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 March 31, 1996
--------------
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 No. 0-21754
SODAK GAMING, INC.
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0407053
(State of Incorporation) (I.R.S. Employer Identification No.)
5301 S. Highway 16
Rapid City, South Dakota 57701
(Address of principal executive offices)
(605) 341-5400
(Registrant's telephone number, including area code)
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
_____________ ______________
At March 31, 1996, there were outstanding 11,361,138 shares of the
Company's common stock.
Page 1 of 17
Exhibit Index Page 16
SODAK GAMING, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995 3
Consolidated Statements of Earnings for the three months
ended March 31, 1996 and 1995 5
Consolidated Statements of Cash Flows for the three months
ended March 31, 1996 and 1995 6
Note to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal proceedings 13
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
EXHIBIT INDEX 16
2
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
- - -----------------------------------------
SODAK GAMING, INC.
Consolidated Balance Sheets
Assets
March 31, December 31,
1996 1995*
-------------- -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 2,510,161 $ 974,221
Receivables:
Trade accounts, net of allowance for doubtful
accounts 10,504,158 15,971,347
Short-term notes receivable 1,496,196 1,846,213
Notes receivable, current maturities 24,913,372 25,610,033
Net investment in direct financing-type lease,
current maturity 797,069 626,693
Accrued interest 308,773 322,012
Inventories:
Gaming machines 11,533,856 12,798,282
Repair parts and other gaming accessories 2,865,245 2,530,500
Prepaid expenses and other current assets 1,756,250 1,080,934
Deferred income taxes 599,000 528,000
-------------- -------------
Total current assets 57,284,080 62,288,235
-------------- -------------
PROPERTY AND EQUIPMENT:
Land and improvements 628,143 628,143
Building 5,641,342 5,640,453
Gaming operations equipment 6,861,218 4,674,004
Office furniture and equipment 2,111,269 1,791,327
Transportation equipment 1,871,471 1,837,565
Shop equipment 481,301 346,789
-------------- -------------
17,594,744 14,918,281
Less accumulated depreciation 1,567,843 1,245,004
-------------- -------------
Total property and equipment, net 16,026,901 13,673,277
-------------- -------------
OTHER ASSETS:
Notes receivable, net of current maturities 26,790,674 26,164,915
Net investment in direct financing-type lease,
net of current maturity 13,185,071 13,355,447
Amounts due from riverboat lessee 21,458,796 19,950,823
Real estate held for sale 1,140,435 1,140,435
Other assets 2,914,345 1,481,885
-------------- -------------
Total other assets 65,489,321 62,093,505
-------------- -------------
$138,800,302 $138,055,017
============== =============
* From audited financial statements
The accompanying note is an integral part of the consolidated financial
statements.
3
SODAK GAMING, INC.
Consolidated Balance Sheets
Liabilities and Shareholders' Equity
March 31, December 31,
1996 1995*
-------------- -------------
(unaudited)
CURRENT LIABILITIES:
Accounts payable $ 15,012,264 $ 22,234,670
Current maturities of long-term debt 57,947 56,891
Income taxes payable 1,471,682 993,718
Accrued liabilities 1,717,865 1,502,170
-------------- -------------
Total current liabilities 18,259,758 24,787,449
-------------- -------------
LONG-TERM DEBT, NET OF CURRENT MATURITIES 22,529,226 18,043,977
-------------- -------------
DEFERRED INCOME TAXES 1,053,000 963,000
-------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock at $0.001 par value, 25,000,000 shares
authorized, none outstanding 0 0
Common stock at $0.001 par value, 75,000,000 shares
authorized, 11,361,138 shares issued and outstanding 11,361 11,361
Additional paid-in capital 63,713,980 63,713,980
Retained earnings 33,232,977 30,535,250
-------------- -------------
Total shareholders' equity 96,958,318 94,260,591
-------------- -------------
COMMITMENTS AND CONTINGENCIES
$138,800,302 $138,055,017
============== =============
* From audited financial statements.
The accompanying note is an integral part of the consolidated financial
statements.
4
SODAK GAMING, INC.
Consolidated Statements of Earnings
(Unaudited)
Three Months Ended March 31,
------------------------------
1996 1995
------------ ------------
REVENUES:
Product sales $14,482,607 $ 9,660,684
Gaming operations 3,842,663 2,107,623
Wide-area progressive systems 1,754,858 431,331
Financing income on notes receivables
and other financing arrangements 1,462,127 966,682
Other 6,782 25,942
------------ ------------
Total revenues 21,549,037 13,192,262
------------ ------------
COSTS AND EXPENSES:
Cost of product sales 10,899,598 7,526,431
Gaming operations 1,518,883 0
Selling, general and administrative 4,408,266 3,526,445
Interest and financing 448,374 46,739
------------ ------------
Total costs and expenses 17,275,121 11,099,615
------------ ------------
INCOME FROM OPERATIONS 4,273,916 2,092,647
Other income, interest 6,787 80,495
------------ ------------
Earnings before income taxes 4,280,703 2,173,142
Provision for income taxes 1,582,976 790,300
------------ ------------
NET EARNINGS $ 2,697,727 $ 1,382,842
============ ============
EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE $0.24 $0.12
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 11,430,887 11,361,138
============ ============
The accompanying note is an integral part of the consolidated financial
statements.
5
SODAK GAMING, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
---------------------------------------------
1996 1995
---------------- --------------
Cash flows from operating activities:
Net earnings $ 2,697,727 $ 1,382,842
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 334,101 108,615
Provision for doubtful accounts 200,000 75,000
Net deferred income taxes 19,000 75,000
Gross profit on sales financed through notes receivable (2,125,374) (1,062,670)
Changes in operating assets and liabilities:
Receivables 5,280,428 9,441,796
Purchase of inventories sold under financed sales (5,831,338) (3,045,634)
Payments received on notes receivable relating
to financed sales 7,429,933 3,882,809
Inventories (313,834) 218,437
Prepaid expenses and other current assets (675,316) 127,872
Accounts payable (7,222,406) (22,913,741)
Accrued liabilities 215,695 489,932
Income taxes payable 477,964 (1,168,482)
---------------- --------------
Net cash provided by (used in) operating activities 486,580 (12,388,224)
---------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash advanced on notes receivable 0 (952,623)
Payments received on notes receivable 947,699 267,990
Purchases of property and equipment (1,433,200) (1,447,867)
Increase in due from riverboat lessee (1,507,973) (1,412,250)
Increase in other assets (1,443,471) (636,570)
---------------- --------------
Net cash used in investing activities (3,436,945) (4,181,320)
---------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term borrowings 10,500,000 5,500,000
Principal repayments of long-term debt (6,013,695) (12,835)
---------------- --------------
Net cash provided by financing activities 4,486,305 5,487,165
---------------- --------------
Net increase (decrease) in cash and cash equivalents 1,535,940 (11,082,379)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 974,221 12,466,828
---------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 2,510,161 $ 1,384,449
---------------- --------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 243,214 $ 12,100
Cash paid during the period for income taxes $ 1,086,012 $ 1,883,782
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITY:
Gaming machines inventory transferred to
gaming operations equipment $ 1,243,515 $ 0
The accompanying note is an integral part of the consolidated financial statements.
6
SODAK GAMING, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(UNAUDITED)
Note 1 - Unaudited Consolidated Financial Statements
- - ----------------------------------------------------
The accompanying unaudited consolidated financial statements of Sodak
Gaming, Inc. and its consolidated subsidiaries, Sodak Gaming International,
Inc., Sodak Gaming Peru, S.A., Ecuasodak S.A., and Sodak Gaming do Brasil Ltda
have been prepared by the Company in accordance with generally accepted
accounting principles for interim financial information, pursuant to the rules
and regulations of the Securities and Exchange Commission. Pursuant to such
rules and regulations, certain financial information and footnote disclosures
normally included in the consolidated financial statements have been condensed
or omitted. The results for the periods indicated are unaudited, but reflect all
adjustments (consisting only of normal recurring adjustments) which management
considers necessary for a fair presentation of operating results.
Results of operations for interim periods are not necessarily
indicative of a full year of operations.
These condensed consolidated financial statements should be read in
conjunction with the 1995 financial statements and notes thereto.
7
Item 2. Management's Discussion and Analysis of Financial Condition and
- - ------------------------------------------------------------------------
Results of Operations
- - ---------------------
RESULTS OF OPERATIONS -- THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO
THE THREE MONTHS ENDED MARCH 31, 1995
Net earnings for the three months ended March 31, 1996 increased 95.1%
to $2.7 million, or $0.24 per share, compared to net earnings of $1.4 million,
or $0.12 per share, for the three months ended March 31, 1995. All of the
Company's revenue sources -- product sales, gaming operations, wide area
progressive systems, and financing -- recorded increases in revenues and net
earnings for the first quarter of 1996 compared to the first quarter of 1995.
Product sales and wide area progressive systems were the primary contributors to
the increase in net earnings.
Comparing the three months ended March 31, 1996 to the corresponding
period in 1995, the gross margin on product sales improved to 24.7%, compared to
22.1%; the operating margin improved to 19.8% compared to 15.9% and the net
earnings margin improved to 12.5% compared to 10.5%.
REVENUES
Total revenues increased 63.3% to $21.5 million for the first three
months in 1996, compared to $13.2 million for the first three months in 1995.
PRODUCT SALES. Product sales increased 49.9% to $14.5 million in 1996,
from $9.7 million in 1995. Total sales of gaming machines, including specialty
gaming machines and used machines, were approximately 1,930 machines in 1996 as
compared to approximately 1,020 machines in 1995. The increase in gaming machine
sales was primarily the result of sales in the states of Arizona, Kansas and
Mississippi due to new and expanding casinos.
GAMING OPERATIONS. Gaming operations revenue increased 82.3% to $3.8
million in 1996, from $2.1 million in 1995. This increase is primarily
attributable to $1.7 million in revenue earned from gaming hall and route
operations in Peru, which began operations in May 1995. In the three months
ended March 31, 1996, gaming operations revenue consisted of 1) $1.6 million in
lease revenue from a riverboat casino, the Miss Marquette (which is currently
overdue -- see page 10, "Liquidity"); 2) $0.5 million in revenue earned from the
Company's share of Harrah's Entertainment, Inc. ("Harrah's") management fee in
connection with Harrah's Phoenix Ak-Chin casino and entertainment complex
("Harrah's") owns approximately 14% of the Company's outstanding shares at March
31, 1996); and 3) $1.7 million in revenue from gaming hall and route operations
in Peru. In the three months ended March 31, 1995, gaming operations revenue
consisted of $1.6 million in lease revenue from the Miss Marquette and $0.5
million from the Company's share of Harrah's management fee in connection with
Harrah's Phoenix Ak-Chin casino and entertainment complex. The Company believes
that gaming operations revenue will increase as
8
current operations mature and additional operations and strategic markets are
developed. However, there can be no assurance that such revenues will be
realized due primarily to gaming's dependence on its legal status and public
acceptance in certain jurisdictions.
WIDE AREA PROGRESSIVE SYSTEMS. Wide area progressive revenues
increased 306.8% to $1.8 million in 1996, from $0.4 million in 1995. The
increase is a result of the expansion of the Quartermania and Megabucks systems
which were first introduced to Native American casinos in August 1994; the
addition of the Nickelmania system in November 1995; and the Arizona intrastate
Quartermania and Megabucks systems which were introduced in December 1995. Wide
area progressive systems revenues are derived from the operation of multi-link
systems available to Native American casinos nationwide in jurisdictions
permitting such systems. The Company also operates a system available to non-
Native American casinos located in Deadwood, South Dakota. Based on current
market trends, the Company believes that the wide area progressive revenues
could increase through the placement of additional machines on existing systems
and well as the introduction of new systems.
FINANCING INCOME. Financing income on notes receivable and other
financing arrangements increased 51.3% to $1.5 million in 1996, compared to $1.0
million in 1995. This increase was primarily due to an increase in financing
arrangements entered into.
COSTS AND EXPENSES
Total costs and expenses increased at a slower rate than total
revenues for the three months ended March 31, 1996, thereby improving operating
margins as compared to the three months ended March 31, 1995. Total costs and
expenses increased 55.6% to $17.3 million for the first three months in 1996,
compared to $11.1 million for the first three months in 1995.
PRODUCT SALES. The cost of product sales increased 44.8% to $10.9
million in 1996, from $7.5 million in 1995. This increase was attributable to
the increased sales volume of slot machines. As a percentage of product sales
revenue, the cost of products decreased to 75.3% in 1996, from 77.9% in 1995.
The higher margin is due primarily to an increase in the percentage of sales
financed, which do not qualify for discounts, and a decrease in the cost of
certain repair parts.
GAMING OPERATIONS. Direct costs of $1.5 million were incurred for the
three months ended March 31, 1996 from the operation and expansion of gaming
hall and route operations in Peru, which began in May 1995. The operating
margin on the Peru operations could improve as the infrastructure more fully
develops and more machines are placed in operation.
9
SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and
administrative expenses increased 25.0% to $4.4 million in 1996, from $3.5
million in 1995. This increase resulted primarily from increases in compensation
and related costs, advertising and promotion, depreciation, provision for
doubtful accounts, travel and other expenses associated with the development of
new markets, including gaming operations in the United States, Peru, Ecuador and
other countries, primarily in Latin America. These expenses are consistent with
the Company's growth philosophy and ongoing strategy to establish gaming
operations and other recurring revenue sources and to successfully pursue
opportunities in potential new gaming jurisdictions. As a percentage of total
revenues, selling, general and administrative expenses decreased to 20.5% in
1996 compared to 26.7% in 1995.
INTEREST AND FINANCING. Interest and financing costs increased to
$0.4 million in 1996 as a result of the increase in financing costs attributed
to borrowings for development of markets in the United States and Latin America,
the financing of sales and construction of a new warehouse, assembly, systems
operations and corporate headquarters facility. The Company believes that
interest and financing expenses will increase during 1996 and future years as
the Company continues its growth strategy.
INCOME FROM OPERATIONS
The cumulative effect of the above described changes resulted in a
104.2% increase in income from operations to $4.3 million for the three months
ended March 31, 1996, from $2.1 million for the three months ended March 31,
1995. As a percentage of revenues, income from operations increased to 19.8% in
1996, from 15.9% in 1995. This improvement in the operating margin of the
Company was primarily attributable to the increase in product sales and wide
area progressive revenues.
EARNINGS BEFORE INCOME TAXES
Earnings before income taxes increased 97.0% to $4.3 million for the
three months ended March 31, 1996, compared to $2.2 million for the three months
ended March 31, 1995. Provision for income taxes were $1.6 million in 1996,
compared to $0.8 million in 1995, representing 37.0% and 36.4% of earnings
before income taxes for the three months ended March 31, 1996 and 1995,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
Working capital increased $1.5 million to $39.0 million during the
three months ended March 31, 1996. This increase was primarily a result of $1.5
million increase in cash and cash equivalents, a $0.7 million increase in
prepaid expenses and other current assets, and a $7.2 million decrease in
accounts payable. The increases were partially offset by a $6.4 million
decrease in receivables, a $0.9 million decrease in inventories and $0.5 million
increase in income taxes payable.
10
CASH FLOWS
During the three months ended March 31, 1996 the Company's cash and
cash equivalents increased $1.5 million to $2.5 million. Cash provided by
operating activities was $0.5 million for the three months ended March 31, 1996.
Cash provided by operating activities was primarily the result of $2.7 million
in net earnings, a $5.3 million decrease in receivables, and $7.4 million in
payments received on notes receivable relating to financed sales. These
proceeds were partially offset by $8.0 million in gross profit and inventories
sold under financing arrangements and a $7.2 million decrease in accounts
payable.
Cash used in investing activities for the three months ended March 31,
1996 was $3.4 million, which consisted of $1.4 million used to purchase property
and equipment primarily for gaming operations in Peru and Ecuador, a $1.5
million increase in amounts due from riverboat lessee and a $1.4 million
increase in other assets primarily for capitalized development costs in Latin
America. Cash used in investing activities was offset by $0.9 million of
payments received on notes receivable.
Financing activities provided $4.5 million during the three months
ended March 31, 1996 as a result of net proceeds from long-term borrowings under
a revolving credit facility. The increase in debt is primarily due to a
reduction in accounts payable and the investments associated with the
development of international markets.
In 1994, the Company invested $21.8 million (excluding approximately
$5.7 million of equipment financing provided by the Company) in the Miss
Marquette riverboat casino, which the Company leased to a casino management
company (the lessee) beginning October 1, 1994 for a period of eight years with
automatic extensions of an additional 17 years. This investment consisted of
(a) $14.3 million expended by Sodak to acquire and refurbish a riverboat, and
(b) an additional $7.5 million that the Company loaned to the lessee to fund
costs incurred by the lessee to develop and construct dockside facilities and
related amenities. The lease requires scheduled lease payments of the greater
of an aggregate of $25,000,000, or 50% of defined net income from the related
casino operations, determined annually, during the first 43 months of the lease;
and 50% of defined net income from related casino operations thereafter,
beginning in April 1998.
The lessee has been unable to meet regularly scheduled payments under
the lease and financing notes due to dockside facility construction and
preopening cost overruns. The Company allowed the lessee to fund the cost
overruns with operating cash flow, and has not demanded the deferred payments.
As of March 31, 1996, the overdue amount owed to the Company totaled
approximately $11.4 million, which represents approximately 10 monthly lease
payments aggregating approximately $6.0 million and the April 1995 through March
1996 payments on the loans aggregating approximately $5.4 million.
11
As part of its assessment as to impairment under SFAS No. 114, the Company
obtained an independent market demand analysis and financial projections for the
riverboat casino's future operations. Based on this analysis, the riverboat
lessee's 1995 operating results and other information, management expects the
riverboat lessee's casino operations will have sufficient cash flows to fully
pay the agreed upon lease payments, including amounts due at March 31, 1996, and
the notes receivable, including interest accrued during any period of delay. The
Company anticipates that receivables from the riverboat lessee may continue to
increase through April 1998, at which time the lease payment changes from a
fixed payment to 50% of defined net income. After that time, the Company expects
receivables to decrease as more of the cash flows are assigned to past due
amounts.
In addition, Company management continues to review alternatives to the
present leasing arrangement, which include selling the riverboat assets to the
lessee, or purchasing the operations and dockside facility. Management's
projections indicate that both of the alternatives would provide sufficient cash
flows to fully recover all amounts outstanding, including interest accrued on
the notes during any period of delay.
INDEBTEDNESS/LINES OF CREDIT
The Company had $22.6 million of long term debt outstanding at March 31,
1996. Of that amount, $22 million is borrowed under proceeds from a $50 million
long-term revolving credit facility from a syndicate of banks. The revolving
line has two components, a $20 million tranche (Tranche A) to be used for
general corporate purposes and a $30 million tranche (Tranche B) for
acquisitions and major capital equipment expenditures. Tranche A matures in
February 1999, plus two one-year renewal options subject to bank approval, and
Tranche B matures in February 2001. The amount available under Tranche B is
reduced by $1.875 million quarterly beginning in 1997. The unused portion of the
revolving credit facility is subject to a commitment fee, based on a calculation
as defined in the agreement. Interest is payable based on variable rates which,
at the Company's option, are based on the prime rate, federal funds rate plus
1%, or a Eurodollar rate plus an applicable margin. Amounts borrowed are secured
by substantially all Company assets, excluding real estate, but including a
first preferred ship mortgage on the Miss Marquette riverboat.
The remaining $0.6 million is secured by certain transportation equipment
and carries an interest rate of 7.45%; the majority of this loan is due in
December 1998.
CAPITAL COMMITMENTS
As part of an agreement with Harrah's, the Company guaranteed financing
relating to 50% of the construction cost of a Native American casino facility,
managed by Harrah's, that opened in December 1994. As of May 10, 1996, the
Company's outstanding guaranty was approximately $3.2 million. As a
12
consideration for the loan guaranty, the Company receives, from Harrah's, 4% of
the distributable net income of the gaming operation over the term of the
management contract.
During 1994, the Company assisted a casino management company in acquiring
$8.0 million in financing from a financial institution. The Company guaranteed
the management company's debt and receives a loan guarantee fee based on a
percentage of the outstanding loan balance. As of May 10, 1996, the Company's
guaranty was approximately $5.6 million.
PART II. OTHER INFORMATION
Item 1. Legal proceedings
- - -------------------------
RICO Litigation. On April 26, 1994, the Company was named as a defendant
in a class action lawsuit filed in the United States District Court, Middle
District of Florida, by William A. Poulos and William Ahearn, respectively, each
of whom sought to assert claims on behalf of themselves and "all other similarly
situated ("the plaintiffs"). Each of the plaintiffs filed suit against Sodak
and approximately 41 other defendants (each a "defendant" and collectively "the
defendants"). These two lawsuits were ordered consolidated by the Court, and
the action has been transferred to the United States District Court, District of
Nevada, for further proceedings. Each defendant is involved in the gaming
business as either a gaming machine manufacturer, distributor, or casino
operator. The class action lawsuit arises out of alleged fraudulent marketing
and operation of casino video poker machines and electronic slot machines. The
plaintiffs allege that the defendants have engaged in a course of fraudulent and
misleading conduct intended to induce people in playing their gaming machines
based on a false belief concerning how those machines actually operate as well
as the extent to which there is actually an opportunity to win on any given
play. The plaintiffs allege that the defendants' actions constitute violations
of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and give rise
to claims of common law fraud and unjust enrichment. The plaintiffs are seeking
monetary damages in excess of $1 billion and are asking that any damage awards
be trebled under applicable federal law.
On April 15, 1996, the Nevada Federal District Court issued Orders granting
Sodak's and others' motions to dismiss and allowed plaintiffs to file amended
Complaints to properly state a claim on or before May 31, 1996. The Company
believe the plaintiffs' lawsuit to be without merit. If an amended complaint is
filed by plaintiffs, the Company intends to vigorously pursue all legal defenses
available to it and has various motions prepared.
On September 26, 1995, another RICO-based class action was filed in the
United State District Court, District of Nevada, by Larry Schreier, which named
the Company as a defendant, along with the
13
same 41 other defendants (each a "defendant" and collectively "the defendants").
The plaintiff in this action is a resident of Tulsa, Oklahoma, and purports to
bring this action on behalf of himself and "all other similarly situated" (the
"plaintiffs"), namely, all members of "casino card clubs" and players in "video
poker tournaments," which would appear to be a sub-class of plaintiffs within
the two prior class actions identified above and which are presently pending
against the Company in the District of Nevada. Except for the identification of
the class which the plaintiff seeks to represent, all substantive allegations of
this action are virtually identical to the consolidated Poulos/Ahearn actions,
and, the Company believes, is also without merit.
This latest action is presently in its initial pleading phase, with answers
or dispositive motions yet to be filed on behalf of the Company. The Company
intends to vigorously pursue this action with all legal defenses available to
it, and to shortly file various dispositive motions on its behalf.
Item 2. Changes in Securities
- - ------------------------------
None.
Item 3. Defaults Upon Senior Securities
- - ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- - ------------------------------------------------------------
None.
Item 5. Other Information
- - --------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
11.1 Calculation of Earnings Per Common and Common Equivalent
Share.
b. Reports on Form 8-K
None.
14
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.
Date: May 10, 1996
SODAK GAMING, INC.
By: \s\ Michael G. Wordeman
---------------------------------
Michael G. Wordeman
Chief Executive Officer
By: \s\ Clayton R. Trulson
-------------------------------------
Clayton R. Trulson
Vice President of Finance
and Treasurer
15
EXHIBIT INDEX
Sequentially
Exhibit No. Numbered Page
- - ----------- -------------
11.1 Calculation of Earnings Per Common
and Common Equivalent Share 17
27 Financial Data Schedule 18
16