06/14/2004 11:00PM

Tote executive sells stock before losing NYRA contract


NEW YORK - Lorne Weil, the chief executive officer of Scientific Games, sold $5.3 million worth of stock the week before the company announced that it had lost one of its major tote clients, the New York Racing Association, according to filings with the government.

Weil sold 225,900 shares on June 7 at a price range of $18.52 to $18.77 for estimated proceeds of $4,212,000, according to the filings, which are required for officials of publicly traded companies who sell stock in their own companies. Three days earlier, on June 4, Weil sold 57,100 shares at a price range of $18.69 to $18.82 for estimated proceeds of $1,071,000.

In an announcement that was released at 2:08 p.m. Eastern time on June 10, Scientific Games said that NYRA would not renew its contract with Scientific Games, which expired on Oct. 24. In heavy trading that day, stock in Scientific Games dropped from $18.92 to $18, a dip of 4.9 percent, after falling as low as $17.42.

In its announcement, Scientific Games, which derives the vast majority of its revenues from selling lottery tickets and terminals, said it expected the company's earnings to decrease by one cent a share because of the loss of the NYRA contract. NYRA is negotiating with United Tote on a new contract, according to NYRA's chairman, Barry Schwartz.

According to the filings, Weil has sold stock in Scientific Games worth an estimated $9 million since April 12, when he exercised an option on 373,000 shares. The cost of the optioned shares was $2.75 to $3 per share, according to the filings.

Weil said Tuesday that the sales had "absolutely nothing" to do with the NYRA contract. "Believe me, I was absolutely astonished on June 10 when we were told that we didn't get the contract," Weil said.

Weil, 58, said the ongoing sales were part of a strategy to diversify his holdings. He said he owns about 5.5 million shares or options in Scientific Games stock.

"Almost my entire net worth is in Scientific Games, so it's just been to do some estate planning and diversify, because any financial adviser will tell you that should be the strategy for a person of my age," Weil said.

According to Scientific Games's filings, Weil was paid $790,958 in salary in 2003 and was given a $1 million bonus. He had other long-term compensation of $398,352 for a total of $2,189,310. The company said that at the end of 2003, Weil had options with a market value of $44.5 million.

In the first quarter of 2004, Scientific Games had total revenues of $123 million. Of that total, $21 million was from the company's parimutuel operations.

Weil's former company, Autotote, merged in 2001 with Scientific Games Inc., which was principally a lottery-ticket supplier. Autotote was dropped as the company's name for its parimutuel division in 2003. In that year, an Autotote employee pleaded guilty as the mastermind of the 2002 Breeders' Cup pick six scandal.

Since the merger, when Autotote stock traded for around $5, the stock price has tripled. The 52-week high and low for Scientific Games stock is $21.90 and $7.52.