SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 1, 1996
SODAK GAMING, INC.
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 0-21754 46-0407053
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) 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)
INFORMATION TO BE INCLUDED IN THIS REPORT
Item 2. Acquisition or Disposition of Assets.
On July 1, 1996, pursuant to a Stock Purchase Agreement by and between the
Registrant and John Parker, John Nix and Gamblers Supply Management Company
(GSMC), the Registrant acquired all of the outstanding shares of GSMC, which
owns, leases and operates a casino gaming facility (the Miss Marquette) located
at Marquette, IA. The Miss Marquette gaming facility consists of a 226-foot
river boat, which is leased from the Registrant, gaming machines and equipment
and dockside facilities, which include a 24-room hotel, parking lots, marina,
restaurant, lounge, other support facilities and related furniture, fixtures and
equipment. The river boat has 698 slot machines and 30 table games. It is
anticipated that the Registrant will continue to operate the Miss Marquette
gaming facility in a manner similar to that in which it was operated under its
prior ownership.
Pursuant to the Stock Purchase Agreement, all the outstanding shares of
Common Stock of GSMC were acquired for One Million Dollars ($1,000,000) which
amount was funded from the Registrant's Credit Facility. In addition to the
purchase price, the Registrant has guaranteed a GSMC note payable to John Parker
and John Nix (the Sellers) in the aggregate of Four Million Four Hundred
Thousand Dollars ($4,400,000), which is payable in 36 equal monthly payments
including interest at 8% beginning August 1, 1996. The Registrant continues to
hold notes receivable relating to prior loans from the Registrant to GSMC to
finance the dockside facility and gaming equipment, and also has lease payments
receivable and accrued interest receivable from GSMC totaling $22,581,768 as of
June 30, 1996.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired. The audited financial
statements of Gamblers Supply Management Company for the years
ended December 31, 1995 and January 1, 1995, included as Exhibit
99(e) to the Report, are incorporated herein by reference.
(b) Pro Forma Combined Financial Information.
1. Unaudited pro forma combined balance sheets of the
Registrant and Gamblers Supply Management Company as of
June 30, 1996;
2. Unaudited pro forma combined statements of earnings of the
Registrant and Gamblers Supply Management Company for the
12 months ended December 31, 1995;
3. Unaudited pro forma combined statements of earnings of the
Registrant and Gamblers Supply Management Company for the
six months ended June 30, 1996.
SODAK GAMING, INC
PRO FORMA COMBINED BALANCE SHEETS
JUNE 30, 1996
UNAUDITED
Gamblers
Supply
Sodak Management Historical Pro Forma Adjusted
Gaming, Inc. Company Total Adjustments Total
------------ ------- ----- ----------- -----
ASSETS
Current assets:
Cash and cash equivalents $ 3,837,366 $ 1,237,572 $ 5,074,938 $(1,000,000) (3) $ 4,074,938
Receivables:
Trade accounts, net of allowance for doubtful accounts 23,437,468 61,988 23,499,456 23,499,456
Short-term notes receivable 628,000 - 628,000 628,000
Notes receivable, current maturities 25,877,680 - 25,877,680 25,877,680
Accrued interest 447,528 - 447,528 447,528
Inventories:
Gaming machines 11,598,177 - 11,598,177 11,598,177
Repair parts and other gaming accessories 5,108,536 - 5,108,536 5,108,536
Prepaid expenses and other current assets 1,020,681 501,469 1,522,150 1,522,150
Deferred income taxes 669,000 - 669,000 669,000
-------------------------------------------------- -----------
Total current assets 72,624,436 1,801,029 74,425,465 (1,000,000) 73,425,465
-------------------------------------------------- -----------
Property and equipment:
Land and improvements 638,361 810,341 1,448,702 (150,741) (2) 1,297,961
Buildings and improvements 5,684,121 11,651,508 17,335,629 (14,508) (2) 17,321,121
Excursion gaming vessel - 14,463,061 14,463,061 (537,397) (1) 13,925,664
Gaming operations equipment 12,587,916 9,807,785 22,395,701 (849,789) (2) 21,545,912
Office furniture and equipment 2,198,340 - 2,198,340 2,198,340
Transportation equipment 1,897,045 - 1,897,045 1,897,045
Shop equipment 481,196 - 481,196 481,196
-------------------------------------------------- -----------
23,486,979 36,732,695 60,219,674 (1,552,435) 58,667,239
Less accumulated depreciation 2,007,205 4,090,999 6,098,204 (4,090,999) (1)(2) 2,007,205
-------------------------------------------------- -----------
Total property and equipment, net 21,479,774 32,641,696 54,121,470 2,538,564 56,660,034
-------------------------------------------------- -----------
Other assets:
Notes receivable, net of current maturities 25,768,784 - 25,768,784 25,768,784
Net investment in direct financing-type lease 13,644,083 - 13,644,083 (13,644,083) (1) -
Amounts due from riverboat lessee 22,581,768 - 22,581,768 (22,581,768) (5) -
Excess of purchase price over fair value of
asset acquired - - 8,537,939 (1)(2)(3)(4) 8,537,939
Real estate held for resale 1,140,435 - 1,140,435 1,140,435
Other assets 3,371,763 168,500 3,540,263 (287,020) (1)(3)(6) 3,253,243
------------------------------------------------------ ------------
Total other assets 66,506,833 168,500 66,675,333 (27,974,932) 38,700,401
------------------------------------------------------ ------------
Total assets $160,611,043 $34,611,225 $195,222,268 $(26,436,368) $168,785,900
====================================================== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 29,925,640 $ 368,437 $ 30,294,077 $ 30,294,077
Current maturities of long-term debt 59,013 1,553,009 1,612,022 1,612,022
Income taxes payable 1,396,851 - 1,396,851 1,396,851
Accrued liabilities 1,451,250 1,917,825 3,369,075 3,369,075
------------------------------------------------------ ------------
Total current liabilities 32,832,754 3,839,271 36,672,025 36,672,025
------------------------------------------------------ ------------
Long-term debt, net of current maturities 25,514,329 36,349,968 61,864,297 (32,014,382) (1)(5) 29,849,915
------------------------------------------------------ ------------
Deferred income taxes 1,151,000 - 1,151,000 1,151,000
------------------------------------------------------ ------------
Shareholders' equity:
Common stock 11,367 10,000 21,367 (10,000) (3)(6) 11,367
Additional paid-in capital 63,787,291 - 63,787,291 63,787,291
Retained earnings 37,314,302 (5,588,014) 31,726,288 5,588,014 (4) 37,314,302
------------------------------------------------------ ------------
Total shareholders' equity 101,112,960 (5,578,014) 95,534,946 5,578,014 101,112,960
------------------------------------------------------ ------------
Total liabilities and shareholders' equity $160,611,043 $34,611,225 $195,222,268 $(26,436,368) $168,785,900
====================================================== ============
Notes to unaudited pro forma combined balance sheets
1) To reflect the elimination of the excursion vessel lease recorded as a direct
financing-type lease of Sodak and a capital lease of GSMC.
2) To reflect allocation of purchase price based upon fair market value and to
reverse prior accumulated depreciation.
3) To reflect Sodak's equity investment resulting from the purchase of the stock
of GSMC.
4) To reflect goodwill created as a result of the excess of purchase price over
fair market value.
5) To reflect the elimination of amounts due from GSMC to Sodak.
6) To reflect the elimination of Sodak's equity investment in GSMC.
SODAK GAMING, INC.
PRO FORMA COMBINED STATEMENTS OF EARNINGS
YEAR ENDED DECEMBER 31, 1995
UNAUDITED
Gamblers
Supply
Sodak Management Historical ProForma Adjusted
Gaming, Inc. Company Total Adjustments Total
------------ ---------- ------------ ----------- ------------
Revenues:
Product sales $73,172,664 - $ 73,172,664 $ 73,172,664
Gaming operations 10,524,435 36,523,126 47,047,561 (6,711,807)(1) 40,335,754
Wide area progressive systems 4,097,323 - 4,097,323 4,097,323
Financing income on notes receivable
and other financing arrangements 5,378,422 - 5,378,422 (1,302,012)(1) 4,076,410
Other 120,910 - 120,910 120,910
---------------------------------------------------------------- ------------
Total revenues 93,293,754 36,523,126 129,816,880 (8,013,819) 121,803,061
---------------------------------------------------------------- ------------
Costs and expenses:
Cost of product sales 55,665,392 - 55,665,392 55,665,392
Gaming operations 2,192,250 31,594,654 33,786,904 (224,444)(1)(2) 33,562,460
Selling, general
and administrative 14,531,355 - 14,531,355 14,531,355
Interest and financing
costs 724,814 6,314,968 7,039,782 (6,274,231)(1) 765,551
---------------------------------------------------------------- ------------
Total costs and expenses 73,113,811 37,909,622 111,023,433 (6,498,675) 104,524,758
---------------------------------------------------------------- ------------
Income (loss) from operations 20,179,943 (1,386,496) 18,793,447 (1,515,144) 17,278,303
Other income 95,608 - 95,608 95,608
---------------------------------------------------------------- ------------
Earnings (loss) before income
taxes 20,275,551 (1,386,496) 18,889,055 (1,515,144) 17,373,911
Provision for income taxes 7,382,210 - 7,382,210 (1,055,000)(1)(2) 6,327,210
---------------------------------------------------------------- ------------
Net earnings (loss) $12,893,341 $(1,386,496) $ 11,506,845 $(460,144) $ 11,046,701
================================================================ ============
Earnings per common and
common equivalent share $ 1.13 $ 0.97
=========== ============
Weighted average number of common
and common equivalent shares
outstanding 11,386,159 11,386,159
=========== ============
Notes to unaudited pro forma combined statements of earnings for the year
ended December 31, 1995
1) To reflect the elimination of the income recorded by Sodak under its direct
financing-type lease, the expense recorded by GSMC under its capital lease,
interest income recognized by Sodak on loans to GSMC and the resulting
income tax benefit.
2) To reflect amortization of goodwill over 15 years and the associated income
tax benefit.
SODAK GAMING, INC.
PRO FORMA COMBINED STATEMENTS OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1996
UNAUDITED
Gamblers
Supply
Sodak Management Historical Pro Forma Adjusted
Gaming, Inc. Company Total Adjustments Total
------------ ---------- ---------- ----------- ------------
Revenues:
Product sales $ 40,578,248 - $ 40,578,248 $ 40,578,248
Gaming operations 9,239,039 15,548,259 24,787,298 (3,278,311) (1) 21,508,987
Wide area progressive systems 3,613,110 - 3,613,110 3,613,110
Financing income on notes receivable
and other financing arrangements 2,902,865 - 2,902,865 (627,056) (1) 2,275,809
Other 15,047 - 15,047 15,047
----------------------------------------------------------------- -------------
Total revenues 56,348,309 15,548,259 71,896,568 (3,905,367) 67,991,201
----------------------------------------------------------------- -------------
Costs and expenses:
Cost of product sales 31,293,408 - 31,293,408 31,293,408
Gaming operations 4,481,555 13,692,109 18,173,664 (112,222) (1)(2) 18,061,442
Selling, general and administrative 8,931,024 - 8,931,024 8,931,024
Interest and financing costs 967,227 2,470,647 3,437,874 (2,470,647) (1) 967,227
----------------------------------------------------------------- -------------
Total costs and expenses 45,673,214 16,162,756 61,835,970 (2,582,869) 59,253,101
----------------------------------------------------------------- -------------
Income (loss) from operations 10,675,095 (614,497) 10,060,598 (1,322,498) 8,738,100
Other income 15,761 - 15,761 15,761
----------------------------------------------------------------- -------------
Earnings (loss) before income
taxes 10,690,856 (614,497) 10,076,359 (1,322,498) 8,753,861
Provision for income taxes 3,911,804 - 3,911,804 (710,000) (1)(2) 3,201,804
----------------------------------------------------------------- -------------
Net earnings (loss) $ 6,779,052 $ (614,497) $ 6,164,555 $ (612,498) $ 5,552,057
================================================================= =============
Earnings per common and common
equivalent share $ 0.59 $ 0.49
============= =============
Weighted average number of common and
common equivalent shares outstanding 11,438,981 11,438,981
============= =============
Notes to unaudited pro forma combined statements of earnings for the six months
ended June 30, 1996
1) To reflect the elimination of the income recorded by Sodak under its direct
financing-type lease, the expense recorded by GSMC under its capital lease,
interest income recognized by Sodak on loans to GSMC and the resulting income
tax benefit.
2) To reflect amortization of goodwill over 15 years and the associated income
tax benefit.
(c) The following documents were filed as Exhibits to Form 8-K dated
July 15, 1996:
2 Stock Purchase Agreement, dated as of July 1, 1996, by and among
John Parker, John Nix and Gamblers Supply Management Company.
99(a) Management Agreement, dated as of June 10, 1994, by and between
Gamblers Supply Management Company and Marquette Gaming Corporation.
99(b) Dock Site Agreement, dated as of June 10, 1994, by and between the
City of Marquette, Iowa and Gamblers Supply Management Company.
99(c) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John E. Nix guaranteed by Sodak Gaming,
Inc.
99(d) Non-Negotiable Promissory Note dated July 1, 1996, between Gamblers
Supply Management Company and John T. Parker guaranteed by Sodak
Gaming, Inc.
The following documents are filed as an Exhibit to this Report:
23 Consent of Independent Public Accountants
99(e) Audited Financial Statements of Gamblers Supply Management Company
for the years ended December 31, 1995 and January 1, 1995.
SIGNATURES
Pursuant to the requirement 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.
Dated: September 13, 1996 SODAK GAMING, INC.
By
\s\ David R. Johnson
------------------------
Chief Financial Officer
Index of Exhibits
Exhibit No.
--------------
2 Stock Purchase Agreement, dated as of July 1, 1996, by and
among John Parker, John Nix and Gamblers Supply Management
Company.
23 Consent of Independent Public Accountants
99 (a) Management Agreement, dated as of June 10, 1994, by and
between Gamblers Supply Management Company and Marquette
Gaming Corporation.
99 (b) Dock Site Agreement, dated as of June 10, 1994, by and
between the City of Marquette, Iowa and Gamblers Supply
Management Company.
99 (c) Non-Negotiable Promissory Note dated July 1, 1996, between
Gamblers Supply Management Company and John E. Nix guaranteed
by Sodak Gaming, Inc.
99 (d) Non-Negotiable Promissory Note dated July 1, 1996, between
Gamblers Supply Management Company and John T. Parker
guaranteed by Sodak Gaming, Inc.
99 (e) Audited financial statements of Gamblers Supply Management
Company for the years ended December 31, 1995 and January 1,
1995.