SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
x Quarterly Report Pursuant to Section 13 or 15 (d) of The Securities Exchange Act of 1934
For the quarterly period ended: March 31, 2003
¨ 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: 0-28318
Multimedia Games, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Texas |
74-2611034 | |
| (State or Other Jurisdiction of Incorporation) |
(IRS Employer Identification Number) |
206 Wild Basin, Building B, Fourth Floor
Austin, Texas 78746
(Address of Principal Executive Offices)
(512) 334-7500
(Registrant’s Telephone Number, Including Area Code)
Indicate by check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act of 1934 during the past 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨
As of March 31, 2003, there were 12,941,795 shares of the Company’s Common Stock, par value $0.01, outstanding.
-1-
INDEX
| PART I. FINANCIAL INFORMATION |
||
| Item 1. Financial Statements |
||
| (As of March 31, 2003 (unaudited) and September 30, 2002 (audited)) |
3 | |
| (For the three months ended March 31, 2003 and 2002) |
4 | |
| (For the six months ended March 31, 2003 and 2002) |
5 | |
| (For the six months ended March 31, 2003 and 2002) |
6 | |
| 7 | ||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |
14 | |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk |
30 | |
| Item 4. Controls and Procedures |
30 | |
| PART II. OTHER INFORMATION |
||
| Item 1. Legal Proceedings |
31 | |
| 31 | ||
| Item 5. Other Information |
31 | |
| Item 6. Exhibits and Reports on Form 8-K |
31 |
-2-
FINANCIAL INFORMATION
MULTIMEDIA GAMES, INC.
As of March 31, 2003 and September 30, 2002
(In thousands, except share amounts)
| March 31, 2003 |
September 30, 2002 |
|||||||
| (Unaudited) |
(Audited) |
|||||||
| ASSETS |
||||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ |
25,126 |
|
$ |
15,247 |
| ||
| Accounts receivable |
|
5,880 |
|
|
5,697 |
| ||
| Allowance for doubtful accounts receivable |
|
(490 |
) |
|
(428 |
) | ||
| Inventory, net |
|
3,022 |
|
|
4,303 |
| ||
| Prepaid expenses and other assets |
|
1,629 |
|
|
1,418 |
| ||
| Notes receivable, net |
|
2,141 |
|
|
3,115 |
| ||
| Deferred income taxes |
|
1,281 |
|
|
797 |
| ||
| Total current assets |
|
38,589 |
|
|
30,149 |
| ||
| Restricted cash and long-term investments |
|
1,296 |
|
|
1,493 |
| ||
| Inventory – non-current |
|
12,088 |
|
|
10,328 |
| ||
| Property and equipment, net |
|
53,860 |
|
|
40,137 |
| ||
| Notes receivable, non-current |
|
500 |
|
|
— |
| ||
| Other assets |
|
6,597 |
|
|
4,083 |
| ||
| Total assets |
$ |
112,930 |
|
$ |
86,190 |
| ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| CURRENT LIABILITIES: |
||||||||
| Current portion of long-term debt and capital leases |
$ |
1,570 |
|
$ |
245 |
| ||
| Accounts payable and accrued expenses |
|
13,362 |
|
|
14,480 |
| ||
| Federal and state income tax payable |
|
5,229 |
|
|
1,181 |
| ||
| Halls’ share of surplus |
|
235 |
|
|
793 |
| ||
| Prize fulfillment fees payable |
|
6 |
|
|
44 |
| ||
| Deferred revenue |
|
1,929 |
|
|
1,929 |
| ||
| Total current liabilities |
|
22,331 |
|
|
18,672 |
| ||
| Long-term debt and capital leases, less current portion |
|
4,388 |
|
|
369 |
| ||
| Other long-term liabilities |
|
3,496 |
|
|
1,385 |
| ||
| Deferred income taxes |
|
588 |
|
|
252 |
| ||
| Total liabilities |
|
30,803 |
|
|
20,678 |
| ||
| Commitments and contingencies (Note 2) |
||||||||
| Stockholders’ equity: |
||||||||
| Preferred stock, Series A, $0.01 par value, 2,000,000 shares authorized, no shares issued and outstanding |
|
— |
|
|
— |
| ||
| Common stock, $0.01 par value, 25,000,000 shares authorized, 14,046,998 and 13,963,489 shares issued, and 12,941,795 and 12,889,144 shares outstanding, respectively |
|
140 |
|
|
140 |
| ||
| Additional paid-in capital |
|
42,252 |
|
|
40,996 |
| ||
| Stockholders’ notes receivable |
|
(1,807 |
) |
|
(2,417 |
) | ||
| Treasury stock, 1,105,203 and 1,074,345 shares at cost, respectively |
|
(6,491 |
) |
|
(5,847 |
) | ||
| Retained earnings |
|
48,033 |
|
|
32,640 |
| ||
| Total stockholders’ equity |
|
82,127 |
|
|
65,512 |
| ||
| Total liabilities and stockholders’ equity |
$ |
112,930 |
|
$ |
86,190 |
| ||
The accompanying notes are an integral part of the consolidated financial statements.
-3-
CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2003 and 2002
(In thousands, except shares and per-share amounts)
| 2003 |
2002 |
|||||||
| (Unaudited) |
(Unaudited) |
|||||||
| REVENUES: |
||||||||
| Gaming revenue – Class II |
$ |
85,882 |
|
$ |
71,037 |
| ||
| Gaming revenue – Class III |
|
1,047 |
|
|
1,479 |
| ||
| Player station and license sale and lease revenue |
|
2,491 |
|
|
3,069 |
| ||
| Other |
|
310 |
|
|
367 |
| ||
| Total revenues |
|
89,730 |
|
|
75,952 |
| ||
| Allotments to hall operators |
|
60,608 |
|
|
50,385 |
| ||
| Bingo prizes and related costs |
|
383 |
|
|
262 |
| ||
| Net revenues |
|
28,739 |
|
|
25,305 |
| ||
| OPERATING COSTS AND EXPENSES: |
||||||||
| Cost of player stations sold |
|
836 |
|
|
2,497 |
| ||
| Selling, general and administrative expenses |
|
10,008 |
|
|
8,034 |
| ||
| Amortization and depreciation |
|
5,132 |
|
|
3,613 |
| ||
| Total operating costs and expenses |
|
15,976 |
|
|
14,144 |
| ||
| Operating income |
|
12,763 |
|
|
11,161 |
| ||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest income |
|
82 |
|
|
48 |
| ||
| Interest expense |
|
(41 |
) |
|
(11 |
) | ||
| Income before income taxes |
|
12,804 |
|
|
11,198 |
| ||
| Income tax expense |
|
4,861 |
|
|
4,309 |
| ||
| Net income |
$ |
7,943 |
|
$ |
6,889 |
| ||
| Earnings per share: |
||||||||
| Basic |
$ |
0.61 |
|
$ |
0.56 |
| ||
| Diluted |
$ |
0.56 |
|
$ |
0.47 |
| ||
| Shares used in per-share calculation: |
||||||||
| Basic |
|
12,922,606 |
|
|
12,355,374 |
| ||
| Diluted |
|
14,307,013 |
|
|
14,706,983 |
| ||
The accompanying notes are an integral part of the consolidated financial statements.
-4-
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended March 31, 2003 and 2002
(In thousands, except shares and per-share amounts)
| 2003 |
2002 |
|||||||
| (Unaudited) |
(Unaudited) |
|||||||
| REVENUES: |
||||||||
| Gaming revenue – Class II |
$ |
167,654 |
|
$ |
127,625 |
| ||
| Gaming revenue – Class III |
|
2,064 |
|
|
2,789 |
| ||
| Player station and license sale and lease revenue |
|
3,134 |
|
|
3,777 |
| ||
| Other |
|
726 |
|
|
652 |
| ||
| Total revenues |
|
173,578 |
|
|
134,843 |
| ||
| Allotments to hall operators |
|
117,641 |
|
|
90,426 |
| ||
| Bingo prizes and related costs |
|
1,103 |
|
|
||||