<PAGE>
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: April 30, 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 June 7, 1994: Class A Common Stock: 27,647,187
Class B Common Stock: None
Page 1 of 15
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AUTOTOTE CORPORATION AND SUBSIDIARIES
QUARTER ENDED APRIL 30, 1994
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
April 30, 1994 (Unaudited) and
October 31, 1993................................. 3
Consolidated Statements of Operations
Three Months Ended April 30, 1994
and 1993 (Unaudited)............................. 4
Consolidated Statements of Operations
Six Months Ended April 30, 1994
and 1993 (Unaudited)............................. 5
Consolidated Statements of Cash Flows
Six Months Ended April 30, 1994 and
1993 (Unaudited)................................. 6
Notes to Consolidated Financial
Statements (Unaudited)........................... 7-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations.................................... 9-13
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................... 14
SIGNATURES...................................................... 15
2
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AUTOTOTE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
(Unaudited)
April 30, 1994 October 31, 1993
-------------- ----------------
(Restated) (Restated)
Assets
------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 7,724 $ 10,524
Accounts receivable, net 25,125 17,912
Inventories 15,228 13,616
Prepaids, deposits and other 3,950 2,745
-------- --------
Total current assets 52,027 44,797
-------- --------
Property and equipment, at cost 120,018 102,224
Less accumulated depreciation 25,184 29,394
-------- --------
Net property and equipment 94,834 72,830
-------- --------
Goodwill, less amortization 23,480 28,502
Operating right, less amortization 19,583 19,833
Other assets and investments 21,377 21,143
-------- --------
$211,301 $187,105
======== ========
<CAPTION>
Liabilities and Stockholders' Equity (Deficiency)
- -------------------------------------------------
<S> <C> <C>
Notes payable and other short term borrowings - 1,034
Current installments of long-term debt 1,340 725
Accounts payable 14,070 12,806
Accrued liabilities 14,129 11,136
Income taxes payable 1,275 2,460
-------- --------
Total current liabilities 30,814 28,161
-------- --------
Deferred income taxes 7,547 4,380
Other long-term liabilities 2,413 2,223
Long-term debt, convertible subordinated debentures 40,000 40,000
Long-term debt, excluding current installments 57,587 36,262
-------- --------
Total liabilities 138,361 111,026
-------- --------
Stockholders' equity:
Common stock 277 279
Additional paid-in-capital 133,922 133,390
Accumulated deficit (60,802) (57,430)
Translation adjustment (457) (160)
-------- --------
Total stockholders' equity 72,940 76,079
-------- --------
$211,301 $187,105
======== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
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AUTOTOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In Thousands, Except per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
April 30, 1994 April 30, 1993
------------------ --------------------
(Restated) (Restated)
<S> <C> <C>
Operating revenues:
Wagering systems $ 24,558 $ 11,386
Wagering equipment and other sales 13,888 5,224
----------------- ------------------
38,446 16,610
----------------- ------------------
Operating expenses (exclusive of depreciation and
amortization shown below):
Wagering systems 14,096 6,000
Inventory, equipment and contract adjustments 2,621 -
Wagering equipment and other sales 7,557 2,866
----------------- ------------------
24,274 8,866
----------------- ------------------
Total gross profit 14,172 7,744
----------------- ------------------
Selling, general and administrative expenses 5,323 2,138
Write-off of investments and other 428 -
Depreciation and amortization 6,065 2,704
----------------- ------------------
Operating income 2,356 2,902
----------------- ------------------
Other (income) expenses
Interest expense 1,340 725
Other (income) expense (87) -
----------------- ------------------
Earnings before income taxes and extraordinary item 1,103 2,177
----------------- ------------------
Income taxes 150 680
----------------- ------------------
Net earnings before extraordinary item 953 1,497
----------------- ------------------
Extraordinary item:
Write-off of financing fees and expenses 4,222 -
----------------- ------------------
Net earnings (loss) $ (3,269) $ 1,497
================= ==================
Earnings (loss) per common share:
Earnings per common share before extraordinary item $ 0.03 $ 0.06
Extraordinary item (0.15) -
----------------- ------------------
Earnings (loss) per common share $ (0.12) $ 0.06
================= ==================
Weighted average number of common shares outstanding 28,107 24,933
================= ==================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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AUTOTOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
April 30, 1994 April 30, 1993
------------------- ------------------
(Restated) (Restated)
<S> <C> <C>
Operating revenues:
Wagering systems $45,205 $20,854
Wagering equipment and other sales 21,530 9,116
------- -------
66,735 29,970
------- -------
Operating expenses (exclusive of
depreciation and amortization shown below):
Wagering systems 26,166 11,299
Inventory, equipment and contract adjustments 2,733 -
Wagering equipment and other sales 12,458 4,545
------- -------
41,367 15,844
------- -------
Total gross profit 25,378 14,126
------- -------
Selling, general and administrative expenses 9,922 4,189
Write-off of investments and other 895 -
Depreciation and amortization 11,186 4,729
------- -------
Operating income 3,375 5,208
------- -------
Other (income) expenses
Interest expense 2,636 2,054
Other (income) expenses (205) -
------- -------
Earnings before income taxes and
extraordinary items 944 3,154
------- -------
Income taxes 94 1,051
------- -------
Net earnings before extraordinary item 850 2,103
------- -------
Extraordinary item:
Write-off of financing fees and expenses 4,222 -
------- -------
Net earnings (loss) $(3,372) $ 2,103
======= =======
Earnings (loss) per common share:
Earnings per common share before
extraordinary item $ 0.03 $ 0.09
Extraordinary item (0.15) -
------- -------
Earnings (loss) per common share $ (0.12) $ 0.09
======= =======
Weighted average number of common
shares outstanding 28,047 22,536
======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
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AUTOTOTE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
April 30, 1994 April 30, 1993
------------------ ------------------
(Restated) (Restated)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (3,372) $ 2,103
------------------ ------------------
Adjustments to reconcile net earnings loss to
cash provided by operating activities:
Depreciation and amortization 11,186 4,729
Write-off of investments and other 895
Write-off of financing fees and expense 4,222 -
Changes in operating assets and liabilities:
Accounts receivable (7,523) (3,733)
Inventories (1,612) -
Prepaids, deposits and other (1,205) (137)
Accounts payable 1,264 (649)
Accrued liabilities 2,993 (1,212)
Income taxes payable (1,185) 581
Other (1,232) (930)
------------------ ------------------
Total adjustments 7,803 (1,351)
------------------ ------------------
Net cash provided by operating activities 4,431 752
------------------ ------------------
Cash flows from investing activities:
Capital expenditures (3,731) (685)
Expenditures for equipment under wagering system
contracts (19,361) (18,436)
Increase in other assets and investments (5,575) (750)
------------------ ------------------
Net cash used in investing activities (28,667) (19,871)
------------------ ------------------
Cash flows from financing activities:
Net repayments on lines-of-credit (1,034) (2,016)
Proceeds from issuance of long-term debt 77,738 4,800
Payments on long-term debt (55,798) (51,175)
Net proceeds from issuance of common stock 530 78,960
------------------ ------------------
Net cash provided by financing activities 21,436 30,569
------------------ ------------------
Increase (decrease) in cash and cash equivalents (2,800) 11,450
Cash and cash equivalents, beginning of period 10,524 1,206
------------------ ------------------
Cash and cash equivalents, end of period $ 7,724 $ 12,656
================== ==================
Cash paid during the six months ended:
Interest, net of amounts capitalized $ 3,415 $ 3,023
================== ==================
Income taxes $ 541 $ 177
================== ==================
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE>
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 April 30, 1994 and the consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
the six month periods ended April 30, 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.
7
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(b) Effect of Stock Splits
Weighted average common shares and earnings (loss) 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
<TABLE>
<CAPTION>
(In Thousands)
(Unaudited)
April 30, 1994 October 31, 1993
-------------- ----------------
<S> <C> <C>
Parts............ $ 4,767 $ 9,230
Work in process.. 10,134 3,721
Ticket paper..... 327 665
------- -------
Total........... $15,228 $13,616
======= =======
</TABLE>
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 April 30, 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 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.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Restatement
As discussed in Note 1, the accompanying consolidated financials statements
and Management's Discussion and Analysis have been restated.
Quarter Ended April 30, 1994 Compared to Quarter Ended April 30, 1993
- ---------------------------------------------------------------------
Revenue Analysis
Total revenues increased 131% or $21.8 million to $38.4 million in the
second quarter of fiscal 1994 from $16.6 million in the second quarter of fiscal
1993. The Company completed four acquisitions in the second half of 1993 which
contributed revenues of $15.0 million in the second quarter of fiscal 1994.
Wagering equipment and other sales, exclusive of $2.7 million of equipment sales
revenues attributable to the 1993 acquisition of TeleControl and GI Lottery
subsidiaries, increased $6.0 million to $11.2 million in the second quarter of
fiscal 1994 compared to $5.2 million in the second quarter of fiscal 1993.
Wagering equipment sales revenue in the 1994 period included continued delivery
of MAX 2000 terminals to Italy's Totip pool; foreign equipment sales and the
delivery of several sports wagering systems. Wagering equipment sales in the
second quarter of fiscal 1993 included equipment sales to foreign customers and
the delivery of sports wagering systems and other equipment. Wagering system
revenue, exclusive of $12.3 million attributable to the 1993 acquisitions, was
$12.3 million in the second quarter of fiscal 1994 compared to $11.4 million in
the second quarter of fiscal 1993. Fiscal 1994 second quarter wagering system
revenues reflect the operation of four new racetracks systems and five New
Jersey casinos.
Expense Analysis
Gross margins on wagering equipment sales remained constant at 45% in the
second quarter of fiscal 1994 and 1993. Gross margins on wagering systems
decreased from 47% in the second quarter of fiscal 1993 to 43% in the second
quarter of fiscal 1994. Wagering system gross margin in the second quarter of
fiscal 1994 reflect the high variable cost nature of the operations of the
Connecticut OTB and decreased performance at the Company's simulcasting
operations. Operating margins decreased from 17% in the second quarter of
fiscal 1993 to 6% in the second quarter of 1994 principally due to the write-
down of inventory and equipment and the expected gross margins of contracts in
process at the Company's simulcasting operations. Lower wagering system gross
margins, higher selling, general and administrative expenses and the write-off
of certain investments in the second quarter of fiscal 1994 compared to the
second quarter of fiscal 1993 also contributed to the decrease in operating
margins.
Selling, general and administrative expenses, which include product
development expenses, increased $3.2 million to $5.3 million in the second
quarter of fiscal 1994 compared to $2.1 million in the second quarter of fiscal
1993, primarily reflecting the increase in marketing efforts associated with
proposed submission to the North American and International Lottery organization
by the Company's on-line lottery business, expenses associated with the
operations of the 1993 acquisitions as well as increases in marketing expenses
associated with expansion of the Company's North American and international
operations.
9
<PAGE>
Product development expenditures in the second quarter of fiscal 1994 were
$2.0 million, up from $1.4 million in the second quarter of fiscal 1993,
reflecting new product development, product enhancement and product support.
Approximately $0.4 million of second quarter of fiscal 1994 development expense
is included in the statement of operations, approximately $1.4 million was
allocated to projects and $0.2 million was reimbursed by customers.
Depreciation and amortization expenses increased 124% to $6.1 million in
the second quarter of fiscal 1994 compared to $2.7 million in the second quarter
of fiscal 1993. The increase was principally due to the depreciation associated
with the new PROBE systems installed at customer sites since fiscal 1993 and
additional amortization and depreciation as a result of the final allocation of
purchase price and the useful life of goodwill and certain other assets,
recorded in connection with the 1993 acquisitions.
Operating income was $2.4 million in the second quarter of fiscal 1994,
compared to $2.9 million in the second quarter of fiscal 1993, reflecting
increased operating expenses, the write-down of certain assets and increased
amortization and depreciation.
Interest expense increased $0.6 million to $1.3 million in the second
quarter of fiscal 1994 compared to $0.7 million in the second quarter of fiscal
1993. The increase primarily reflects the increased borrowing associated with
the construction of wagering system equipment and the Company's senior financing
for the 1993 acquisitions.
Income Taxes
Effective income tax rates were approximately 14% in the second quarter of
fiscal 1994 and 31% in the second quarter of fiscal 1993. The rate for 1994
differs from the U.S. statutory tax rate of 34% principally due to higher
foreign earnings which are taxed at a lower income tax rate than the U.S. tax
rate. The Company has not recognized the full tax benefit of its domestic
operating losses due to the expectation that such operating losses are not
likely to be realized.
Net Earnings/Loss
Net earnings before extraordinary item for the second quarter of fiscal
1994 were $1.0 million or $0.03 per share compared to $1.5 million or $0.06 per
share in the second quarter of fiscal 1993. The net loss for the second quarter
of fiscal 1994 was $3.3 million or $0.12 per share compared to net earnings of
$1.5 million or $0.06 per share in the second quarter of fiscal 1993. The net
loss for the second quarter of fiscal 1994 includes an extraordinary non-cash
charge to write-off financing fees and expenses associated with repayment of the
Company's senior credit facility of $4.2 million. Earnings per share were
calculated using 28.1 million weighted average shares outstanding in the second
quarter of fiscal 1994, compared to 24.9 million weighted average shares
outstanding in the second quarter of fiscal 1993.
10
<PAGE>
Six Months Ended April 30, 1994 Compared to Six Months Ended April 30, 1993
- ---------------------------------------------------------------------------
Revenue Analysis
Total revenues increased 123% or $36.7 million to $66.7 million for the six
months ended April 30, 1994 from $30.0 million in the comparable period in
fiscal 1993. Revenues for the six months ended April 30, 1994 associated with
the 1993 acquisitions amounted to $25.9 million. Wagering equipment sales
exclusive of $2.9 million of equipment sales revenue attributable to the 1993
acquisitions of the TeleControl and GI Lottery subsidiaries, increased $9.5
million to $18.6 million in the six months ended April 30, 1994 from $9.1
million in the comparable six month period of fiscal 1993. Wagering equipment
sales revenue in the 1994 period include continued delivery of MAX 2000
terminals to Italy's Totip pool; foreign sales and delivery of several sports
wagering systems and other equipment. Wagering equipment sales revenue in the
1993 period include equipment sales to foreign customers; engineering fees
earned on the customized MAX 2000 terminal and the sale of several sports
wagering systems and other equipment. Wagering system revenue, exclusive of
$23.0 million attributable to the 1993 acquisitions, was $22.2 million in the
six months ended April 30, 1994, compared to $20.8 million in the comparable
period of fiscal 1993. Fiscal 1994 six months wagering system revenues include
revenues from new wagering systems contracts which became operational during the
previous 12 months. Partly offsetting this increase was the adverse affect of
the severe winter weather in the Northeast and rate reductions associated with
contract renewals.
Expense Analysis
Gross margins on wagering equipment sales decreased to 42% in the 1994
period as compared to 50% in the comparable period in 1993. Gross margins on
wagering systems decreased from 46% in the six months ended April 30, 1993 to
42% in the comparable period in fiscal 1994. Wagering equipment sales margins
in fiscal 1993 reflect higher margins associated with the engineering fees for
the customization of the MAX 2000 terminal. Wagering systems gross margin in
fiscal 1994 reflects the high variable cost nature of the operations of the
Connecticut OTB and lower margins at the Company's simulcasting operations.
Operating margins decreased from 17% in fiscal 1993 to 6% in the fiscal 1994
period principally due to the absence of higher margin engineering fees for
customization of the MAX 2000 terminal; the write-down of inventory and
equipment, the expected gross margins of contracts in process at the Company's
simulcasting operations, higher selling, general and administration expenses and
the write-off of certain investments in fiscal 1994 compared to fiscal 1993.
Selling, general and administrative expenses increased $5.7 million to $9.9
million in the six months ended April 30, 1994 from $4.2 million in the
comparable fiscal 1993 period primarily reflecting the increase in marketing
efforts associated with the Company's on-line lottery business, expenses
associated with the operations of the 1993 acquisitions as well as marketing
expenses associated with expansion of the Company's North American and
international operations.
Depreciation and amortization expenses increased 137% to $11.2 million in
the six months ended April 30, 1994, as compared to $4.7 in the comparable
period in fiscal 1993. The increase was principally due to the depreciation
associated with the new PROBE system installed at customer sites
11
<PAGE>
since fiscal 1993 and additional amortization and depreciation as a result of
the final allocation of purchase price and the useful life of goodwill and
certain other assets recorded in connection with the 1993 acquisitions.
Operating income was $3.4 million in the six months ended April 30, 1994
compared to $5.2 million in the comparable period in fiscal 1993, reflecting
increased operating expenses the write-down of certain assets and increased
amortization and depreciation.
Interest expense increased $0.5 million to $2.6 million in the six months
ended April 30, 1994 compared to $2.1 million in the comparable period in fiscal
1993. The increase primarily reflects the increased borrowing associated with
the construction of wagering system equipment and financing for the 1993
acquisitions.
Income Taxes
Effective income tax rates were approximately 10% for the six months ended
April 30, 1994 and 33% in fiscal 1993. The rate for 1994 differs from the U.S.
statutory tax rate of 34% principally due to foreign earnings taxed at a lower
income tax rate than the U.S. tax rate. The Company has not recognized the full
tax benefit of its domestic operating losses due to the expectation that such
operating losses are not likely to be realized.
Net Earnings (Loss)
Net earnings before extraordinary item for the six months ended April 30,
1994 were $0.9 million or $0.03 per share compared to $2.1 million or $0.09 per
share in the comparable fiscal 1993 period. The net loss for the six months
ended April 30, 1994 was $3.4 million or $0.12 per share compared to net
earnings of $2.1 million or $0.09 per share in the comparable fiscal 1993
period. The net loss for fiscal 1994 includes an extraordinary non-cash charge
of $4.2 million to write-off financing fees and expenses associated with the
Company's repayment of its senior credit facility. Earnings (loss) per share
were calculated using 28.0 million weighted average shares outstanding in the
fiscal 1994 period, compared to 22.5 million weighted average shares outstanding
in the fiscal 1993 period.
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
contracts. New lottery contracts would also require substantial initial
outlays. In the six months ended April 30, 1994 the Company invested $19.4
million in expenditures for wagering and video gaming equipment under wagering
system's contracts. The Company also invested $3.7 million in capital
expenditures primarily for leasehold improvements in its lottery operations and
Connecticut OTB facilities. In the six months ended April 30, 1994 net cash
provided by operating activities was $4.4 million after giving effect to
increases in accounts receivable, inventories and other current assets of $7.5
million, $1.6 million and $1.2 million, respectively, and the decrease in income
taxes of $1.2 million. The Company generated cash of $12.9 million from net
earnings and non-cash charges for depreciation, amortization, and the one-time
write-off of financing charges and write-off of certain assets. During the
period, the Company financed its expenditures through borrowing under its senior
credit facility.
12
<PAGE>
The amount of the Company's future expenditures for wagering systems
equipment will depend on the Company's ability to enter into service contracts
with the 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 and video gaming
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 capital
expenditures of approximately $50.0 million in fiscal 1994 for wagering systems
arising out of current commitments. At April 30, 1994, the Company's cash and
cash equivalents totaled $7.7 million, versus $10.5 million at October 31, 1993.
At April 30, 1994 $65.1 million were available under its revolving credit
facility. 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 be sufficient to satisfy the company's
capital commitments through fiscal 1994.
Senior Credit Facility
On April 28, 1994, the Company's wholly-owned subsidiary ("Systems")
entered into an Amended and Restated Credit Agreement with Bankers Trust Company
("BT"), providing for a replacement senior credit facility (the "Amended Credit
Facility"), consisting of a $125 million, five-year, revolving credit facility
with $25 million for letters of credit. The revolver reduces by $25 million on
April 30, 1996 unless the Company has raised, prior to that date, $50 million
through issuance of securities. The Amended Credit Facility contains various
financial and other covenants, including limitations on the Company's
acquisitions, indebtedness, investments and capital expenditures. Also, in
addition to customary events of default, a Change of Control of the Company (as
defined) constitutes an event of default under the Amended Credit Facility. The
Amended Credit Facility is guaranteed by the Company and other subsidiaries and
is secured by substantially all of the assets of the Company and those
subsidiaries. At the closing, the Company paid BT a closing fee equal to 1.625%
of the total amount of the facility. Loans under the Amended Credit Facility
bear interest at the Base Rate (as defined) plus a margin ranging from 0% to
.75%, or the Eurodollar Rate (as defined) plus a margin ranging from .75% to
1.75% per year, in each case depending on the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") to interest expense
ratio and bank debt to EBITDA ratio, and in all cases an additional 2% in the
event of certain defaults. A commitment fee of 0.5% per year is payable on the
unused amount under the Revolver which is subject to reduction if certain
financial ratios are met. A letter of credit fee equal to the applicable margin
on Eurodollar loans then in effect less 1/8 of 1% and a facing fee of 1/8 of 1%
per year is payable to each letter of credit issued, provided that the minimum
amount of the facing fee in any 12 month period is $500. The Amended Credit
Facility permits voluntary prepayments, and requires prepayments under certain
specified circumstances. The Amended Credit Facility contains various other
covenants, including covenants that prohibit the payment of cash dividends on
the Company's stock and distributions to stockholders (see Note 4 to the
consolidated financial statements).
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
Form of Amended and Restated Credit Agreement among Autotote
Corporation, Autotote Systems, Inc., various banks and Bankers
Trust Company, as agent, as amended and restated as of April 28,
1994.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter.
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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
Corporate Controller
Dated: June 14, 1995
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