SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
DATE OF REPORT: FEBRUARY 18, 1998 (DECEMBER 19, 1997)
-----------------------------------------------------
AMERICAN BINGO & GAMING CORP.
-----------------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 1-13530 74-2723809
-------- ------- ----------------
(State or other jurisdiction of Commission (I.R.S. Employer
incorporation or organization) File Number Identification No.)
515 CONGRESS AVENUE, SUITE 1200, AUSTIN, TEXAS 78701
----------------------------------------------- -----
(Address of principal executive offices)
(512) 472-2041
--------------
(Registrant's telephone number)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- --------------------------------------------------
DARLINGTON MUSIC COMPANY, INC. ACQUISITION
- ----------------------------------------------
On or about November 12, 1997 American Bingo & Gaming Corp.
("Registrant") entered into an agreement to acquire Darlington Music
Company, Inc. ("Darlington"), a South Carolina video gaming business.
The acquisition ("Acquisition") will be consummated in a stock-for-stock
transaction, with the Registrant exchanging 1,000,000 shares of its Common
Stock for 100% of the issued and outstanding capital stock of Darlington.
There is no cash consideration. Based on its due diligence, the Registrant
believes that Darlington will generate more than $4 million in revenues and
$1 million in free cash flow in 1998. Since the Registrant will account for
the Acquisition as a pooling of interests, Darlington's historical financial
results will be combined with the Registrant's financial results. The
Acquisition closed on December 18, 1997.
Darlington was founded in 1938 by George Harrison Sr. and is today owned and
operated by his three sons George Harrison, Jr., Thomas Harrison and William
Harrison (collectively, the "Harrisons"), and Michael Mims, Vice President -
Gaming ("Mims"), who, together, will continue to operate the business.
The Acquisition involves consideration in excess of 10% of the Registrant's
total assets. The Registrant will file, by amendment to this Form 8-k,
the required financial statements and exhibits within 60 days of the date
of this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------
a) Annexed as Exhibit A are Darlington's audited financial statements for the
eleven and one-half month period ended December 17, 1997 and year ended
December 31, 1996.
b) Annexed as Exhibit B are the Company's Pro-Forma condensed balance sheet
and statement of operations and explanatory notes, giving effect to the
combined accounts of the Company and Darlington as required by the
instructions to Form 8-K.
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 hereunto duly authorized.
AMERICAN BINGO & GAMING CORP. (Registrant)
February 18, 1998 By: /s/ John Orton
----------------
John Orton, Chief Financial Officer
<PAGE>
<TABLE>
<CAPTION>
DARLINGTON MUSIC COMPANY, INC.
I N D E X
---------
Page No.
--------
<S> <C>
INDEPENDENT AUDITOR'S REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DARLINGTON MUSIC COMPANY, INC. FINANCIAL STATEMENTS:
- --------------------------------------------------------------------------------------------
Balance Sheets as of December 17, 1997 and December 31, 1996 . . . . . . . . . . . . . . . . 3
Statements of Income For the Periods Ended December 17, 1997 and
December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Retained Earnings For the Periods Ended December 17, 1997 and
December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Statements of Cash Flows For the Periods Ended December 17, 1997 and
December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
AMERICAN BINGO & GAMING CORP. and DARLINGTON MUSIC COMPANY, INC.
UNAUDITED PRO-FORMA FINANCIAL STATEMENTS:
- --------------------------------------------------------------------------------------------
Introductory Paragraph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Consolidated Balance Sheet as of September 30, 1997. . . . . . . . . . . . . . . . . . . . . 11
Consolidated Statements of Operations For the Periods Ended September 30, 1997 and
December 31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-14
</TABLE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
----------------------------
Board of Directors
Darlington Music Company, Inc.
I have audited the accompanying balance sheets of Darlington Music Company,
Inc. as of December 17,1997 and December 31, 1996 and the related statements
of income, retained earnings, and cash flows for the periods then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material aspects, the financial position of Darlington Music Company, Inc.
as of December 17, 1997 and December 31, 1996 and the results of operations
and its cash flows for the periods then ended in conformity with generally
accepted accounting principles.
/s/ WALTER C. WRIGHT, CPA, PC
-----------------------------
WALTER C. WRIGHT, CPA, PC
Augusta, GA
February 7, 1998
<PAGE>
<TABLE>
<CAPTION>
DARLINGTON MUSIC COMPANY, INC.
BALANCE SHEETS
ASSETS
- ------
December 17, 1997 December 31, 1996
------------------- -------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . . $ 50,403 $ 262,545
Accounts and note receivable - officers (Note 5) 305,261 64,988
Accounts receivable - other. . . . . . . . . . . 320,018 94,495
Prepaid licenses . . . . . . . . . . . . . . . . 594,646 578,052
Prepaid income taxes . . . . . . . . . . . . . . 38,853 33,348
------------------- -------------------
Total current assets . . . . . . . . . . . . . . . 1,309,181 1,033,428
Property and equipment at cost, net of
accumulated depreciation (Note 2). . . . . . . . 1,314,785 1,187,973
Other assets
Land - at cost --- 241,187
Non-compete agreement. . . . . . . . . . . . . . 44,030 47,225
Cash surrender value - life insurance --- 269,500
------------------- -------------------
Total other assets . . . . . . . . . . . . . . . . 44,030 557,912
Total Assets . . . . . . . . . . . . . . . . . . . $ 2,667,996 $ 2,779,313
=================== ===================
LIABILITIES AND STOCKHOLDERS'S EQUITY
- --------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses. . . . . . $ 14,751 $ 66,572
Income taxes payable (Note 6) . . . . . . . . . 188,827 188,827
Accrued income taxes (Note 6) . . . . . . . . . 236,582 86,513
Note payable - current portion (Note 3) . . . . 165,600 128,866
------------------- -------------------
Total current liabilities. . . . . . . . . . . . . 605,760 470,778
Note payable net of current portion (Note 3) . . . 176,944 355,870
Stockholder's Equity
Capital stock, par value, 250,00 authorized,
25,000 shares issued and outstanding. . . . . . 25,000 25,000
Paid-in capital . . . . . . . . . . . . . . . . 9,275 9,275
Retained earnings . . . . . . . . . . . . . . . 2,548,737 1,964,810
Treasury stock, 8,800 shares at cost (Note 8) . (697,720) ( 46,420)
------------------- -------------------
Total stockholder's equity . . . . . . . . . . . . 1,885,292 1,952,665
Total Liabilites and Stockholder's Equity. . . . . $ 2,667,996 $ 2,779,313
=================== ===================
</TABLE>
The accompanying notes are an integral part of these financial statements
<TABLE>
<CAPTION>
DARLINGTON MUSIC COMPANY, INC.
STATEMENTS OF INCOME
For the
Eleven and one-half
Month Period Ended For the Year Ended
December 17, 1997 December 31, 1996
--------------------- --------------------
<S> <C> <C>
Revenues. . . . . . . . . . . . . . . . $ 3,439,673 $ 2,526,273
Cost of revenues:
- ---------------------------------------
Machine licenses. . . . . . . . . . . 734,760 507,810
Parts and supplies . . . . . . . . . 100,326 147,980
Supplies --- 27,351
Freight. . . . . . . . . . . . . . . 971 1,325
--------------------- --------------------
Total cost of revenues. . . . . . . . . 836,057 684,466
--------------------- --------------------
Gross profit. . . . . . . . . . . . . . 2,603,616 1,841,807
General and administrative expenses . . 2,060,010 1,911,172
--------------------- --------------------
Income from operations. . . . . . . . . 543,606 ( 69,365 )
Other income (expense)
- ---------------------------------------
Interest expense. . . . . . . . . . . (33,556) (8,139)
Interest income . . . . . . . . . . . 952 11,055
Gain on sale of fixed assets. . . . . 4,510 30,459
Machine licenses collected. . . . . . 154,315 132,472
Rental income . . . . . . . . . . . . 9,000 2,600
Miscellaneous income. . . . . . . . . 16,619 10,662
Sale and distribution - other assets 176,898 ---
--------------------- --------------------
Total other income (expense). . . . . . 347,738 179,109
--------------------- --------------------
Income before income taxes. . . . . . . 891,344 109,744
--------------------- --------------------
Provision for Income Taxes (Note 6) . . 347,624 31,787
--------------------- --------------------
Net income. . . . . . . . . . . . . . . $ 543,720 $ 77,957
===================== ====================
</TABLE>
The accompanying notes are an integral part of these statements
<TABLE>
<CAPTION>
DARLINGTON MUSIC COMPANY, INC.
STATEMENTS OF RETAINED EARNINGS
For the
Eleven and one-half
Month Period Ended For the Year Ended
December 17, 1997 December 31, 1996
-------------------- -------------------
<S> <C> <C>
Retained Earnings at beginning of period $ 1,964,810 $ 1,591,510
(as previously reported)
Adjustment of understatement
of prepaid licenses (net of
applicable income taxes of
$188,827 in 1996 (Note 6) . . . . . . . 295,343
Adjustments to GAAP from
other comparative basis
of accounting (Note 7). . . . . . . . . 40,207
Balance at beginning of -------------------- -------------------
period, as restated . . . . . . . . . . 2,005,017 1,886,853
Net income. . . . . . . . . . . . . . . . 543,720 77,957
-------------------- -------------------
Retained earnings at end of period. . . . $ 2,548,737 $ 1,964,810
==================== ===================
</TABLE>
The accompanying notes are an integral part of these statements
<PAGE>
<TABLE>
<CAPTION>
DARLINGTON MUSIC COMPANY, INC.
STATEMENTS OF CASH FLOWS
For the
Eleven and one-half
Month Period Ended For the Year Ended
December 17, 1997 December 31, 1996
--------------------- --------------------
<S> <C> <C>
Cash flows from operating activities:
- -------------------------------------------------
Net income. . . . . . . . . . . . . . . . . . . $ 543,720 $ 77,957
--------------------- --------------------
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization . . . . . . . 395,554 299,544
Loss (gain) on sale of assets . . . . . . . (181,408) 30,459
Changes in accounts receivable. . . . . . . (465,796) (7,001)
Changes in prepaid/other assets . . . . . . (22,010) (411,127)
Changes in accounts payable/
other liabilities. . . . . . . . . . . . . 98,247 279,720
Net cash provided by operating activities . . . . 368,307 269,552
--------------------- --------------------
Cash flows from investing activities
- -------------------------------------------------
Capital expenditures. . . . . . . . . . . . . . (512,655) (709,420)
Proceeds from sale of assets. . . . . . . . . . 56,197 106,556
Cash value life insurance. . . . . . . . . . . 269,500 (18,692)
--------------------- --------------------
Net cash used in investing activities . . . . . . (186,958) (621,556)
--------------------- --------------------
Cash flows from financing activities
- -------------------------------------------------
Payments on long-term debt. . . . . . . . . . . (142,191)
Proceeds from long-term debt
financing . . . . . . . . . . . . . . . . . . 464,736
Repurchase of capital stock . . . . . . . . . . (251,300)
--------------------- --------------------
Net cash used for financing activities: . . . . . (393,491) 464,736
--------------------- --------------------
Net increase (decrease) in cash and
cash equivalents . . . . . . . . . . . . . . . (212,142) 112,732
Cash and cash equivalents, beginning. . . . . . . 262,545 149,813
--------------------- --------------------
Cash and cash equivalents, ending . . . . . . . . $ 50,403 $ 262,545
===================== ====================
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash payments for
Interest. . . . . . . . . . . . . . . . . . . . 33,556 8,139
Income taxes paid . . . . . . . . . . . . . . . 153,411
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DARLINGTON MUSIC COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED
DECEMBER 17, 1997 AND DECEMBER 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------
This summary of significant policies of Darlington Music Company, Inc,
("Darlington") is presented to assist in understanding the Corporations
financial statements. The financial statements and notes are representations
of the Corporation's management who are responsible for their integrity and
objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
A. Nature of Operations
----------------------
Darlington Music Company, Inc, is a video gaming route business with machines
located in counties across the northeastern part of South Carolina. There is
no indication of risk due to concentration in volume of business with a
particular customer.
B. Cash and Cash Equivalents
----------------------------
Darlington considers all highly liquid debt instruments purchased with a
maturity date of three months or less to be cash equivalents. The Corporation
places its cash investments with high quality financial institutions in
Darlington, SC. Deposits are insured by FDIC up to $100,000. At times during
the audited period, balances exceeded this amount.
C. Use of Estimates
------------------
The preparation of financial statements in conformity with generally accepted
principles requires management to make estimates and assumptions that affect
certain reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
D. Property and Equipment
------------------------
Leasehold improvements, furniture and equipment are carried at cost.
Major additions are capitalized and depreciated. Maintenance and repairs
which do not improve or extend the life of the respective assets are expensed.
Gains and losses from the sale of fixed assets are included in income.
The cost of equipment, furniture and fixtures is depreciated over the
estimated useful lives of the assets of between five and seven years, using
the straight-line method. Leasehold improvements are depreciated over fifteen
to thirty-nine years using the straight-line method.
E. Licenses
--------
Video game operators in South Carolina are required to obtain licenses to
operate video gaming machines. Generally, licenses are granted for a two-year
period. Therefore, Darlington expenses the costs of its licenses over a
two-year license period. Darlington periodically reviews its license
portfolio to ensure that the future economic benefits of its licenses are
consistent with their recorded values.
F. Revenue Recognition
--------------------
Darlington's revenue is determined by the win from gaming activities
which is the difference between gaming wins and losses. A percentage of the
win is paid to the locations where the machines are located, and the net is
reported as the Corporation's revenue.
<PAGE>
DARLINGTON MUSIC COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS ENDED
DECEMBER 17, 1997 AND DECEMBER 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
G. Bad Debts
----------
The Company used the direct write-off method of recognizing bad debt
expense. In the year that management determines an account to be
uncollectible it is written off and recorded as bad debt. Bad debts written
off in 1997 and 1996 totaled $30,089 and $23,683, respectively.
NOTE 2 - PROPERTY AND EQUIPMENT.
-------------------------
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 17, 1997 December 31, 1996
------------------- -------------------
<S> <C> <C>
Machines. . . . . . . . . . . $ 2,709,860 $ 2,906,245
Office furniture/equipment. . 81,289 105,526
Automobiles and trucks. . . . 238,479 252,790
Leasehold improvements. . . . 102,993 100,510
Radios. . . . . . . . . . . . 18,317 18,317
------------------- -------------------
Total . . . . . . . . . . . . 3,150,938 3,383,388
less accumulated depreciation (1,836,153) (2,195,415)
Net Property and Equipment. . $ 1,314,785 $ 1,187,973
=================== ===================
<FN>
Depreciation expense for 1997 totaled $395,554 and $299,544 respectively.
</TABLE>
NOTE 3 - NOTE PAYABLE
-------------
Note payable is as follows:
<TABLE>
<CAPTION>
December 17, 1997 December 31, 1996
------------------ ------------------
<S> <C> <C>
Current . . . . . . $ 165,600 $ 128,866
Non-current . . . . 176,984 355,870
------------------ ------------------
Total Notes Payable $ 342,544 $ 484,736
================== ==================
<FN>
Note payable represents an obligation due to a South Carolina commercial bank.
The note bears interest 7.75% and is secured by all equipment and
amusement machines.
</TABLE>
<PAGE>
DARLINGTON MUSIC COMPANY, INC.
FOR THE PERIODS ENDED
DECEMBER 17, 1997 AND DECEMBER 31, 1996
NOTE 4 - RELATED PARTY TRANSACTIONS - LEASES
---------------------------------------
Darlington leases several buildings from various shareholders. One
building provides monthly payments of $3,500 for a period of fifteen years
with an option to renew for an additional five years. Other buildings are
leased from shareholders on a month-to-month basis totaling $1,100 per month.
The Corporation is responsible for taxes, insurance, and repairs under all
lease arrangements.
<TABLE>
<CAPTION>
Years ended December 31, Amount
<S> <C>
1998 . . . . . . . . . . . $ 42,000
1999 . . . . . . . . . . . 42,000
2000 . . . . . . . . . . . 42,000
2001 . . . . . . . . . . . 42,000
2002 . . . . . . . . . . . 42,000
Thereafter . . . . . . . . . 84,000
--------
Total minimum annual rentals $254,000
========
</TABLE>
NOTE 5 - RELATED PARTY TRANSACTIONS - ACCOUNTS AND NOTE RECEIVABLE
----------------------------------------------------------------
GBT Harrison is a partnership where partners are stockholders of Darlington
Music Co., Inc. In July, 1995, the Corporation advanced the partnership funds
amounting to $80,000. At December 31, 1996, the note receivable from GBT
Harrison was $61,988 and at December 17, 1997, $59,265. The note is payable
in monthly installments of $764.52 including interest at 8%. Loans in the
amount of $245,996 were made to the Company's officers on December 17, 1997
and were outstanding at that period-end.
NOTE 6 - INCOME TAXES
-------------
Income taxes reflected in the accompanying balance sheets were calculated
using statutory, federal and state rates applied to earnings for the total
periods indicated. The Company operates on a fiscal year ending August 31 and
taxes through that period have been filed and paid with the exception of a
liability derived from an error in calculation of prepaid licenses when
two-year licenses were implemented in or around June, 1992.
Amounts indicated as accrued income taxes are taxes due on that portion of
earnings after the Company's fiscal year-end.
NOTE 7 - ADJUSTMENT OF RETAINED EARNINGS
----------------------------------
In the past, financial statements were issued using the tax basis of
accounting which allows for accelerated depreciation methods. This adjustment
was made to adjust prior years' accumulated depreciation to straight-line
depreciation as generally accepted.
<PAGE>
DARLINGTON MUSIC COMPANY, INC.
FOR THE PERIODS ENDED
DECEMBER 17, 1997 AND DECEMBER 31, 1996
NOTE 8 - CAPITAL STOCK
--------------
All stock in the Company is owned by family members with no particular rights
as to participation, call prices or dates, conversion or exercise prices,
sinking fund requirements, unusual voting rights or obligation to issue
additional shares. During 1997, all of the capital stock of one shareholder
was repurchased for cash and transfer of land owned by the Company totaling
$651,300 in value.
NOTE 9 - SUBSEQUENT EVENTS
------------------
In December of 1997 the Darlington Music Company, Inc. was acquired in a
stock-for-stock transaction by American Bingo & Gaming Corp. (ABG), a public
company engaged in the charitable bingo and gaming business. ABG exchanged
1,000,000 of its common shares for 100% of Darlington Music Company Inc.
shares in a transaction to be accounted for as a pooling of interests. The
market value of ABG shares on this date was approximately $5.5 million. There
was no cash or other consideration in this transaction.
<PAGE>
DARLINGTON MUSIC COMPANY, INC.
AMERICAN BINGO & GAMING CORP. AND
DARLINGTON MUSIC COMPANY, INC.
UNAUDITED PRO-FORMA CONSOLIDATED FINANCIAL STATEMENTS
INTRODUCTORY PARAGRAPH
In November of 1997 American Bingo & Gaming Corp. ("ABG") agreed to
acquire Darlington Music Company, Inc. (Darlington), a video gaming business
in South Carolina. In December of 1997 this acquisition was closed in a
stock-for-stock transaction. ABG's acquisition of Darlington was accounted for
as a pooling of interests.
The pro-forma unaudited consolidated balance sheet at September 30, 1997
gives effect to the acquisition of Darlington as if it had occurred on that
date. The pro-forma unaudited statements of operations for the nine-month
period ended September 30, 1997 and the year ended December 31, 1996 reflect
the combined results of operations as if the acquisition had occurred on
January 1, 1996.
The unaudited pro-forma consolidated financial information also includes
the results of the Company's recent Gold Strike and Lucky 4 acquisitions. The
unaudited pro-forma consolidated financial information is not necessarily
indicative of the results of operations that would have been reported had such
events occurred on the dates specified, nor is it necessarily indicative of
the future results of the consolidated entities. The unaudited consolidated
pro forma financial statements should be read in conjunction with the
historical financial statements of the Company.
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BINGO & GAMING CORP. AND DARLINGTON MUSIC COMPANY, INC.
UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997
- Historical - Pro-Forma
ASSETS American Bingo Darlington Adjustments Consolidated
- ------------------------------------------------ ---------------- ------------ ----------- --------------
- none-
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . . . $ 1,769,904 $ 422,446 $ 2,192,351
Accounts receivable. . . . . . . . . . . . . . 329,544 5,000 334,544
Notes receivable - current portion 407,109 ---- 407,109
Other current assets . . . . . . . . . . . . . 368,752 266,235 634,987
---------------- ------------ --------------
Total current assets . . . . . . . . . . . . . . 2,875,309 693,681 3,568,991
Property and equipment-at cost, net of
accumulated depreciation . . . . . . . . . . . 3,619,930 1,558,687 5,178,617
Other assets:
Notes receivable - net of current portion. . . 624,184 59,914 684,098
Intangible assets, net of accum. amortization. 2,452,891 44,723 2,497,614
Deposits, other. . . . . . . . . . . . . . . . 751,998 186,431 938,428
---------------- ------------ --------------
Total other assets . . . . . . . . . . . . . . . 3,829,073 291,068 4,120,140
Total Assets . . . . . . . . . . . . . . . . . . $ 10,324,312 $ 2,543,436 $ 12,867,748
================ ============ ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------
Current liabilities:
Accounts payable and accrued expenses. . . . . $ 175,035 $ 141,682 $ 316,717
Notes payable - current portion. . . . . . . . 442,210 382,197 824,407
Lease obligations 182,054 --- 182,054
---------------- ------------ --------------
Total current liabilities. . . . . . . . . . . . 799,299 523,879 1,323,178
Long-term liabilities:
Notes payable - net of current portion 705,098 --- 705,098
Obligations under capital leases 754,232 --- 754,232
---------------- ------------ --------------
Total long-term liabilities 1,459,330 --- 1,459,330
Commitments and contingency --- --- ---
Owners' equity:
Preferred stock - $.01 par value 20 --- 20
Authorized and unissued - 1,000,000 shares
Common stock - $.001 par value . . . . . . . . 5,868 25,000 30,868
Authorized - 20,000,000 shares
Issued and outstanding - 4,645,919 shares
Less treasury stock at cost --- (46,420) (46,420)
Additional paid-in capital . . . . . . . . . . 13,351,649 9,275 13,360,924
Retained earnings (accumulated deficit). . . . . (5,291,855) 2,031,702 (3,260,153)
---------------- ------------ --------------
Total owners' equity . . . . . . . . . . . . . . 8,065,682 2,019,557 10,131,659
Total liabilities and owners' equity . . . . . . $ 10,324,312 $ 2,543,436 $ 12,867,748
================ ============ ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BINGO & GAMING CORP. AND DARLINGTON MUSIC COMPANY, INC.
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 1997
- Historical - Pro-Forma
American Bingo Darlington Adjustments Consolidated
--------------- ----------- -------------- --------------
<S> <C> <C> <C> <C>
Revenues:
Rental $ 1,950,205 --- $ 1,950,205
Gaming, concession and other . . . . 5,114,419 $ 2,759,506 7,873,925
--------------- ----------- --------------
Total Revenues . . . . . . . . . . . . 7,064,624 2,759,506 9,824,130
Cost of revenues:
Rent and supplies. . . . . . . . . . 1,380,382 81,374 1,461,756
Depreciation and amortization 311,770 --- 311,770
Other operating costs. . . . . . . . 1,757,965 555,583 2,313,548
Reduced salaries --- --- (108,750) (a) (108,750)
--------------- ----------- -------------- --------------
Total cost of revenues . . . . . . . . 3,450,117 636,957 (108,750) 3,978,324
Operating income . . . . . . . . . . . 3,614,507 2,122,549 108,750 5,845,806
Operating expenses:
General and administrative expenses. 1,859,621 1,713,020 3,572,641
Total operating expenses . . . . . . . 1,859,621 1,713,020 3,572,641
Other income (expense):
Interest expense --- --- ---
Interest income. . . . . . . . . . . 130,884 26,392 157,276
Gain (loss) sale of assets --- 8,665 8,665
--------------- ----------- --------------
Total other income (expense) . . . . . 130,884 35,057 165,941
Income before taxes. . . . . . . . . . 1,885,770 444,586 108,750 2,439,106
Provision for income taxes . . . . . . 19,587 128,551 36,975 (b) 185,113
--------------- ----------- -------------- --------------
Net Income . . . . . . . . . . . . . . $ 1,866,183 $ 316,035 $ 71,775 $ 2,253,993
=============== =========== ============== ==============
Net income per share - primary . . . . $ 0.35 $ 0.31 $ 0.35
=============== ============== ==============
Net income per share - fully diluted . $ 0.33 $ 0.31 $ 0.33
=============== ============== ==============
Weighted average shares outstanding. . 5,389,534 1,000,000 6,389,534
Weighted average shares outstanding -
assuming full dilution . . . . . . . 5,734,905 1,000,000 6,734,905
<FN>
(a) Includes a reduction of $108,750 for pro-forma new salaries for Darlington Music Company
officers for first nine months of 1997.
(b) Includes $36,975 for pro-forma taxes on incremental Darlington Music Company net income for the
first nine months of 1997 at current statutory rates.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BINGO & GAMING CORP. AND DARLINGTON MUSIC COMPANY, INC.
UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- Historical - Pro-Forma
American Bingo Darlington Adjustments Consolidated
---------------- ------------ ------------- ------------------------
<S> <C> <C> <C> <C>
Revenues:
Rental $ 2,062,737 --- $ 2,062,737
Gaming, concession and other. 3,539,715 2,526,273 6,065,988
---------------- ------------ ------------------------
Total Revenues. . . . . . . . . 5,602,452 2,526,273 8,128,725
Cost of revenues:
Rent and supplies . . . . . . 1,219,421 243,251 1,462,672
Depreciation and amortization 491,593 807,354 1,298,947
Other operating costs . . . . 1,472,710 84,618 1,557,328
Reduced salaries --- --- (99,900) (a) (99,900)
---------------- ------------ ------------- ------------------------
Total cost of revenues. . . . . 3,183,724 1,135,223 (99,900) 4,219,047
------------------------
Operating income. . . . . . . . 2,418,728 1,391,050 99,900 3,909,678
Operating expenses:
General and administrative 1,819,862 1,460,415 ---- 3,280,277
Total operating expenses 1,819,862 1,460,415 ---- 3,280,277
Other income (expense):
Interest expense (25,591) (8,139) ---- (33,730)
Interest/other income . . . . 413,217 156,789 570,006
Gain (loss) on sale of assets 14,660 30,459 ---- 45,119
---------------- ------------ ------------- ------------------------
Total other income. . . . . . . 402,286 179,109 581,395
Income before taxes . . . . . . 1,001,152 109,744 99,900 1,210,796
Provision for income taxes. . . 40,977 31,787 33,966 (b) 106,730
---------------- ------------ ------------- ------------------------
Net Income. . . . . . . . . . . $ 960,175 $ 77,957 $ 65,934 $ 1,104,066
================ ============ ============= ========================
Net income (loss) per share . . $ 0.18 $ 0.08 $ 0.17
================ ============ ========================
Weighted average number
of shares outstanding . . . . . 5,325,706 1,000,000 6,325,706
<FN>
(a) Includes a reduction of $99,900 for pro-forma new salaries for Darlington Music Company officers for
1996.
(b) Includes $33,966 for pro-forma assumed tax cost on incremental Darlington Music Company net loss for
1996 at then current statutory tax rates.
</TABLE>
