<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to ____________
Commission file number 000-23124
ANCHOR GAMING
(Exact name of registrant as specified in its charter)
NEVADA 88-0304253
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
815 PILOT ROAD, SUITE G
LAS VEGAS, NEVADA
89119
(Address of principal executive offices)
(Zip Code)
(702) 896-7568
(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
------- -------
Shares outstanding of each of the registrant's classes of common stock as of
November 13, 1998:
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<CAPTION>
Class Outstanding as of November 13, 1998
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<S> <C>
Common stock, $.01 par value 12,061,732
</TABLE>
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<PAGE>
ANCHOR GAMING
FORM 10-Q
QUARTER ENDED SEPTEMBER 30, 1998
INDEX
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<CAPTION>
Page No.
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Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
Consolidated Condensed Balance Sheets at
September 30, 1998 and June 30, 1998 (unaudited) 3
Consolidated Condensed Statements of
Income for the three months ended
September 30, 1998 and 1997 (unaudited) 4
Consolidated Condensed Statements of Cash
Flows for the three months ended September 30,
1998 and 1997 (unaudited) 5
Notes to Consolidated Condensed Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ANCHOR GAMING
CONSOLIDATED CONDENSED SEPTEMBER 30, JUNE 30,
BALANCE SHEETS (UNAUDITED) 1998 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 80,611,343 $ 73,187,295
Accounts receivable, net 8,581,591 8,977,254
Inventory 3,430,115 3,869,496
Prepaid expenses 1,631,740 1,951,947
Other current assets 696,683 53,688
------------- -------------
Total current assets 94,951,472 88,039,680
Property and equipment, net 96,619,407 94,791,189
Long-term notes receivable, net 2,394,332 2,234,856
Intangible assets, net 2,870,472 3,534,048
Investments in unconsolidated affiliates 31,709,486 32,638,738
Deposits and other 23,397,461 23,895,032
------------- -------------
Total assets $ 251,942,630 $ 245,133,543
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,404,328 $ 5,994,029
Accrued salaries, wages and vacation pay 3,810,228 3,905,951
Income tax payable 9,013,344 12,469,108
Other current liabilities 12,751,611 11,221,310
------------- -------------
Total current liabilities 30,979,511 33,590,398
Minority interest in consolidated subsidiary 1,196,823 1,061,470
------------- -------------
Total liabilities and minority interest in
consolidated subsidiary 32,176,334 34,651,868
------------- -------------
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized,
0 shares issued and outstanding at September 30, 1998 and
June 30, 1998 - -
Common stock, $.01 par value, 50,000,000 shares
authorized, 13,768,675 issued and 12,423,532 outstanding
at September 30, 1998, 13,758,375 issued and 12,593,232
outstanding at June 30, 1998 137,687 137,584
Additional paid-in capital 114,518,260 114,179,417
Treasury stock at cost, 1,345,143 shares at September 30, 1998,
1,165,143 shares at June 30, 1998 (62,834,165) (52,731,940)
Retained earnings 167,944,514 148,896,614
------------- -------------
Total stockholders' equity 219,766,296 210,481,675
------------- -------------
Total liabilities and stockholders' equity $ 251,942,630 $ 245,133,543
------------- -------------
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</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements
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<PAGE>
<TABLE>
<CAPTION>
ANCHOR GAMING THREE MONTHS ENDED SEPTEMBER 30,
CONSOLIDATED CONDENSED --------------------------------------
STATEMENTS OF INCOME (UNAUDITED) 1998 1997
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<S> <C> <C>
Revenues:
Proprietary games operations $ 33,071,334 $ 24,967,818
Casino operations 22,098,239 20,046,846
Route operations 8,946,548 9,015,530
Other operations 486,594 451,043
------------- -------------
Total revenues 64,602,715 54,481,237
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Costs and expenses:
Proprietary games operations 4,122,430 3,755,848
Casino operations 10,730,254 8,952,092
Route operations 5,888,979 5,388,044
Other operations 595,992 604,699
Selling, general and administrative 9,704,839 6,870,118
Depreciation and amortization 3,890,839 2,860,772
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Total costs and expenses 34,933,333 28,431,573
------------- -------------
Income from operations 29,669,382 26,049,664
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Other income (expense):
Interest income 1,065,194 823,003
Interest expense - (56,694)
Other income 83,631 152,906
Minority interest in earnings of consolidated
subsidiary (219,171) (182,055)
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Total other income 929,654 737,160
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Income before provision for income taxes 30,599,036 26,786,824
Income tax provision 11,551,136 10,045,059
------------- -------------
Net income $ 19,047,900 $ 16,741,765
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------------- -------------
Basic earnings per share $ 1.52 $ 1.29
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------------- -------------
Weighted average shares outstanding 12,533,065 12,969,271
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Diluted earnings per share $ 1.48 $ 1.25
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Weighted average common and common equivalent
shares outstanding 12,874,052 13,386,141
------------- -------------
------------- -------------
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements.
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<PAGE>
<TABLE>
<CAPTION>
ANCHOR GAMING THREE MONTHS ENDED SEPTEMBER 30,
CONSOLIDATED CONDENSED -------------------------------------
STATEMENTS OF CASH FLOWS (UNAUDITED) 1998 1997
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<S> <C> <C>
Net cash provided by operating activities $ 23,924,160 $ 20,513,115
------------ ------------
Cash flows from investing activities:
Acquisition of property and equipment (5,719,057) (7,692,190)
Expenditures for intangible assets - (80,614)
Issuance of notes receivable (842,449) (75,000)
Principal reductions on notes receivable 40,019 19,700
------------ ------------
Net cash used in investing activities (6,521,487) (7,828,104)
------------ ------------
Cash flows from financing activities:
Net proceeds from sale of stock and warrants 123,600 1,252,125
Treasury stock purchases (10,102,225) (10,406,425)
------------ ------------
Net cash used in financing activities (9,978,625) (9,154,300)
------------ ------------
Net increase in cash and cash equivalents 7,424,048 3,530,711
Cash and cash equivalents, beginning of period 73,187,295 66,427,369
------------ ------------
Cash and cash equivalents, end of period $ 80,611,343 $ 69,958,080
------------ ------------
------------ ------------
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ 56,694
------------ ------------
------------ ------------
Cash paid for income taxes $ 14,911,000 $ 3,059,700
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated condensed financial statements
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<PAGE>
ANCHOR GAMING
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated condensed financial statements include the accounts of
Anchor Gaming and its subsidiaries ("the Company" or "Anchor"), Anchor Coin,
C.G. Investments, Inc. ("CGI"), Colorado Grande Enterprises, Inc. ("Colorado
Grande") and D D Stud, Inc. ("DD Stud"), which conduct gaming operations in
Nevada, in Black Hawk and Cripple Creek, Colorado, and various other gaming
jurisdictions (collectively the "Subsidiaries"). All significant intercompany
accounts and transactions have been eliminated.
BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments necessary to present
fairly the results of its operations and cash flows for the three month
periods ended September 30, 1998 and 1997, and its financial position at
September 30, 1998. These financial statements should be read in conjunction
with the Company's audited consolidated financial statements for the fiscal
year ended June 30, 1998. The operating results and cash flows for the three
months ended September 30, 1998 are not necessarily indicative of the results
that will be achieved in future periods.
INVENTORY
Inventories consist of silver and silver tokens, parts for gaming
machines, and food and beverage items. Silver inventory of $751,535 and
$1,067,381 at September 30, 1998 and June 30, 1998, respectively, is
classified as raw material. The remainder of inventory is classified as
finished goods. All inventories are stated at the lower of cost (first-in,
first-out) or market.
OTHER CURRENT LIABILITIES
Included in other current liabilities are $4,269,000 and $3,519,000 in
employee royalties payable at September 30, 1998 and June 30, 1998.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The Company has investments in unconsolidated affiliates that are
accounted for under the equity method. Under the equity method, original
investments are recorded at cost and adjusted by the Company's share of
earnings, losses and distributions of these affiliates. Investments in
unconsolidated affiliates consist primarily of a 50% interest in a joint
venture (the "Joint Venture") with International Game Technology ("IGT"). The
primary business of the Joint Venture is to distribute gaming machines on
wide-area progressive systems. The Company's share of net earnings from the
Joint Venture are included in revenue from proprietary games operations.
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<PAGE>
The Joint Venture operates on a September 30 year-end and began
operations during the quarter ended March 31, 1997. For the three months
ended September 30, 1998, operating revenues for the Joint Venture were
$73,790,000, operating expenses were $36,450,000, operating income was
$37,340,000 and net income was $37,740,000. For the three months ended
September 30, 1997, revenues were $38,540,000, expenses were $16,950,000,
operating income was $21,590,000 and net income was $21,230,000.
ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates in the financial statements include
the estimated depreciable lives of property and equipment and certain
estimated liabilities and valuation reserves. Actual results could differ
from those estimates.
RECLASSIFICATIONS
Certain amounts in the consolidated condensed financial statements for
the three months ended September 30, 1997 have been reclassified to be
consistent with the presentation used for the three months ended September
30, 1998.
EARNINGS PER SHARE
During the year ended June 30, 1998, the Company adopted FASB Statement
No. 128 "Earnings per Share." This statement established standards for
computing and presenting earnings per share and required restatement of all
prior-period earnings per share data presented. A reconciliation of income
and shares for basic and diluted earnings per share (EPS) is as follows:
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Three Months Ended Three Months Ended
September 30, 1998 September 30, 1997
Per Share Per Share
Income Shares Amount Income Shares Amount
------ ------ --------- ------ ------ ---------
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Basic EPS:
Net Income $19,047,900 12,533,065 $ 1.52 $16,741,765 12,969,271 $ 1.29
Effect of Dilutive
Securities:
Options 340,987 (0.04) 416,870 (0.04)
----------- ----------- ------ ----------- ---------- ------
Diluted EPS:
Net Income $19,047,900 12,874,052 $ 1.48 $16,741,765 13,386,141 $ 1.25
----------- ----------- ------ ----------- ---------- ------
----------- ----------- ------ ----------- ---------- ------
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-7-
<PAGE>
2. COMMITMENTS AND CONTINGENCIES
Several securities class action lawsuits have been filed against the
Company and certain of its current and former officers and directors. The
lawsuits were filed in various jurisdictions following the Company's
announcement in early December 1997 that the Company's results for the
December quarter might not meet analysts' expectations. The lawsuits have
been brought on behalf of certain purchasers of the stock of the Company and
allege violations of state and/or federal securities laws arising out of
alleged misstatements and omissions to state material facts about the Company
over various periods of time covered by the suits. The lawsuits have all been
consolidated in Nevada, both in federal and state court. The consolidated
federal action is captioned IN RE ANCHOR GAMING SECURITIES LITIGATION, Civil
Action No. CV-S-97-01751-PMP (RJJ), and the consolidated state action is
captioned RYAN, ET AL. V. ANCHOR GAMING, ET AL., Civil No. A383456. Certain
other actions have been transferred and/or dismissed. The Company believes
that the claims are without merit, and the Company intends to vigorously
contest the lawsuits. The consolidated state court action has been stayed by
order of the court.
3. SUBSEQUENT EVENTS
In October 1998, the board of directors authorized a repurchase of up to
640,400 additional shares of Common Stock bringing the number of shares
authorized for repurchase back up to 1.0 million shares at October 21, 1998.
As of September 30, 1998, the Company had repurchased 1,154,000 shares of
Common Stock at a cost of $59.7 million, 180,000 shares were repurchased
during fiscal 1999 at a cost of $10.1 million, 638,000 shares were
repurchased during fiscal 1998 at a cost of $36.1 million and 336,000 shares
were repurchased during fiscal 1997 at a cost of $13.5 million. From October
1, 1998 through November 9, 1998 the Company repurchased an additional
362,000 shares for $18.4 million leaving a balance of 638,000 authorized
shares remaining under the repurchase program.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THIS REPORT ON FORM 10-Q CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS
WITHIN THE MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND OTHER APPLICABLE SECURITIES LAWS. ALL STATEMENTS OTHER THAN
STATEMENTS OF HISTORICAL FACT ARE "FORWARD-LOOKING STATEMENTS" FOR PURPOSES
OF THESE PROVISIONS, INCLUDING ANY PROJECTIONS OF EARNINGS, REVENUES OR OTHER
FINANCIAL ITEMS; ANY STATEMENTS OF THE PLANS, STRATEGIES, AND OBJECTIVES OF
MANAGEMENT FOR FUTURE OPERATION; ANY STATEMENTS CONCERNING PROPOSED NEW
PRODUCTS, SERVICES, OR DEVELOPMENTS; ANY STATEMENTS REGARDING FUTURE ECONOMIC
CONDITIONS OR PERFORMANCE; STATEMENTS OF BELIEF; AND ANY STATEMENT OF
ASSUMPTIONS UNDERLYING ANY OF THE FOREGOING. SUCH FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES, AND ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE FORWARD-LOOKING STATEMENTS.
ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN ANY OF ITS
FORWARD-LOOKING STATEMENTS WILL PROVE TO BE CORRECT, ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THOSE PROJECTED OR ASSUMED IN THE COMPANY'S
FORWARD-LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE, BUT ARE
NOT LIMITED TO: RISKS OF PROPRIETARY GAMES SUCH AS PRESSURE FROM COMPETITORS,
CHANGES IN ECONOMIC CONDITIONS, OBSOLESCENCE, DECLINING POPULARITY,
DUPLICATION BY THIRD PARTIES AND CHANGES IN INTEREST RATES AS THEY RELATE TO
THE WIDE AREA PROGRESSIVE MACHINE OPERATIONS WITHIN THE COMPANY'S JOINT
VENTURE WITH IGT; COMPETITION IN BLACK HAWK, COLORADO; DEPENDENCE ON
SUPPLIERS; CHANGES IN GAMING REGULATIONS AND TAXES; DEPENDENCE UPON KEY
PERSONNEL; AND OTHER FACTORS DESCRIBED FROM TIME TO TIME IN THE COMPANY'S
REPORTS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
COMPANY'S FORM 10-K FOR THE YEAR ENDED JUNE 30, 1998. THE COMPANY UNDERTAKES
NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT.
OVERVIEW
The following table sets forth the percentage of Anchor's total revenues
attributable to proprietary games operations, casino operations, gaming
machine route operations, and other operations during the three months ended
September 30, 1998 and 1997. The growth in proprietary games revenue as a
percentage of total revenues is attributable primarily to the growth in the
Joint Venture, which began contributing revenue during the second half of
fiscal 1997.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
------------------
SOURCES OF REVENUES: 1998 1997
----- -----
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Proprietary games operations.................... 51.2% 45.8%
Casino operations............................... 34.2 36.8
Route operations................................ 13.8 16.6
Other operations................................ .8 .8
----- -----
Total Revenues............................. 100.0% 100.0%
----- -----
----- -----
</TABLE>
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<PAGE>
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
REVENUES. Total revenues were $64.6 million for the three months ended
September 30, 1998, an increase of $10.1 million or 18.5% from $54.5 million
for the three months ended September 30, 1997.
Revenues from proprietary games operations were $33.1 million for the
three months ended September 30, 1998, an increase of $8.1 million or 32.4%
from $25.0 million for the three months ended September 30, 1997. The
increase is primarily due to increased equity earnings in the Joint
Venture, which, for accounting purposes, is recorded net of
expense. At September 30, 1998 there were more than 6,000 games, primarily
Wheel of Fortune-TM-, operating within the Joint Venture, compared to more
than 3,000 games at September 30, 1997. This increase is also due to
increased revenues from the Company's proprietary games CashBall-TM- and
SafeBuster-TM-. These increases were offset to some extent by decreased
revenues generated from the sale of tokens for the proprietary game Silver
Strike-TM- and decreased revenues generated from the proprietary games Wheel
of Gold-TM-, Clear Winner-TM- and Totem Pole-TM-. The Company expects the
trend of decreased year over year revenue comparisons for these particular
proprietary games to continue due to the market maturity of these proprietary
games. These operations are influenced by seasonal fluctuations as a result
of weather and casino patron traffic patterns. The Company expects that these
seasonal trends will continue in both the Joint Venture operations and the
proprietary games operations outside of the Joint Venture. In addition,
recent declines in interest rates had a negative effect on the earnings of
the Joint Venture during the first quarter of fiscal 1999. Since
jackpot expense is a function of the present value of future jackpot
payments, future decreases in interest rates will increase future jackpot
expense of the Joint Venture while future increases in interest rates will
decrease future jackpot expense of the Joint Venture.
Revenues from casino operations were $22.1 million for the three months
ended September 30, 1998, an increase of $2.1 million or 10.5% from $20.0
million for the three months ended September 30, 1997. The increase is
primarily due to increased revenue at the Colorado Central Station Casino and
to a lesser extent due to increased revenues at the Colorado Grande Casino.
The competitive landscape began to change recently in the Black Hawk market,
with a competitor of Anchor opening a new casino, as expected, on June 24,
1998, near the Colorado Central Station Casino. The Company expects the
opening of another new casino by a competitor, also near the Colorado Central
Station Casino, during December 1998 or January 1999. The Company is aware of
other casino projects in various stages of planning in the Black Hawk market.
The Company cannot predict the effect, if any, that the new or proposed
casino openings will have on the Company's Colorado casino operations. The
Company does expect that the increased competition could have a negative
effect on revenues as well as on costs of casino operations such as
promotions and costs related to maintaining and recruiting qualified
employees. Historically, revenues and casino patronage in the Colorado casino
operations are highest in the summer months and other months unaffected by
inclement weather. The Company expects this trend to continue.
Revenues from route operations were $8.9 million for the three months
ended September 30, 1998, a decrease of $100,000 or 1.1% from $9.0 million
for the three months ended September
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30, 1997. Machines on route increased 44 machines or 5.4% to 860 machines at
September 30, 1998 from 816 machines at September 30, 1997. Average machines
on route during the first quarter of fiscal 1999 increased 42 average
machines or 5.2% to 855 average machines from 813 average machines during the
first quarter of fiscal 1998. The decrease in route revenue was due to a
decrease in the average win per unit of machines on route resulting from
increased competition due to expansion of grocery store chains and local
casino operations. As a result of the increased competition, the trend of
generally flat year over year route revenue comparisons is expected to
continue. During the quarter, several recently publicized quality of life
issues surrounding the route operations were settled in a manner acceptable
to both Anchor and certain governmental entities. Prospectively, the slot
route industry will alcove slot machines in grocery stores, provide better
ventilation for cigarette smoke, enhance enforcement of the supervision over
minors near slot areas, and provide greater awareness of facilities for the
treatment of problem gambling. The Company cannot predict the effect, if any,
that potential future efforts by governmental or other agencies to limit or
curtail slot route operations in Nevada will have on the Company's route
operations' revenues and profits.
COSTS AND EXPENSES. Total costs and expenses were $34.9 million for the
three months ended September 30, 1998, an increase of $6.5 million or 22.9%
from $28.4 million for the three months ended September 30, 1997. Total costs
and expenses as a percentage of total revenues increased to 54.1% during the
first quarter of fiscal 1999 from 52.2% during the first quarter of fiscal
1998.
Costs and expenses of proprietary games operations were $4.1 million for
the three months ended September 30, 1998, an increase of $300,000 or 7.9%
from $3.8 million for the three months ended September 30, 1997. Proprietary
games costs and expenses as a percentage of proprietary games revenues
decreased to 12.5% during the first quarter of fiscal 1999 from 15.0% during
the first quarter of fiscal 1998. The increase in proprietary games costs and
expenses was primarily due to increased production and service payroll. The
decrease in proprietary games costs as a percentage of revenue is primarily
due to increased revenues from the Joint Venture with IGT, which, for
accounting purposes, are recorded net of expenses. Developments in world
silver markets during the past year have resulted in increased volatility in
silver prices, which, if it persists, could affect the profitability of the
Silver Strike-TM- game.
Costs and expenses of casino operations were $10.7 million for the three
months ended September 30, 1998, an increase of $1.7 million or 18.9% from
$9.0 million for the three months ended September 30, 1997. Casino costs and
expenses as a percentage of casino revenue increased to 48.6% during the
first quarter of fiscal 1999 from 44.7% during the first quarter of fiscal
year 1998. The increase in casino costs and expenses was primarily due to
increased advertising and promotions and gaming taxes at the Company's
Colorado Central Station Casino. Although the Company cannot predict the
effect of the new and proposed casino openings in Black Hawk on the Colorado
Central Station Casino's operations, management believes it is likely to
increase both promotion and payroll cost in future periods.
Costs and expenses of route operations were $5.9 million for the three
months ended September 30, 1998, an increase of $500,000 or 9.3% from $5.4
million for the three months ended September 30, 1997. Costs and expenses of
route operations as a percentage of route
-11-
<PAGE>
revenue increased to 65.8% during the first quarter of fiscal 1999 from 59.8%
during the first quarter of fiscal year 1998. The increase in route costs
and expenses was primarily due to increased location costs.
Selling, general, and administrative ("SG&A") expenses were $9.7 million
for the three months ended September 30, 1998, an increase of $2.8 million
or 40.6% from $6.9 million for the three months ended September 30, 1997.
SG&A expenses as a percentage of total revenue increased to 15.0% during the
first quarter of fiscal 1999 compared to 12.6% during the first quarter of
fiscal 1998. The increase in total SG&A expenses is primarily due to
increased expenses in the Company's proprietary games operations of
approximately $2.2 million. These increased expenses are primarily due to
increased payroll and compensation costs, research and development costs, and
valuation allowances. Holding company costs such as legal and corporate
development also during the quarter. During the first quarter of fiscal 1999
the Company incurred approximately $379,000 of development costs related to
the Canadian charity based casino initiative that was cancelled by the
Ontario provincial government on June 26, 1998. The Company expects these
costs to be less during the quarter ended December 31, 1998 and to be
immaterial thereafter. The Company continues to pursue the collection of all
amounts spent, as well as a portion of overhead costs, related to the
cancelled Canadian charity based casino initiative. The Company cannot
predict to what extent, if any, or when it may be successful in collecting
these amounts.
Depreciation and amortization expense was $3.9 million for the three
months ended September 30, 1998, an increase of $1.0 million or 34.5% from
$2.9 million for the three months ended September 30, 1997. This increase is
primarily due to increased depreciation and amortization expense incurred in
the Company's proprietary games operations due to the placement of additional
proprietary gaming machines.
INCOME FROM OPERATIONS. As a result of the factors discussed above,
income from operations was $29.7 million for the three months ended September
30, 1998, an increase of $3.7 million or 14.2% from $26.0 million for the
three months ended September 30, 1997. As a percentage of total revenues,
income from operations decreased to 45.9% during the first quarter of fiscal
1999 from 47.8% during the first quarter of fiscal 1998.
INTEREST INCOME. Interest income was $1.1 million for the three months
ended September 30, 1998, an increase of $300,000 or 37.5% from $800,000 for
the three months ended September 30, 1997. The increase is due to increased
interest earning investments during the first quarter of fiscal 1999.
NET INCOME. As a result of the factors discussed above, net income was
$19.0 million for the three months ended September 30, 1998, an increase of
$2.3 million or 13.8% from $16.7 million for the three months ended September
30, 1997.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Anchor's principal sources of liquidity have been cash flows from
operations and the net proceeds from the secondary offering in April 1996 and
the initial public offering in February 1994. Net proceeds to the Company
from the secondary offering were $53.9 million, and net proceeds from the IPO
were $34.1 million. In October 1997, the Company completed a stock offering
on behalf of selling shareholders. The Company did not receive any proceeds
from the October 1997 offering. Net cash provided by operating activities
was $23.9 million during the first quarter of fiscal 1999 and $20.5 million
during the first quarter of fiscal 1998. At September 30, 1998, the Company
had cash and cash equivalents of $80.6 million, working capital of $64.0
million, and a $10.0 million unsecured revolving bank line of credit (the
"Bank Revolver").
In the first quarter of fiscal 1999, the Company spent $5.7 million on
capital expenditures, primarily related to the purchase of gaming devices and
equipment for use in its proprietary games operations.
In April 1997, the board of directors authorized a repurchase of up to
1,000,000 shares of the Company's Common Stock, $.01 par value per share
("common stock"). In December 1997, the board of directors authorized a
repurchase of up to 514,000 additional shares of Common Stock. In October
1998, the board of directors authorized a repurchase of up to 640,400
additional shares of Common Stock bringing the number of shares authorized
for repurchase back up to 1.0 million shares at October 21, 1998. As of
September 30, 1998, the Company had repurchased 1,154,000 shares of Common
Stock at a cost of $59.7 million, 180,000 shares were repurchased during the
first quarter of fiscal 1999 at a cost of $10.1 million, 638,000 shares were
repurchased during fiscal 1998 at a cost of $36.1 million and 336,000 shares
were repurchased during fiscal 1997 at a cost of $13.5 million. From October
1, 1998 through November 9, 1998 the Company repurchased an additional
362,000 shares for $18.4 million leaving a balance of 638,000 authorized
shares remaining under the repurchase program.
In April 1997, the Company entered into the Bank Revolver, which expires
November 30, 1998. The Company expects to renew the Bank Revolver with terms
substantially the same as the current agreement. The Bank Revolver bears
interest at the prime rate of interest or LIBOR plus 2%, at the Company's
option. The Company has agreed to maintain certain financial and
non-financial covenants customary with lending arrangements of this type.
The Company has remained in compliance with the covenants throughout the term
of the credit facility. During the first quarter of fiscal 1999 the Company
did not borrow under the Bank Revolver.
The Company believes its principal liquidity requirements will be the
purchase of additional proprietary gaming machines in formats that have
already been introduced to the market as well as the development and purchase
of proprietary gaming machines in formats that have not yet been introduced.
The Company believes that cash on hand, cash flow from operations, and
available borrowings under the Bank Revolver will be sufficient to fund its
currently planned capital expenditures.
The Company continually seeks opportunities to expand its gaming
oriented businesses
-13-
<PAGE>
in new and existing gaming jurisdictions. If successful in pursuing another
opportunity in any gaming oriented business and depending on the amount of
funding required, the Company may be required to obtain additional financing.
YEAR 2000
In the past, many computer software programs were written using two
digits rather than four to define the applicable year. As a result,
date-sensitive computer software may recognize a date using "00" as the year
1900 rather than the year 2000. This is generally referred to as the "Year
2000 Problem." If this situation occurs, the potential exists for computer
system failures or miscalculations by computer programs, which could disrupt
operations.
The Company has conducted a comprehensive review of its computer and
other systems deemed to be date sensitive (as well as those of its
unconsolidated affiliates) to assess its exposure to the Year 2000 Problem.
The Company is already in the process of modifying or replacing those systems
that are not Year 2000 compliant. Based upon the comprehensive review,
management believes that the Company's systems are compliant or will be
compliant by mid-1999. However, if modifications are not made or not
completed within an adequate time frame, the Year 2000 Problem could have a
material adverse effect on the operations of the Company.
In addition, the Company has communicated with its major vendors and
suppliers to determine their state of readiness relative to the Year 2000
Problem and the Company's exposure to third party Year 2000 issues. However,
there can be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted, or that representations made
to the Company by third parties are in fact accurate. As a result, the
failure of a major vendor or supplier to adequately address their Year 2000
Problem could have a material adverse effect on the operations of the
Company.
All costs related to the Company's Year 2000 Problem are being expensed
as incurred, while the cost of new hardware or software, is being capitalized
and amortized over its expected useful life. The costs associated with Year
2000 compliance have not been and are not anticipated to be material to the
Company's financial position or results of operations. Specifically, as of
September 30, 1998, the Company has spent less than $100,000 and anticipates
spending less than $500,000 thereafter. These costs and estimated completion
dates are based upon management's best estimates, as well as third party
modification plans and other factors. However, there can be no guarantee that
these estimates will be achieved and actual results could differ from these
plans. The Company does not have a contingency plan relative to the Year
2000 Problem, although it intends to develop one before June 30, 1999.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Several securities class action lawsuits have been filed against the
Company and certain of its current and former officers and directors. The
lawsuits were filed in various jurisdictions following the Company's
announcement in early December 1997 that the Company's results for the
December quarter might not meet analysts' expectations. The lawsuits have
been brought on behalf of certain purchasers of the stock of the Company and
allege violations of state and/or federal securities laws arising out of
alleged misstatements and omissions to state material facts about the Company
over various periods of time covered by the suits. The lawsuits have all been
consolidated in Nevada, both in federal and state court. The consolidated
federal action is captioned IN RE ANCHOR GAMING SECURITIES LITIGATION, Civil
Action No. CV-S-97-01751-PMP (RJJ), and the consolidated state action is
captioned RYAN, ET AL. V. ANCHOR GAMING, ET AL., Civil No. A383456. Certain
other actions have been transferred and/or dismissed. The Company believes
that the claims are without merit, and the Company intends to vigorously
contest the lawsuits. The consolidated state court action has been stayed by
order of the court.
Item 6. (d) Exhibits
See index to exhibits
-14-
<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
ANCHOR GAMING
(Registrant)
Date November 13, 1998 /s/Stanley E. Fulton
------------------- -----------------------------
Stanley E. Fulton
Chairman and
Chief Executive Officer
Date November 13, 1998 /s/Geoffrey A. Sage
------------------- -----------------------------
Geoffrey A. Sage
Corporate Controller and
Principal Accounting Officer
-15-
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
- --------
<C> <S>
2.1 Reorganization Agreement (the "Reorganization Agreement") among
Anchor Gaming, Anchor Coin, D D Stud, Inc., C. G. Investments, Inc.,
Colorado Grande Enterprises, Inc., New AC, New DD, New CG, and
certain stockholders of such corporations. (Incorporated by
reference to Exhibit 2.1 to the Company's Registration Statement on
Form S-1 (Registration No. 33-71870)).
2.2 Amendment No. 1 to the Reorganization Agreement, dated as of
January 25, 1993. (Incorporated by reference to Exhibit 2.2 to the
Company's Registration Statement on Form S-1 (Registration No.
33-71870)).
2.3 Purchase Agreement (Global Gaming Products, L.L.C.) between
Stanley E. Fulton, William Randall Adams, Global Products, Inc.,
Michael S. Stone, Thomas J. Matthews, James R. Purdy, and Anchor
Gaming, dated as of December 22, 1993. (Incorporated by reference to
Exhibit 2.3 to the Company's Registration Statement on Form S-1
(Registration No. 33-71870)).
2.4 Purchase Agreement (Global Gaming Distributors, Inc.) between Global
Gaming Distributors, Michael S. Stone, Thomas J. Matthews, James R.
Purdy, and Anchor Gaming, dated as of December 22, 1993.
(Incorporated by reference to Exhibit 2.4 to the Company's
Registration Statement on Form S-1 (Registration No. 33-71870)).
3.1 Restated Articles of Incorporation of Anchor Gaming. (Incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement
on Form S-1 (Registration No. 33-71870)).
3.2 Restated Bylaws of Anchor Gaming. (Incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on Form S-1
(Registration No. 33-71870)).
4.1 Specimen of Common Stock Certificate. (Incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-71870)).
4.2 Rights Agreement between the Company and the Rights Agent
(incorporated by reference to exhibit 4.2 to the Company's June 30,
1998 Annual Report on Form 10-K (File No. 0-23124).
4.3 Certificate of Designation, Preferences, and Rights of Series A
Junior Participating Preferred Stock (incorporated by reference to
exhibit 4.3 to the Company's June 30, 1998 Annual Report on Form
10-K (File No. 0-23124).
9.1 Irrevocable Proxy of Elizabeth F. Jones in favor of Stanley E.
Fulton. (Incorporated by reference to Exhibit 9.1 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
9.2 Irrevocable Proxy of Lucinda F. Tischer in favor of Stanley E.
Fulton. (Incorporated by reference to Exhibit 9.2 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
9.3 Irrevocable Proxy of Stanley M. Fulton in favor of Stanley E.
Fulton. (Incorporated by reference to Exhibit 9.3 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
9.4 Irrevocable Proxy of Deborah J. Fulton in favor of Stanley E. Fulton
(Incorporated by reference to Exhibit 9.4 to the Company's June 30,
1996 Annual Report on Form 10-K (File No. 0-23124))
9.5 Irrevocable Proxy of Elizabeth F. Jones in favor of Stanley E.
Fulton (Incorporated by reference to Exhibit 9.5 to the Company's
June 30, 1996 Annual Report on Form 10-K (File No. 0-23124)).
9.6 Irrevocable Proxy of Stanley M. Fulton in favor of Stanley E. Fulton
(Incorporated by reference to Exhibit 9.6 to the Company's June 30,
1996 Annual Report on Form 10-K (File No. 0-23124)).
9.7 Irrevocable Proxy of Michael B. Fulton in favor of Stanley E. Fulton
(Incorporated by reference to Exhibit 9.7 to the Company's June 30,
1996 Annual Report on Form 10-K (File No. 0-23124)).
9.8 Irrevocable Proxy of Lucinda F. Tischer in favor of Stanley E.
Fulton (Incorporated by reference to Exhibit 9.8 to the Company's
June 30, 1996 Annual Report on Form 10-K (File No. 0-23124)).
9.9 Irrevocable Proxy of Virginia L. Fulton in favor of Stanley E.
Fulton (Incorporated by reference to Exhibit 9.9 to the Company's
June 30, 1996 Annual Report on Form 10-K (File No. 0-23124)).
10.1 Settlement Agreement between Anchor Gaming, Stanley E. Fulton, and
Michael B. Fulton, dated as of December 22, 1993. (Incorporated by
reference to Exhibit 10.2 to the Company's Registration Statement on
Form S-1 (Registration No. 33-71870)).
10.2 Commercial Note of Pelican Gaming, Inc. to Anchor Coin dated
March 15, 1995. (Incorporated by reference to Exhibit 10.1 to the
Company's March 31, 1994 Quarterly Report on Form 10-Q (File
No. 0-23124)).
<PAGE>
10.3 Promissory Notes of Anchor Coin, D D Stud, Inc., and C. G.
Investments, Inc. to Stanley E. Fulton. (Incorporated by reference
to Exhibit 10.4 to the Company's Registration Statement on Form S-1
(Registration No. 33-71870)).
10.4 Loan Agreement of Pelican Gaming, Inc. to Anchor Coin dated as of
March 15, 1994. (Incorporated by reference to Exhibit 10.2 to the
Company's March 31, 1994 Quarterly Report on Form 10-Q (File
No. 0-23124)).
10.5 Promissory Note of Colorado Grande Enterprises, Inc. to
C.G. Investments, Inc. (Incorporated by reference to Exhibit 10.5 to
the Company's Registration Statement on Form S-1 (Registration
No. 33-71870)).
10.6 Promissory Notes of Anchor Coin to Michael B. Fulton, Stanley M.
Fulton, Elizabeth Fulton Jones, Lucinda Fulton Tischer, Virginia L.
Fulton, and Deborah J. Fulton. (Incorporated by reference to
Exhibit 10.6 to the Company's Registration Statement on Form S-1
(Registration No. 33-71870)).
10.7 Promissory Note of Anchor Coin to Elizabeth Fulton and related Stock
Option Agreement. (Incorporated by reference to Exhibit 10.7 to the
Company's Registration Statement on Form S-1 (Registration
No. 33-71870)).
10.8 Loan Agreement between Bank of America Nevada and Anchor Coin, dated
as of June 13, 1994. (Incorporated by reference to Exhibit 10.6 to
the Company's June 30, 1994 Annual Report on Form 10-K (File
No. 0-23124)).
10.9 Lease and Sublease Agreement between Smith's Food & Drug
Centers, Inc. and Anchor Coin, dated July 28, 1993. (Confidential
Treatment for a portion of this document was requested and granted
pursuant to Rule 406 under the Securities Act). (Incorporated by
reference to Exhibit 10.10 to the Company's Registration Statement
on Form S-1 (Registration No. 33-71870)).
10.10 Employment Agreement between Anchor Gaming and Stanley E. Fulton.
(Incorporated by reference to Exhibit 10.10 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.11 Employment Agreement between Anchor Gaming and Michael S. Stone.
(Incorporated by reference to Exhibit 10.11 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.12 Employment Agreement between Anchor Gaming and Thomas J. Matthews.
(Incorporated by reference to Exhibit 10.12 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.13 Employment Agreement between Anchor Gaming and Joseph Murphy.
(Incorporated by reference to Exhibit 10.13 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.14 Employment Agreement between Anchor Gaming and James R. Purdy.
(Incorporated by reference to Exhibit 10.14 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.15 Employment Agreement between Anchor Gaming and Nick E. Greenwood.
(Incorporated by reference to Exhibit 10.15 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.16 Employment Agreement between Anchor Gaming and William Randall
Adams. (Incorporated by reference to Exhibit 10.16 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.17 Employment Agreement between Anchor Gaming and Salvatore T.
DiMascio. (Incorporated by reference to Exhibit 10.17 to the
Company's June 30, 1994 Annual Report on Form 10-K (File
No. 0-23124)).
10.18 Option Agreement between Michael S. Stone and Anchor Gaming.
(Incorporated by reference to Exhibit 10.18 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.19 Option Agreement between Thomas J. Matthews and Anchor Gaming.
(Incorporated by reference to Exhibit 10.19 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.20 Option Agreement between Joseph Murphy and Anchor Gaming.
(Incorporated by reference to Exhibit 10.20 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.21 Option Agreement between William Randall Adams and Anchor Gaming.
(Incorporated by reference to Exhibit 10.21 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.22 Option Agreement between Nick E. Greenwood and Anchor Gaming.
(Incorporated by reference to Exhibit 10.22 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.23 Option Agreement between James R. Purdy and Anchor Gaming.
(Incorporated by reference to Exhibit 10.23 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.24 Option Agreement between Salvatore T. DiMascio and Anchor Gaming.
(Incorporated by reference to Exhibit 10.24 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.25 Option Agreement between Anchor Gaming and Geoffrey A. Sage.
(Incorporated by reference to
<PAGE>
Exhibit 10.25 to the Company's June 30, 1994 Annual Report
on Form 10-K (File No. 0-23124)).
10.26 Option Agreement between the Company and Stuart D. Beath.
(Incorporated by reference to Exhibit 10.26 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.27 Option Agreement between the Company and Garret A. Scholz.
(Incorporated by reference to Exhibit 10.27 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.28 Form of Stock Option Agreement between the Company and Glen J.
Hettinger (File No. 000-23124)).
10.29 Form of Indemnification Agreement between the Company and Officers
and Directors. (Incorporated by reference to Exhibit 10.28 to the
Company's June 30, 1994 Annual Report on Form 10-K (File
No. 0-23124)).
10.30 Indemnification Agreement between the Company and Glen J.
Hettinger (incorporated by reference to exhibit 10.30 to the
Company's June 30, 1998 Annual Report on Form 10-K
(File No. 0-23124).
10.31 Tax Indemnification Agreement between Stanley E. Fulton, Anchor
Gaming and its subsidiaries. (Incorporated by reference to
Exhibit 10.29 to the Company's June 30, 1994 Annual Report on
Form 10-K (File No. 0-23124)).
10.32 Option Agreement between the Company and Elizabeth Fulton.
(Incorporated by reference to Exhibit 10.30 to the Company's
June 30, 1994 Annual Report on Form 10-K (File No. 0-23124)).
10.33 Option Agreement between the Company and Michael D. Rumbolz.
(Incorporated by reference to Exhibit 10.31 to the Company's
June 30, 1995 Annual Report on Form 10-K (File No. 0-23124)).
10.34 Employment Agreement between the Company and Michael D. Rumbolz.
(Incorporated by reference to Exhibit 10.31 to the Company's
June 30, 1995 Annual Report on Form 10-K (File No. 0-23124)).
10.35 Anchor Gaming 1995 Employee Stock Option Plan. (Incorporated by
reference to Exhibit 10.31 to the Company's June 30, 1995 Annual
Report on Form 10-K (File No. 0-23124)).
10.36 Addendum Agreement to amend the Employment and Stock Option
Agreements between the Company and Salvatore T. DiMascio
(Incorporated by reference to Exhibit 10.34 to the Company's
June 30, 1996 Annual Report on Form 10-K (File No. 0-23124)).
10.37 Joint Venture Agreement, dated as of December 3, 1996 by and between
Anchor Games, a d.b.a. of Anchor Coin, a Nevada corporation and
Subsidiary of the Company, and IGT (File No. 000-23124)).
(Incorporated by reference to Exhibit 10.37 to the Company's
June 30, 1997 Annual Report on Form 10-K (File No. 0-23124)).
10.38 Stock Option Agreement of William Adams dated April 2, 1997
(Incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8 (File No. 333-53257)).
10.39 Stock Option Agreement of Thomas J. Matthews dated April 2, 1997
(Incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-8 (File No. 333-53257)).
10.40 Stock Option Agreement of Joseph Murphy dated April 2, 1997
(Incorporated by reference to Exhibit 4.3 to the Company's
Registration Statement on Form S-8 (File No. 333-53257)).
21.1 List of Subsidiary Corporations (incorporated by reference to
exhibit 21.1 to the Company's June 30, 1998 Annual Report on
Form 10-K (File No. 0-23124).
27.1* Financial Data Schedule
</TABLE>
___________
* Filed herewith
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ANCHOR GAMING CONSOLIDATED CONDENSED BALANCE SHEET FOR THE SEPTEMBER 30,
1998 AND THE CONSOLIDATED CONDENSED STATEMENT OF INCOME FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 1998
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 80,611,343
<SECURITIES> 0
<RECEIVABLES> 8,581,591
<ALLOWANCES> 0
<INVENTORY> 3,430,115
<CURRENT-ASSETS> 94,951,472
<PP&E> 96,619,407
<DEPRECIATION> 0
<TOTAL-ASSETS> 251,942,630
<CURRENT-LIABILITIES> 30,979,511
<BONDS> 0
0
0
<COMMON> 137,687
<OTHER-SE> 219,628,609
<TOTAL-LIABILITY-AND-EQUITY> 251,942,630
<SALES> 0
<TOTAL-REVENUES> 64,602,715
<CGS> 0
<TOTAL-COSTS> 34,933,333
<OTHER-EXPENSES> (929,654)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30,599,036
<INCOME-TAX> 11,551,136
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,047,900
<EPS-PRIMARY> 1.52
<EPS-DILUTED> 1.48
</TABLE>
