UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report: October 6, 2005
(Date of earliest event reported) (September 30, 2005)
Multimedia Games, Inc.
(Exact name of registrant as specified in its charter)
001-14551
(Commission File Number)
Texas 74-2611034
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
206 Wild Basin Rd., Bldg. B, Suite 400,
Austin, Texas 78746
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (512) 334-7500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry Into a Material Definitive Agreement.
On September 30, 2005, the Compensation Committee of the Board of Directors (the
"Committee") of Multimedia Games, Inc. (the "Company" or "we") approved an
immediate acceleration of the vesting for certain out-of-the-money unvested
stock options previously awarded to employees. The accelerated options were
issued under our 2001, 2002, 2003, and Ad Hoc Stock Option Plans. The Committee
made the decision to immediately vest these options based in part on the
Financial Accounting Standards Board's issuance of Statement of Financial
Accounting Standards No. 123 (Revised 2004), or SFAS No. 123(R). The Committee
also considered the limited retention and motivational incentive of various
groups of our out-of-the-money stock options. Absent the acceleration of these
options, upon adoption of SFAS No. 123(R) on October 1, 2005, we would have been
required to recognize approximately $1,500,000 in pre-tax compensation expense
from these options over their remaining vesting terms. This current estimate was
calculated using the Black-Scholes model. We may ultimately use a different
model, such as a lattice model, to calculate this expense, and such calculations
may differ significantly from our current estimates. By vesting the selected
previously unvested options, that amount of stock-based compensation expense
under SFAS No. 123 will only be reflected in our footnote disclosures.
In the event they terminate their employment with or service to the Company
prior to the completion of the original vesting terms, certain employees, three
of our executive officers, and one of our directors may benefit from the
accelerated vesting of their stock options, as they would have the ability to
exercise certain options that would have otherwise been forfeited. Because we
have accelerated the vesting of only select, out-of-the-money options, no
stock-based compensation expense will be recorded with respect to these options.
The closing market price per share of our common stock on September 30, 2005 was
$9.71, and the exercise price of the 311,625 unvested options on that date
ranged from $10.15 to $21.53.
The following table summarizes the options subject to acceleration:
Aggregate number
of shares
issuable under
accelerated Exercise
portion of Price per
options Share(1)
---------------- ----------
Director and Executive Officer
Michael J. Maples 20,625 $ 15.94
P. Howard Chalmers 20,000 $ 12.10
Randy Cieslewicz 22,500 $ 10.15
Dirk Heinen 76,250 $ 10.84
All Other Employees 172,250 $ 14.31
Total 311,625 $ 13.13
(1) The closing price of the Company's closing stock on the day the
Compensation Committee approved the acceleration was $9.71
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MULTIMEDIA GAMES, INC.
Dated: October 6, 2005 By: /s/ Craig S. Nouis
-----------------------
Craig S. Nouis
Vice President and
Chief Financial Officer
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