Filed Pursuant to Rule 424(b)(3)
Registration No. 333-127795
MIDWAY GAMES INC.
Up to 109,363 Shares of Common Stock
par value $.01
The persons offering shares of our common stock by means of this prospectus, and the
maximum number of shares that they may offer, are identified under the heading “Selling
Stockholders” in this prospectus. The selling stockholders acquired the shares or rights to
acquire the shares of our common stock covered by this prospectus in connection with our
acquisition of Ratbag Holdings Pty Ltd (“Ratbag”), a software development company located in
Australia. See “Selling Stockholders” on pages 3 and 4 below.
Our principal executive office is located at 2704 West Roscoe Street,
Chicago,
IL 60618,
telephone no. (
773) 961-2222. Our common stock is listed on the New York Stock Exchange under the
symbol
“MWY.” On
September 12, 2005, the last reported sale price of our common stock on the NYSE
was $16.21 per share.
The selling stockholders may offer shares through public or private transactions, at
prevailing market prices, at privately negotiated prices or by any other lawful method. The
selling stockholders are not required to sell any of their shares. More detailed information about
the distribution of the shares is found in the section of this prospectus entitled “Plan of
Distribution.”
Investing in our common stock involves risks.
See “Risk Factors” on page 2.
Neither the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
1
About this Prospectus
You should carefully read this prospectus before purchasing our common stock, including the
information under the heading “Risk Factors.” You should also carefully read the documents that
are identified under the heading “Documents Incorporated by Reference” near the end of this
prospectus.
Risk Factors
Investing in our securities involves risks. The most significant factors that make an
investment in our securities risky or speculative are discussed under the captions
“Item 1.
Business—Risk Factors” and
“Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operations” in our most recent Annual Report on Form 10-K; and in the Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K that are
incorporated by reference in this
prospectus. These factors, and others that are not presently known to us, may cause our operating
results to vary from anticipated results or may materially and adversely affect our business and
financial condition. If any of the unfavorable events or circumstances described in the risk
factors actually occur, our business may suffer, the trading price of our common stock and other
securities could decline, and you could lose all or part of your investment.
Forward-Looking Statements
Some of the information in this prospectus contains
“forward-looking statements” within
the meaning of the federal securities laws. These statements may also be found in the information
incorporated by reference in this prospectus. These statements describe our plans, strategies and
goals and our beliefs concerning future business conditions and our business outlook based on
currently available information. We make no commitment to update the forward-looking statements
included in this prospectus, except as required by law. Forward-looking statements typically are
identified by use of terms describing future events and terms such as
“may,” “will,” “could,”
“should,” “expect,” “anticipate,” “seek,” “believe,” “plan,” “strategy,” “estimate,” “intend” and
similar words, although some forward-looking statements are expressed differently. You should
consider carefully the discussion of risks and uncertainties
incorporated by reference as described
under the heading
“Risk Factors” above and in other sections of this prospectus, as well as in the
information incorporated by reference, which describe additional factors that could cause events or
our actual results to differ from the expectations expressed in the forward-looking statements.
Use of Proceeds
We will not receive any proceeds from the sale of the shares of common stock by the selling
stockholders in this offering.
Common Stock Market Price Data
Our common stock trades publicly on the NYSE under the symbol “MWY.” The following table
shows the high and low closing sale prices of our common stock for the periods indicated as
reported on the NYSE:
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Calendar Period |
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High |
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Low |
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2003 |
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First Quarter |
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$ |
4.62 |
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$ |
2.95 |
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Second Quarter |
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4.22 |
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3.14 |
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Third Quarter |
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3.82 |
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2.10 |
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Fourth Quarter |
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3.92 |
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2.62 |
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2
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Calendar Period |
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High |
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Low |
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2004 |
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First Quarter |
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$ |
7.38 |
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$ |
3.65 |
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Second Quarter |
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12.85 |
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7.25 |
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Third Quarter |
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12.53 |
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9.45 |
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Fourth Quarter |
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11.63 |
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9.23 |
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2005 |
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First Quarter |
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$ |
10.66 |
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$ |
8.69 |
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Second Quarter |
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11.11 |
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8.19 |
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16.51 |
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11.19 |
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On
September 12, 2005, there were approximately 1,050 holders of record of our common stock.
Dividend Policy
We have never paid cash dividends on our common stock. In addition, under our agreements with
our bank and with some of our securityholders, we are prohibited from paying cash dividends on our
common stock. We plan to retain any earnings to fund the operation of our business.
Selling Stockholders
We have registered shares of our common stock in order to permit the persons named below to
offer the shares for resale from time to time. We have agreed to pay the expenses of the
registration.
On
August 4, 2005, we issued 377,453 shares of our common stock as consideration for all of
the shares of capital stock of Ratbag Holdings Pty Ltd. This prospectus covers 30,196 of those
shares, which were issued to Martin Cooper in exchange for his Ratbag shares. This prospectus also
covers 41,117 shares of our common stock issued on the same date to five persons, including Mr.
Cooper, as consideration for the extinguishment of all rights to acquire shares of capital stock of
Ratbag. 1,055 of those shares were issued to Mr. Cooper. This prospectus also covers up to 38,050
shares that may be issued to employees of Ratbag, as described below.
Of Mr. Cooper’s shares of our common stock that are covered by this prospectus, 1,153 will be
held in escrow until
August 4, 2006 and another 3,349 will be held in escrow until
August 4, 2008
for his potential indemnification obligations to us. These shares may not be sold as long as they
are held in escrow. He has also agreed not to sell or otherwise transfer the following numbers of
the remaining shares issued to him until the following dates: 4,935 shares until
August 4, 2006;
another 4,566 shares until after
August 4, 2007; and another 1,218 shares until after
August 4,
2008.
On
August 4, 2005, we also granted rights to purchase an aggregate of 38,050 shares of our
common stock to 10 employees of Ratbag as inducements to remain so employed after the acquisition.
These rights are exercisable as to 33% of these shares on
August 4, 2006, as to an additional 33%
of these shares on
August 4, 2007 and as to an additional 34% of these shares on
August 4, 2008.
Rights may be exercised without consideration for those shares only within the one-month period
following each the date they become exercisable. If the employee’s services with us (including our
subsidiaries) are terminated for any reason except for a termination by us without cause, the
employee will forfeit any unexercised rights. The holders of the rights are identified in the
selling stockholder table below.
Prior to the acquisition, Ratbag provided videogame development services to us. The selling
stockholders, as indicated by the footnotes to the selling stockholder table below, were employees
or a consultant of Ratbag prior to the acquisition. The selling stockholders other than Mr. Cooper
continue to be so employed. Except in their service to Ratbag, the selling stockholders have not
had any material relationships with us in the past three years.
3
Each of the selling stockholders has advised us that he or she is not a registered
broker-dealer and is not an affiliate of a registered broker-dealer.
The table below identifies the selling stockholders and other information regarding the
beneficial ownership of our common stock by each of the selling stockholders. The second column
lists the number of shares of our common stock beneficially owned by each selling stockholder as of
September 12, 2005. The third column lists the number of shares of common stock that may be
offered by each selling stockholder through this prospectus.
The fourth and fifth columns assume the sale of all of the shares offered by each selling
stockholder in this offering, although the selling stockholders are not required to sell any of
their shares included in this prospectus. We do not know whether any selling stockholder will sell
any or all of his or her shares of common stock under this prospectus.
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Shares |
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Percent of Class |
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Amount and Nature of |
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Shares to |
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Beneficially Owned |
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Beneficially Owned |
Name of each selling stockholder |
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Beneficial Ownership |
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be Sold (1) |
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After Offering |
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After Offering(2) |
Mark Stewart Bracken (3) |
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13,889 |
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13,889 |
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0 |
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0% |
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Pierangelo Della Porta (3) |
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8,370 |
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8,370 |
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0 |
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0% |
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Nicholas Jon Young (3) |
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1,046 |
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1,046 |
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0 |
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0% |
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Cameron Jack Dunn (3)(4) |
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16,757 |
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20,562 |
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0 |
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0% |
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Sadhana Pereira (4) |
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0 |
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3,805 |
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0 |
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0% |
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Adam Mackay-Smith (4) |
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0 |
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3,805 |
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0 |
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0% |
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Andrew Medlin (4) |
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0 |
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3,805 |
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0 |
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0% |
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David Joseph Todd (4) |
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0 |
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3,805 |
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0 |
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0% |
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Frantisek Fulin (4) |
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0 |
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3,805 |
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0 |
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0% |
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Karl Burdack (4) |
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0 |
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3,805 |
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0 |
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0% |
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Kim Forrest (4) |
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0 |
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3,805 |
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0 |
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0% |
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Robin Maddock (4) |
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0 |
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3,805 |
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0 |
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0% |
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Tony Albrecht (4) |
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0 |
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3,805 |
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0 |
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0% |
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Martin Saumarez Cooper (3)(5) |
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31,251 |
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31,251 |
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0 |
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0% |
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Total |
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71,313 |
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109,363 |
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0 |
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0% |
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(1) |
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Represents the maximum number of shares that could be sold under this prospectus. The table
assumes that the selling stockholders sell all of their shares being offered under this
prospectus. Each selling stockholder, however, will determine the number of shares to be sold
by that holder and if or when he or she will sell. |
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(2) |
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Calculated based on 89,109,870 shares of common stock outstanding as of September 12, 2005. |
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(3) |
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These persons were holders of rights to purchase shares of common stock of Ratbag prior to
the acquisition and received shares of our common stock as consideration for the
extinguishment of all rights to acquire shares of Ratbag. |
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(4) |
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These persons were employees of Ratbag prior to the acquisition and received rights to
acquire shares of our common stock as inducements to remain employed by Ratbag after the
acquisition. The rights become exercisable as described above. |
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(5) |
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Mr. Cooper was consultant, rights holder and shareholder of Ratbag and received some of his
shares of our common stock as consideration for his Ratbag shares, as described above. |
Plan of Distribution
The shares of common stock to be sold in this offering are listed for trading on the NYSE.
The selling stockholders may also sell shares under Rule 144 under the Securities Act of 1933, if
available, rather than under this Prospectus. The selling stockholders have agreed not to sell or
offer to sell the shares in Australia within 12 months of the date they were issued.
4
The selling stockholders may sell all or a portion of the common stock beneficially owned by
them and offered through this prospectus directly or through one or more broker-dealers or agents.
If the common stock is sold through broker-dealers or agents, the selling stockholder will be
responsible for any commissions. The common stock may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of the sale, at varying prices determined at the
time of sale, at negotiated prices or in a combination of any of these methods of sale or by any
other method permitted under applicable law.
The selling stockholders and any broker-dealer participating in the distribution of shares of
common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933,
and any commission paid, or any discounts allowed to the broker-dealer may be deemed to be
underwriting discounts or commissions under the Securities Act. Under the securities laws of some
states, the shares of common stock may be sold in those states only through registered or licensed
brokers or dealers.
The selling stockholders have advised us that they are not residents of the United States and
acquired the shares of common stock offered through this prospectus in a transaction outside the
United States. The selling stockholders have also advised us that they have acquired their shares
of common stock offered through this prospectus for investment and not for sale or distribution,
except pursuant to a registration statement or an applicable exemption from registration under the
Securities Act. Each of the selling stockholders has also advised us that he or she is not a
registered broker-dealer and is not an affiliate of a registered broker-dealer. We do not know
whether any selling stockholder will sell any or all of his or her shares of common stock under
this prospectus.
We will pay all expenses of the registration of the shares of common stock being offered under
this prospectus, including SEC filing fees. We will not receive any of the proceeds from the sale
by the selling stockholders of the shares of common stock. We expect that our expenses for this
offering, including primarily filing fees and legal expenses, will be approximately $30,000.
We will indemnify the selling stockholders who received their shares of our common stock as
consideration for their shares of, or rights to acquire, Ratbag stock against liabilities,
including some liabilities under the Securities Act of 1933 and the Securities Exchange Act of
1934, in accordance with an agreement with those holders. We will be indemnified by those selling
stockholders against civil liabilities, including liabilities under the Securities Act, that may
arise from any written information furnished to us by those selling stockholders for use in this
prospectus.
Each share of common stock is sold together with stock purchase rights under our Rights
Agreement with the Bank of New York, as rights agent. These rights are described in a registration
statement on Form 8-A/A, Amendment No. 4 (File No.
001-12367), which we filed with the SEC on
October 16, 2003. See
“Documents Incorporated by Reference” below.
Legal Matters
The validity of the issuance of the shares offered by this prospectus will be passed upon by
our counsel, Blank Rome LLP, New York, New York. As of
September 12, 2005, partners of Blank Rome
LLP held options to purchase a total of 60,000 shares of our common stock.
Experts
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for the year ended
December 31, 2004, and management’s assessment of the effectiveness of our internal control over
5
financial reporting as of
December 31, 2004, as set forth in their reports, which are incorporated
by reference in this prospectus and elsewhere in the registration statement. Our financial
statements and schedule and management’s assessment are
incorporated by reference in reliance on
Ernst & Young LLP’s reports, given on their authority as experts in accounting and auditing.
Where You Can Find More Information
We have filed a registration statement on Form S-3 with the SEC in connection with this
offering (File No.
333-127795). In addition, we file annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and copy the registration statement
and any other documents we have filed at the SEC’s Public Reference Room at 100 F St., NE,
Washington, DC 20549. You may call the SEC at 1-800-SEC-0330 for information on the operation of
the Public Reference Room. Our SEC filings are also available to the public at the SEC’s Internet
site found at
“www.sec.gov” and can be inspected at the offices of the NYSE, 20 Broad Street,
New
York,
NY 10005. The SEC’s Internet site contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC.
This prospectus is part of the registration statement and does not contain all of the
information included in the registration statement. Whenever a reference is made in this
prospectus to any
contract or other document of ours, you should refer to the exhibits that are a
part of the registration statement for a copy of the
contract or document.
The SEC allows us to
“incorporate by reference” into this prospectus the information we file
with the SEC. This means that we are disclosing important information to you without restating
that information in this document. Instead, we are referring you to the documents listed below,
and you should consider those documents to be part of this prospectus. Information that we file
with the SEC after the date of this prospectus will update and supersede the information in this
prospectus and the documents listed below.
We
incorporate by reference into this prospectus the documents listed below and all documents that we file
in the future with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, including exhibits, until this offering is terminated:
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our annual report on Form 10-K for the year ended December 31, 2004; |
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our quarterly reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005; |
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our current reports on Form 8-K filed on March 2, 2005, March 3, 2005, March 9,
2005, May 10, 2005, May 11, 2005, June 7, 2005, August 5, 2005, August 8, 2005 and August
26, 2005; and |
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the description of our common stock and accompanying rights contained in our
registration statement on Form 8-A/A, Amendment No. 4 (File No. 001-12367) filed on October
16, 2003. |
We will provide to each person, including any beneficial owner, to whom a copy of this
prospectus is delivered, a copy of any or all of the information that we have incorporated by
reference in this prospectus. You may request copies of this information in writing or orally, and
we will provide it at no cost. You may contact us at:
Midway Games Inc.
2704 West Roscoe Street
Chicago,
IL 60618
Attention: Deborah K. Fulton, General Counsel
Telephone: (
773) 961-2222
6