sweden-based lottery systems supplier. From 1984 until 1992, Mr. Roman served
as President of the London-based Datech Group Plc, an international information
systems company.
SECTION 16(a) BENEFICIAL OWNER REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Officers, directors,
and greater than 10% stockholders are required by certain regulations to
furnish the Company with copies of all Section 16(a) forms they file. Based
solely on its review of the copies of such forms received by it and written
representations of its directors and executive officers, the Company believes
that all officers, directors and greater than 10% beneficial owners have
complied with all applicable filing requirements with respect to the equity
securities of the Company.
1
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding compensation paid
during each of the last three fiscal years to the Company's chief executive
officer and each of the Company's four other most highly compensated executive
officers (based on total annual salary and bonus for the fiscal year ended
June 30, 2000).
<TABLE>
<CAPTION>
NUMBER OF
ANNUAL COMPENSATION SECURITIES
NAME AND ---------------------- UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS GRANTED COMPENSATION
------------------ -------- -------- -------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Stanley E. Fulton...................... 2000(1) $246,885 $ --(2) -- --
1999 245,000 100,000 -- --
1998(3) 245,000 --(2) -- --
Thomas J. Matthews..................... 2000(4,5) 476,580 282,450 -- --
Chairman of the Board, 1999(5) 200,000 337,500 -- --
Chief Executive Officer and President 1998(5) 198,462 410,400 -- --
Joseph Murphy.......................... 2000(6) 413,104 188,300 -- --
Vice President and Chief Operating 1999 200,000 225,000 -- --
Officer--Gaming Operations 1998 198,462 273,600 -- --
Geoffrey A. Sage....................... 2000(7) 124,231 100,000(8) 30,000 --
Chief Financial Officer, 1999(9) 100,000 70,000 -- --
Treasurer, and Secretary 1998 96,923 40,000 25,000 --
John C. Beach.......................... 2000(10) 220,000 180,000(11) 40,000 --
President and Chief
Operating Officer of Automated
Wagering International, Inc.
Michael D. Rumbolz..................... 2000(12) 302,000 -- -- 2,630(13)
1999 360,000 100,000 -- 7,890(13)
1998 360,000 100,000 -- 7,890(13)
</TABLE>
--------------------------
(1) Mr. Fulton resigned his position on the Board.
(2) Mr. Fulton forfeited his bonuses that were accrued for fiscal years 1998
and 2000.
(3) Mr. Fulton also held the offices of Chief Executive Officer and acting
Chief Financial Officer.
(4) Mr. Matthews was appointed Chief Executive Officer and President March 2000
and Chairman of the Board in October 2000.
(5) Mr. Matthews held the offices of Treasurer, Executive Vice President, and
Secretary.
(6) Mr. Murphy was appointed Chief Operating Officer--Gaming Operations in
September 2000. Mr. Murphy held the office of Vice President prior to such
time.
(7) Mr. Sage was appointed Treasurer November 1999 and Secretary March 2000.
(8) Mr. Sage's bonus was accrued and paid on a calendar year basis.
(9) Mr. Sage was appointed Chief Financial Officer November 1998.
(10) Mr. Beach was previously a Powerhouse Technologies, Inc. employee.
(11) Mr. Beach's bonus was paid in September 2000 but was accrued for fiscal
year 2000.
(12) Mr. Rumbolz's service as President and Chief Executive Officer ended
March 3, 2000.
(13) Mr. Rumbolz's insurance premiums were paid by the Company as additional
compensation.
2
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning options to purchase
Common Stock granted in the fiscal year ended June 30, 2000, to the individuals
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS POTENTIAL
UNDERLYING GRANTED TO STOCK APPRECIATION
OPTIONS EMPLOYEES EXERCISE PRICE EXPIRATION -------------------
NAME GRANTED IN 2000 (1) $/SHARE (2) DATE 5% (3) 10% (3)
---- ---------- ----------- -------------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Stanley E. Fulton................ 0 0 N/A N/A N/A N/A
Thomas J. Matthews............... 0 0 N/A N/A N/A N/A
Joseph Murphy.................... 0 0 N/A N/A N/A N/A
Geoffrey A. Sage................. 30,000 6.70% $50.00 12/31/05 414,422 915,765
John C. Beach.................... 40,000 8.93% $49.50 6/30/05 410,278 906,607
Michael D. Rumbolz............... 0 0 N/A N/A N/A N/A
</TABLE>
------------------------
(1) 448,000 options were granted to employees in 2000.
(2) The exercise price in each case is the fair market value of the common stock
on the date of the grant.
(3) Assumed annual compounded rates of stock price appreciation of 5% and 10%
over the term of the grant.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information concerning options to
purchase common stock by the individuals named in the Summary Compensation
Table.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT JUNE 30, 2000 AT JUNE 30, 2000(1)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley E. Fulton...... 0 $ 0 0 0 $ 0 $ 0
Thomas J. Matthews..... 49,400 1,204,457 41,600 112,500 673,421 1,821,150
Joseph Murphy.......... 58,900 1,265,907 30,600 112,500 495,353 1,821,150
Geoffrey A. Sage....... 0 0 15,000 45,000 5,315 0
John C. Beach.......... 0 0 0 40,000 0 0
Michael D. Rumbolz..... 60,000 1,886,956 125,000 0 3,273,500 0
</TABLE>
------------------------
(1) The value is the amount by which the market value of the underlying stock at
June 30, 2000 ($47.938) exceeds the aggregate exercise prices of the
options.
COMPENSATION OF DIRECTORS
Directors who are not employees or otherwise affiliates of the Company
receive director's fees of $1,250 for each Board meeting and for each Audit
Committee meeting attended, and $750 for all other committee meetings attended,
as well as an annual director's fee of $12,500. Additionally, all directors are
generally reimbursed for out-of-pocket expenses incurred in connection with
attending Board and committee meetings.
3
<PAGE>
EMPLOYMENT CONTRACTS; TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS; 2000 COMPENSATION OF CHIEF EXECUTIVE OFFICER
EXECUTIVE OFFICER EMPLOYMENT AGREEMENTS. In connection with the purchase
of the Fulton family shares in October 2000, the Board of Directors
determined that it was important to the future success of the Company to
retain a management team with the capacity to lead the Company into the
future. In order to provide a compensation package that would replace
existing short-term agreements and to provide for a compensation system that
would align the interests of management with those of the stockholders, the
Board of Directors and the Special Committee charged with evaluating the
Fulton transaction adopted the Anchor Gaming 2000 Incentive Stock Plan; made
grants of options and restricted stock thereunder; and entered into
employment agreements with key employees and officers of the Company.
The Company's employment agreements with each of the five named executive
officers of the Company listed in the Summary Compensation Table are summarized
below.
The following chart sets forth the position of each of the four executive
officers that entered into the employment agreements with the Company on the
closing of the transaction with the Fulton family, such officer's salary and
maximum bonus.
<TABLE>
<CAPTION>
MAXIMUM
NAME TITLE ANNUAL SALARY ANNUAL BONUS
---- ----------------------------------------- ------------- ------------
<S> <C> <C> <C>
Thomas J. Matthews............. Chairman of the Board, President and $450,000 $450,000
Chief Executive Officer
Joseph Murphy.................. Vice President and Chief Operating $360,000 $360,000
Officer--Gaming Operations
Geoffrey A. Sage............... Chief Financial Officer, Treasurer and $250,000 $200,000
Secretary
David D. Johnson............... General Counsel $225,000 $200,000
</TABLE>
Each of the employment agreements with these executive officers has a term
of 4 years. Each employment agreement provides that if the executive's
employment is terminated for Cause (as defined in the employment agreement),
such executive will receive no severance of any kind. If the executive
voluntarily terminates his employment, he will receive no severance payment of
any kind. In the event that the Company chooses to terminate the executive's
employment for any reason other than Cause, the executive will receive a
severance payment equal to one year's salary. If the executive is for any reason
terminated or subjected to constructive termination (as defined in the
employment agreement), following a Change of Control (as defined below), such
executive will receive a severance payment equal to one year's salary. "CHANGE
OF CONTROL" means the occurrence of any of the following events, as a result of
one transaction or a series of transactions: (i) any "person" (as that term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, (the "Exchange Act"), but excluding the Company, its affiliates, and
any qualified or non-qualified plan maintained by the Company or its affiliates)
becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of Anchor Gaming
representing more than 50% of the combined voting power of Anchor Gaming's then
outstanding securities; (ii) individuals who constitute a majority of the Board
of Directors of the Company immediately prior to a contested election for
positions on the Board cease to constitute a majority as a result of such
contested election; (iii) Anchor Gaming is combined (by merger, share exchange,
consolidation, or otherwise) with another entity, and as a result of such
combination, less than 50% of the outstanding securities of the surviving or
resulting entity are owned in the aggregate by the former shareholders of Anchor
Gaming; (iv) the Company sells, leases, or otherwise transfers all or a majority
of all of its properties, assets or income or revenue generating capacity to
another person or entity; (v) a dissolution or liquidation of Anchor Gaming or;
(vi) any other transaction or series of
4
<PAGE>
transactions is consummated that results in a required disclosure under Item 1
of Form 8-K or successor form.
In the event that the total compensation paid to any of these executives as
severance in the event of a Change of Control, taking into account all cash
severance payments, shares of stock, accelerated vesting of stock options and
bonuses, if any (the "Severance Payment"), is found to constitute "an excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, then the Company will pay to the executive, in
addition to the compensation paid as Severance Payment, an additional amount,
which, after reduction for income taxes and excise taxes on the additional
amount, is sufficient to provide for the payment of any excise tax that may be
due by the executive on the Severance Payment.
The employment agreements with these executives also contain covenants not
to compete and a covenant to protect confidential information.
On June 25, 1997, Powerhouse Technologies, Inc. entered into an agreement
with John Beach to serve as Chief Operating Officer of AWI with an annual base
salary of $220,000 and a potential annual bonus of $200,000 based on any bonus
or executive incentive compensation plan as may be established. If Mr. Beach is
removed from his position with the Company without cause or for good reason as
defined in the agreement after June 1998 he will receive his then current salary
for a period of 12 months following termination. Mr. Beach also agreed to
certain confidentiality, non-competition and similar provisions. In no event
will the Company be required to make to Mr. Beach any payment under his
agreement that would result, in the opinion of tax counsel, in an "excess
parachute payment" within the meaning of section 280G of the Internal Revenue
Code of 1986, and the imposition of an excise tax under Section 4999 of the
Internal Revenue Code of 1986.
EXECUTIVE STOCK OPTIONS AND RESTRICTED STOCK GRANTS. As part of the
executive compensation program described above, the Company has granted options
and restricted stock awards to its officers and key employees. These option and
restricted stock grants are subject to the approval of the stockholders at the
annual meeting, to the extent they exceed the amounts available for grant under
the Anchor Gaming 1995 Stock Option Plan. The table below sets forth the grants
for each of the five named executive officers of the Company listed on the
Summary Compensation Table.
<TABLE>
<CAPTION>
RESTRICTED
NAME TITLE OPTION GRANTS STOCK GRANTS
---- ----------------------------------------- ------------- ------------
<S> <C> <C> <C>
Thomas J. Matthews............. Chairman of the Board, President and 120,000 50,000
Chief Executive Officer
Joseph Murphy.................. Vice President and Chief Operating 120,000 50,000
Officer--Gaming Operations
Geoffrey A. Sage............... Chief Financial Officer, Treasurer and 35,000 5,000
Secretary
David D. Johnson............... General Counsel 35,000 5,000
John C. Beach.................. President and Chief Operating Officer of 35,000 5,000
Automated Wagering International, Inc.
</TABLE>
The options and the restricted stock grants vest as follows: 20% of the
total number of shares subject to options and restricted stock awards vested on
the closing of the transaction with the Fulton family; the remainder vests
quarterly over the four-year period ending December 31, 2004.
5
<PAGE>
The exercise price for all Options is $71.875 per share, the closing
price for the Company's common stock on the Nasdaq National Market on the
date the board granted the options. Because a portion of the options and the
restricted stock grants are subject to stockholder approval, the difference
between the exercise price for all options and restricted stock subject to
stockholder approval and the closing price of the Company's common stock on
the date that such approval is obtained will constitute a noncash
compensation expense to the Company. A total of 542,000 shares of common
stock of the Company is subject to restricted stock and option grants as to
which stockholder approval will be sought.
If the executive is terminated from employment with the Company without
Cause, options and restricted stock not yet vested will vest immediately. Once
vested, (i) if the executive ceases to be an employee of the Company for any
reason whatsoever, voluntary or involuntary, other than death, the option may be
exercised only until 5:00 p.m. Las Vegas time on the business day immediately
preceding the first anniversary of the stated date of cessation of employment
and in any case no later than the stated expiration date of the option, and
(ii) if the executive ceases to be an employee because of death of the
executive, the option may be exercised by the executive's estate only for two
years after the executive's death and in any case no later than the stated
expiration date of the option. The vesting of the options and the restricted
stock will accelerate on a Change of Control, as defined above.
In the event that the total compensation paid to any of these executives as
severance in the event of a Change of Control, taking into account all cash
severance payments, shares of stock, accelerated vesting of stock options, and
bonuses, if any (the "Severance Payment"), is found to constitute "an excess
parachute payment" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended, then the Company will pay to the executive, in
addition to the compensation paid as Severance Payment, an additional amount,
which, after reduction for income taxes and excise taxes on the additional
amount, is sufficient to provide for the payment of any excise tax that may be
due by the executive on the Severance Payment.
The Company has the right to require the executive to sell stock
purchased under the option back to the Company for the exercise price and
restricted stock for $5.00 per share plus certain adjustments or to disgorge
certain profits from any sale of such stock if the executive breaches
restrictive covenants set forth in the option or the restricted stock
agreement relating to confidential information and non-competition.
Mr. Matthews has previously received options to purchase up to 200,000
shares of common stock at an exercise price of $31.875 per share. The stock
option agreement expires on July 1, 2007. Under the terms of the stock option
agreement, 6,250 shares vest on March 31, June 30, September 30, and December
31 of 1999, 2000, and 2001. An additional 125,000 shares will vest if certain
performance goals established by the Board of Directors are achieved.
Notwithstanding the foregoing, all of the shares of common stock as to which
vesting has not occurred in accordance with the previously described
provisions will vest on June 30, 2005, if and only if Mr. Matthews has been
an employee of the Company for the entire period from the date of the stock
option agreement until June 30, 2005.
Mr. Sage has previously received options to purchase 30,000 shares of
common stock at an exercise price of $50.00 per share. This stock option
agreement expires on December 31, 2005, unless Mr. Sage is terminated earlier
under the terms of his new employment agreement. Under the terms of this
stock option agreement, 5,000 shares vested on June 30, 2000, 5,000 will vest
on December 31, 2000 and an additional 10,000 shares will vest on December
31, 2004. In 1996, Mr. Sage also received an option grant to purchase 5,000
shares of common stock at an exercise price per share of $46.75. This stock
option agreement expires on May 13, 2006 unless Mr. Sage is terminated
earlier under the terms of his new employment agreement. Under the terms of
this stock option agreement, the shares subject to the option will vest on
May 13, 1999 and will cease to vest immediately on termination of employment.
In 1997, Mr. Sage received options to purchase 25,000 shares of common stock
at an exercise price of $55.75. This stock option agreement expires on
December 31, 2007 unless Mr. Sage is terminated earlier under the terms of
his new employment agreement. Under the terms of this stock option agreement,
5,000
6
<PAGE>
shares vested December 31, 1999, 10,000 will vest on June 30, 2001 and 10,000
will vest on December 31, 2002. The option will cease to vest immediately on
termination of employment. In the event of a Change of Control (as defined in
his new employment agreement), if Mr. Sage is terminated other than for
substantial misconduct, significantly demoted or required to relocate greater
than sixty (60) miles from his prior place of work in contemplation of or within
one year following a Change of Control, the options of Mr. Sage will immediately
vest and be exercisable, and will remain vested and exercisable for one year
from the date of the termination, demotion or requirement to relocate. A Change
of Control under Mr. Sage's new employment agreement will constitute a Change of
Control under his previous option agreements. Termination under Mr. Sage's new
employment agreement will constitute termination under his previous option
agreements.
Mr. Murphy has previously received options to purchase up to 200,000 shares
of common stock at an exercise price of $31.875 per share. The stock option
agreement expires on July 1, 2007. Under the terms of the stock option
agreement, 6,250 shares vest on March 31, June 30, September 30, and
December 31 of 1999, 2000 and 2001. An additional 125,000 shares will vest if
certain performance goals established by the Board of Directors are achieved.
Notwithstanding the foregoing, all of the shares of common stock as to which
vesting has not occurred in accordance with the previously described provisions
will vest on June 30, 2005, if and only if Mr. Murphy has been an employee of
the Company for the entire period from the date of the stock option agreement
until June 30, 2005.
Mr. Johnson has previously received options to purchase 40,000 shares of
common stock at an exercise price of $52.87 per share. Under the terms of
these options, the first 10,000 shares vested on June 30, 2000, with 10,000
shares vesting on September 30, 2001, 10,000 shares vesting on December 31,
2002, and 10,000 shares vesting on June 30, 2004.
GRANTS TO DIRECTORS. Anchor Gaming believes that directors as well as
officers of the Company should have a meaningful investment in the company
they manage. In order to increase the Company's stock ownership by its
non-employee directors and to attract and retain highly qualified individuals
to serve as directors of the Company, the Board of Directors grants the
directors options pursuant to the 1995 Plan and under the 2000 Plan, subject
to stockholder approval to the extent the amount of the grants exceeds
amounts available under the Anchor Gaming 1995 Stock Option Plan. There are
currently three non-employee directors serving on the Board of Directors.
Each non-employee director of the Company or its subsidiaries has
received nonqualified options to purchase 25,000 shares of common stock,
subject to stockholder approval to the extent the amount of the grants
exceeds amounts available under the Anchor Gaming 1995 Stock Option Plan. The
option grants will vest quarterly over four years beginning January 1, 2000,
except 20% vested on closing of the transactions with the Fulton family. The
exercise price for all options is $71.875, the closing price for the common
stock on the Nasdaq Market on the date of the grant. Upon an event of a
Change of Control, these options will become immediately exercisable.
7
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of October 2, 2000, the beneficial
ownership of each current director, each nominee for director, each executive
officer included in the Summary Compensation Table, the directors and executive
officers as a group, and each stockholder known to management to own
beneficially more than 5% of the common stock. The table does not give effect to
the two-for-one stock split that was announced on September 25, 2000 to be made
to holders of record as of October 31, 2000, and distributed as soon as
practicable thereafter or the repurchase of approximately 4.6 million shares
of common stock from the Fulton family and their affiliates.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES
OF BENEFICIAL OWNER (1) BENEFICIALLY OWNED PERCENTAGE OF CLASS
----------------------- ------------------ -------------------
<S> <C> <C>
Thomas J. Matthews (2)...................................... 121,850 1.0%
John C. Beach (3)........................................... 22,000 *
David D. Johnson (4)........................................ 22,000 *
Joseph Murphy (5)........................................... 113,350 1.0%
Geoffrey A. Sage (6)........................................ 27,000 *
Stuart D. Beath (7)......................................... 12,500 *
Glen J. Hettinger (8)....................................... 12,500 *
Richard R. Burt (9)......................................... 5,000 *
All executive officers and directors as a group (8 persons)
(10)...................................................... 336,200 2.9%
</TABLE>
------------------------
* Less than 1%
(1) Unless otherwise noted, and subject to community property laws, where
applicable, the persons in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by
them. The address for each listed person other than Mr. Burt is c/o Anchor
Gaming, 815 Pilot Rd., Suite G, Las Vegas, Nevada 89119. Mr. Burt's
address is 1275 Pennsylvania Avenue NW, 10th Floor, Washington, DC 20004.
(2) Includes 50,000 shares of restricted stock, of which 10,000 shares are
vested and 40,000 shares of which vest quarterly through December 31,
2004, and 67,750 shares that may be acquired upon the exercise of options
exercisable within the next 60 days. Includes 4,100 shares with respect to
which Mr. Matthews holds voting and dispositive powers with his wife.
(3) Includes 5,000 shares of restricted stock, of which 1,000 shares are
vested and 4,000 shares of which vest quarterly through December 31, 2004,
and 7,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(4) Includes 5,000 shares of restricted stock, of which 1,000 shares are
vested and 4,000 shares of which vest quarterly through December 31, 2004,
and 7,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(5) Includes 50,000 shares of restricted stock, of which 10,000 shares are
vested and 40,000 shares of which vest quarterly through December 31,
2004, and 24,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days. Includes 2,500 shares with respect to
which Mr. Murphy shares voting and dispositive power with his wife.
(6) Includes 5,000 shares of restricted stock, of which 1,000 shares are
vested and 4,000 shares of which vest quarterly through December 31, 2004,
and 22,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(7) Includes 12,500 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(8) Includes 12,500 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(9) Includes 5,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
(10) Includes 115,000 shares of restricted stock, of which 23,000 shares are
vested and 92,000 shares of which vest quarterly through December 31,
2004, and 69,000 shares that may be acquired upon the exercise of options
exercisable within the next 60 days.
8
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Hettinger is a director of the Company and a partner at Hughes &
Luce, L.L.P., which has rendered legal services to the Company in the past
and is expected to continue to do so in the future. Richard R. Burt, who
became the vice chairman of the Board of Directors on June 29, 1999, is the
chairman and a founder of IEP Advisors, Inc. ("IEP"), which has been retained
by the Company to provide consulting services and to assist the Company in
connection with its international activities. In addition, IEP, Mr. Burt and
the Company entered into a consulting agreement in September 1999, under
which Mr. Burt is to provide assistance to the Company and its affiliates in
the expansion of their international activities. The agreement has a two-year
term from June 30, 1999 and may be terminated by the Company or by Mr. Burt
and IEP upon 30 days' prior written notice. Mr. Burt will be paid $15,000 per
month, an annual bonus of at least $60,000, and reimbursement of reasonable
out-of-pocket, travel and entertainment expenses as well as licensing costs.
The consulting agreement also provides that Mr. Burt will not compete with
the Company for a period of two years from the end of the term, and will
serve as a member of the Board of Directors.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
ANCHOR GAMING
By: /s/ THOMAS J. MATTHEWS
------------------------------------
Thomas J. Matthews,
CHIEF EXECUTIVE OFFICER
By: /s/ GEOFFREY A. SAGE
------------------------------------
Geoffrey A. Sage,
CHIEF FINANCIAL OFFICER
Date: October 27, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities indicated.
Signature Title Date
/s/ STUART D. BEATH Director October 27, 2000
-------------------------
Stuart D. Beath
/s/ RICHARD R. BURT Director October 27, 2000
-------------------------
Richard R. Burt
/s/ JOSEPH MURPHY Director October 27, 2000
-------------------------
Joseph Murphy
/s/ GLEN J. HETTINGER Director October 27, 2000
-------------------------
Glen J. Hettinger
10
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
2.1 Agreement and Plan of Merger dated as of March 9, 1999 among
Anchor Gaming, Olive AP Acquisition Corporation and
Powerhouse Technologies, Inc. (Incorporated by reference to
Exhibit 2.1 of our Current Report on Form 8-K dated March
12, 1999.)
2.2 Amendment No. 1 to Merger Agreement dated as of March 19,
1999 among Anchor Gaming, Olive AP Acquisition Corporation
and Powerhouse Technologies, Inc. (Incorporated by reference
to Exhibit 2.2 of our Current Report on Form 8-K dated July
14, 1999)
3.1 Restated Articles of Incorporation of Anchor Gaming.
(Incorporated by reference to Exhibit 3.1 to our
Registration Statement on Form S-1 (Registration No.
33-71870)).
3.2 Restated Bylaws of Anchor Gaming. (Incorporated by reference
to Exhibit 3.2 to our Registration Statement on Form S-1
(Registration No. 33-71870)).
4.1 Specimen of Common Stock Certificate. (Incorporated by
reference to Exhibit 4.1 to our Registration Statement on
Form S-1 (Registration No. 33-71870)).
4.2 Rights Agreement between Anchor Gaming and the Rights Agent.
(Incorporated by reference to Exhibit 4.2 to our June 30,
1998 Annual Report on Form 10-K (File No. 0-23124)).
4.3 Certificate of Designation, Preferences, and Rights of
Series A Junior Participating Preferred Stock (Incorporated
by reference to Exhibit 4.3 to our June 30, 1998 Annual
Report on Form 10-K (File No. 0-23124)).
9.1 Irrevocable Proxy of Michael B. Fulton in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.10 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
9.2 Irrevocable Proxy of Stanley M. Fulton in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.11 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
9.3 Irrevocable Proxy of Elizabeth F. Jones in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.12 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
9.4 Irrevocable Proxy of Lucinda F. Tischer in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.13 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
9.5 Irrevocable Proxy of Deborah J. Fulton in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.14 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
9.6 Irrevocable Proxy of Maryland Park Apartments, Inc. in favor
of Stanley E. Fulton dated January 22, 1999. (Incorporated
by reference to Exhibit 9.15 to our June 30, 1999 Annual
Report on Form 10-K (File No. 0-23124)).
9.7 Irrevocable Proxy of Virginia L. Fulton in favor of Stanley
E. Fulton dated January 19, 1999. (Incorporated by reference
to Exhibit 9.16 to our June 30, 1999 Annual Report on Form
10-K (File No. 0-23124)).
10.1 Promissory Notes of Anchor Coin, D D Stud, Inc., and C. G.
Investments, Inc. to Stanley E. Fulton. (Incorporated by
reference to Exhibit 10.4 to our Registration Statement on
Form S-1 (Registration No. 33-71870)).
10.2 Promissory Note of Colorado Grande Enterprises, Inc. to C.G.
Investments, Inc. (Incorporated by reference to Exhibit 10.5
to our Registration Statement on Form S-1 (Registration No.
33-71870)).
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
10.3 Lease and Sublease Agreement between Smith's Food & Drug
Centers, Inc. and Anchor Coin, dated July 28, 1993.
(Confidential Treatment for a portion of this document was
requested and granted pursuant to Rule 406 under the
Securities Act). (Incorporated by reference to Exhibit 10.10
to our Registration Statement on Form S-1 (Registration No.
33-71870)).
10.4 Fourth Amendment to Lease and Sublease Agreement dated
February 27, 1996 between Smith's Food and Drug Centers,
Inc. and Anchor Coin. (Incorporated by reference to
Exhibit 10.4 to our June 30, 2000 Annual Report on Form
10-K (File No. 0-23124))
10.5 Employment Agreement between Anchor Gaming and Stanley E.
Fulton. (Incorporated by reference to Exhibit 10.10 to our
June 30, 1994 Annual Report on Form 10-K (File No.
0-23124)).
10.6 Option Agreement between Thomas J. Matthews and Anchor
Gaming. (Incorporated by reference to Exhibit 10.19 to our
June 30, 1994 Annual Report on Form 10-K (File No.
0-23124)).
10.7 Option Agreement between Joseph Murphy and Anchor Gaming.
(Incorporated by reference to Exhibit 10.20 to our June 30,
1994 Annual Report on Form 10-K (File No. 0-23124)).
10.8 Option Agreement between William Randall Adams and Anchor
Gaming. (Incorporated by reference to Exhibit 10.21 to our
June 30, 1994 Annual Report on Form 10-K (File No.
0-23124)).
10.9 Option Agreement between Geoffrey A. Sage and Anchor Gaming.
(Incorporated by reference to Exhibit 10.25 to our June 30,
1994 Annual Report on Form 10-K (File No. 0-23124)).
10.10 Option Agreement between Stuart D. Beath and Anchor Gaming.
(Incorporated by reference to Exhibit 10.26 to our June 30,
1994 Annual Report on Form 10-K (File No. 0-23124)).
10.11 Form of Stock Option Agreement between Glen J. Hettinger and
Anchor Gaming. (Incorporated by reference to Exhibit 10.28
to our June 30, 1996 Annual Report on Form 10-K (File No.
000-23124)).
10.12 Form of Indemnification Agreement between Officers and
Directors and Anchor Gaming. (Incorporated by reference to
Exhibit 10.28 to our June 30, 1994 Annual Report on Form
10-K (File No. 0-23124)).
10.13 Indemnification Agreement between Glen J. Hettinger and
Anchor Gaming. (Incorporated by reference to Exhibit 10.30
to our June 30, 1998 Annual Report on Form 10-K (File No.
0-23124)).
10.14 Tax Indemnification Agreement between Stanley E. Fulton,
Anchor Gaming and its subsidiaries. (Incorporated by
reference to Exhibit 10.29 to our June 30, 1994 Annual
Report on Form 10-K (File No. 0-23124)).
10.15 Option Agreement between Elizabeth Fulton and Anchor Gaming.
(Incorporated by reference to Exhibit 10.30 to our June 30,
1994 Annual Report on Form 10-K (File No. 0-23124)).
10.16 Anchor Gaming 1995 Employee Stock Option Plan. (Incorporated
by reference to Exhibit 10.31 to our June 30, 1995 Annual
Report on Form 10-K (File No. 0-23124)).
10.17 Joint Venture Agreement, dated as of December 3, 1996 by and
between Anchor Games,
d/b/a/ Anchor Coin, a Nevada corporation and our
Subsidiary, and IGT (File No. 000-23124)). (Incorporated by
reference to Exhibit 10.37 to our June 30, 1997 Annual
Report on Form 10-K (File No. 0-23124)).
10.18 Stock Option Agreement of William Adams dated April 2, 1997.
(Incorporated by reference to Exhibit 4.1 to our
Registration Statement on Form S-8 (File No. 333-53257)).
10.19 Stock Option Agreement of Thomas J. Matthews dated April 2,
1997. (Incorporated by reference to Exhibit 4.2 to our
Registration Statement on Form S-8 (File No. 333-53257)).
10.20 Stock Option Agreement of Joseph Murphy dated April 2, 1997.
(Incorporated by reference to Exhibit 4.3 to our
Registration Statement on Form S-8 (File No. 333-53257)).
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
--------
<C> <S>
10.21 Loan Agreement, dated as of June 29, 1999 among Anchor
Gaming as borrower, the lenders therein named, and Bank of
America national Trust and Savings Association as
administrative agent. (Incorporated by reference to Exhibit
10.35 to our June 30, 1999 Annual Report on Form 10-K (File
No. 0-23124)).
10.22 Form of Stock Option Agreement. (Incorporated by reference
to Exhibit 10.36 to our June 30, 1996 Annual Report on Form
10-K (File No. 0-23124)).
10.23 Amendment No. 1 to Loan Agreement dated March 24, 2000
between Anchor Gaming, as borrower, Bank of America, N.A.,
as administrative agent and the other lenders named therein.
(Incorporated by reference to Exhibit 10.23 to our June 30,
2000 Annual Report on Form 10-K (File No. 0-23124))
10.24 Guaranty dated June 15, 2000 of Anchor Gaming in favor of
Bank of America, N.A., as administrative agent for the
benefit of lenders to the Pala Band of Mission Indians.
(Incorporated by reference to Exhibit 10.24 to our June 30,
2000 Annual Report on Form 10-K (File No. 0-23124))
10.25 Asset Purchase Agreement dated September 24, 2000 by and
between My Way Holdings LLC and Nuevo Del Sol Turf Club,
Inc. (Incorporated by reference to Exhibit 99.2 to the
Current Report on Form 8-K filed September 26, 2000. (File
No. 0-23124)).
10.26 Stock Purchase Agreement dated September 24, 2000 between
Anchor Gaming and members of the Fulton family and their
affiliates. (Incorporated by reference to Exhibit 99.3 to
the Current Report on Form 8-K filed September 26, 2000
(File No. 0-23124)).
10.27 Assignment of Membership Interests in Ourway Realty, L.L.C.
dated September 24, 2000 between Anchor Gaming and Stanley
Fulton. (Incorporated by reference to Exhibit 99.4 to the
Current Report on Form 8-K filed September 26, 2000 (File
No. 0-23124)).
10.28 Consulting Agreement dated September 24, 2000 entered into
by Stanley Fulton and Anchor Gaming. (Incorporated by
reference to Exhibit 99.5 to the Current Report on Form 8-K
filed September 26, 2000 (File No. 0-23124)).
10.29* Form of Anchor Gaming Executive Stock Option
Agreement.
10.30* Form of Anchor Gaming Director Stock Option Agreement.
10.31* Form of Anchor Gaming Restricted Stock Agreement.
10.32* Anchor Gaming 2000 Stock Incentive Plan.
10.33* Form of Employment Agreement between Anchor Gaming and
Thomas J. Matthews.
10.34* Form of Employment Agreement between Anchor Gaming and
Joseph Murphy.
10.35* Form of Employment Agreement between Anchor Gaming and
Geoffrey A. Sage.
10.36* Form of Employment Agreement between Anchor Gaming and
David D. Johnson.
10.37* Amendment No. 2, dated October 17, 2000, to Loan
Agreement dated June 29, 1999 among Anchor Gaming as
Borrower, the Lenders therein named and Bank of
America N.A. as Administrative Agent.
10.38* Amendment No. 1, dated October 17, 2000, to Guaranty
dated June 15, 2000 by Anchor Gaming in favor of Bank
of America, N.A. as Administrative Agent and the
other lenders named therein that are party to the
Pala Loan Agreement.
10.39* Anchor Gaming's $35,000,000 Promissory Note, dated
October 17, 2000, to Bankers Trust Company.
10.40* Anchor Gaming's $15,000,000 Promissory Note, dated
October 17, 2000, to Lehman Commercial Paper, Inc.
10.41* Joinder and Assumption Agreement, dated October 17,
2000, among Anchor Gaming as Borrower, Bankers Trust
as Increasing Lender, Lehman Commercial Paper, Inc.
as Joining Lender and Bank of America N.A. as
Administrative Agent pursuant to June 29, 1999 Loan
Agreement.
10.42* Indenture for 9-7/8% Senior Subordinated Notes Due
2008, dated October 17, 2000.
21.1 List of Subsidiary Corporations. (Incorporated by
reference to Exhibit 21.1 to our June 30, 2000 Annual
Report on Form 10-K (File No. 0-23124))
27.1 Financial Data Schedule. (Incorporated by reference
to Exhibit 27.1 to our June 30, 2000 Annual Report
on Form 10-K (File No. 0-23124))
</TABLE>
------------------------
* Filed herewith
13
