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WASHINGTON, D.C. 20549
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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, 1998
-----------------------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to
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Commission file number: 0-23588
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PAUL-SON GAMING CORPORATION
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(Exact name of registrant as specified in its charter)
NEVADA 88-0310433
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1700 S. Industrial Road, Las Vegas, Nevada 89102
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(Address of principal executive offices) (Zip Code)
(702) 384-2425
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(Registrant's telephone number, including area code)
Not Applicable
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(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
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Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
3,476,050 shares of Common Stock, $0.01 par value as of
October 9, 1998
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1998 AND MAY 31, 1998 (UNAUDITED)
ASSETS
AUGUST 31, MAY 31,
1998 1998
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 126,911 $ 347,876
Trade receivables, net of allowance for doubtful 3,062,824 5,147,819
accounts of $435,000 and $292,340
Income taxes receivable 955,516 786,463
Inventories, net 4,921,468 5,171,402
Prepaid expenses 306,790 118,693
Other current assets 336,787 405,299
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Total current assets 9,710,296 11,977,552
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PROPERTY AND EQUIPMENT, NET 9,190,965 9,105,545
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DEFERRED TAX ASSET 263,000 263,000
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OTHER ASSETS
Note receivable 150,000 150,000
Goodwill and other assets 454,332 469,229
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Total other assets 604,332 619,229
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TOTAL ASSETS $ 19,768,593 $ 21,965,326
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short term borrowings $ 550,000 $ 850,000
Current maturities of long-term debt 59,451 59,007
Bank overdraft - 431,380
Accounts payable 1,109,351 1,733,122
Accrued expenses 527,648 1,115,915
Customer deposits 672,227 681,825
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Total current liabilities 2,918,677 4,871,249
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LONG-TERM DEBT, NET OF CURRENT MATURITIES 1,753,998 1,769,722
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COMMITMENTS AND CONTINGENCIES - -
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 3,475,050
and 3,465,750 shares as of August 31, 1998 and
May 31, 1998 34,751 34,658
Additional paid-in capital 13,636,457 13,566,800
Retained earnings 1,424,710 1,722,897
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15,095,918 15,324,355
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,768,593 $ 21,965,326
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See notes to the condensed consolidated financial statements
</TABLE>
2
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<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
---------------------------
1998 1997
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<S> <C> <C>
Revenues $ 5,698,409 $ 5,546,583
Cost of revenues 4,393,359 4,741,579
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Gross profit 1,305,050 805,004
Selling, general and administrative
expenses 1,722,793 1,567,540
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Operating loss (417,743) (762,536)
Other income 9,593 61,501
Interest expense (50,599) (4,854)
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Loss before income taxes (458,749) (705,889)
Income tax benefit 160,562 257,649
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Net loss ($298,187) ($448,240)
============ ============
Loss per share:
Basic ($0.09) ($0.13)
Diluted ($0.09) ($0.13)
See notes to the condensed consolidated financial statements
</TABLE>
3
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<TABLE>
<CAPTION>
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
AUGUST 31,
------------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers $ 7,723,399 $ 5,749,399
Cash paid to suppliers and employees (7,170,865) (6,993,149)
Interest received 5,826 23,875
Interest paid (50,599) (4,854)
Income taxes paid (130,260) (207,752)
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 377,501 (1,432,481)
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (352,936) (256,956)
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NET CASH USED IN INVESTING ACTIVITIES (352,936) (256,956)
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CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 69,750 36,270
Principal payments on short-term borrowings (300,000) -
Principal payments on long-term borrowings (15,280) (7,307)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (245,530) 28,963
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Net decrease in cash and cash equivalents (220,965) (1,660,474)
CASH AND CASH EQUIVALENTS, beginning of period 347,876 2,753,152
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 126,911 $ 1,092,678
============= =============
RECONCILIATION OF NET LOSS TO NET CASH PROVIDED
BY (USED IN) OPERATING ACTIVITIES
Net loss $ (298,187) $ (448,240)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 267,516 242,755
Provision for bad debts 60,000 24,000
Change in assets and liabilities:
Decrease in accounts receivable 2,024,995 458,558
Increase in income taxes receivable (169,053) (146,471)
Decrease (increase) in inventories 249,934 (485,787)
Increase in prepaid expenses (188,097) (77,398)
Increase in other current assets 68,512 137,406
Decrease (increase) in other assets 14,897 (12,312)
Decrease in accounts payable and accrued expenses (1,212,038) (488,694)
Decrease in bank overdraft (431,380) -
Decrease in customer deposits (9,598) (317,368)
Decrease in income taxes payable - (318,930)
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES $ 377,501 $ (1,432,481)
============= =============
See notes to the condensed consolidated financial statements
</TABLE>
4
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Paul-Son Gaming Corporation, including its subsidiaries
(collectively "Paul-Son" or the "Company"), is a 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 and in various countries throughout the world.
BASIS OF CONSOLIDATION AND PRESENTATION
The condensed consolidated financial statements include the
accounts of Paul-Son and its wholly-owned subsidiaries, Paul-Son
Gaming Supplies, Inc. ("Paul-Son Supplies"), Paul-Son Mexicana,
S.A. de C.V. ("Mexicana") and Authentic Products, Inc. All
material intercompany balances and transactions have been
eliminated in consolidation. The condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial
information and do not include all of the information and notes
required by generally accepted accounting principles for complete
financial statements. These statements should be read in
conjunction with the Company's annual audited consolidated
financial statements and related notes included in the Company's
Form 10-K for the year ended May 31, 1998.
The condensed consolidated balance sheet as of August 31,
1998 and statements of operations and cash flows for the three
month periods ended August 31, 1998 and 1997 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 periods. 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
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.
ACCOUNTS RECEIVABLE AND CUSTOMER DEPOSITS
The Company performs ongoing credit evaluations of its
customers and generally requires a fifty percent deposit for
manufactured or purchased products at the discretion of
management. These customer deposits are classified as a current
liability on the balance sheet.
5
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued)
The Company maintains an allowance for doubtful accounts, and
charges against the allowance have been within management's
expectations.
INVENTORIES
Inventories are stated at the lower of cost or market, net
of reserves for slow-moving, excess and obsolete items. Cost is
determined using the first-in, first-out method.
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
Buildings and improvements 18-27
Furniture and equipment 5-10
Vehicles 5-7
GOODWILL
Goodwill is amortized on a straight-line basis over 20
years.
REVENUE RECOGNITION
Substantially all revenue is recognized when products are
shipped to customers. The Company typically sells its products
with payment terms of net 30 days or less.
INCOME TAXES
The Company uses Statement of Financial Accounting Standards
("SFAS") No. 109 for financial accounting and reporting for
income taxes. A current tax liability or asset is recognized for
the estimated taxes payable or refundable on tax returns for the
current year. A deferred tax liability or asset is recognized
for the estimated future tax effects, based on provisions of the
enacted law, attributable to temporary differences and
carryforwards.
FOREIGN TRANSACTIONS
Sales outside of the United States are not significant and
substantially all transactions occur in United States dollars.
6
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(continued)
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. Estimates and assumptions have been made in determining
the depreciable life of assets and the allowance for doubtful
accounts and slow-moving, excess and obsolete inventories.
Actual results could differ from those estimates.
RECENTLY ADOPTED ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") issued
SFAS No. 130, "Reporting Comprehensive Income" in June 1997.
This statement, which is effective for fiscal years beginning
after December 31, 1997, requires a company to classify items of
other comprehensive income by their nature in a financial
statement and display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the stockholders' equity section of
the consolidated balance sheet. The adoption of SFAS No. 130
did not affect the Company's condensed consolidated financial
statements for the periods ended August 31, 1998 and 1997.
NOTE 2 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1998
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<S> <C> <C>
Raw materials $ 1,632,430 $ 1,734,738
Work in process 247,621 333,182
Finished goods 3,241,417 3,303,482
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5,121,468 5,371,402
Less inventory reserves 200,000 200,000
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$ 4,921,468 $ 5,171,402
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</TABLE>
NOTE 3 - SHORT-TERM BORROWINGS
The Company has a $1.0 million line of credit agreement with
a bank. Interest on outstanding borrowings currently accrues at
the bank's prime rate of interest (8.5% at August 31, 1998).
This facility, which is cross collateralized with a $1.8 million
note (see Note 4), is secured by a first deed of trust on certain
real estate owned by Paul-Son Supplies and by a secured interest
in all accounts, equipment, inventory and general intangibles of
Paul-Son
7
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 3 - SHORT-TERM BORROWINGS (continued)
Supplies. The Company is also the guarantor of this facility and
the $1.8 million note. Borrowings under the line of credit at
August 31, 1998 and May 31, 1998 were $550,000 and $850,000,
respectively. The line of credit agreement and the $1.8 million
note contain restrictive covenants, generally requiring the
Company to maintain certain financial ratios, as defined in the
agreement.
NOTE 4 - LONG-TERM DEBT AND PLEDGED ASSETS
Long-term debt consists of the following:
<TABLE>
<CAPTION>
August 31, May 31,
1998 1998
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<S> <C> <C>
Note payable to a bank in monthly installments
of $18,118 including interest of 8.87%
through October 2003 with a balloon payment
of approximately $1,450,000 due November
2003, secured by first a deed of trust on
the Company's main facility in Las Vegas,
Nevada and a first security interest on all
Company assets $ 1,756,751 $ 1,771,076
Notes payable to mortgage companies,
collateralized by real estate, interest at
7.5% to 9.5%, with principal and interest
payments of $898 due monthly through 2016 56,698 57,653
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1,813,449 1,828,729
Less current portion 59,451 59,007
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$ 1,753,998 $ 1,769,722
============= =============
</TABLE>
NOTE 5 - EARNINGS PER SHARE
The following table provides a reconciliation of basic and
diluted loss per share as required by SFAS No. 128, "Earnings per
Share":
<TABLE>
<CAPTION>
Dilutive
Stock
Basic Options Diluted
------------ ----------- ------------
For the 3 month period ending August 31, 1998
- ---------------------------------------------
<S> <C> <C> <C>
Net loss ($298,187) ($298,187)
Weighted Average Shares 3,472,649 - 3,472,649
Per Share Amount ($0.09) ($0.09)
</TABLE>
8
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 5 - EARNINGS PER SHARE (continued)
<TABLE>
<CAPTION>
Dilutive
Stock
Basic Options Diluted
------------ ------------- -----------
For the 3 month period ending August 31, 1997
- ---------------------------------------------
<S> <C> <C> <C>
Net loss ($448,240) ($448,240)
Weighted Average Shares 3,421,500 - 3,421,500
Per Share Amount ($0.13) ($0.13)
</TABLE>
Dilutive stock options for the three months ended August 31,
1998 (400,950) and August 31, 1997 (918,250) have not been
included in the computation of diluted net loss per share as
their effect would be antidilutive.
The Company has granted certain stock options to purchase
common stock which had an exercise price greater than the average
market price. These antidilutive options have been excluded from
the computation of diluted net loss per share for the respective
3 month periods. These outstanding antidilutive options for the
three months ending August 31, 1998 and 1997 were 453,750 and 0,
respectively.
NOTE 6 - RELATED PARTIES
Included in selling, general and administrative expenses for
the three month periods ended August 31, 1998 and 1997 are
approximately $0 and $27,000, respectively, for legal services
rendered by an individual while a member of the Company's Board
of Directors.
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 1, 1998, with interest only payable
quarterly to the Company at an interest rate equal to prime (8.5%
at August 31, 1998) 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.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Paul-Son is a 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 its primary manufacturing facilities
located in San Luis, Mexico and sales offices in Las Vegas and
Reno, Nevada; Atlantic City, New Jersey; 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.
COMPARISON OF OPERATIONS FOR THE THREE MONTHS ENDED AUGUST 31,
1998 AND AUGUST 31, 1997
REVENUES. For the three months ended August 31, 1998,
revenues totaled approximately $5.7 million, an approximate 3%
increase from the approximate $5.5 million of revenues in the
comparable period of the prior year. The increase in revenues
for the 1998 period was due principally to an increase in playing
card sales of approximately $874,000 (or approximately 113%) and
increases in sales of casino chips, layouts, roulette wheels and
dice of approximately $310,000 (approximately 35%) offset, in
part, by a decrease in other products distributed (which are not
manufactured by the Company) of approximately $1.0 million.
Sales of products manufactured by the Company totaled
approximately $4.2 million in the 1998 quarter vs. approximately
$2.8 million in the same period of the prior year.
COST OF REVENUES. Cost of revenues, as a percentage of
sales, decreased to 77.1% for the current period as compared to
85.5% for the three months ended August 31, 1997. This
improvement in the gross margin occurred as sales of the
Company's manufactured, higher-margin products (principally
playing cards, casino chips, dice and table layouts) increased by
approximately $1.2 million over the prior year quarterly period.
Additionally, improvements in the Company's gross margin were
attributable to the elimination of dual playing card production
facilities. During the three month period ended August 31, 1997,
the Company manufactured playing cards in San Luis, Mexico and,
to a limited extent, in Las Vegas, Nevada. Certain
inefficiencies, which resulted in higher manufacturing costs in
the prior year quarter, were eliminated with the transition of
the Las Vegas playing card production to San Luis in May 1998.
During certain previous reporting periods, the Company has
generally had a positive impact from the decrease in the value of
the Mexican peso. Over the last several reporting periods, the
value of the Mexican peso has remained relatively stable. The
Company cannot predict what impact fluctuations between the
Mexican peso and the U.S. dollar will have on the future
operating results of the Company.
GROSS PROFIT. Gross profit for the quarter ended August 31,
1998, increased in absolute dollars by approximately $500,000
over the comparable period in the prior year. This improvement
was primarily a result of the aforementioned higher revenues and
the
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aforementioned improvement in the cost of revenues as a
percentage of sales in the 1998 period versus the 1997 period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. For the three
months ended August 31, 1998, selling, general and administrative
("SG&A") expenses increased approximately $155,000, or 9.9%, to
approximately $1.7 million as compared to approximately $1.6
million in the comparable period of the prior year. This increase
was primarily attributable to increased personnel and occupancy
costs from the expansion into new and existing gaming markets and
increased depreciation expense related to property and equipment
purchases during the fiscal year ending May 31, 1998.
INTEREST EXPENSE. For the three months ended August 31,
1998, interest expense increased to approximately $51,000 from
approximately $5,000 in the 1997 period. This increase was due
principally to the acquisition of debt (approximately $1.8
million) associated with the purchase of a new manufacturing
facility in San Luis and certain manufacturing equipment acquired
in November 1997, and average borrowings of approximately
$700,000 under the Company's existing line of credit facility
during the quarter ended August 31, 1998. Both of these debt
instruments were acquired subsequent to August 31, 1997.
OTHER INCOME. For the three months ended August 31, 1998,
other income decreased to approximately $10,000 from
approximately $62,000 in the 1997 period. This decrease was
caused principally by a reduction in the amount of interest
income received during the three months ended August 31, 1998 as
compared to the comparable 1997 quarterly period (based on
average outstanding cash balances during the quarters).
NET LOSS. For the three months ended August 31, 1998 the
Company sustained a net loss of approximately $298,000 versus a
net loss of approximately $448,000 in the comparable prior year
period. This improvement in net operating results was primarily
due to the aforementioned increase in revenues and gross profit
margins offset, in part, by an increase in SG&A expenses. The net
loss per diluted share was $.09 for the three months ended August
31, 1998 as compared to a net loss per diluted share of $.13 per
share for the three months August 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
OVERVIEW. Management believes that the combination of cash
flows from operations, cash on hand and bank financing
alternatives will provide sufficient liquidity both on a short-
term and long-term basis.
WORKING CAPITAL. Working capital totaled approximately $6.8
million at August 31, 1998, as compared to the approximately $7.1
million at May 31, 1998.
CASH FLOW. Operating activities provided approximately
$378,000 in cash during the three months ended August 31, 1998,
as compared to cash used in operating activities of approximately
$1.4 million during the same period in the prior year. A
significant reduction in the Company's accounts receivable
offset, in part, by a decrease in accounts payable and accrued
expenses were the primary components of the net cash provided by
operations.
11
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LINE OF CREDIT. The Company has a line of credit (the "Line
of Credit") from Norwest Bank of Nevada ("Norwest"), which now
allows the Company to borrow up to $1,000,000. The Line of
Credit matures on October 31, 1998. As of August 31, 1998,
advances of $550,000 were outstanding under the Line of Credit.
The Line of Credit is collateralized by a first priority security
interest in substantially all of the Company's depository
accounts at Norwest, accounts receivable, inventory, furniture,
fixtures and equipment, and bears interest at a variable rate
equal to Norwest's prime lending rate (8.5% at August 31, 1998).
Under the Line of Credit, the Company has agreed to comply
with certain financial covenants and ratios. Specifically, the
Company has agreed to maintain profitability on an annualized
basis of at least $250,000, maintain a tangible net worth (as
defined in the agreement) of at least $14 million and maintain a
debt to tangible worth ratio (total liabilities divided by
tangible net worth) of less than 0.5 to 1.
SEASONALITY. The Company has occasionally experienced some
seasonality relative to new casino openings, particularly in Las
Vegas, as new openings have tended to occur near the end of a
calendar year; however, there does not appear to be any
seasonality associated with the Company's core sales to existing
customers.
YEAR 2000 PROJECT. The Company is conducting a review of its
computer systems to identify those areas that could be affected
by the "Year 2000" issue and is in the process of updating many
of its existing systems to improve overall business performance
and to accommodate business for the "Year 2000". However, given
the inherent risks for a project of this magnitude and the
resources required, the timing and costs involved could differ
materially from that anticipated by the Company. The Company
expects its "Year 2000" date conversion project to be completed
on a timely basis. However, there can be no assurance that the
conversion project will be completed on schedule, and that the
systems of other companies on which the Company may rely also
will be timely converted or that such failure to convert by
another company would not have an adverse impact on the Company's
systems. The estimated costs directly or indirectly associated
with the conversion project is currently expected to be less than
$50,000, a significant portion of which will be in the form of
capital expenditures. As of August 31, 1998, the Company has
incurred no significant costs which are directly or indirectly
related to the "Year 2000" project.
RECENTLY ISSUED ACCOUNTING STANDARDS. See Note 1 to the
Condensed Consolidated Financial Statements for a discussion of
recently issued accounting standards and their expected impact on
the Company's condensed consolidated financial statements.
STATEMENT ON FORWARD-LOOKING INFORMATION
Certain information included herein contains statements that
may be considered forward-looking, such as statements relating to
anticipated performance and financing sources. 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
12
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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, 1998, 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.
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
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this amended report to be
signed on its behalf by the undersigned thereunto duly
authorized.
PAUL-SON GAMING CORPORATION
Date: October 12, 1998 By: /s/ Eric P. Endy
Eric P. Endy, President
(Duly Authorized Officer)
Date: October 12, 1998 By: /s/ John M. Garner
John M. Garner, Treasurer and
Chief Financial Officer
(Principal Financial Officer)
14
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<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, 1998, 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-31-1999
<PERIOD-END> AUG-31-1998
<CASH> 127
<SECURITIES> 0
<RECEIVABLES> 3,498
<ALLOWANCES> 435
<INVENTORY> 4,921
<CURRENT-ASSETS> 9,710
<PP&E> 14,130
<DEPRECIATION> 4,939
<TOTAL-ASSETS> 19,769
<CURRENT-LIABILITIES> 2,919
<BONDS> 0
0
0
<COMMON> 35
<OTHER-SE> 15,061
<TOTAL-LIABILITY-AND-EQUITY> 19,769
<SALES> 5,698
<TOTAL-REVENUES> 5,698
<CGS> 4,393
<TOTAL-COSTS> 4,393
<OTHER-EXPENSES> 1,732
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51
<INCOME-PRETAX> (459)
<INCOME-TAX> 161
<INCOME-CONTINUING> (298)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (298)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
