-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, o/K+LqZ0N54UXSU36RzQEzDInFJc+p3B+mPmDHRVnPJ5D9k0L2rj7bWdivH6JqSS g5lfgSHU26i/jKD6lOLt2Q== 0000950109-95-002301.txt : 19950615 0000950109-95-002301.hdr.sgml : 19950615 ACCESSION NUMBER: 0000950109-95-002301 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940131 FILED AS OF DATE: 19950614 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AUTOTOTE CORP CENTRAL INDEX KEY: 0000750004 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 810422894 STATE OF INCORPORATION: DE FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13063 FILM NUMBER: 95546875 BUSINESS ADDRESS: STREET 1: 888 7TH AVENUE CITY: NEW YORK STATE: NY ZIP: 10106-1894 BUSINESS PHONE: 3027374300 MAIL ADDRESS: STREET 1: 100 BELLEVUE ROAD CITY: NEWARK STATE: NJ ZIP: 19714 FORMER COMPANY: FORMER CONFORMED NAME: UNITED TOTE INC DATE OF NAME CHANGE: 19920317 10-Q/A 1 FORM 10-Q/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: January 31, 1994 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition from to ---------------- ---------------- Commission file number: 0-13063 AUTOTOTE CORPORATION -------------------- Exact name of registrant as specified in its charter Delaware 81-0422894 - ------------------------------- ------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 888 Seventh Avenue, Ste. 1808, New York, New York 10106-1894 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 541-6440 -------------- (Registrant's telephone number, including area code) ---------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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. Yes X No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Class A Common Stock: 27,598,437 Class B Common Stock: None Page 1 of 12 AUTOTOTE CORPORATION AND SUBSIDIARIES QUARTER ENDED JANUARY 31, 1994 INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets January 31, 1994 (Unaudited) and October 31, 1993................................. 3 Consolidated Statements of Operations Three Months Ended January 31, 1994 and 1993 (Unaudited)............................. 4 Consolidated Statements of Cash Flows Three Months Ended January 31, 1994 and 1993 (Unaudited)................................. 5 Notes to Consolidated Financial Statements (Unaudited)........................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 8-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings........................................ 11 Item 4. Submission of Matters to Vote of Security Holders........ 11 Item 6. Exhibits and Reports on Form 8-K......................... 11 SIGNATURES ................................................. 12 2 AUTOTOTE CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (In Thousands)
(Unaudited) January 31, 1994 October 31, 1993 ----------------- ----------------- (Restated) (Restated) Assets ------ Current assets: Cash and cash equivalents $ 7,830 $ 10,524 Accounts receivable, net 20,334 17,912 Inventories 13,812 13,616 Prepaids, deposits and other 2,800 2,745 -------- -------- Total current assets 44,776 44,797 -------- -------- Property and equipment, at cost 120,661 102,224 Less accumulated depreciation 34,214 29,394 -------- -------- Net property and equipment 86,447 72,830 -------- -------- Goodwill, less amortization 24,185 28,502 Marketing rights, less amortization 19,708 19,833 Other assets and investments 21,395 21,143 -------- -------- $196,511 $187,105 ======== ======== Liabilities and Stockholders' Equity (Deficiency) ------------------------------------------------- Notes payable and other short term borrowings 149 1,034 Current installments of long-term debt 990 725 Accounts payable 14,798 12,806 Accrued liabilities 10,480 11,136 Income taxes payable 1,399 2,460 -------- -------- Total current liabilities 27,816 28,161 -------- -------- Deferred income taxes 7,359 4,380 Other long-term liabilities 3,080 2,223 Long-term debt, convertible subordinated debentures 40,000 40,000 Long-term debt, excluding current installments 41,813 36,262 -------- -------- Total liabilities 120,068 111,026 -------- -------- Stockholders' equity: Common Stock 281 279 Additional paid-in-capital 133,899 133,390 Accumulated deficit (57,533) (57,430) Translation adjustment (204) (160) -------- -------- Total stockholders' equity 76,443 76,079 -------- -------- $196,511 $187,105 ======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 3 AUTOTOTE CORPORATION AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (In Thousands, Except Per Share Amounts)
Three Months Ended Three Months Ended January 31, 1994 January 31, 1993 ------------------- ------------------ (Restated) (Restated) Operating revenues: - ------------------- Wagering systems $20,647 $ 9,468 Wagering equipment and other sales 7,642 3,892 ------- ------- 28,289 13,360 ------- ------- Operating expenses (exclusive of depreciation and - ------------------ amortization shown below): Wagering systems 12,070 5,299 Inventory, equipment and contract adjustments 112 - Wagering equipment and other sales 4,901 1,679 ------- ------- 17,083 6,978 ------- ------- Total gross profit 11,206 6,382 Selling, general and administrative expenses 4,599 2,051 Write-off of investments and other 467 - Depreciation and amortization 5,121 2,025 ------- ------- Operating income 1,019 2,306 Other (income) expenses - ----------------------- Interest expense 1,296 1,329 Other (income) / expense (118) - ------- ------- Earnings/(loss) before income taxes / (benefit) (159) 977 ------- ------- Income taxes (benefit) (56) 371 ------- ------- Net earnings / (loss) $ (103) $ 606 ======= ======= Earnings per common share $ - $ 0.03 ======= ======= Weighted average number of common shares outstanding 27,987 20,142 ======= =======
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 4 AUTOTOTE CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (Unaudited) (In Thousands)
Three Months Ended Three Months Ended January 31, 1994 January 31, 1993 ------------------- ------------------- (Restated) (Restated) Cash flows from operating activities: Net earnings / (loss) $ (103) $ 606 -------- -------- Adjustments to reconcile net earnings (loss) to cash provided by (used in) operating activities: Depreciation and amortization 5,121 2,025 Write-off of investments and other 467 - Changes in operating assets and liabilities: Accounts receivable (2,422) (564) Inventories (196) (10,390) Prepaids, deposits and other (55) 129 Accounts payable 1,992 1,839 Accrued liabilities (656) (2,195) Income taxes payable (1,061) 15 Other 229 (478) -------- -------- Total adjustments 3,419 (9,619) -------- -------- Net cash provided by (used in) operating activities 3,316 (9,013) -------- -------- Cash flows from investing activities: Capital expenditures (990) (455) Expenditures for equipment under wagering system contracts (9,362) - Increase in other assets and investments (1,100) (513) -------- -------- Net cash used in investing activities (11,452) (968) -------- -------- Cash flows from financing activities: Net borrowings on lines-of-credit 4,862 5,721 Proceeds from issuance of long-term debt 246 4,800 Payments on long-term debt (177) (684) Net proceeds from issuance of common stock 511 87 -------- -------- Net cash provided by financing activities 5,442 9,924 -------- -------- Decrease in cash and cash equivalents (2,694) (57) Cash and cash equivalents, beginning of period 10,524 1,207 -------- -------- Cash and cash equivalents, end of period $ 7,830 $ 1,150 ======== ======== Cash paid during the nine months ended: Interest, net of amounts capitalized $ 779 $ 1,312 ======== ======== Income taxes $ 825 $ 170 ======== ========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 AUTOTOTE CORPORATION AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 1. Restatement The Company has restated its previously issued financial results for all of the quarters in the fiscal year ended October 31, 1994. The restated financial results relate principally to: (i) payments made to former Tele Control Group stockholders pursuant to contingent payment provisions in the Tele Control Group acquisition agreement as a result of the award of certain lottery contracts to the Tele Control Group; (ii) additional amortization and depreciation as a result of the final review of the allocation of purchase price and the useful life of goodwill and certain other assets, recorded in connection with the 1993 acquisitions of the Tele Control Group, the ETAG Group, Autotote Lottery and the right to operate the Connecticut OTB (the 1993 acquisitions); (iii) corrections to inventory, equipment and contract adjustments resulting in charges to the financial statements delivered by the sellers in connection with the Company's simulcasting acquisition on July 20, 1994 of Marvin H. Sugarman Productions, Inc. (MHSP), and Racing Technology, Inc. (RTI), for periods prior to the acquisition; and other factors. The acquisition of MHSP and RTI was accounted for as a pooling of interests and, accordingly, the accompanying consolidated financial statements have been restated to include the accounts and operations for all periods prior to the acquisition. This Form 10-Q/A should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1994, which was filed with the Securities and Exchange Commission on February 24, 1995, and Form 10-Q/A filed for all of the quarters in the fiscal year ended October 31, 1994. For more information regarding the effect on the Company's consolidated financial statements related to the acquisition of MHSP and RTI, see Note 3 to the Annual Report on Form 10-K for the year ended October 31, 1994. 2. Summary of Significant Accounting Principles (a) Principles of Consolidation The consolidated balance sheet as of January 31, 1994 and the consolidated statements of operations and cash flows for the three month periods ended January 31, 1994 and 1993 have been prepared by the Company, without audit. In the opinion of management, all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the periods indicated have been made. The October 31, 1993 financial information was taken from statements audited by KPMG Peat Marwick LLP in connection with the Company's annual audit. 6 (b) Effect of Stock Splits Weighted average common shares and earnings per share have been adjusted to reflect the Company's 3 for 2 and 2 for 1 stock splits in the form of stock dividends effected in 1993. 3. Inventories
(In Thousands) (Unaudited) January 31, 1994 October 31, 1993 ---------------- ---------------- Parts............... $ 7,809 $ 9,230 Work in process..... 5,230 3,721 Ticket paper........ 773 665 ------- ------- Total.......... $13,812 $13,616 ======= =======
Prior to 1993, the Company utilized inventory accounts to accumulate all costs associated with the production of its products. During 1993, the Company began to identify the association between production assembly jobs and specific wagering systems contracts. For financial reporting purposes, at January 31, 1994 and October 31, 1993 costs for equipment associated with specific wagering systems equipment contracts not yet placed in service are recorded as work in process. When the equipment is placed in service at wagering facilities, the related costs are transferred from work in process to machinery and equipment. Under wagering systems contracts, the Company retains ownership of all equipment located at wagering facilities. 4. Commitments and Contingencies As more fully discussed in Notes 10 and 18 to the Annual Report on Form 10-K for the year ended October 31, 1994, the Company was in violation of certain covenants of the senior bank credit facility. In addition, the Company and certain of its officers and directors were named as defendants in lawsuits alleging violation of certain federal securities laws. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Restatement As discussed in Note 1, the accompanying consolidated financial statements and Management's Discussion and Analysis have been restated. First Quarter Fiscal 1994 Compared to First Quarter Fiscal 1993 - --------------------------------------------------------------- Revenue Analysis Revenues increased 112% or $15 million to $28 million in the first quarter of fiscal 1994 from $13 million in the first quarter of fiscal 1993. The Company completed four acquisitions in the third and fourth quarters of fiscal 1993 which contributed revenues of $11.6 million in the first quarter of fiscal 1994. Wagering equipment and other sales revenues, exclusive of $0.8 million of equipment sales revenue attributable to the recent Tele Control and GI lottery acquisitions, increased to $6.8 million in the first quarter of fiscal 1994 compared to $3.9 million in the first quarter of fiscal 1993. Wagering equipment sales revenue in the 1994 period included $5.8 million attributable to delivery of MAX 2000 terminals to Italy's TOTIP pool. Wagering equipment sales in the first quarter of fiscal 1993 included engineering fees earned on the customized MAX 2000 TOTIP terminals. In addition, the Company delivered three sports wagering systems and other equipment in the first quarter of fiscal 1993. Wagering systems revenue, exclusive of $10.8 million attributable to the 1993 acquisitions, was $9.8 million in the first quarter of fiscal 1994 compared to $9.5 million in the first quarter of fiscal 1993. Fiscal 1994 first quarter wagering systems revenues reflect three months of operations under contracts signed in 1993 with Santa Anita Park, Southern California Off-Track Wagering, Inc. and Ontario Jockey Club, compared to only one month of operation in 1993. Partly offsetting this increase was the adverse affect of the severe winter weather in the Northeast, the earthquake in California and rate reductions associated with contract renewals. Expense Analysis Gross margins on wagering equipment sales decreased from 57% in the first quarter of fiscal 1993 to 36% in the first quarter of fiscal 1994 primarily due to lower margin terminal sales in 1994 and the startup of the Company's Irish manufacturing facility compared to the higher margin associated with the engineering fees for the customization of the MAX 2000 terminals for Italy's TOTIP pool and the delivery of high margin sports wagering systems in 1993. Gross margin on wagering systems decreased from 44% in the first quarter of fiscal 1993 to 42% in the first quarter of fiscal 1994. Adversely affecting wagering systems margins in the first quarter of fiscal 1994 were the severe weather conditions in the Northeast, the earthquake in California, and rate reductions associated with contract renewals in fiscal 1993. In addition, systems gross margins in the first quarter of fiscal 1994 reflect the labor intensive nature of the operations of the Connecticut OTB. 8 Selling, general and administrative expenses, including product development expenses, increased $2.6 million to $4.6 million for the first quarter of fiscal 1994 from $2.0 million in the first quarter of fiscal 1993, primarily reflecting increases in marketing efforts associated with proposal submissions to North American and international lottery organizations by the Company's on-line lottery business, expenses associated with the operations of the 1993 acquisitions as well as increases in management personnel and marketing expenses associated with the expansion of the Company's North American and international operations. Product development expenditures in the first quarter of fiscal 1994 were $1.8 million, up from $1.0 million in the first quarter of fiscal 1993, reflecting increases in new product development, product enhancements and product support. Approximately $0.6 million of the first quarter of fiscal 1994 development expense is included in the statement of operations, approximately $0.7 million was allocated to projects and $0.5 million was reimbursed by customers. Depreciation and amortization expenses increased 153% to $5.1 million in the first quarter of fiscal 1994 compared to $2.0 million in the first quarter of fiscal 1993. The increase was principally due to the depreciation associated with the new PROBE systems installed at customer sites in fiscal 1993 and to the amortization of goodwill associated with the 1993 acquisitions. Operating income was $1.0 million in the first quarter of fiscal 1994 compared to $2.3 million in the first quarter of fiscal 1993 reflecting lower margins on the TOTIP terminal sales, adverse effect of the weather in the Northeast on wagering systems sales, increased marketing efforts, the write-off of certain investments and higher depreciation and amortization associated with new wagering system contracts and 1993 acquisitions. Net interest and other expense declined $0.1 million to $1.2 million in the first quarter of fiscal 1994 compared to $1.3 million in the first quarter of fiscal 1993 primarily due to the capitalization of $0.2 million of interest associated with the construction of wagering systems equipment. Income Taxes The decrease in effective tax rates from 38% in 1993 to 35% in 1994 is primarily due to 1994 foreign earnings taxed at a lower rate than the U.S. tax rate. Net Earnings (Loss) The net loss for the first quarter of fiscal 1994 was $0.1 million compared to net earnings of $0.6 million in the first quarter of fiscal 1993. 9 Liquidity and Capital Resources The Company's wagering system contracts are capital intensive, requiring substantial initial cash outlays recouped over time from cash flows from the contracts. New lottery contracts would also require substantial initial outlays. In the first quarter of fiscal 1994, the Company invested $9.4 million in expenditures for equipment under wagering system contracts, primarily for new installations of PROBE systems. In the first quarter of fiscal 1994, net cash provided by operating activities was $3.3 million, after giving effect to increases in accounts payable of $2.0 million, partly offset by $2.4 million in increases in accounts receivable, decreases in accrued liabilities of $0.7 million and decreases in income taxes payable of $1.1 million. The Company generated cash of $5.5 million from net earnings and non-cash charges for depreciation and amortization in the first quarter of fiscal 1994 and the write-off of certain assets. During the period the Company partially financed its capital expenditures through its senior credit facility. The amount of the Company's future capital expenditures for wagering systems equipment and lottery equipment will depend on the Company's ability to enter into service contracts with new customers and renewal of existing contracts with systems upgrades. Each new customer may require the manufacture and assembly of a new wagering system unless the dates of operations and requirements of a new facility allow an existing system to be used at such facility. New lottery service contracts generally will require the manufacture and assembly of new systems. Under some circumstances, the Company may be required to begin manufacture of wagering systems prior to the award of a contract in a competitive bidding situation. The Company anticipates total expenditures of approximately $14.6 million in fiscal 1994 for wagering systems arising out of commitments at January 31, 1994. At January 31, 1994, the Company's cash and cash equivalents were $7.8 million, versus $10.5 million at October 31, 1993. At January 31, 1994, the acquisition/capital expenditure portion of the Company's senior credit facility was fully utilized, and $4.1 million were available under the revolving portion of the facility. Effective March 9, 1994, the acquisition/capital expenditure portion of the Company's senior credit facility was increased by $15 million until June 9, 1994 (see Note 4 to the consolidated financial statements). The Company's wagering equipment sales customers fund portions of required expenditures in the form of advance payments. The Company's capital requirements continue to increase as a result of continued growth in its business and the 1993 acquisitions. The Company believes that its current capital resources including operating cash flow, advance payments from customers and borrowings under the Company's senior credit facility, will not be sufficient to satisfy the Company's anticipated capital needs through fiscal 1994 and that additional sources of capital will be required. The Company is exploring financing alternatives, including an equity offering and additional bank borrowings to meet these additional capital requirements. 10 PART II OTHER INFORMATION Item 1 - Legal Proceedings In addition to routine legal proceedings incidental to the conduct of its business, the Company and certain of its officers and directors have been named as defendants in lawsuits commenced in February 1995 as class actions in the United States District Court for the District of Delaware. The putative classes consist of purchasers of Class A Common Stock and put and call options between March 1994 and January 30, 1995. The complaints allege that the Company and certain of its officers and directors violated the federal securities laws and seek remedies of unspecified monetary damages and awards of fees and expenses. The Company intends to vigorously defend these proceedings. However, the ultimate outcome of the actions cannot yet be determined, and no provision for any liability, if any, that may result from the actions has been recognized in the accompanying consolidated financial statements. Item 4 - Submission of Matters to Vote of Security Holders. None. Item 6 - Exhibits and Reports on Form 8-K. (a) Exhibits None. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter. 11 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. AUTOTOTE CORPORATION (Registrant) By: /S/ Philip G. Taggart ---------------------- Name: Philip G. Taggart Title: Corporate Controller Dated: June 14, 1995 12 -----END PRIVACY-ENHANCED MESSAGE-----