<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1999.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- -------------
0-21426
-----------------------------------
(Commission File Number)
CASINO DATA SYSTEMS
--------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
NEVADA
------------------------------------------------------
(State or Other Jurisdiction of Incorporation or
Organization)
88-0261839
------------------------------------
(I.R.S. Employer Identification
Number)
3300 BIRTCHER DRIVE, LAS VEGAS, NEVADA 89118
--------------------------------------------------------------
(Address of Principal Executive Offices)
(702) 269-5000
--------------------------------------------------
(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 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 18,336,524 SHARES OF COMMON
STOCK OUTSTANDING AS OF AUGUST 10, 1999.
-1-
<PAGE>
<TABLE>
<CAPTION>
CASINO DATA SYSTEMS
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
<S> <C>
Item 1. Financial Statements
Unaudited Condensed Consolidated Balance Sheet
June 30, 1999 and December 31, 1998 (audited)................................... 3-4
Unaudited Condensed Consolidated Statement of Operations
For the six months ended June 30, 1999 and 1998................................. 5
Unaudited Condensed Consolidated Statement of Operations
For the three months ended June 30, 1999 and 1998............................... 6
Unaudited Condensed Consolidated Statement of Cash Flows
For the six months ended June 30, 1999 and 1998................................. 7
Notes to Unaudited Condensed Consolidated Financial Statements.................. 8-11
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations....................................................... 11-15
Item 7a. Quantitative and Qualitative Disclosures about Market Risk...................... 15-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................... 17-18
Item 6. Exhibits and Reports on Form 8-K................................................ 18
Signatures ................................................................................ 19
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CASINO DATA SYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
June 30, December 31,
1999 1998
----------- ---------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 5,076 $ 5,141
Restricted cash and cash equivalents 7,727 8,111
Investment securities 1,735 1,691
Restricted investment securities 1,712 959
Accounts receivable, net of allowance for doubtful
accounts of $2,287 and $3,516, respectively 18,597 13,421
Current portion of notes receivable 4,064 2,284
Inventories 20,955 19,147
Prepaid expenses and other current assets 2,972 2,984
----------- ----------
Total current assets 62,838 53,738
----------- ----------
Property and equipment, net of accumulated
depreciation of $6,731 and $5,349, respectively 18,688 19,828
Restricted investment securities 14,698 14,623
Notes receivable, excluding current portion 708 1,137
Intangible assets, net of accumulated amortization of
$3,653 and $2,795, respectively 3,850 4,649
Software development costs, net of accumulated
amortization of $1,383 and $626, respectively 3,046 3,804
Other assets 1,230 1,231
----------- ----------
Total non-current assets 42,220 45,272
----------- ----------
Total assets $ 105,058 $ 99,010
=========== ==========
</TABLE>
(Continued)
See accompanying Notes to Condensed Consolidated Financial Statements
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<PAGE>
CASINO DATA SYSTEMS
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------------- --------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 54 $ 211
Accounts payable 3,804 3,687
Accrued expenses and customer deposits 10,061 8,026
Accrued slot liability 1,870 2,107
----------- ----------
Total current liabilities 15,789 14,031
----------- ----------
Non-current Liabilities
Accrued slot liability 20,544 18,839
----------- ----------
Total non-current liabilities 20,544 18,839
----------- ----------
Shareholders' Equity
Common stock, no par value. Authorized 100,000,000
shares; issued and outstanding 18,207,647 and
18,065,897 at June 30, 1999 and December 31, 1998,
respectively 84,233 83,790
Accumulated deficit (15,508) (17,650)
----------- ----------
Total shareholders' equity 68,725 66,140
----------- ----------
Total liabilities and shareholders' equity $ 105,058 $ 99,010
=========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
-4-
<PAGE>
CASINO DATA SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------
1999 1998
------------------ --------------
<S> <C> <C>
Revenue
Systems and services $ 15,083 $ 10,974
Games 15,435 5,316
Recurring revenue 4,152 4,901
Signs 2,656 2,184
TurboPower 1,179 1,009
----------- ----------
Total revenue 38,505 24,384
----------- ----------
Cost of goods sold 21,531 12,735
----------- ----------
Gross margin 16,974 11,649
----------- ----------
Operating expenses
Selling, general and administrative 9,756 8,653
Research and development 2,560 1,513
Depreciation and amortization 2,100 1,253
----------- ----------
Total operating expenses 14,416 11,419
----------- ----------
Income from operations 2,558 230
----------- ----------
Other income (expense)
Interest and other income, net 765 963
Interest expense (28) (148)
------------ ----------
Total other income, net 737 815
------------ ----------
Income before income taxes 3,295 1,045
Income tax expense 1,153 361
----------- ----------
Net income $ 2,142 $ 684
=========== ==========
Basic net income per share $ .12 $ .04
=========== ==========
Diluted net income per share $ .12 $ .04
=========== ==========
Basic weighted average shares outstanding 18,105 18,066
=========== =========
Diluted weighted average shares outstanding 18,345 18,094
=========== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
-5-
<PAGE>
CASINO DATA SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Amounts in Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
-------------------------------------
1999 1998
---------------- ---------------
<S> <C> <C>
Revenue
Systems and services $ 8,187 $ 5,601
Games 10,741 2,695
Recurring revenue 1,952 2,090
Signs 1,449 846
TurboPower 439 455
----------- ----------
Total revenue 22,768 11,687
----------- ----------
Cost of goods sold 12,763 5,963
----------- ----------
Gross margin 10,005 5,724
----------- ----------
Operating expenses
Selling, general and administrative 5,337 4,295
Research and development 1,244 709
Depreciation and amortization 1,049 599
----------- ----------
Total operating expenses 7,630 5,603
----------- ----------
Income from operations 2,375 121
----------- ----------
Other income (expense)
Interest and other income, net 613 504
Interest expense 12 (65)
----------- ----------
Total other income, net 625 439
----------- ----------
Income before income taxes 3,000 560
Income tax expense 1,050 196
----------- ----------
Net income $ 1,950 $ 364
=========== ==========
Basic net income per share $ .11 $ .02
=========== ==========
Diluted net income per share $ .11 $ .02
=========== ==========
Basic weighted average shares outstanding 18,143 18,066
=========== =========
Diluted weighted average shares outstanding 18,498 18,092
=========== =========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
-6-
<PAGE>
CASINO DATA SYSTEMS
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(UNAUDITED)
(Dollars in Thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------------
1999 1998
------------------ ---------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $ 2,142 $ 684
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,238 1,253
Amortization of intangible assets 674 656
Amortization of software development costs 205 --
Loss on disposal of assets 47 12
Net increase in deferred tax asset -- (175)
Changes in assets and liabilities:
Decrease in restricted cash 384 2,601
Increase in accounts and notes receivable (6,527) (859)
Increase in inventories (1,808) (663)
(Increase) decrease in prepaid expenses, other
current assets and deposits (4) 1,172
(Increase) decrease in accounts payable 117 (984)
Increase in accrued liabilities, customer deposits and
slot liability 3,503 227
----------- ----------
Net cash provided by operating activities 971 3,924
----------- ----------
Cash Flows From Investing Activities:
Increase in investment securities - current (44) (1,639)
Increase in restricted investment securities - current (753) (514)
Increase in investment securities - non current -- 1,479
Increase in restricted investment securities - non current (75) (145)
Increase in intangible assets (57) --
Increase in software development -- (1,081)
Increase in property and equipment (409) (2,451)
Sale of assets 17 --
----------- ----------
Net cash used in investing activities (1,321) (4,351)
----------- ----------
Cash Flows From Financing Activities:
Repayment of notes payable (157) (1,129)
Proceeds from the issuance of stock 442 --
----------- ----------
Net cash used in financing activities 285 (1,129)
----------- ----------
Net decrease in cash and cash equivalents (65) (1,556)
Cash and cash equivalents at beginning of period 5,141 12,273
----------- ----------
Cash and cash equivalents at end of period $ 5,076 $ 10,717
=========== ==========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements
-7-
<PAGE>
CASINO DATA SYSTEMS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Description of Business and Summary of Significant Accounting Policies
Casino Data Systems, a Nevada corporation, was incorporated in June 1990.
Each of the following corporations are wholly owned subsidiaries of Casino
Data Systems: CDS Services Company; CDS Graphics and Imaging Company; CDS
Signs, Inc.; TurboPower Software Company, and CDS Gaming Company
(collectively the "Company"). The Company's operations consist principally
of: (i) the development, licensing and sale of casino management information
systems (the Oasis(TM) System); (ii) the operation of multi-site link
progressive (MSP) systems; (iii) the design and manufacture of video
interactive gaming machines, and (iv) the design and manufacture of casino
meters, signs and graphics. The Company also creates software development
tools for sale to outside software professionals and for use by the Company's
own software engineers. The Company provides these products through operation
of five segments: systems and services, games, recurring revenue products,
signs and software development tools (TurboPower).
The consolidated financial statements include the accounts of Casino Data
Systems and all of the subsidiaries mentioned above. All significant
inter-company balances and transactions have been eliminated in
consolidation. Certain items for prior periods have been reclassified to
conform with current presentation. These reclassifications had no effect on
net income as previously reported.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These condensed unaudited
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements and notes thereto included in the
Company's annual report as filed on Form 10-K.
The accompanying condensed unaudited consolidated financial statements
contain all adjustments which, in the opinion of management, are necessary
for a fair statement of the results of the interim periods presented. The
results of operations for any interim period are not necessarily indicative
of the results of operations that will be achieved for an entire year.
(2) Business Segments
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No 131, "Disclosures About Segments of an Enterprise and
Related Information" for financial statements for periods ending after
December 15, 1997. This statement supersedes Statement No. 14 and provides
accounting guidance for reporting information about operating segments in
annual financial statements and requires public business enterprises to
report selected information about operating segments in interim financial
reports. Following is the disclosure of the above items that management
utilizes in measuring the profit or loss of each of the Company's segments.
<TABLE>
<CAPTION>
REVENUES
--------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
----------------------------------- -----------------------------
1999 1998 1999 1998
--------------- ---------------- ------------- --------------
(In thousands)
<S> <C> <C> <C> <C>
Systems and Services $ 8,187 $ 5,601 $ 15,083 $ 10,974
Games 10,741 2,695 15,435 5,316
Recurring Revenue 1,952 2,090 4,152 4,901
Signs 1,449 846 2,656 2,184
TurboPower 439 455 1,179 1,009
--------- ---------- --------- ---------
Total $ 22,768 $ 11,687 $ 38,505 $ 24,384
========== ========== ========== ==========
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
INCOME (LOSS) FROM OPERATIONS
------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Systems and Services $ 3,161 $ 1,193 $ 5,899 $ 1,782
Games (918) (981) (3,185) (1,997)
Recurring Revenue (67) (170) (428) (30)
Signs 187 70 (52) 337
TurboPower 12 9 324 138
--------- ---------- --------- ---------
Total $ 2,375 $ 121 $ 2,558 $ 230
========== ========== ========== ==========
</TABLE>
Corporate expenses have been allocated to each segment based on an estimate of
each segment's utilization of corporate resources.
(3) Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
--------------- -----------------
(Unaudited)
<S> <C> <C>
Raw materials $ 13,076 $ 9,734
Work in process 1,473 711
Finished goods 8,542 10,139
----------- ----------
23,091 20,584
Less reserve for obsolescence (2,136) (1,437)
----------- ----------
$ 20,955 $ 19,147
============ ==========
</TABLE>
(4) Net Income Per Share
The following is an analysis of the components of the shares used to compute net
income per common share pursuant to SFAS 128.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- --------------------------
1999 1998 1999 1998
---------- ---------- --------- -----------
(In thousands, except per share information)
<S> <C> <C> <C> <C>
Numerator for earnings per share
Net income $ 1,950 $ 364 $ 2,142 $ 684
========== ========== ========= ==========
Denominator for earnings per share
Denominator for basic earnings per share
Weighted average shares outstanding 18,143 18,066 18,105 18,066
Effect of dilutive securities
Stock options 355 26 240 28
---------- ---------- ---------- ----------
Denominator for diluted earnings
per share 18,498 18,092 18,345 18,094
========== ========== ========= ==========
Basic earnings per share $ .11 $ .02 $ .12 $ .04
========== ========== ========= ==========
Diluted earnings per share $ .11 $ .02 $ .12 $ .04
========== ========== ========= ==========
</TABLE>
-9-
<PAGE>
(5) Commitments and Contingencies
In connection with the operation of its MSP Systems, the Company is liable
for progressive jackpots, which are paid as an initial base jackpot component
followed by an annuity (progressive component) paid out over 20 years after
the prize is won. The base jackpot component is charged against income
ratably over the amount of coin play expected to precede payout based on a
statistical analysis. The progressive jackpot component increases based on
the number of coins played. The accrual of these liabilities commensurate
with coin play matches recognition of costs and revenues. The possibility
exists that the winning combination may be hit before the Company has fully
accrued the base jackpot component, at which time any unaccrued portion would
be expensed. There was no unaccrued portion at June 30, 1999. To ensure
adequate funds are available to pay the slot liability and to comply with
gaming regulatory requirements, the Company has established restricted cash
accounts aggregating $7,727,000 at June 30, 1999. The Company also has
restricted investment securities of $16,410,000 for the annuity payments for
jackpots already won.
In December, 1996, a class action complaint was filed in the United States
District Court, District of Nevada, by Gary A. Edwards against the Company
and certain present and former Company executives. The Company won a motion
to dismiss the First Amended Complaint filed by Edwards. The court, however,
granted Edwards leave to amend his Complaint. On July 13, 1998, Edwards filed
a Second Amended Complaint. Three additional purported shareholder class
actions were filed in 1997 in connection with the same drop in stock price
following the December 16, 1996 press release. Pending settlement, the
parties stipulated to stay the Company's response to all complaints.
Management believes these claims were without merit, and would have continued
to vigorously defend against them. However, due to the inherent risks and
ongoing expense of maintaining litigation, management determined it to be in
the best interests of the Company to settle the claims. Subject to court
approval, the parties have agreed to a settlement of all four related
lawsuits, pursuant to which the Company paid $1 million in November 1998. The
settlement is proceeding through the court. Notice of the lawsuit proposed
settlement has been sent to class members. The related charge was reflected
as loss from shareholder suit in the consolidated statement of operations for
the year ended December 31, 1998.
A patron dispute was filed against the Company in connection with the
Company's Cool Millions dollars progressive slot machine at Splash Casino in
Tunica, Mississippi. The dispute was heard by the Mississippi Gaming
Commission, who decided that the patron had won only $5.00 rather than the
jackpot of $1,742,000 as alleged by the patron. The patron appealed the
Commission's decision to the Circuit Court of Tunica County. On January 16,
1998, the Court issued an Order reversing the Commission's decision and
ordered the Company to pay the jackpot plus interest from April 8, 1995. As a
result of the Circuit Court's Order, and with the consent of the Mississippi
Gaming authorities, the Company reduced the Cool Millions dollar Mississippi
jackpot by $1,742,000. The Company appealed the decision to the Mississippi
Supreme Court. The Mississippi Supreme Court ruled in favor of the Company.
Upon receiving the decision of the Mississippi Supreme Court in favor of the
Company, the Company discontinued accruing interest on the disputed amount
and adjusted the previously accrued interest balance of $411,000 to zero.
The patron has requested a rehearing by the Mississippi Supreme Court. The
Company has opposed the requested rehearing and awaits the courts decision.
While the outcome of the lawsuit described above is not presently
determinable, management does not expect the outcome will have a material
adverse effect on the Company's consolidated financial statements taken as a
whole.
On May 19, 1998, Acres Gaming Corporation filed an action against the
Company, Mikohn Gaming Corporation, New York New York Hotel & Casino, LLC,
and Sunset Station Hotel & Casino, in the Federal Court for the State of
Nevada, alleging that the Company violated certain patent rights of Acres
Gaming. Acres Gaming also filed a Motion for Preliminary Injunction. The
Company filed its Response to the Motion for Preliminary Injunction
("Response") along with its own Motion for Summary Judgment ("MSJ")
requesting dismissal of Acres' claims. After reviewing the Company's Response
and Motion for Summary Judgment, Acres withdrew their Motion for Preliminary
Injunction. The Company's Motion for Summary Judgment was denied. The Company
believes this action is without merit and will continue to vigorously defend
itself. While the outcome of this lawsuit is not presently determinable,
management does not expect the outcome will have a material adverse effect on
the Company's consolidated financial statements taken as a whole.
On November 17, 1998, Acres filed a second lawsuit against the Company alleging
that the Company's Pro Turbo Software module violates certain patent rights of a
second Acres patent. CDS has filed an answer and a
-10-
<PAGE>
counterclaim seeking a declaration of invalidity, noninfringement and
unenforceability of the patent asserted. The Company has filed
additional counterclaims for alleged patent misuse, spoliation of
evidence, antitrust violations and unfair competition. The Company
believes that this action is without merit and will continue to vigorously
defend itself. While the outcome of this lawsuit is not presently
determinable, management does not expect the outcome will have a
material adverse effect on the Company's consolidated financial
statements taken as a whole.
The Company and its subsidiaries are also involved from time to time in other
various claims and legal actions arising in the ordinary course of business
including, but not limited to, administrative claims and legal actions
brought in state and federal courts by patrons of the Company's MSP games,
wherein the patron may allege the winning of jackpot awards or some multiple
thereof. Because of the size of the jackpots that a patron may play for,
related patron disputes often involve sizable claims. The loss of a sizable
patron dispute claim could have a material adverse effect on the Company.
However, management believes that the likelihood of success by those making
such claims is remote and that the ultimate outcome of these matters will not
have a material adverse effect on the Company's consolidated financial
statements taken as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of financial condition and results of
operations should be read in conjunction with the Unaudited Condensed
Consolidated Financial Statements and Notes thereto included elsewhere in
this document and the Consolidated Financial Statements and Notes thereto
included in the Company's annual report on Form 10-K.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH THE SIX MONTHS ENDED JUNE 30,
1998
OVERVIEW
Income from operations was $2,558,000 and $230,000 for the six months ended
June 30, 1999 and 1998, respectively, an increase of $2,328,000. Net income
increased from $684,000 for the six months ended June 30, 1998 to $2,142,000
for the same period in 1999, an improvement of $1,458,000.
REVENUE
Total revenue for the six months ended June 30, 1999 was $38,505,000 compared
with $24,384,000 for the same period in 1998, an increase of $14,121,000 or
58%. This increase is primarily due to higher revenue from games and systems
and services during the first six months of 1999 compared with the same
period in the prior year.
Systems and services revenue was $15,083,000 and $10,974,000 for the six
months ended June 30, 1999 and 1998, respectively, an increase of $4,109,000
or 37%. This increase is primarily attributable to sales of the Company's
Windows (Windows is a registered trademark of Microsoft Corporation) based
Oasis product, which was introduced into the market late in the fourth
quarter of 1998.
Revenue from game sales increased $10,119,000 from $5,316,000 for the six
month period ended June 30, 1998 to $15,435,000 for the same 1999 period.
This dramatic increase in revenue is primarily the result of the Bandit Bingo
game, which made up 56% of the units sold in the first six months of 1999.
Bingo sales began late in the fourth quarter of 1998. Bingo is the first of a
series of games designed on the Company's proprietary Bandit platform.
Revenue from the recurring revenue segment was $4,152,000 and $4,901,000 for
the six months ended June 30, 1999 and 1998, respectively, a decrease of 15%
or $749,000. This revenue decline is primarily due to fewer Cool Millions
operating units in service combined with lower levels of play on the
recurring revenue products for the six months ended June 30, 1999 compared
with the same period in 1998.
Signs revenue increased from $2,184,000 for the six months ended June 30,
1998 to $2,656,000 for the same period in 1999, an increase of $472,000 or
22%. This increase is primarily due to higher sales of games related signage.
Revenue of $1,179,000 from TurboPower Software was slightly higher for the
six months ended June 30, 1999 compared with revenue of $1,009,000 for the
same prior year period.
-11-
<PAGE>
GROSS MARGIN
The gross margin percentage decreased from 48% for the six months ended June
30, 1998 to 44% for the same period in 1999. This decrease is primarily due
to a higher percentage of revenue generated from the lower margin games
segment rather than the higher margin systems and services segment. Revenue
from games represented 40% of total revenue for the six months ended June 30,
1999 compared with 22% of total revenue for the same period in the prior
year. Despite reporting higher revenues, systems and services revenue as a
percentage of total company revenue declined from 45% to 39% for the six
months ended June 30, 1999 compared with the same period in 1998,
respectively.
OPERATING EXPENSES
Operating expenses were $14,416,000 and $11,419,000 for the six months ended
June 30, 1999 and 1998, respectively, an increase of $2,997,000 or 26%.
Operating expenses decreased as a percentage of revenues from 47% for the six
months ended June 30, 1998, to 37% for the same period in 1999.
Selling, general and administrative expenses increased from $8,653,000 for
the six months ended June 30, 1998, to $9,756,000 for the same period in
1999, an increase of $1,103,000 or 13%. Selling, general and administrative
expenses as a percentage of revenues decreased from 35% for the six months
ended June 30, 1998, to 25% for the same period in 1999. The increase in
selling, general and administrative expenses is primarily attributable to
increased legal costs and higher commissions related to the higher revenue.
The decrease in selling, general and administrative expenses as a percentage
of revenue is partly due to the fixed nature of some expenses which do not
fluctuate with revenue.
Research and development expenses increased from $1,513,000 for the
six months ended June 30, 1998, to $2,560,000 for the same period in 1999, an
increase of $1,047,000 or 69%. Research and development expenses as a
percentage of revenues increased from 6% for the six months ended June 30,
1998 to 7% for the same period in 1999. The increase is primarily
attributable to increased headcount.
Depreciation and amortization expense increased from $1,253,000 for
the six months ended June 30, 1998, to $2,100,000 for the same period in
1999, an increase of $847,000 or 68%. The increase in depreciation and
amortization is primarily due to an increased number of units on the Xtreme
link within the recurring revenue segment this year compared with prior year,
combined with amortization of software development costs related to the
Bandit platform. Amortization of these costs began in the fourth quarter of
1998.
OTHER INCOME, NET
Other income, net, is comprised of interest income, interest expense, gains
and losses on disposal of assets and other transactions that are not the
result of normal operations. Other income, net, decreased from $815,000 for
the six months ended June 30, 1998, to $737,000 for the same period in 1999,
a decrease of $78,000 or 10%. This decrease is primarily due to lower
interest expense from the reversal of approximately $411,000 of interest
expense related to a favorable lawsuit settlement in the second quarter of
1999.
THREE MONTHS ENDED JUNE 30, 1999 COMPARED WITH THE THREE MONTHS ENDED JUNE
30, 1998
OVERVIEW
Income from operations was $2,375,000 for the three months ended June 30,
1999, an increase of $2,254,000 from the same period in 1998. Net income
increased from $364,000 for the three months ended June 30, 1998 to
$1,950,000 for the same period in 1999, an improvement of $1,586,000.
REVENUE
Total revenue for the three months ended June 30, 1999 was $22,768,000
compared with $11,687,000 for the same prior year period. This is an increase
of $11,081,000, or 95%, due mainly to higher sales from systems and services
and games.
-12-
<PAGE>
Systems and services revenue was $8,187,000 for the second quarter of 1999
compared with $5,601,000 for the second quarter of 1998, an increase of
$2,586,000 or 46%. This increase is primarily due to sales of the Oasis
Windows product, which was introduced into the market late in the fourth
quarter of 1998.
Revenue from games increased from $2,695,000 for the three months ended June
30, 1998 to $10,741,000 for the three months ended June 30, 1999, an
improvement of $8,046,000. Sales of the Bandit Bingo game, which began late
in the fourth quarter of 1998, were the primary reason for the increase.
The recurring revenue segment experienced a 7% decline in revenue for the
second quarter of 1999 compared with the same prior year period. Revenue was
$1,952,000 for the three months ended June 30, 1999 compared with $2,090,000
for the prior year. This decline in revenue was primarily attributable to
fewer machines on the Cool Millions links combined with lower levels of play.
The number of linked units decreased 21% between June 30, 1998 and June 30,
1999, primarily due to the closing of the Mississippi link in February 1999.
Revenue from signs was $1,449,000, an increase of 71%, or $603,000, for the
three months ended June 30, 1999 compared with the same 1998 period. This
increase is primarily attributable to the increased demand for custom signage
for games.
TurboPower revenue had a slight decrease from $455,000 for the three months
ended June 30, 1998 to $439,000 for the same period in 1998.
GROSS MARGIN
The gross margin percentage decreased from 49% for the three months ended
June 30, 1998 to 44% for the same three month period in 1999. This decrease
is primarily due to a higher percentage of revenue generated from the lower
margin games segment rather than the higher margin systems and services
segment. Revenue from games represented 47% of total revenue for the three
months ended June 30, 1999 compared with 23% of total revenue for the same
quarter in prior year. The amount of systems and services revenue as a
percentage of total revenue declined from 48% for the quarter ended June 30,
1998 to 36% for the same quarter in 1999.
OPERATING EXPENSES
Operating expenses increased from $5,603,000 for the three months ended June
30, 1998, to $7,630,000 for the same period in 1999, an increase of
$2,027,000 or 36%. Operating expenses decreased as a percentage of revenues
from 48% for the three months ended June 30, 1998, to 34% for the same period
in 1999.
Selling, general and administrative expenses increased from $4,295,000 for
the three months ended June 30, 1998, to $5,337,000 for the same period in
1999, an increase of $1,042,000 or 24%. Selling, general and administrative
expenses as a percentage of revenues decreased from 37% for the three months
ended June 30, 1998, to 23% for the same period in 1999. The increase in
selling, general and administrative expenses is primarily attributable to
higher legal costs and increased commissions related to the higher level of
sales for the current quarter. The decrease in selling, general and
administrative expenses as a percentage of revenue is partly due to the fixed
nature of some expenses which do not fluctuate with revenue.
Research and development expenses were $1,244,000 for the second
quarter of 1999 compared with $709,000 for the same quarter in 1998, an
increase of $535,000 or 75%. Research and development expenses as a
percentage of revenues decreased from 6% for the three months ended June 30,
1998 to 5% for the same period in 1999. The increase is principally due to
increases in headcount.
Depreciation and amortization expense increased from $599,000 to
$1,049,000 for the three months ended June 30, 1998 compared with the same
period in 1999. This increase is primarily attributable to an increase in the
number of units on the Xtreme link within the recurring revenue segment for
the second quarter of 1999 compared with the second quarter in 1998. Also
contributing to the increase was amortization of software development costs
in 1999 related to the Bandit platform. Amortization of these costs began in
the fourth quarter of 1998.
-13-
<PAGE>
OTHER INCOME, NET
Other income, net, is comprised of interest income, interest expense, gains
and losses on disposal of assets and other transactions that are not the
result of normal operations. Other income, net, increased from $439,000 for
the three months ended June 30, 1998, to $625,000 for the same period in
1999, an increase of $186,000 or 42%. This increase is primarily due to the
reversal of interest expense of $411,000 related to a lawsuit settlement in
the second quarter of 1999, offset in part by lower interest income in 1999
compared with 1998.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its operating and capital expenditures
primarily through cash flows from its operations and cash from proceeds of
its equity offerings. The Company had cash and cash equivalents of
$12,803,000 at June 30, 1999, compared with $13,252,000 at December 31, 1998,
of which $7,727,000 and $8,111,000, respectively, were restricted for payment
of slot liabilities. The Company generated cash from operations of $971,000
during the six months ended June 30, 1999.
Certain jurisdictions in which MSP systems operate require that the
Company maintain restricted funds for the payment of jackpot prizes. The
amount of funds required is dependent on several factors including the type
and denomination of the games and the regulatory requirements. At June 30,
1999, the Company's accrued slot liability for its MSP systems aggregated
$22,414,000. There was no unaccrued slot liability. In connection with these
slot liabilities and in accordance with gaming requirements, the Company
established restricted cash accounts aggregating approximately $7,727,000 at
June 30, 1999 to ensure availability of adequate funds to pay for future
jackpot liabilities. The Company also has restricted investment securities
approximating $16,410,000 as of June 30, 1999 for the payment of jackpots
already won. Although statistically remote, a possibility exists that
multiple jackpots may be awarded prior to the time period over which game
play has generated sufficient revenue to accrue each base jackpot amount.
Such occurrences could have a material adverse impact on the Company's
results of operations in the reporting period in which the jackpots are hit.
The Company's ratio of current assets to current liabilities is 4.0 to 1 at
June 30, 1999, while the noncurrent liabilities to equity ratio is .30 to 1.
Based on this financial position, the Company believes it could obtain
additional long-term financing for growth that may result in working capital
additions that exceed available cash and cash equivalents to be provided by
operations. However, there can be no assurance that the Company will be able
to obtain additional sources of capital.
YEAR 2000
The year 2000 issue is the result of computer programs written using two
digits (rather than four) to define years. Computers or other equipment with
date-sensitive software may recognize "00" as 1900 rather than 2000. This
could result in system failures or miscalculations. If the Company, or its
customers, suppliers or other third parties fail to correct year 2000 issues,
the Company's operations may be adversely affected.
Over the last year, the Company has assessed the impact of year 2000 issues
on its internal processing systems and on the products produced and sold by
the Company. In September 1998, the Company formed an internal committee
comprised of management from every operational and functional department of
the Company. This committee is responsible for identifying and testing
systems that may be subject to year 2000 issues and for formulating
contingency plans if the Company experiences year 2000 issues.
The Company's internal information system, put into operation in the second
quarter of 1998, has been certified by the vendor as year 2000 compliant. The
operating system that this software uses has also been certified as year 2000
compliant by the third party manufacturer. The Company has tested certain
attributes of this system by processing test information in the year 2000
format. The results of those tests confirmed that the tested attributes are
year 2000 compliant. Additional testing will be performed on the remaining
attributes. Management expects to be completed with this testing in September
1999. Based on the vendor assurances, and the results of the preliminary
testing, the Company believes that it will not experience any disruption in
daily operations with this system related to year 2000
-14-
<PAGE>
issues; however, if such disruption should occur, the Company believes that
it could maintain ongoing operations through manual record keeping procedures
until the computerized system functionality is reestablished.
The Company is also in the process of testing and upgrading all desktop
computers and their associated software for year 2000 compliance. This
testing is expected to be completed by September 1999. The total cost of
upgrading non-compliant personal computers and software is expected to be
$225,000. Through June 30, 1999 approximately $146,000 has been spent on year
2000 compliant software upgrades.
The Company operates its MSP systems using its own proprietary software which
utilizes a third party operating system which is not year 2000 compliant. The
Company is in the process of upgrading the operating system to a certified
year 2000 compliant version and will modify its proprietary software as
necessary. This upgrade is expected to be complete by September 1999 at an
approximate cost of $10,000. With this upgrade, the Company does not believe
it will experience any disruption of MSP operations; however, the MSP
technology is dependent upon third party phone service as well as
computerized information systems and electricity at the various casino sites
where the MSP equipment is deployed. Disruption in any of these areas could
render MSP operations inoperable until service is reestablished.
The Company continues to review the impact of year 2000 issues concerning the
Company's production facility. No concerns have been identified. Therefore,
at this time, the Company believes that there will not be any material
adverse affect on its production capabilities resulting from year 2000 issues
related to the Company's production processes.
The Company also sells proprietary software to third parties. The Company has
year 2000 compliant versions of this software; however, the majority of the
Company's customer base uses a version of the software that includes certain
modules which are not year 2000 compliant. The Company has notified all of
these customers that they require an upgrade to become year 2000 compliant.
The Company has completed 80% of customer upgrades and plans to complete all
such upgrades on customers covered by purchased maintenance agreements in
calendar year 1999 at an estimated cumulative cost of approximately $100,000.
Through June 30, 1999 approximately $80,000 has been spent. The Company has
also planned the resources necessary to complete the upgrades for customers
that are not under maintenance agreements; however, performing these upgrades
is contingent upon these customers contracting for a fee with the Company to
purchase an upgrade.
The Company has sent written questionnaires to its significant manufacturing
materials suppliers, banks, telecommunications suppliers, utility providers
and payroll service to assess their year 2000 readiness and the effect these
third parties could have on the Company. No concerns have been identified.
The Company plans to maintain communication with significant suppliers and
vendors with respect to this issue.
Based on current assessments and testing, the Company does not expect year
2000 issues to have a material adverse effect on the Company's financial
position, results of operations or cash flows. However, risk exists regarding
non-compliance of third parties with operational importance to the Company,
such as key suppliers and customers, utilities, telecommunication providers,
or financial institutions, which could result in lost production, sales, or
administrative difficulties on the part of the Company. Year 2000 issues, if
severe, could have a material effect on the Company. Pending completion of
the year 2000 assessment, the Company will finalize a contingency plan to
address possible risks of year 2000 noncompliance on the Company's financial
position. Though assessment and testing will be ongoing throughout 1999, the
Company expects to have its assessment, testing and contingency planning
completed by October 1999.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to the impact of interest rate changes and the changes
in the market values of its investments.
The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's investment portfolio. The Company has not
used derivative financial instruments in its investment portfolio. The
Company invests its excess cash primarily in debt instruments of the U.S.
Government and its agencies and state and
-15-
<PAGE>
other municipal government agencies. By policy, the Company limits the amount
of credit exposure to any one issuer. The Company protects and preserves its
invested funds by limiting default, market and reinvestment risk.
Investments in fixed rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates. The Company may suffer
losses in principal if forced to sell securities which have declined in
market value due to changes in interest rates.
CAUTIONARY STATEMENT FOR THE PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company is including the following cautionary statement to take advantage
of the "safe harbor" provisions of the PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995 for any forward-looking statement made by, or on behalf of, the
Company. The factors identified in this cautionary statement are important
factors (but not necessarily all the important factors) that could cause
actual results to differ materially from those expressed in any
forward-looking statement made by, or on behalf of, the Company. Where any
such forward-looking statement includes a statement of the assumptions or
bases underlying such forward-looking statement, the Company cautions that,
while it believes such assumptions or bases to be reasonable and makes them
in good faith, assumed facts or bases almost always vary from actual results,
and the differences between assumed facts or bases and actual results can be
material, depending on the circumstances. Where, in any forward-looking
statement, the Company, or its Management, expresses an expectation or belief
as to future results, such expectation or belief is expressed in good faith
and believed to have a reasonable basis, but there can be no assurance that
the statement of expectation or belief will result, or be achieved or
accomplished. Taking into account the foregoing, the following are identified
as important risk factors that could cause actual results to differ
materially from those expressed in any forward-looking statement made by, or
on behalf of, the Company:
- - Risks associated with developing gaming machines that offer technological
advantages or unique entertainment features to enable the Company to
effectively compete in the gaming machine market.
- - Possible adverse effects upon revenues if the Company experiences delays in
developing or obtaining regulatory approval of new products.
- - Possible adverse effects on revenues if new products or enhancements do not
gain customer acceptance.
- - Possible adverse effects on revenues due to the difficulty in competing
with well-established competitors in markets for the Company's products,
including without limitation, casino management information systems, MSP
products and gaming machines.
- - Possible adverse effects on revenues associated with the dependence upon
Steven A. Weiss, a key employee of the Company.
- - The general profitability of the gaming industry at large can substantially
affect the Company's revenues.
- - Even though the Company seeks to protect its intellectual property upon
which it relies to sell its products, there is the possibility of adverse
affects on revenue generation if such intellectual property were not
protected or available for use due to patents issued to competitors.
- - Possible adverse affects related to any negative outcome of pending or
threatened litigation.
- - The Year 2000 Project and the date on which the Company believes it will be
completed are based on Management's best estimates, which are derived
utilizing numerous assumptions of future events including the continued
availability of certain resources, third-party modification plans and other
factors. However, there can be no assurance that there will be no delay in,
or no increased costs associated with, the implementation of the Year 2000
Project. Specific factors that might cause differences between the
estimates and actual results include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, timely responses by
third-parties and suppliers, and similar uncertainties. The Company's
inability to implement Year 2000 changes could have an adverse effect on
future results of operations.
-16-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December, 1996, a class action complaint was filed in the United States
District Court, District of Nevada, by Gary A. Edwards against the Company
and certain present and former Company executives. The Company won a motion
to dismiss the First Amended Complaint filed by Edwards. The court, however,
granted Edwards leave to amend his Complaint. On July 13, 1998, Edwards filed
a Second Amended Complaint. Three additional purported shareholder class
actions were filed in 1997 in connection with the same drop in stock price
following the December 16, 1996 press release. Pending settlement, the
parties stipulated to stay the Company's response to all complaints.
Management believes these claims were without merit, and would have continued
to vigorously defend against them. However, due to the inherent risks and
ongoing expense of maintaining litigation, management determined it to be in
the best interests of the Company to settle the claims. Subject to court
approval, the parties have agreed to a settlement of all four related
lawsuits, pursuant to which the Company paid $1 million in November 1998. The
settlement is proceeding through the court. Notice of the lawsuit proposed
settlement has been sent to class members. The related charge was reflected
as loss from shareholder suit in the consolidated statement of operations for
the year ended December 31, 1998.
A patron dispute was filed against the Company in connection with the
Company's Cool Millions dollars progressive slot machine at Splash Casino in
Tunica, Mississippi. The dispute was heard by the Mississippi Gaming
Commission, who decided that the patron had won only $5.00 rather than the
jackpot of $1,742,000 as alleged by the patron. The patron appealed the
Commission's decision to the Circuit Court of Tunica County. On January 16,
1998, the Court issued an Order reversing the Commission's decision and
ordered the Company to pay the jackpot plus interest from April 8, 1995. As a
result of the Circuit Court's Order, and with the consent of the Mississippi
Gaming authorities, the Company reduced the Cool Millions dollar Mississippi
jackpot by $1,742,000. The Company appealed the decision to the Mississippi
Supreme Court. The Mississippi Supreme Court ruled in favor of the Company.
Upon receiving the decision of the Mississippi Supreme Court in favor of the
Company, the Company discontinued accruing interest on the disputed amount
and adjusted the previously accrued interest balance of $411,000 to zero.
The patron has requested a rehearing by the Mississippi Supreme Court. The
Company has opposed the requested rehearing and awaits the courts decision.
While the outcome of the lawsuit described above is not presently
determinable, management does not expect the outcome will have a material
adverse effect on the Company's consolidated financial statements taken as a
whole.
On May 19, 1998, Acres Gaming Corporation filed an action against the
Company, Mikohn Gaming Corporation, New York New York Hotel & Casino, LLC,
and Sunset Station Hotel & Casino, in the Federal Court for the State of
Nevada, alleging that the Company violated certain patent rights of Acres
Gaming. Acres Gaming also filed a Motion for Preliminary Injunction. The
Company filed its Response to the Motion for Preliminary Injunction
("Response") along with its own Motion for Summary Judgment ("MSJ")
requesting dismissal of Acres' claims. After reviewing the Company's Response
and Motion for Summary Judgment, Acres withdrew their Motion for Preliminary
Injunction. The Company's Motion for Summary Judgment was denied.. The
Company believes this action is without merit and will continue to vigorously
defend itself. While the outcome of this lawsuit is not presently
determinable, management does not expect the outcome will have a material
adverse effect on the Company's consolidated financial statements taken as a
whole.
On November 17, 1998, Acres filed a second lawsuit against the Company
alleging that the Company's Pro Turbo Software module violates certain patent
rights of a second Acres patent. CDS has filed an answer and a counterclaim
seeking a declaration of invalidity, noninfringement and unenforceability of
the patent asserted. The Company has filed additional counterclaims for
alleged patent misuse, spoliation of evidence, antitrust violations and
unfair competition. The Company believes that this action is without merit
and will continue to vigorously defend itself. While the outcome of this
lawsuit is not presently determinable, management does not expect the outcome
will have a material adverse effect on the Company's consolidated financial
statements taken as a whole.
The Company and its subsidiaries are also involved from time to time in other
various claims and legal actions arising in the ordinary course of business
including, but not limited to, administrative claims and legal actions
brought in state and federal courts by patrons of the Company's MSP games,
wherein the patron may allege the
-17-
<PAGE>
winning of jackpot awards or some multiple thereof. Because of the size of
the jackpots that a patron may play for, related patron disputes often
involve sizable claims. The loss of a sizable patron dispute claim could have
a material adverse effect on the Company. However, management believes that
the likelihood of success by those making such claims is remote and that the
ultimate outcome of these matters will not have a material adverse
effect on the Company's consolidated financial statements taken as a whole.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit 3.2(a) By-laws (incorporated herein by reference to Exhibit
3.2 of the Company's Registration Statement on Form
SB-2 (File No. 33-59148LA))
Exhibit 3.2(b) Amendment to Bylaws dated June 18, 1999
Exhibit 27.1 Financial Data Schedule
There were no reports filed on Form 8-K for the six month period ended June 30,
1999.
-18-
<PAGE>
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 duly authorized.
CASINO DATA SYSTEMS
-------------------
Registrant
Date: August 13, 1999 /s/ Steven A. Weiss
--------------------------- ------------------------------------
Steven A. Weiss
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
Date: August 13, 1999 /s/ Lee Lemas
--------------------------- ------------------------------------
Lee Lemas
Chief Operating and
Financial Officer
(Principal Financial and
Accounting Officer)
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<PAGE>
EXHIBIT 3.2(b)
AMENDMENT TO
BYLAWS
OF
CASINO DATA SYSTEMS
The bylaw provision set forth below amends the section set forth in the
original bylaws adopted by resolution of the Board of Directors of Casino
Data System at a meeting of Board of Directors held on the 25th day of March,
1993.
SECTION 4.03. CLASSES; ELECTION OF DIRECTORS. (a) The Board shall be
classified, with respect to the time for which they severally hold office,
into two (2) classes: Class I and Class II, which shall be as nearly as equal
in number as possible; PROVIDED HOWEVER, that the number of directors in any
one class may not exceed the number of directors in any other class by more
than one. Each director shall serve for a term ending on the second annual
meeting of the stockholders following the annual meeting of the stockholders
at which the director was elected; PROVIDED, HOWEVER, that each initial
director in Class I shall hold office until the annual meeting of the
stockholders in 2000. Notwithstanding the foregoing provisions of this
Article, each director shall serve until his successor is duly elected and
qualified or until his death, resignation or removal.
(b) In the event the number of directors is increased to seven (7) or
more, then the Board shall be reclassified into three (3) classes: Class A,
Class B and Class C, which shall be as nearly as equal in number as possible;
PROVIDED HOWEVER, that the number of directors in any one class may not exceed
the number of directors in any other class by more than one. In the event of
such reclassification, each director shall serve for a term ending on the
third annual meeting of the stockholders following the annual meeting of the
stockholders at which the director was elected; PROVIDED, HOWEVER, that each
initial director in Class A shall hold office until the first annual meeting
of the stockholders following the reclassification, and each initial director
in Class B shall hold office until the second annual meeting of the
stockholders following the reclassification.
(c) In the event of any increase or decrease in the authorized number
of directors, the newly created directorships resulting from such increase or
decrease shall be apportioned by the Board of Directors between the classes
of directors so as to maintain such classes as nearly equal as possible. No
decrease in the number of directors constituting the Board of Directors shall
shorten the term of any incumbent director.
(d) If any annual stockholders meeting is not held and a written
consent in lieu of an annual meeting is not filed, or the Directors are not
elected, the Directors may be elected at any special stockholders' meeting
held for that purpose or by the filing of a special written consent.
I, the undersigned, being the Secretary of CASINO DATA SYSTEMS, do
hereby certify the foregoing to be an Amendment to the Bylaws of said
corporation, as adopted on June 18, 1999, by a written action of the Board of
Directors of Casino Data Systems.
s/s Lee Lemas
--------------------------
Lee Lemas, Secretary
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<PERIOD-START> JAN-01-1999
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<RECEIVABLES> 23,369
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0
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<COMMON> 84,233
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