-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QbkLQRUSk6TRCj+gjbc21MIENiTzxo93ZCvMjk2d47E0MJNaID9QxEFwaLFa3u8D S8Pa0VkkEyvp4VpBM6V9tQ== 0000002491-95-000011.txt : 19951119 0000002491-95-000011.hdr.sgml : 19951119 ACCESSION NUMBER: 0000002491-95-000011 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE GAMING CORP CENTRAL INDEX KEY: 0000002491 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880104066 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-04281 FILM NUMBER: 95591692 BUSINESS ADDRESS: STREET 1: 4380 BOULDER HGWY CITY: LAS VEGAS STATE: NV ZIP: 89121 BUSINESS PHONE: 7024354200 MAIL ADDRESS: STREET 1: 4380 BOULDER HIGHWAY CITY: LAS VEGAS STATE: NV ZIP: 89121 FORMER COMPANY: FORMER CONFORMED NAME: UNITED GAMING INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GAMING & TECHNOLOGY INC DATE OF NAME CHANGE: 19890206 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED PATENT TECHNOLOGY INC DATE OF NAME CHANGE: 19830519 10-Q 1 UNITED STATES 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 Quarter ended September 30, 1995 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 0-4281 ALLIANCE GAMING CORPORATION (Exact name of registrant as specified in its charter) NEVADA 88-0104066 (State or other jurisdiction of (I.R.S. Employer Incorporation or organization) Identification No.) 4380 Boulder Highway Las Vegas, Nevada 89121 (Address of principal executive offices) (Zip Code) Registrant's telephone number: (702) 435-4200 Indicate 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. [X] Yes [ ] No The number of shares of Common Stock, $0.10 par value, outstanding as of November 13, 1995 according to the records of the registrant's registrar and transfer agent, was 11,654,150. On the same date, the number of shares outstanding of non voting Junior Convertible Special Stock, $0.10 par value, was 1,333,333. I N D E X PART I. FINANCIAL INFORMATION Page Item 1. Unaudited Financial Statements Unaudited Condensed Consolidated Balance Sheets as of June 30, 1995 and September 30, 1995 3 Unaudited Condensed Consolidated Statements of Operations for the three months ended September 30, 1994 and 1995 5 Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 1994 and 1995 6 Notes to Unaudited Condensed Consolidated Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION Item 6. Exhibits and reports on Form 8-K 14 SIGNATURES 15 PART 1 ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS June 30 Sept 30 1995 1995 (In thousands) Current assets: Cash cash equivalents securities available for sale $ 37,414 $ 34,561 Receivables, net 3,316 4,791 Inventories 714 705 Prepaid expenses 4,148 3,496 Refundable income taxes 361 49 Other 156 107 Total current assets 46,109 43,709 Property and equipment: Land 17,296 17,296 Building and improvements 8,822 8,822 Gaming equipment 36,396 37,144 Furniture, fixtures and equipment 11,582 11,341 Leasehold improvements 5,372 5,282 Construction in Progress 30 1,052 79,498 80,937 Less accumulated depreciation and amortization 29,146 30,265 Property and equipment, net 50,352 50,672 Other assets: Receivables, net 5,309 4,986 Excess of costs over net assets of an acquired business, net of accumulated amortization of $585 and $629 3,842 3,798 Intangible assets, net of accumulated amortization of $5,516 and $5,429 12,405 11,779 Deferred tax assets 1,399 1,935 Investment in minority owned subsidiary 1,585 1,585 Other 5,347 5,241 Total other assets 29,887 29,324 Total Assets $126,348 $123,705 (continued) ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY June 30 Sept 30 1995 1995 (In thousands) Current liabilities: Current maturities of long-term debt $ 3,995 $ 4,002 Accounts payable 1,758 1,487 Accrued expenses, including related parties of $931 and $570 8,610 8,957 Total current liabilities 14,363 14,446 Long-term debt, less current maturities 97,402 96,599 Deferred tax liabilities 1,399 1,935 Other liabilities 2,556 2,330 Total liabilities 115,720 115,310 Commitments and contingencies Minority interest 643 787 Stockholders' equity: Common stock, $0.10 par value; authorized 175,000,000 shares; issued and outstanding 11,654,150 and 11,654,150 1,165 1,165 Special stock, $0.10 par value; authorized 10,000,000 shares; issued and outstanding 1,333,333 and 1,333,333 133 133 Paid-in capital 32,134 32,134 Unrealized gain (loss) on securities available for sale (316) 725 Accumulated deficit (23,131) (26,549) Total stockholders' equity 9,985 7,608 Total liabilities and stockholders' equity $ 126,348 $ 123,705 See notes to condensed consolidated financial statements. ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended September 30, 1994 and 1995 1994 1995 (In thousands, except per share amounts) Revenues: Gaming Routes $ 25,717 $ 26,296 Casinos and taverns 4,065 11,190 Food and beverage sales 1,032 1,052 Net equipment sales 10 3 30,824 38,541 Costs and expenses: Cost of gaming Routes 19,101 20,212 Casinos and taverns 2,407 5,158 Cost of food and beverage 723 757 Cost of equipment sales 6 --- Selling, general and administrative 3,297 4,505 Business development expenses 1,543 5,365 Corporate expenses 1,977 1,522 Depreciation and amortization 2,304 2,487 31,358 40,006 Operating loss (534) (1,465) Other income (expense): Interest income 704 426 Interest expense (1,945) (2,208) Minority share of income (72) (144) Other, net 110 (498) Loss before income taxes (1,736) (3,889) Income tax benefit (expense) (190) 471 Net loss $ (1,926) $ (3,418) Loss per share of common stock $ (.18) $ (.29) Weighted average common shares outstanding 10,971 11,654 See notes to condensed consolidated financial statements. ALLIANCE GAMING CORPORATION AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended September 30, 1994 and 1995 1994 1995 (In thousands) Cash flows from operating activities: Net loss (1,926) (3,418) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 2,304 2,487 Loss on sale of property and equipment 25 151 Write off of other assets 230 188 Provision for losses on receivables 153 21 Amortization of debt discounts 71 59 Equity in losses of affiliate 69 --- Net change in operating assets and liabilities: (Increase) decrease in: Inventories 27 9 Prepaid expenses 1,047 652 Refundable income taxes --- 312 Other assets (20) (487) Increase (decrease) in: Accounts and slot contracts payable 432 (271) Accrued expenses (2,606) 347 Minority interests 72 144 Other liabilities (260) (212) Net cash used in operating activities: $ (382) $ (18) Cash flows from investing activities: Additions to property and equipment (1,418) (2,226) Proceeds from sale of property and equipment 187 296 Additions to receivables (7,617) (3,198) Cash collections on receivables 4,819 2,745 Proceeds from sale (acquisition) of securities available for sale (205) 4,084 Additions to intangible assets (96) (354) Additions to other long-term assets (766) (819) Net cash provided by (used in) investing activities (5,096) 528 Cash flows from financing activities: Reduction of long-term debt (703) (1,024) Proceeds from long-term debt --- 168 Issuance of stock 43 --- Net cash used in financing activities (660) (856) Cash and cash equivalents: (Decrease) increase for period (6,138) (346) Balance, beginning of period 37,085 13,734 Balance, end of period $ 30,947 $ 13,388 See notes to condensed consolidated financial statements. ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended September 30, 1994 and 1995 1. ADJUSTMENTS FOR FAIR PRESENTATION In the opinion of management, all adjustments necessary for a fair statement of the unaudited results for the three months ended September 30, 1994 and 1995 have been made. The results of operations for an interim period are not necessarily indicative of the results to be expected for a full year. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that the accompanying condensed consolidated financial statements be read in conjunction with the financial statements and notes in the Company's annual report on Form 10-K. 2. RECLASSIFICATIONS Certain reclassifications have been made to prior period financial statements to conform with current period presentations. 3. RECEIVABLES The Company's gaming route operations from time to time involve making loans to location operators in order to participate in revenues over extended periods of time. These loans, generally made for buildouts, tenant improvements and initial operating expenses, are generally guaranteed on a full recourse basis by the location owner and are secured by the assets of the location. The majority of the loans are interest bearing and are expected to be repaid over a period of time not to exceed the life of the related revenue sharing agreement. The loans have varying payment terms with weekly payments ranging from approximately $200 to $2,000 and monthly payments ranging from approximately $500 to $9,000. Annual interest rates on the loans range from prime plus 1.5% to stated rates of 12% with various maturity dates ranging from October 1995 to April 2007. The loans are expected to be repaid from the locations' cash flows or proceeds from the sale of the leaseholds. Receivables consist of the following: June 30 Sept 30 1995 1995 (In thousands) Notes receivable-location operators $ 7,760 $ 8,453 Other receivables 865 1,324 8,625 9,777 Less current amounts (3,316) (4,791) Long-term receivables, excluding current amounts $ 5,309 $ 4,986 Receivables are presented net of an allowance for doubtful accounts of approximately $1,659,000 and $1,643,000 as of June 30, 1995 and September 30, 1995, respectively. The allowance is allocated between current and long-term receivables on a pro rata basis related to notes receivable from location operators. Receivables at September 30, 1995 also included $1,215,000 related to the previously disclosed sale of the Company's tavern operations to an unrelated third party. ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended September 30, 1994 and 1995 4. DEBT Long-term debt at June 30, 1995 and September 30, 1995 consists of the following: June 30 Sept 30 1995 1995 (In thousands) 7.5% Convertible subordinated debentures due 2003 85,000 85,000 Due to stockholder, net of discount of $747,619 and $688,596 3,309 3,055 Hospitality Franchise Systems 9,065 8,773 Other debt 4,023 3,773 101,397 100,601 Less current maturities 3,995 4,002 Long-term debt, less current maturities $97,402 $96,599 Accrued interest of approximately $1,991,000 (June 30) and $354,000 (September 30) is included in accrued expenses in the unaudited condensed consolidated balance sheets. Included in these amounts are $27,813 (June 30) and $25,168 (September 30) due to affiliates of Alfred H. Wilms, the Company's largest stockholder and a member of the Board of Directors of the Company, relating to funding of the Company's majority- controlled subsidiary, Video Services, Inc.'s ("VSI") gaming device route operations. 5. INCOME TAXES The Company generally accounts for income taxes and files its income tax returns on a consolidated basis. However, VSI, in which the Company holds 100% of the voting interests, has previously filed its income tax returns on a separate basis and was not consolidated for tax purposes. During the quarter ended December 31, 1994, the Company determined that VSI can be consolidated for tax purposes. As a result, the Company filed for and has received a refund of estimated income taxes paid for fiscal year 1994. The Company accounts for income taxes in accordance with the provisions of Financial Accounting Standard No. 109 Accounting for Income Taxes. Under the asset and liability method of Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Due to losses and the lack of available carrybacks, the Company recognized no federal income tax expense or benefit for the quarters ended September 30, 1994 and 1995 other than the tax effect of changes in the unrealized gains (losses) on securities available for sale . ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended September 30, 1994 and 1995 5. INCOME TAXES (Continued) The federal and state income tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities at September 30, 1995 are presented below. (in thousands) Deferred tax assets: Net operating loss carryforwards $13,643 Inventory obsolescence reserve 179 Receivables, bad debt allowance 559 Organization and start-up costs 157 Reserves for discontinued operations 1,279 Other 401 Total gross deferred tax assets 16,218 Less: Valuation allowance (14,283) Net deferred tax assets $ 1,935 Deferred tax liabilities: Property and equipment principally due to depreciation differences 1,363 Other 572 Total gross deferred tax liabilities 1,935 Net $ --- The valuation allowance for deferred tax assets as of June 30, 1995 was $13,908,000. The net change in the total valuation allowance for the consolidated group for the quarter ended September 30, 1995 was an increase of $375,000. At September 30, 1995, the Company had estimated net operating loss carryforwards for federal income tax purposes of approximately $40,000,000 which are available to offset future federal taxable income, if any, expiring 2007 through 2009. 6. INTANGIBLE ASSETS Intangible Assets includes $4,409,000, net of $1,095,000 of accumulated amortization, for costs related to the commissions, discounts and other issuance costs of the Company's private placement of $85,000,000 aggregate principal amount of 7.5% Convertible Subordinated Debentures due 2003. Such costs are being amortized on a straight line basis over the term of the debentures. 7. INVESTMENT IN MINORITY OWNED SUBSIDIARY Investment in minority owned subsidiary consists of $1,585,000 related to the Company's investment in Kansas Financial Partners, LLC. ALLIANCE GAMING CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Three Months Ended September 30, 1994 and 1995 8. CASH, CASH EQUIVALENTS AND SECURITIES AVAILABLE FOR SALE For balance sheet presentation the following account balances have been combined at September 30, 1995: (in thousands) Cash and cash equivalents $ 13,388 Securities available for sale 21,173 Total $ 34,561 As of September 30, 1995, unrealized losses for securities available for sale was $725,000 net of the tax effect of $374,000 and is included as a component of stockholder's equity. 9. SUBSEQUENT EVENTS On October 18, 1995 the Company and Bally Gaming International, Inc. ("BGII") entered into a definitive agreement under which 5.9 million shares of BGII shares will each be exchanged for $13 in cash and the remainder of BGII shares will be exchanged for the Company's shares also valued at $13 per share. BGII shareholders will not receive less than 2.167 of the Company's shares nor more than 3.059 shares in exchange for each BGII share. The transaction was unanimously approved by both companies' Boards of Directors, is subject to approval by both companies' shareholders, obtaining needed regulatory approvals, the securing of $150 million in permanent financing by the Company and certain other conditions. The merger is expected to close in late January 1996. BGII has terminated its merger agreement with WMS Industries, Inc. and the Company has withdrawn its tender and consent solicitation for BGII shares. BGII and the Company agreed to dismiss the litigation between them. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Financial Condition Liquidity and Capital Resources: At September 30, 1995, the Company had working capital of approximately $29,263,000, a decrease of approximately $2,483,000 from June 30, 1995. The decrease in working capital is primarily in cash and cash equivalents which were used to fund development activities in connection with the Company's growth strategy. As of September 30, 1995, the Company had $34,561,000 in cash, cash equivalents and securities available for sale, of which approximately $7,000,000 is necessary to fund ongoing gaming operations in the ordinary course of business. During the three months ended September 30, 1995, the Company incurred approximately $5,365,000 in costs associated with pursuit of the Company's growth strategy. The Company's strategy is to use its strengthened management team, diversified gaming expertise and business and investment community relationships to develop new opportunities in the operation of land-based, dockside and riverboat casinos (including Native American casinos), gaming systems and technology, and the supply and management of gaming devices. Included in these costs are expenses of $4,677,000 associated with the Company's tender and consent solicitation, and subsequent entering into a definitive merger agreement with, Bally Gaming International, Inc.. As previously reported, on July 16, 1994, the Rainbow Casino located in Vicksburg, Mississippi permanently opened for business. In connection with the completion of the casino and the acquisition of its 45% limited partnership interest, through a wholly-owned subsidiary, the Company funded a $3,250,000 advance to Rainbow Casino Corporation ("RCC") on the same terms as RCC's financing from Hospitality Franchise Systems, Inc. ("HFS"). On March 29, 1995 the Company consummated certain transactions whereby the Company acquired from RCC the controlling general partnership interest in Rainbow Casino Vicksburg Partnership ("RCVP") and increased its partnership interest. In exchange for the assumption by National Gaming Mississippi, Inc. ("NGM"), a subsidiary of National Gaming Corporation, of approximately $1,140,000 of liabilities (plus a financing fee payable to HFS) related to the completion of certain elements of the project which survived the opening of the casino (for which RCC was to have been responsible for, but failed to satisfy), a related $652,000 cash payment by the Company to NGM and commitments by the Company and NGM to fund additional financing required to complete the project (i) a subsidiary of the Company became the general partner and RCC became the limited partner and (ii) the respective partnership interests were adjusted. As adjusted, RCC is entitled to receive 10% of the net available cash flows, as defined, (which amount shall increase to 20% of cash flow above $35,000,000 (i.e. only on such incremental amount), for a period of 15 years, such period being subject to one year extensions for each year in which a minimum payment of $50,000 is not made. The Company and Casino Magic Corporation, through wholly owned subsidiaries, are members in Kansas Gaming Partners, LLC ("KGP") and Kansas Financial Partners, LLC ("KFP"), both Kansas limited liability companies. Under an option agreement granted to KGP by Camptown Greyhound Racing, Inc. ("Camptown"), KGP has been granted the exclusive right to operate gaming devices and/or casino-type gaming at Camptown's facility if and when such gaming is permitted in Kansas. In September 1994, the Kansas Racing Commission approved a revised financing proposal submitted by Camptown that would facilitate completion of construction of a greyhound racing facility on the 320 acre site in Frontenac, Kansas. Camptown has received a $3,205,000 loan commitment which will be guaranteed by KFP. In December 1994, the Company invested $1,580,000 in KFP for its portion of the loan guarantee which was made in the form of a certificate of deposit. Construction of Camptowns racing facility opened for business in May 1995. Camptown's obligation to begin to repay the loan guarantee by KFP commenced in June 1995 with interest only payments. Principal repayment is scheduled to commence in June 1996. There can be no assurance as to the successful completion or operation of any part of this project. Cash used in operations for the quarter improved by approximately $364,000 (95.3%) from amounts reported for the prior year period due principally to continued increases in cash flows from the Company's route and casino operations. Cash flows provided by investing activities increased $5,624,000 from the same period in the prior year due primarily to the proceeds from the sale of approximately $4,084,000 of securities available for sale. Also, net collections on receivables improved by $2,345,000 compared to the same quarter last year as receivable activity returned to historical norms. Cash flows used in financing activities increased $196,000 from the same quarter last year due primarily to the Company's principal reductions on long-term debt. Management believes the Company's present working capital and funds generated from operations will be sufficient to meet its existing commitments, debt payments and other obligations as they become due. As discussed in previous reports, however, it remains a part of the Company's business strategy to seek complementary gaming opportunities, including opportunities in which its route and casino experience may be applicable. As part of its business activities, the Company is regularly involved in the identification, investigation and development of such opportunities. Accordingly, in order to support such activities, the Company may in the future elect to issue additional debt or equity securities if and when appropriate opportunities become available on terms satisfactory to management. The Company intends to seek debt financing of $140,000,000 to $160,000,000 and equity financing of $20,000,000 to $40,000,000 in connection with its intended merger with Bally Gaming International, Inc. Results of Operations. Three Months Ended September 30, 1994 and 1995 Revenues: Total revenues for the three months ended September 30, 1995 were $38,541,000, an increase of $7,717,000 (25.0%) over those for the same period in 1994. Revenues from all gaming route operations increased $579,000 (2.3%) to approximately $26,296,000 in the first quarter of fiscal 1996. Revenues from the Louisiana route operations decreased $188,000 (a decrease of 4.7%) primarily as a result of increased competition from riverboat operations and a land-based casino in New Orleans. Revenue from Nevada route operations increased approximately $767,000 (3.5%) over those for the same period last year. The increase in the Nevada gaming route revenues was attributable to a $0.62 increase in the average net win per gaming device per day for the three months ended September 30, 1995 compared to the same period in 1994 (accounting for an increase of approximately $295,000) and an increase in the weighted average number of gaming devices on location for the three months ended September 30, 1995 as compared to the same period in 1994 (accounting for an increase of approximately $472,000). Revenues from casino and tavern operations, including food and beverage sales, increased approximately $7,145,000 (140.2%) during the current year quarter as compared to those for the prior year as revenues recognized from the Rainbow Casino, which were consolidated beginning March 29, 1995, exceeded the revenues lost with the termination of the Company's lease at the Royal Casino. Costs and Expenses: Costs of Revenues Cost of gaming route revenues for the quarter ended September 30, 1995 increased $1,111,000 (5.8%) over the same quarter in 1994. Costs of revenues from route operations in Louisiana decreased $210,000 (a decrease of 8.1% from last year) as revenues declined primarily as a result of the increased competition in that market. Costs of gaming revenues for Nevada gaming route revenues increased $1,321,000 (8.0%) as compared to the prior year and increased slightly as a percent of Nevada gaming route revenues primarily due to increased costs associated with additional and renewed space lease contracts. Cost of route revenues includes rents under both space lease and revenue sharing arrangements, gaming taxes and direct labor, including related taxes and benefits. The cost of casino and tavern revenues including costs of food and beverage revenues increased $2,785,000 (89.0%) compared to 1994 results primarily due to the Rainbow Casino cost of revenues which were consolidated beginning March 29, 1995. This increase was partially offset from the termination of the Company's lease at the Royal Casino. Cost of casino and tavern revenues includes cost of goods sold, gaming taxes, rent and direct labor, including related taxes and benefits. Expenses For the quarter ended September 30, 1995 the Company incurred developmental costs associated with pursuing the Company's growth strategy of approximately $5,365,000, an increase of $3,822,000 (247.7%) over the same period from last year. These business development expenses include salaries and wages, related taxes and benefits, professional fees, travel expense and other expenses associated with supporting the Company's growth strategy. Current year development costs also include expenses of $4,677,000 associated with the Company's tender offer to acquire, and subsequent entering into a definitive merger agreement with, Bally Gaming International, Inc. Selling, general and administrative expenses for the period increased approximately $1,208,000 (36.6%) from the prior year. Expenses for casinos and taverns increased $1,675,000 (177.0%) from the prior year primarily due to the Rainbow Casino expenses which were consolidated beginning March 29, 1995. This increase was partially offset from the termination of the Company's lease at the Royal Casino. Such expenses related to gaming route operations decreased $467,000 (19.9%) from the prior year reflecting steps taken to control costs, including reduced staffing levels. Corporate general and administrative expenses decreased $455,000 (23.0%). This decrease was caused primarily by controlling costs and reducing staffing levels. The Company expects that there may be further increases in selling, general and administrative expenses related to the addition of new management and development personnel and other costs associated with supporting the Company's growth strategy. Included in the last year's other income and expenses is a charge of $69,000 representing the Company's equity in the net loss of the Rainbow Casino in its first quarter of operations prior to the Company's acquisition of the general partnership interest in RCVP on March 29, 1995. PART II Item 6. Exhibits and Reports on Form 8-K a. Exhibits Exhibit Number Description 10.67 Agreement and Plan of Merger among Alliance Gaming Corporation, BGII Acquisition Corp. and Bally Gaming International,Inc. as of October 18, 1995. 10.68 Employment Agreement, dated as of October 28, 1995, between the Company and Robert Miodunski. b. Reports on Form 8-K: 1) The registrant submitted Form 8-K dated July 14, 1995 which included the following items: Item 5. As of the close of business on June 20, 1995 the Company was the beneficial owner of 1,000,000 shares of common stock of Bally Gaming International, Inc. ("BGII"). Item 7. Schedule 13D, with all exhibits there to. 2) The registrant submitted Form 8-K dated August 18, 1995 which included the following item: Item 5. Letter Agreement among the Company, BGII and WMS, dated August 14, 1995. 3) The registrant submitted Form 8-K dated September 1, 1995 which included the following item: Item 5. Litigation commenced by BGII and WMS and the Company's wholly owned subsidiary, BGII Acquisition Corp. 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 thereunto authorized. ALLIANCE GAMING CORPORATION (Registrant) By /s/ Steve Greathouse Chairman of the Board of Directors, President and Chief Executive Officer By /s/ John W. Alderfer Sr. Vice President, Treasurer and Chief Financial Officer EX-27 2
5 This schedule contains summary financial information excerpted from Form 10-Q for the quarter ended 09/30/95. 1,000 3-MOS JUN-30-1996 SEP-30-1995 13,388 21,173 4,791 0 705 43,709 80,937 30,265 123,705 14,446 0 1,165 0 133 6,310 123,705 3 38,541 0 26,127 13,879 0 2,208 (3,889) 471 (3,418) 0 0 0 (3,418) (0.29) 0
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