<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: August 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from:__________ to __________
Commission file number: 0-23588
PAUL-SON GAMING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0310433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1700 S. Industrial Road, Las Vegas, Nevada 89102
(Address of principal executive offices) (Zip Code)
(702) 384-2425
(Registrant's telephone number, including area code)
Not Applicable
(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 [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
3,421,500 shares of Common Stock, $0.01 par value as of August 29, 1997
<PAGE>
<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1997 and MAY 31, 1997
ASSETS
AUGUST 31, MAY 31,
1997 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $1,092,678 $2,753,152
Trade receivables, less allowance for doubtful accounts
($292,340, August 31, 1997; $269,140, May 31, 1997) 3,186,581 3,669,139
Inventories (Note 2) 5,836,233 5,350,446
Prepaid expenses 218,360 140,962
Income tax benefit receivable 146,471 -
Other current assets 490,402 627,808
Total current assets $10,970,725 $12,541,507
----------- -----------
PROPERTY AND EQUIPMENT, NET (NOTE 4) $7,270,533 $7,250,030
OTHER ASSETS
Note receivable (Note 5) $150,000 $150,000
Goodwill and other assets 461,216 455,205
----------- -----------
$18,852,474 $20,396,742
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt (Note 4) $26,635 $24,052
Accounts payable 418,106 727,196
Accrued expenses 404,608 584,212
Customer deposits 1,261,793 1,579,161
Income tax payable 318,930
Total current liabilities 2,111,142 3,233,551
----------- -----------
LONG-TERM DEBT, net of current maturities
Notes and contracts payable (Note 4) 57,534 67,424
Deferred tax liability, net 11,060 11,060
----------- -----------
68,594 78,484
STOCKHOLDERS' EQUITY
Preferred stock, authorized 10,000,000 shares,
$.01 par value, none issued and outstanding - -
Common stock, authorized 30,000,000 shares,
$.01 par value, issued and outstanding 3,421,500 and 34,215 34,170
3,417,000 shares as of August 31, 1997 and May 31, 1997
Additional paid-in capital 13,145,223 13,108,998
Retained earnings 3,493,300 3,941,539
----------- -----------
16,672,738 17,084,707
----------- -----------
$18,852,474 $20,396,742
=========== ===========
</TABLE>
2
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<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
AUGUST 31,
-----------------------------
1997 1996
----------- -----------
<S> <C> <C>
Revenues $5,546,583 $6,042,758
Cost of revenues 4,741,579 4,126,393
----------- -----------
Gross profit 805,004 1,916,365
Selling, general and
administrative expenses (Note 5) 1,567,540 1,415,549
----------- -----------
Operating income (loss) (762,536) 500,816
Other income 61,501 19,722
Interest expense (4,854) (13,394)
----------- -----------
Income (loss) before income taxes (705,889) 507,144
Income tax benefit (expense) 257,649 (185,108)
----------- -----------
Net income (loss) ($448,240) $322,036
=========== ===========
Net income (loss) per share ($0.13) 0.10
=========== ===========
Weighted average common
shares outstanding 3,421,500 3,324,000
=========== ===========
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
AUGUST 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $5,749,399 $6,650,752
Cash paid to suppliers and employees (6,993,149) (5,396,179)
Interest received 23,875 9,384
Interest paid (4,854) (13,394)
Income taxes paid (207,752) (156,050)
Net cash (used in) provided by operating activities (1,432,481) 1,094,513
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (256,956) (73,397)
Net cash (used in) investing activities (256,956) (73,397)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on due to related party - (15,000)
Proceeds from exercise of options 36,270 -
Principal payments on long-term borrowings (7,307) (22,177)
Net cash (used in) provided by financing activities 28,963 (37,177)
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,660,474) 983,939
CASH AND CASH EQUIVALENTS, beginning 2,753,152 997,509
------------ ------------
CASH AND CASH EQUIVALENTS, ending $1,092,678 $1,981,448
============ ============
RECONCILIATION OF NET (LOSS) INCOME TO NET
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
Net (loss) income ($448,240) $322,036
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities:
Depreciation and amortization 242,755 191,235
Provision for bad debts 24,000 24,000
Change in assets and liabilities:
Decrease in accounts receivable 458,558 119,226
(Increase) in income tax benefit receivable (146,471) -
(Increase) decrease in inventories (485,787) 203,369
(Increase) decrease in prepaid expenses (77,398) 23,350
(Increase) decrease in other current assets 137,406 (39,223)
(Increase) decrease in other assets (12,312) 5,302
Decrease in account payable and accrued expenses (488,694) (280,145)
(Decrease) increase in customer deposits (317,368) 478,430
(Decrease) increase in income taxes payable (318,930) 46,933
------------ ------------
Net cash (used in) provided by operating activities ($1,432,481) $1,094,513
============ ============
</TABLE>
4
<PAGE>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Paul-Son Gaming Corporation and its subsidiaries ("Paul-Son"
or the "Company") is the leading manufacturer and supplier of
casino table game equipment in the United States. The Company's
products include casino chips, table layouts, playing cards,
dice, furniture, table accessories and other products, which are
used with casino table games such as blackjack, poker, baccarat,
craps and roulette. The Company sells its products in every
state in which casinos operate in the United States.
BASIS OF PRESENTATION
The consolidated statements of operations and cash flows of
Paul-Son for the periods ended August 31, 1997 and 1996 include
the accounts of Paul-Son, Paul-Son Gaming Supplies, Inc.
("Paul-Son Supplies"), and Paul-Son Mexicana S.A. de C. V.
("Mexicana"). All material intercompany balances and
transactions have been eliminated in consolidation.
The consolidated balance sheet as of August 31, 1997 and the
related consolidated statements of operations and statements of
cash flows for the three month periods ended August 31, 1997 and
August 31, 1996 are unaudited, but in the opinion of management,
reflect all adjustments, which consist of only normal recurring
adjustments, necessary for a fair presentation of results for
such period. The results of operations for an interim period are
not necessarily indicative of the results for the full year.
A summary of the Company's significant accounting policies
are as follows:
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments and
repurchase agreements with original maturities of three months or
less to be cash and cash equivalents.
INVENTORY
Inventories are stated at the lower of cost or market. Cost
is determined using the first-in, first-out method.
5
<PAGE>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, net of
depreciation. Depreciation is computed primarily on the straight
line method for financial reporting purposes over the following
estimated useful lives:
YEARS
-------
Building and Improvement 18-27
Furniture and Equipment 5-10
Vehicles 5-7
GOODWILL
Goodwill is amortized on a straight-line basis over 20
years.
EARNINGS PER SHARE
Earnings per share is computed based on the weighted average
number of shares outstanding during the period. The effect of
common stock equivalents was antidilutive for the period ended
August 31, 1997 and was not material in 1996.
ESTIMATES
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. Actual results could differ from those estimates.
RECENTLY ISSUED ACCOUNTING STANDARDS
During 1997 the Financial Accounting Standards Board
("FASB") issued the following statements of financial accounting
standards ("FAS"): FAS No. 128, "Earnings per Share", FAS No.
129, "Disclosure of Information about Capital Structure", FAS No.
130, "Reporting Comprehensive Income", and FAS No. 131,
"Disclosure About Segments of an Enterprise and Related
Information". FAS No. 128 and 129 are effective for the periods
ending after December 15, 1997, and establish standards for
computing and presenting earnings per share ("EPS"), and for
disclosing information about an entity's capital structure,
respectively. Management believes these standards will not have
a significant impact on its EPS or financial statement
disclosure. FAS No. 130 and 131 are effective for periods
beginning after December 15, 1997. FAS No. 130 requires
classifying items of other comprehensive income by their nature
in a financial statement. FAS No. 131 establishes additional
standards for segment disclosures in the financial statements.
Management has not determined the effect of these statements on
its financial statement disclosures.
6
<PAGE>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - INVENTORIES
Inventories consist of the following:
August 31, May 31,
1997 1997
------------ ------------
Raw materials $ 1,884,244 $ 1,977,089
Work in process 432,165 465,514
Finished goods 3,519,824 2,907,843
------------ ------------
$ 5,836,233 $ 5,350,446
============ ============
NOTE 3 - SHORT-TERM BORROWINGS
The Company has available a revolving line of credit (the
"Line of Credit") with a financial institution which allows
maximum borrowings of the lesser of $750,000 or 75% of eligible
accounts receivable. Borrowings are collaterized by a general
pledge agreement covering the Company's accounts receivable,
inventory, certain fixed assets and depository accounts. There
was no balance outstanding under the Line of Credit at August 31,
1997 and May 31, 1997.
NOTE 4 - LONG-TERM DEBT AND PLEDGED ASSETS
Long-term debt, other than amounts due to related parties,
consists of the following:
August 31, May 31,
1997 1997
----------- -----------
Various notes payable for
equipment, interest at 14.5%
to 25.5%, payable in monthly
payments of $6,300 through
1988 $ 21,311 $ 27,472
Notes payable to mortgage
companies, collateralized by
real estate, interest at
7.5% to 9.5%, principal and
interest payments of $898
are due monthly through 2016 62,858 64,004
----------- -----------
84,169 91,476
Less current portion 26,635 24,052
----------- -----------
$ 57,534 $ 67,424
=========== ===========
NOTE 5 - RELATED PARTIES
The following amounts were paid for legal, accounting and
consulting fees to individuals who are currently, or have been,
members of the Company's Board of Directors.
7
<PAGE>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1997 1996
---------- ---------
Laurence A. Speiser $ 40,937 $ 31,304
Michael E. Cox 4,035 4,877
---------- ---------
$ 44,972 $ 36,181
========== =========
On November 22, 1996 the Company advanced to a director a
$150,000 line of credit. The line of credit is to be repaid in
full on or before December 1998, with interest only payable
quarterly to the Company at an interest rate equal to prime plus
2%. The loan is secured by a general pledge agreement covering
all of the director's assets, rights to purchase certain shares
of the Company's stock, and a pledge of certain shares of the
Company's common stock by the Company's principal stockholder.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Paul-Son is the leading manufacturer and supplier of casino
table game equipment in the United States. The Company's
products include casino chips, table layouts, playing cards,
dice, gaming furniture, and miscellaneous table accessories such
as chip trays, drop boxes, and dealing shoes, which are used in
conjunction with casino table games such as blackjack, poker,
baccarat, craps and roulette. The Company is headquartered in
Las Vegas, Nevada, with manufacturing facilities located in Las
Vegas and San Luis, Mexico, and sales offices in Las Vegas and
Reno, Nevada; Atlantic City, New Jersey; New Orleans, Louisiana;
Fort Lauderdale, Florida; Gulfport, Mississippi; Portland,
Oregon; and Ontario, Canada. The Company sells its products in
every state in which casinos operate in the United States, and
management believes that it has the leading market share for most
of its major product lines.
COMPARISON OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31,
1997 AND AUGUST 31, 1996
REVENUES. For the three months ended August 31, 1997,
revenues were approximately $5.5 million, an 8.2% or
approximately $500,000 decrease from the approximately $6.0
million in revenues in the comparable period of the prior year.
This decrease was due principally to a decrease in core sales
revenues. During the three months ended August 31, 1997 the
Company supplied products totaling approximately $1.7 million to
5 new casinos (including 1 new opening which generated sales
reported in the prior quarter), almost identical to the
approximately $1.7 million to 5 new casinos in the comparable
period of the prior year. Core sales revenue decreased by 10.7%,
or approximately $465,000, to $3.9 million for the three months
ended August 31, 1997, versus approximately $4.3 million in core
sales for the same period in the prior year. Core sales, which
are sales of consumable gaming supplies and equipment to the
Company's existing customer base, decreased during the quarter
ended August 31, 1997 principally due to decreases in casino chip
sales during the quarter, which were partially offset by
increases in layout and playing card sales. Management believes
the reduced demand for casino chips during the quarter is
unusual and is not expected to continue beyond the next fiscal
quarter.
COST OF REVENUES. Cost of revenues, as a percentage of
sales, increased to 85.5% for the current period, as compared to
68.3% for the three months ended August 31, 1996. The increase
was due principally to lower sales volume and
corresponding lower operating efficiencies (i.e. decreased sales
resulting in a lower number of units produced over the same fixed
production costs), coupled with a change in the product mix sold
in comparison to the historical results of the Company. Casino
chip sales, for which the Company normally generates the highest
gross margin (approximately 50%) were only approximately $1.0
million during the quarter ended August 31, 1997, versus
approximately $2.3 million in the comparable quarter of the prior
year. Because of the low volume in casino chip production, the
higher per unit costs of manufacturing resulted in the Company
achieving a margin of less than 25% on the casino chips that were
sold during the quarter. Conversely, furniture and seating sales,
for which the Company generates its lowest profit margins
(normally less than 20%) made up almost 35% of the sales for the
quarter,
9
<PAGE>
twice the historical ratio. The increase in the cost of
revenues was also due in part to the Company's transfer of a
portion of its playing card production to Mexico and the
operating of duplicate playing card production facilities until
the Company has completed the transfer. Overall sales of the
Company's manufactured products during the quarter dropped to
approximately $2.8 million, versus approximately $4.0 in the same
quarter of the prior year. Management believes the change in
product mix is unusual and is not expected to continue beyond
the next fiscal quarter.
GROSS PROFIT. Gross profit during the quarter ended August
31, 1997 decreased in absolute dollars by approximately $1.1
million from the comparable period in the prior year as a result
of lower revenues and the higher cost of revenues as a percentage
of sales from 68.3% to 85.5% due to the factors discussed above.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the
three months ended August 31, 1997, selling, general and
administrative expenses ("SG&A") increased approximately $152,000
or 10.7%, to approximately $1.6 million, as compared to the
approximately $1.4 million in the comparable period of the prior
year. Major increases in SG&A included increases in salaries and
wages ($65,000) and advertising and promotion ($34,000) as a
result of the Company's efforts to expand market share for its
products and expand sales coverage in certain areas, and
depreciation ($44,000) as a result of the Company's installation
of additional production facilities.
NET INCOME. For the three months ended August 31, 1997 the
Company sustained a net loss of approximately ($448,000), an
decrease in net income of $770,000 from the net income for the
three months ended August 31, 1996 of approximately $322,000,
primarily as a result of decreases in sales and gross profit, and
increases in SG&A over the comparable period in the prior year.
The net loss per share was ($0.13) for the three months ended
August 31, 1997, as compared to net income per share of $0.10 for
the three months ended August 31, 1996, based on the weighted
average number of shares outstanding.
MATERIAL CHANGES IN FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW. Management believes that the combination of cash
flow from operations and cash on hand will provide sufficient
liquidity both on a short term and long term basis.
WORKING CAPITAL. Working capital totaled approximately
$8.9 million at August 31, 1997, versus approximately $9.3
million at May 31, 1997. Working capital decreased during the
three months ended August 31, 1997, primarily due to the
Company's net loss before depreciation and income taxes of
approximately $463,000, and the Company's investment in property,
plant and equipment of $257,000 during the quarter.
CASH FLOW. Operating activities used approximately $1.4
million in cash during the three months ended August 31, 1997, as
compared to cash generated of approximately $1.1 million during
the same period in the prior year. The net loss before
depreciation and income taxes of approximately $463,000,
reduction of accounts payable and accrued expenses of $489,000,
and
10
<PAGE>
the increased investment in inventories of $486,000 were the
major operational uses of cash during the quarter.
Additionally, the Company used approximately $257,000 to purchase
property and equipment during the quarter.
LINE OF CREDIT. The Company maintains a line of credit (the
"Line of Credit") with Wells Fargo Bank of Nevada ("Wells Fargo")
which presently allows the Company to borrow up to $750,000.
The Line of Credit matures on January 2, 1998. As of August 31,
1997, no advances were outstanding and all of the Line of Credit
was available. The Line of Credit is collateralized by a first
priority security interest in substantially all of the Company's
depository accounts at Wells Fargo, accounts receivable,
inventory, furniture, fixtures and equipment, and bears interest
at a variable rate of 2.0% over Wells Fargo's prime lending rate.
Under the Line of Credit, the Company has agreed to comply
with certain financial covenants and ratios. Specifically, the
Company has agreed to maintain a current ratio (current assets to
current liabilities) of not less than 1.5 to 1, a debt to worth
ratio (total liabilities divided by stockholders' equity) of less
than 1 to 1 and a fixed charge coverage ratio ((earnings before
interest, taxes, depreciation and amortization) divided by (prior
period current maturities of long term debt plus interest plus
rent)) of at least 2.0 to 1 on an annual basis.
SEASONALITY. The Company has traditionally experienced some
seasonality, as new casino openings, particularly in Las Vegas,
have tended to occur near the end of a calendar year (typically
during the Company's second fiscal quarter). In the past, there
has not appeared to be any seasonality associated with the
Company's "core sales" to existing customers. However, in light
of the changes to core sales experienced during the quarter ended
August 31, 1997, the Company is evaluating whether this continues
to be the case.
BACKLOG. Open orders as of August 31, 1997 totaled
approximately $2.8 million, compared to approximately $1.9
million at August 31, 1996. Management believes that
substantially all of these orders will be filled within the next
six months, with the majority filled within the next fiscal
quarter.
LAS VEGAS FACILITIES. In May 1997, the Company relocated
its corporate headquarters to new facilities (the "New Las Vegas
Facility"). The New Las Vegas Facility was purchased in
September 1995 for $2,000,000, and since that time the Company
has made improvements totaling approximately $375,000. The New
Las Vegas Facility now houses the casino sales office, a
centralized warehouse of finished goods inventory, the Las Vegas
playing card production line, roulette and Big Six wheel
manufacturing, and the table layout art and chip art departments.
The Company's retail sales showroom, plastic dealing shoes
manufacturing and some limited warehousing is located at the
Company's former headquarters (the "Original Las Vegas Facility")
which the Company has owned since 1966. In February 1997, the
Company sold one of the buildings (approximately 9,000 square
feet) which was a component of the Original Las Vegas Facility
for $450,000, resulting in the reduction in the square footage at
the Original Las Vegas Facility from 35,000 to 26,000 square feet
and repayment of the Company's prior obligations to a financial
institution in the original principal amount of $500,000 which
was secured by a deed of trust on the Original Las Vegas
Facility. The remaining components of the Original Las Vegas
Facility continue to be listed for sale.
11
<PAGE>
SAN LUIS FACILITIES . In January of 1997, the Company
installed a second playing card production line in its San Luis,
Mexico facilities (the "San Luis Facilities"). The use of
existing space at the San Luis Facilities provides additional
playing card production capacity while the Company evaluates
production costs and efficiencies achieved in the San Luis
Facilities. The additional production line will also augment the
Company's ability to solicit orders from larger and multi-site
casinos both in the United States and from the international
market, which provides additional opportunities to the Company.
The Company's ability to compete for additional market share in
playing card sales should be enhanced by the Company's
anticipated decrease in per unit production costs. Management is
analyzing whether the anticipated lower playing card production
costs will justify the relocation of other portions of its
manufacturing operations to Mexico.
NEW SAN LUIS BUILDING. In July 1997, the Company's Board of
Directors approved the purchase of an existing approximately
66,000 square foot building (the "New San Luis Building") located
approximately 400 yards from the San Luis Facilities for
$1,100,000. The purchase of the New San Luis Building is expected
to be completed on or before November 15, 1997. The funds for
the purchase of the New San Luis Building will come from cash on
hand or a combination of cash on hand and new financing. The
Company plans to use the New San Luis Building to augment its
playing card and chip production capabilities to accommodate the
anticipated increase in demand for the Company's playing cards.
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that
may be considered forward-looking, such as statements relating to
anticipated performance, financing sources and the relocation of
certain operations. Any forward-looking statement made by the
Company necessarily is based upon a number of estimates and
assumptions that, while considered reasonable by the Company, is
inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are
beyond the control of the Company, and are subject to change.
Actual results of the Company's operations may vary materially
from any forward-looking statement made by or on behalf of the
Company. Forward-looking statements should not be regarded as a
representation by the Company or any other person that the
forward-looking statements will be achieved. Undue reliance
should not be placed on any forward-looking statements. Some of
the contingencies and uncertainties to which any forward-looking
statement contained herein is subject include, but are not
limited to, those relating to dependence on existing management,
gaming regulation (including action affecting licensing),
leverage and debt service (including sensitivity to fluctuations
in interest rates), domestic or global economic conditions and
changes in federal or state tax laws or the administration of
such laws.
For a summary of additional factors affecting forward-
looking information, see the Company's annual report on Form 10-K
for the year ended May 31, 1997, Part II, Item 7. "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Statement on Forward-Looking Information."
Note: Dollar amounts have been rounded for narrative
purposes while the percentages were calculated using actual
amounts.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
At the Company's annual meeting of stockholders held on
October 3, 1997, the Company's stockholders voted on the election
of two directors for terms expiring in 2000. The results were as
follows:
NAME OF DIRECTOR For Against Abstain Unvoted
---------------- -----------------------------------------
Paul S. Endy, Jr. 3,226,811 5,900 0 0
Laurence A. Speiser 3,226,811 5,900 0 0
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------- -----------
27.01 Financial Data Schedule
(b) Reports on Form 8-K
None.
13
<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.
PAUL-SON GAMING CORPORATION
Date: October 20, 1997 By: /s/ Eric P. Endy
Eric P. Endy, President
(Duly Authorized Officer)
Date: October 20, 1997 By: /s/ Kirk Scherer
Kirk Scherer, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
14
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION Page
- ------- ----------- ------
27.01 Financial Data Schedule 16
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and statements of income of Paul-Son Gaming
Corporation, as of and for the quarter ended August 31, 1997, and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1998
<PERIOD-END> AUG-31-1997
<CASH> 1,093
<SECURITIES> 0
<RECEIVABLES> 3,479
<ALLOWANCES> 292
<INVENTORY> 5,836
<CURRENT-ASSETS> 10,971
<PP&E> 11,252
<DEPRECIATION> 3,981
<TOTAL-ASSETS> 18,852
<CURRENT-LIABILITIES> 2,111
<BONDS> 0
0
0
<COMMON> 34
<OTHER-SE> 16,639
<TOTAL-LIABILITY-AND-EQUITY> 18,852
<SALES> 5,547
<TOTAL-REVENUES> 5,547
<CGS> 4,742
<TOTAL-COSTS> 4,742
<OTHER-EXPENSES> 1,568
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (706)
<INCOME-TAX> 258
<INCOME-CONTINUING> (448)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (448)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
