UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
{Mark One}
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
OR
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from NOVEMBER 1, 2000 to DECEMBER 31, 2000
---------------- -----------------
Commission File number: 0-13063
AUTOTOTE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 81-0422894
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
750 LEXINGTON AVENUE, NEW YORK, NEW YORK 10022
----------------------------------------------
(Address of principal executive offices)
(Zip Code)
(212)-754-2233
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of February 16, 2001:
Class A Common Stock: 40,155,991
Class B Common Stock: None
Page 1 of 23
AUTOTOTE CORPORATION AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND OTHER INFORMATION
TWO MONTHS ENDED DECEMBER 31, 2000
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Balance Sheets as of October 31, 2000
and December 31, 2000 3
Statements of Operations for the Two Months
Ended December 31, 1999 and 2000 4
Statements of Cash Flows for the Two Months
Ended December 31, 1999 and 2000 5
Notes to Consolidated Financial Statements 6-16
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 17-21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 6. Exhibits and Reports on Form 8K 22
2
AUTOTOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OCTOBER 31, DECEMBER 31,
2000 2000
---------------- ---------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents................................................... $ 15,308 6,488
Restricted cash............................................................. 758 670
Accounts receivable, net of allowance for doubtful accounts................. 54,263 56,819
Inventories................................................................. 24,678 27,608
Prepaid expenses, deposits and other current assets......................... 17,420 15,911
--------- ---------
Total current assets................................................... 112,427 107,496
--------- ---------
Property and equipment, at cost.................................................. 317,549 323,732
Less accumulated depreciation............................................... 130,895 139,121
--------- ---------
Net property and equipment............................................. 186,654 184,611
--------- ---------
Goodwill, net.................................................................... 156,557 157,591
Operating right, net............................................................. 12,848 12,681
Other intangible assets, net..................................................... 119,871 118,598
Other assets and investments..................................................... 58,858 53,964
--------- ---------
Total assets........................................................ $647,215 634,941
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt...................................... $ 5,823 6,636
Accounts payable............................................................ 29,746 30,588
Accrued liabilities......................................................... 66,875 55,561
Interest payable............................................................ 4,126 11,112
--------- ---------
Total current liabilities.............................................. 106,570 103,897
--------- ---------
Deferred income taxes............................................................ 60,834 59,261
Other long-term liabilities...................................................... 7,481 9,586
Long-term debt, excluding current installments................................... 438,011 434,044
--------- ---------
Total liabilities...................................................... 612,896 606,788
--------- ---------
Stockholders' equity:
Convertible preferred stock, par value $1.00 per share, 2,000 shares
authorized, 1,132 and 1,149 shares outstanding at October 31,
2000 and December 31, 2000, respectively................................ 1,132 1,149
Class A common stock, par value $0.01 per share, 99,300 shares
authorized, 39,922 and 40,156 shares outstanding at October 31,
2000 and December 31, 2000, respectively................................ 371 373
Class B non-voting common stock, par value $0.01 per share, 700 shares
authorized, none outstanding............................................ -- --
Additional paid-in capital.................................................. 264,987 266,917
Accumulated losses.......................................................... (228,853) (234,910)
Treasury stock, at cost..................................................... (102) (102)
Accumulated other comprehensive loss........................................ (3,216) (5,274)
--------- ---------
Total stockholders' equity............................................. 34,319 28,153
--------- ---------
Total liabilities and stockholders' equity............................. $647,215 634,941
========= =========
See accompanying notes to consolidated financial statements.
3
AUTOTOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
TWO MONTHS ENDED DECEMBER 31, 1999 AND 2000
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
1999 2000
------------- ------------
Operating revenues:
Services........................................................................ $22,159 57,584
Sales........................................................................... 8,083 9,007
------------- ------------
30,242 66,591
------------- ------------
Operating expenses (exclusive of depreciation and amortization shown below):
Services........................................................................ 15,660 39,592
Sales........................................................................... 5,220 5,547
------------- ------------
20,880 45,139
------------- ------------
Total gross profit......................................................... 9,362 21,452
Selling, general and administrative expenses......................................... 4,213 9,902
Depreciation and amortization........................................................ 3,560 8,598
------------- ------------
Operating income........................................................... 1,589 2,952
------------- ------------
Other deductions:
Interest expense................................................................ 2,697 8,790
Other income.................................................................... (19) (247)
------------- ------------
2,678 8,543
------------- ------------
Loss before income tax expense (benefit)........................................ (1,089) (5,591)
Income tax expense (benefit)......................................................... 30 (677)
------------- ------------
Net loss........................................................................ (1,119) (4,914)
Convertible preferred stock dividend................................................. -- 1,143
------------- ------------
Net loss available to common stockholders............................................ $(1,119) (6,057)
============= ============
Basic and diluted loss per share:
Net loss............................................................................. $ (0.03) (0.12)
============= ============
Net loss available to common stockholders............................................ $ (0.03) (0.15)
============= ============
Weighted average number of shares used in per share calculations:
Basic shares.................................................................... 36,362 40,025
============= ============
Diluted shares.................................................................. 36,362 40,025
============= ============
See accompanying notes to consolidated financial statements.
4
AUTOTOTE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
TWO MONTHS ENDED DECEMBER 31, 1999 AND 2000
(UNAUDITED, IN THOUSANDS)
1999 2000
----------- -----------
Cash flows from operating activities:
Net loss........................................................................... $(1,119) (4,914)
----------- -----------
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization................................................. 3,560 8,598
Changes in operating assets and liabilities................................... (3,119) (783)
Other......................................................................... 172 (873)
----------- -----------
Total adjustments........................................................ 613 6,942
----------- -----------
Net cash provided by (used in) operating activities..................................... (506) 2,028
----------- -----------
Cash flows from investing activities:
Capital expenditures............................................................... (626) (3,301)
Wagering systems expenditures...................................................... (5,327) (2,802)
Increase in other assets and investments........................................... (1,282) (2,419)
----------- -----------
Net cash used in investing activities................................................... (7,235) (8,522)
----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) under lines of credit.................................. 7,720 (2,250)
Proceeds from issuance of long-term debt........................................... 12 --
Payments on long-term debt......................................................... (1,362) (1,324)
Proceeds from the issuance of common stock......................................... 22 202
----------- -----------
Net cash provided by (used in) financing activities..................................... 6,392 (3,372)
----------- -----------
Effect of exchange rate changes on cash................................................. (56) 1,046
----------- -----------
Decrease in cash and cash equivalents................................................... (1,405) (8,820)
Cash and cash equivalents, beginning of period.......................................... 5,067 15,308
----------- -----------
Cash and cash equivalents, end of period................................................ $ 3,662 6,488
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest........................................................................... $ 56 1,662
=========== ===========
Income taxes ...................................................................... $ 75 1,585
=========== ===========
Non-cash financing activity during the period:
Convertible preferred stock paid in kind dividends................................. $ -- 1,143
=========== ===========
See accompanying notes to consolidated financial statements.
5
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
On December 20, 2000, Autotote Corporation determined to change its
fiscal year from an October 31 year-end to a calendar year-end, beginning
with the year ending December 31, 2001. This report on Form 10-Q covering the
transition period from November 1, 2000 to December 31, 2000 is a result of
the change in fiscal year. The Company's next fiscal year commenced on
January 1, 2001.
The consolidated balance sheet as of December 31, 2000 and the
consolidated statements of operations for the two months ended December 31,
1999 and 2000, and the consolidated statements of cash flows for the two
months then ended have been prepared by the Company without audit. In the
opinion of management, all adjustments necessary to present fairly the
financial position of the Company at December 31, 2000 and the results of its
operations for the two months ended December 31, 1999 and 2000 and its cash
flows for the two months ended December 31, 1999 and 2000 have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. These consolidated
financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's 2000 Annual Report on
Form 10-K. The results of operations for the period ended December 31, 2000
are not necessarily indicative of the operating results for the full year.
Certain items in prior period's financial statements have been
classified to conform with the current year presentation.
BASIC AND DILUTED NET LOSS PER SHARE
The following represents a reconciliation of the numerator and
denominator used in computing basic and diluted net loss per share for the
two month periods ended December 31, 1999 and 2000:
TWO MONTHS ENDED DECEMBER 31,
-----------------------------
1999 2000
-------------- ------------
LOSS (NUMERATOR)
Net loss...................................................... $(1,119) (4,914)
Convertible preferred stock dividend.......................... -- (1,143)
-------------- ------------
Net loss available to common stockholders..................... $(1,119) (6,057)
============== ============
SHARES (DENOMINATOR)
Basic weighted average common shares outstanding.............. 36,362 40,025
Effect of diluted securities-stock options, warrants,
and deferred shares (1).................................. -- --
-------------- ------------
Diluted weighted average common shares outstanding............ 36,362 40,025
============== ============
BASIC AND DILUTED PER SHARE AMOUNT
Net loss...................................................... $ (0.03) (0.12)
============== ============
Net loss available to common stockholders..................... $ (0.03) (0.15)
============== ============
(1) Potential common shares are not included in the calculation of
dilutive net loss per share in the periods presented, since there inclusion
would be anti-dilutive.
6
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
At December 31, 2000, the Company had outstanding stock options,
warrants, convertible preferred stock and deferred shares which could
potentially dilute basic earnings per share in the future. (See Notes 13 and
14 to the Consolidated Financial Statements for the year ended October 31,
2000 in the Company's 2000 Annual Report on Form 10-K.)
INTEREST RATE AGREEMENTS
On November 1, 2000, the Company adopted Statement of Financial
Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES ("SFAS 133"), as amended by SFAS 138. SFAS 133 establishes
accounting and reporting standards for derivative instruments and hedging
activities. It requires entities to record all derivative instruments on the
balance sheet at fair value. Changes in the fair value of derivatives are
recorded in each period in current operations or other comprehensive income
(loss), based on whether a derivative is designated as part of a hedge
transaction and the type of hedge transaction. The ineffective portion of all
hedges is recognized in operations..
Pursuant to the terms of the Company's credit facility, the Company is
required to maintain interest rate hedges for a notional amount of not less
than $140,000 for a period of not less than two years. In satisfaction of
this requirement, the Company entered into three interest rate swap
agreements in November 2000 which obligate the Company to pay a fixed LIBOR
rate and entitle the Company to receive a variable LIBOR rate on an aggregate
$140,000 notional amount of debt. The Company has structured these interest
rate swap agreements and intends to structure all future such agreements to
qualify for hedge accounting pursuant to the provisions of SFAS 133. The
Adoption of SFAS 133 did not have a material affect on the Company's
consolidated operations or financial position at November 1, 2000. For the
two months ended December 31, 2000, the Company recorded a $2,395 charge to
other comprehensive loss for the change in fair value of the interest rate
hedge instruments.
(2) ACQUISITION OF SCIENTIFIC GAMES HOLDINGS CORP.
On September 6, 2000, the Company completed the acquisition of
Scientific Games Holdings Corp. ("Scientific Games"), a world-leading
supplier of lottery products, integrated lottery systems and support
services, and pre-paid telephone cards. The acquisition was completed through
a merger in which Scientific Games became a wholly-owned subsidiary of the
Company, at a cost of approximately $308,000 in aggregate merger
consideration to Scientific Games stockholders, plus related fees and
expenses. The acquisition was recorded using the purchase method of
accounting. The acquired assets and liabilities were recorded at their
estimated fair value at the date of acquisition. The excess of the purchase
price over the fair values of the net assets acquired was approximately
$156,828 and has been recorded as goodwill which is being amortized over 20
years. The operating results of Scientific Games' businesses have been
included in the accompanying consolidated statements of operations from the
date of the acquisition.
The Scientific Games acquisition and the refinancing of substantially
all existing debt of both the Company and Scientific Games, along with the
payment of certain related fees and expenses, was completed with funds
provided by: (1) proceeds from the issuance of $150,000 principal amount of
the Company's 12 1/2% Senior Subordinated Notes due August 15, 2010; (2)
$280,000 of term loan borrowings under the terms of a new senior credit
facility; (3) $2,987 of borrowings under the new revolving credit facility of
the senior credit facility; (4) $4,805 of cash on hand; and (5) $110,000 of
gross proceeds from the sale of new convertible preferred stock, principally
to an affiliated entity of Olivetti S.p.A. (See notes 9 and 13 to the
consolidated financial statements for the year ended October 31, 2000
included in the Company's 2000 Annual Report on Form 10-K.)
7
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(2) ACQUISITION OF SCIENTIFIC GAMES HOLDINGS CORP. --(CONTINUED)
The following table presents unaudited pro forma results of operations
as if the Scientific Games acquisition and related financing transactions had
occurred at the beginning of the period presented after giving effect to
certain adjustments, including amortization of goodwill and other
identifiable intangible assets, additional depreciation expense, increased
interest expense, convertible preferred stock dividends and related income
tax effects. These pro forma results have been prepared for comparative
purposes and do not purport to be indicative of what would have occurred had
the acquisition been made at the beginning of the two months ended December 31,
1999 or the results which may occur in the future.
TWO MONTHS ENDED
DECEMBER 31,
1999
----------------
(unaudited)
Operating revenues............................... $70,973
Operating income................................. 6,382
Loss before income tax benefit................... (730)
Net loss......................................... (627)
Convertible preferred stock dividend............. 1,143
--------
Net loss available to common stockholders........ $(1,770)
========
Basic and diluted income (loss)per share:
Net income....................................... $ (0.02)
========
Net loss available to common stockholders........ $ (0.05)
========
8
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(3) BUSINESS SEGMENTS
The following tables represent revenues, profits, depreciation and assets
by business and geographic segments for the two months ended December 31, 1999
and 2000. Corporate expenses are allocated among business segments. Interest
expense and other (income) deductions are not allocated to business segments.
TWO MONTHS ENDED
DECEMBER 31,
---------------------------------
1999 2000
---------------------------------
Service and Sales Revenue:
Lottery Group.................. $ 5,886 36,630
Pari-mutuel Group.............. 15,331 13,485
Venue Management Group......... 8,698 9,274
Telecommunications Group....... -- 7,202
SJC Video Group................ 327 --
---------------- --------------
$30,242 66,591
================ ==============
Gross profit:
Lottery Group.................. $ 1,635 11,276
Pari-mutuel Group.............. 5,478 4,692
Venue Management Group......... 2,249 2,514
Telecommunications Group....... -- 2,970
SJC Video Group................ -- --
---------------- --------------
$ 9,362 21,452
================ ==============
Operating income:
Lottery Group.................. $ 840 458
Pari-mutuel Group.............. (20) (800)
Venue Management Group......... 769 1,147
Telecommunications Group....... -- 2,147
SJC Video Group................ -- --
---------------- --------------
$ 1,589 2,952
================ ==============
Included in operating income
Depreciation and amortization:
Lottery Group.................. $ 394 5,309
Pari-mutuel Group.............. 2,711 2,576
Venue Management Group......... 455 427
Telecommunications Group....... -- 286
SJC Video Group................ -- --
---------------- --------------
$ 3,560 8,598
================ ==============
9
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(3) BUSINESS SEGMENTS--(CONTINUED)
TWO MONTHS ENDED
DECEMBER 31,
---------------------------------
1999 2000
---------------------------------
A reconciliation of total segment
operating income to consolidated loss
before income tax expense (benefit)
is as follows:
Total reported segments.......... $ 1,589 2,952
Interest expense................. 2,697 8,790
Other income..................... (19) (247)
---------------- --------------
$(1,089) (5,591)
================ ==============
OCTOBER 31, DECEMBER 31,
2000 2000
---------------------------------
Assets:
Lottery Group.................. $350,367 330,138
Pari-mutuel Group.............. 227,049 232,990
Venue Management Group......... 34,207 34,055
Telecommunications Group....... 35,592 37,758
SJC Video Group................ -- --
---------------- --------------
$647,215 634,941
================ ==============
TWO MONTHS ENDED
DECEMBER 31,
---------------------------------
1999 2000
---------------------------------
Capital and wagering systems
expenditures:
Lottery Group.................. $ 72 1,694
Pari-mutuel Group.............. 5,637 2,354
Venue Management Group......... 244 316
Telecommunications Group....... -- 1,739
SJC Video Group................ -- --
---------------- --------------
$5,953 6,103
================ ==============
10
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(4) COMPREHENSIVE (LOSS)
The following presents a reconciliation of net loss to comprehensive loss
for the two months ended December 31, 1999 and 2000:
TWO MONTHS ENDED DECEMBER 31,
----------------------------
1999 2000
------------ ------------
Net loss................................................. $(1,119) (4,914)
Other comprehensive loss:
Foreign currency translation........................ (254) 1,212
Unrealized loss on investments...................... -- (875)
Unrealized loss on interest rate swap contract...... -- (2,395)
------------ -------------
Other comprehensive loss............................ (254) (2,058)
------------ -------------
Comprehensive loss....................................... $(1,373) (6,972)
============ =============
(5) INVENTORIES
Inventories consist of the following:
OCTOBER 31, DECEMBER 31,
2000 2000
-------------- --------------
Parts and work-in-process.............................. $12,545 16,193
Finished goods......................................... 12,133 11,415
-------------- --------------
$24,678 27,608
============== ==============
Parts and work-in-process include costs for equipment expected to be
sold. Costs incurred for equipment associated with specific wagering system
service contracts not yet placed in service are classified as construction in
progress in property and equipment.
(6) DEBT
At December 31, 2000, the Company had approximately $46,591 available
for borrowing under the Company's revolving Credit Facility (the "Facility"),
subject to limitations imposed by the debt covenants. There were approximately
$9,000 of borrowings outstanding under the Facility at December 31, 2000, and
approximately $9,409 in letters of credit were issued under the Facility. At
October 31, 2000, Autotote's available borrowing capacity was $52.1 million.
11
AUTOTOTE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(7) FINANCIAL INFORMATION FOR GUARANTOR SUBSIDIARIES AND NON-GUARANTOR
SUBSIDIARIES
The Company conducts substantially all of its business through its
domestic and foreign subsidiaries. The Notes and Facility issued on September
6, 2000 in connection with the acquisition of Scientific Games are jointly
and severally guaranteed by substantially all of the Company's wholly owned
domestic subsidiaries (the "Guarantor Subsidiaries").
Presented below is condensed consolidating financial information for (i)
Autotote Corporation (the "Parent Company") which includes the activities of
Autotote Management Corporation, (ii) the Guarantor Subsidiaries and (iii)
the wholly owned foreign subsidiaries and the non-wholly owned domestic and
foreign subsidiaries (the "Non-Guarantor Subsidiaries") as of October 31,
2000 and December 31, 2000 and for the two months ended December 31, 1999 and
2000. The condensed consolidating financial information has been presented to
show the nature of assets held, results of operations and cash flows of the
Parent Company, Guarantor Subsidiaries and Non-Guarantor Subsidiaries
assuming the guarantee structure of the Notes was in effect at the beginning
of the periods presented. Separate financial statements for Guarantor
Subsidiaries are not presented based on management's determination that they
would not provide additional information that is material to investors.
The condensed consolidating financial information reflects the
investments of the Parent Company in the Guarantor and Non-Guarantor
Subsidiaries using the equity method of accounting. In addition, corporate
interest and administrative expenses have not been allocated to the
subsidiaries.
12
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
OCTOBER 31, 2000
(IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
-------------- -------------- -------------- -------------- ---------------
ASSETS
Cash and cash equivalents............... $ 379 7,791 7,137 1 15,308
Accounts receivable, net................ -- 40,699 18,180 (4,616) 54,263
Inventories............................. -- 19,298 5,844 (464) 24,678
Other current assets.................... 531 14,054 3,563 30 18,178
Property and equipment, net............. 2,020 151,536 33,937 (839) 186,654
Investment in subsidiaries.............. 193,740 -- -- (193,740) --
Goodwill................................ 191 145,549 10,817 -- 156,557
Intangible assets....................... -- 110,432 22,287 -- 132,719
Other assets............................ 20,516 79,756 997 (42,411) 58,858
-------------- -------------- -------------- -------------- ---------------
Total assets........................ $ 217,377 569,115 102,762 (242,039) 647,215
============== ============== ============== ============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of long-term debt.. $ 5,256 7 560 -- 5,823
Current liabilities..................... 20,503 60,097 24,195 (4,048) 100,747
Long-term debt, excluding current
installments.......................... 437,490 (212) 4,997 (4,264) 438,011
Other non-current liabilities........... 3,222 59,682 22,237 (16,826) 68,315
Intercompany balances................... (283,857) 258,203 26,138 (484) --
Stockholders' equity.................... 34,763 191,338 24,635 (216,417) 34,319
-------------- -------------- --------------- --------------- --------------
Total liabilities and stockholders'
equity............................. $ 217,377 569,115 102,762 (242,039) 647,215
============== ============== ============== =============== ==============
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2000
(UNAUDITED, IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
-------------- -------------- -------------- -------------- ---------------
ASSETS
Cash and cash equivalents............... $ 867 (51) 5,671 1 6,488
Accounts receivable, net................ -- 39,554 20,555 (3,290) 56,819
Inventories............................. -- 21,602 6,470 (464) 27,608
Other current assets.................... 186 13,421 2,944 30 16,581
Property and equipment, net............. 2,002 142,446 40,452 (289) 184,611
Investment in subsidiaries.............. 202,980 -- -- (202,980) --
Goodwill................................ 190 154,313 3,088 -- 157,591
Intangible assets....................... -- 109,232 22,047 -- 131,279
Other assets............................ 19,832 75,699 1,077 (42,644) 53,964
-------------- -------------- -------------- -------------- ---------------
Total assets........................ $ 226,057 556,216 102,304 (249,636) 634,941
============== ============== ============== ============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current installments of long-term debt.. $ 6,012 8 616 -- 6,636
Current liabilities..................... 25,663 51,642 22,866 (2,910) 97,261
Long-term debt, excluding current
installments.......................... 433,180 19 5,492 (4,647) 434,044
Other non-current liabilities........... 5,786 57,020 21,491 (15,450) 68,847
Intercompany balances................... (272,737) 245,226 27,809 (298) --
Stockholders' equity.................... 28,153 202,301 24,030 (226,331) 28,153
-------------- -------------- --------------- -------------- --------------
Total liabilities and stockholders'
equity............................. $ 226,057 556,216 102,304 (249,636) 634,941
============== ============== ============== =============== ==============
13
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED STATEMENT OF OPERATIONS
TWO MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED, IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
-------------- ---------------- ---------------- -------------- --------------
Operating revenues......................... $ -- 23,135 8,326 (1,219) 30,242
Operating expenses......................... -- 14,751 7,348 (1,219) 20,880
------------- ---------------- ---------------- -------------- --------------
Gross profit............................ -- 8,384 978 -- 9,362
Selling, general and administrative
expenses................................ 1,552 2,002 659 -- 4,213
Depreciation and amortization.............. 48 2,937 592 (17) 3,560
------------- ---------------- ---------------- -------------- --------------
Operating income (loss)................. (1,600) 3,445 (273) 17 1,589
Interest expense........................... 2,535 126 105 (69) 2,697
Other (income) expense..................... (58) (6) (24) 69 (19)
------------- ---------------- ---------------- -------------- --------------
Income (loss) before equity in income of
subsidiaries, and income taxes........... (4,077) 3,325 (354) 17 (1,089)
Equity in income (loss) of subsidiaries.... 2,958 -- -- (2,958) --
Income tax expense......................... -- 17 13 -- 30
------------- ---------------- ---------------- -------------- --------------
Net income (loss).......................... $(1,119) 3,308 (367) (2,941) (1,119)
============= ================ ================ ============== ==============
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED STATEMENT OF OPERATIONS
TWO MONTHS ENDED DECEMBER 31, 2000
(UNAUDITED, IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
-------------- ---------------- ---------------- -------------- --------------
Operating revenues......................... $ -- 57,125 22,087 (12,621) 66,591
Operating expenses......................... -- 41,333 16,425 (12,619) 45,139
------------- ---------------- ---------------- -------------- --------------
Gross profit............................ -- 15,792 5,662 (2) 21,452
Selling, general and administrative
expenses................................ 2,872 4,896 2,136 (2) 9,902
Depreciation and amortization.............. 49 7,340 1,224 (15) 8,598
------------- ---------------- ---------------- -------------- --------------
Operating income (loss)................. (2,921) 3,556 2,302 15 2,952
Interest expense........................... 8,930 13 477 (630) 8,790
Other (income) expense..................... (87) (458) (277) 575 (247)
------------- ---------------- ---------------- -------------- --------------
Income (loss) before equity in income of
subsidiaries and income taxes........... (11,764) 4,001 2,102 70 (5,591)
Equity in income (loss) of subsidiaries.... 6,850 -- -- (6,850) --
Income tax expense (benefit)............... -- (1,267) 590 -- (677)
------------- ---------------- ---------------- -------------- --------------
Net income (loss).......................... $ (4,914) 5,268 1,512 (6,780) (4,914)
============= ================ ================ ============== ==============
14
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED STATEMENT OF CASH FLOWS
TWO MONTHS ENDED DECEMBER 31, 1999
(UNAUDITED, IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
-------------- -------------- --------------- -------------- --------------
Net income (loss)............................. $(1,119) 3,308 (367) (2,941) (1,119)
Depreciation and amortization.............. 48 2,937 592 (17) 3,560
Equity in income (loss) of subsidiaries.... (2,958) -- -- 2,958 --
Changes in operating assets and
liabilities.............................. 2,398 (6,478) 961 -- (3,119)
Other non-cash adjustments................. 189 14 (31) -- 172
-------------- --------------- --------------- -------------- --------------
Net cash provided by (used in) operating
activities................................. (1,442) (219) 1,155 -- (506)
-------------- --------------- --------------- -------------- --------------
Cash flows from investing activities:
Capital and wagering systems expenditures.. (17) (5,118) (818) -- (5,953)
Other assets and investments............... (92) (1,044) (89) (57) (1,282)
-------------- --------------- --------------- -------------- --------------
Net cash provided by (used in) investing
activities................................. (109) (6,162) (907) (57) (7,235)
-------------- --------------- --------------- -------------- --------------
Cash flows from financing activities:
Net borrowing under lines of credit........ 7,720 -- -- -- 7,720
Proceeds from issuance of long-term debt... -- -- 12 -- 12
Payments on long-term debt................. (1,250) (23) (89) -- (1,362)
Other, principally intercompany balances... (1,233) 1,792 (594) 57 22
-------------- --------------- --------------- -------------- --------------
Net cash provided by (used in) financing
activities................................. 5,237 1,769 (671) 57 6,392
-------------- --------------- --------------- -------------- --------------
Effect of exchange rate changes on cash....... (1) 4 (59) -- (56)
-------------- --------------- --------------- -------------- --------------
Increase (decrease) in cash and cash
equivalents................................ 3,685 (4,608) (482) -- (1,405)
Cash and cash equivalents, beginning of
period..................................... 1,598 506 2,963 -- 5,067
-------------- --------------- --------------- -------------- --------------
Cash and cash equivalents, end of period...... $ 5,283 (4,102) 2,481 -- 3,662
============== =============== =============== ============== ==============
15
AUTOTOTE CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL CONDENSED STATEMENT OF CASH FLOWS
TWO MONTHS ENDED DECEMBER 31, 2000
(UNAUDITED, IN THOUSANDS)
Parent Guarantor Non-Guarantor Eliminating
Company Subsidiaries Subsidiaries Entries Consolidated
------------- ---------------- ---------------- -------------- --------------
Net income (loss).......................... $(4,914) 5,268 1,512 (6,780) (4,914)
Depreciation and amortization........... 49 7,340 1,224 (15) 8,598
Equity in income (loss) of subsidiaries. (6,850) -- -- 6,850 --
Changes in operating assets and
liabilities........................... 6,078 (5,643) (988) (230) (783)
Other non-cash adjustments.............. 428 (1,341) 40 -- (873)
------------- ---------------- ---------------- -------------- --------------
Net cash provided by (used in) operating
activities.............................. (5,209) 5,624 1,788 (175) 2,028
------------- ---------------- ---------------- -------------- --------------
Cash flows from investing activities:
Capital and wagering systems
expenditures......................... (13) (3,608) (2,136) (346) (6,103)
Other assets and investments............ (3,060) (770) (93) 1,504 (2,419)
------------- ---------------- ---------------- -------------- --------------
Net cash provided by (used in) investing
activities................................. (3,073) (4,378) (2,229) 1,158 (8,522)
------------- ---------------- ---------------- -------------- --------------
Cash flows from financing activities:
Net borrowing under lines of credit..... (2,250) -- -- -- (2,250)
Payments on long-term debt.............. (1,304) -- (20) -- (1,324)
Other, principally intercompany balances 12,324 (10,288) (851) (983) 202
------------- ---------------- ---------------- -------------- --------------
Net cash provided by (used in) financing
activities.............................. 8,770 (10,288) (871) (983) (3,372)
------------- ---------------- ---------------- -------------- --------------
Effect of exchange rate changes on cash.... -- 1,199 (153) -- 1,046
------------- ---------------- ---------------- -------------- --------------
Increase (decrease) in cash and cash
equivalents............................. 488 (7,843) (1,465) -- (8,820)
Cash and cash equivalents, beginning of
period.................................. 379 7,792 7,137 -- 15,308
------------- ---------------- --------------- -------------- --------------
Cash and cash equivalents, end of period... $ 867 (51) 5,672 -- 6,488
============= ================ =============== ============== ==============
16
AUTOTOTE CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR
THE TWO MONTHS ENDED DECEMBER 31, 2000
BACKGROUND
As a result of the Company's decision to change its fiscal year from an
October 31 year-end to a calendar year-end, beginning with the year ending
December 31, 2001, the Company is filing this transition report for the two
month period ended December 31, 2000.
The following discussion addresses the financial condition of the
Company as of December 31, 2000 and the results of its operations for the two
month period ended December 31, 2000, compared to the same period in the
prior year. This discussion should read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations for
the fiscal year ended October 31, 2000, included in the Company's 2000 Annual
Report on Form 10-K.
We operate in four business segments: Lottery Group, Pari-Mutuel Group,
Venue Management Group and Telecommunications Products Group. Our Lottery
Group consists of two product lines: Instant Tickets and Related Services
("ITRS") and Lottery Systems. ITRS includes ticket design and manufacturing
as well as value-added services, including game design, sales and marketing
support, inventory management and warehousing and fulfillment services. In
addition, this division includes promotional instant tickets and pull-tab
tickets that we sell to both lottery and non-lottery customers. Lottery
Systems includes the supply of transaction processing software for the
accounting and validation of both instant ticket and on-line lottery games,
point-of-sale terminal hardware sales, central site computers and
communication hardware sales, and ongoing support and maintenance services
for these products. This product line also includes software and hardware and
support service for sports betting and credit card processing systems.
Our Pari-Mutuel Group is comprised of the same businesses historically
reported in Autotote's Pari-mutuel Operations segment which encompasses our
North American and international on-track, off-track and inter-track
pari-mutuel services, simulcasting and communications services, and video
gaming, as well as sales of pari-mutuel systems and equipment.
Our Venue Management Group is comprised of the same businesses
historically reported in Autotote's Venue Management Operations segment and
include the Connecticut off-track betting operations, and Autotote's
Netherlands on-track and off-track betting operations.
Our Telecommunications Products Group is comprised of the prepaid
cellular phone cards business.
In the second quarter of fiscal 2000, Autotote completed the sale of its
SJC Video business, which had previously been reported as a separate segment.
In the two months ended December 31, 1999, our Lottery Group consisted
solely of the Lottery Systems product line, exclusive of sports betting and
credit card processing services, and the Telecommunications Products Group,
which were not yet acquired by Autotote as part of the Scientific Games
acquisition.
Autotote's revenues are derived from two principal sources: service
revenues and sales revenues. Service revenues are earned pursuant to
multi-year contracts to provide ITRS and wagering systems and services; or
are derived from wagering by customers at facilities owned or leased by
Autotote. Sales revenues are derived from sales of prepaid phone cards and
from contracts for the sale of wagering systems, equipment, and software
licenses.
The first calendar quarter and the fourth calendar quarter of the year
traditionally comprise the weakest season for Autotote's pari-mutuel wagering
service revenue. Wagering equipment sales and software license revenues
usually reflect a limited number of large transactions which do not recur on
an annual basis. Consequently, revenues and operating results can vary
substantially from period to period as a result of the timing of revenue
recognition for major equipment sales and software license revenue. In
addition, instant ticket and prepaid phone card sales may vary depending on
the size and timing of contract awards, changes in customer budgets,
inventory ticket position, lottery retail sales and general economic
conditions.
Operating results may also vary significantly from period to period
depending on the addition or disposition of business units in
17
each period. The acquisition of Scientific Games in 2000 and the German
pari-mutuel service business in 1999, which were both accounted for as
purchases, affect the comparability of operations from period to period (see
Note 3 to the consolidated financial statements for the year ended October 31,
2000 included in the Company's 2000 Annual Report on Form 10-K.)
The following tables and discussion present actual data for the November
and December 2000 and 1999, and pro forma data for the November and December
1999 period, as if Autotote had acquired Scientific Games on November 1, 1999.
RESULTS OF OPERATIONS:
TWO MONTHS ENDED DECEMBER 31,
------------------------------------------------
PRO FORMA ACTUAL ACTUAL
---------------- --------------- ---------------
1999 1999 2000
---------------- --------------- ---------------
(IN THOUSANDS)
LOTTERY GROUP
Service revenue............................................... $34,298 1,699 36,630
Sales revenue................................................. 6,693 4,187 --
---------------- --------------- ---------------
Total operating revenue....................................... $40,991 5,886 36,630
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $11,939 1,635 11,276
================ =============== ===============
PARI-MUTUEL GROUP
Service revenue............................................... $11,435 11,435 11,680
Sales revenue................................................. 3,896 3,896 1,805
---------------- --------------- ---------------
Total operating revenue....................................... $15,331 15,331 13,485
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $ 5,478 5,478 4,692
================ =============== ===============
VENUE MANAGEMENT GROUP
Service revenue............................................... $ 8,698 8,698 9,274
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $ 2,249 2,249 2,514
================ =============== ===============
TELECOMMUNICATIONS GROUP
Sales revenue................................................. $ 5,626 -- 7,202
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $ 2,165 -- 2,970
================ =============== ===============
SJC VIDEO GROUP
Service revenue............................................... $ 327 327 --
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $ -- -- --
================ =============== ===============
COMPANY TOTAL
Service revenue............................................... $54,758 22,159 57,584
Sales revenue................................................. 16,215 8,083 9,007
---------------- --------------- ---------------
Total operating revenue....................................... $70,973 30,242 66,591
================ =============== ===============
Gross Profit (excluding depreciation and amortization)........ $21,831 9,362 21,452
================ =============== ===============
18
TWO MONTHS ENDED DECEMBER 31, 2000 COMPARED TO TWO MONTHS ENDED DECEMBER 31,
1999
REVENUE ANALYSIS
Lottery Group revenue of $36.6 million in November and December 2000
improved $30.7 million from the same period in 1999 due to the addition of
Scientific Games in September 2000, plus the start-up of the on-line Vermont
and New Hampshire lotteries in July 2000. On a pro forma basis, total service
revenue in November and December increased $2.3 million from the same period
in 1999 largely due to new on-line lottery contracts and total sales revenue
declined $6.7 million as a result of non-recurring sales in 1999 primarily to
Sisal Sport Italia SpA and the Western Canadian Lottery.
Pari-mutuel Group service revenue of $11.7 million in November and
December 2000 improved $0.2 million or 2.1% from the same period in 1999.
This increase is attributable to revenue improvements in the North America
operations, as well as in the North American simulcasting operations and in
the NASRIN(TM) service operations. These revenue increases were partially
offset by lower revenues in the French operations and the effect of the lower
Euro exchange rate on revenues from the German racing operations. Sales
revenue of $1.8 million in November and December 2000 decreased $2.1 million
from same period in 1999 due to non-recurring 1999 equipment sales.
Venue Management Group service revenue of $9.3 million in November and
December 2000 were $0.6 million higher than in the same period in 1999,
reflecting Handle related revenue increases in the Connecticut OTB
operations, partially offset by the effect of the lower Euro exchange rate on
the Netherlands revenues.
Telecommunications Group sales revenue of $7.2 million in November and
December 2000 are the result of the acquisition of Scientific Games in
September 2000. On a pro forma basis, revenues in November and December 2000
increased $1.6 million as a result of continued customer and volume growth of
this business unit.
SJC Video Group service revenue of $0.3 million in November and December
1999 did not recur in November and December 2000 because the business was
sold in February 2000.
GROSS PROFIT ANALYSIS
The total gross profit earned, exclusive of depreciation and
amortization, of $21.5 million in November and December 2000 increased $12.1
million or 129% from the same period in 1999 as a result of the acquisition
of Scientific Games in September 2000. On a pro forma basis, the gross profit
earned, exclusive of depreciation and amortization, decreased $0.4 million
primarily because improved gross margins in the service businesses and the
Telecommunications Products Group were offset by non-recurring 1999 systems
and equipment sales.
On a pro forma basis gross profit as a percent of service revenues
increased to 31% in November and December 2000 compared to 30% in the same
period in 1999, primarily as a result of revenue improvements and cost
control measures in all segments of the Company's business. On a pro forma
basis, gross profit as a percent of sales revenues was 38% in November and
December 2000 compared to 31% in the same period in 1999 reflecting the
change in the mix of equipment and systems sold in the two periods, and
improvements in the Telecommunications Group.
The Lottery Group gross profit of $11.3 million, or 31% of revenues,
decreased slightly on a pro-forma basis in November and December 2000 from
$11.9 million or 29% of revenues in the same period in 1999. Gross margin
improvements were realized as a result of the addition of the Vermont and New
Hampshire lottery contracts which commenced operations in July 2000. These
margin improvements were partially offset by non-recurring 1999 systems and
equipment sales.
Pari-mutuel Group gross profit of $4.7 million in November and December
2000 or 35% of revenues decreased $0.8 million from $5.5 million or 36% of
revenues in the same period in 1999. This decrease is primarily attributable
to non-recurring 1999 systems and equipment sales, partially offset by
continued growth of the North American operations.
Venue Management Group gross profit of $2.5 million in November and
December 2000 or 27% of revenues improved $0.3 million from $2.2 million or
26% of revenues in the same period in 1999. This improvement primarily
reflects higher Handle and reduced operating costs in the Connecticut OTB
operation, partially offset by the effect of the lower Euro exchange rate on
the Netherlands revenues.
19
The Telecommunications Group gross profit of $3.0 million in November
and December 2000 or 41% of revenues increased $0.8 million on a pro-forma
basis from a gross profit of $2.2 million or 38% of revenues in the same
period in 1999. The increase reflects the effects of cost saving initiatives
implemented in fiscal 2000, partially offset by slightly lower margins as a
result of increased competition in this market.
EXPENSE ANALYSIS
Selling, general and administrative expenses, including software
development costs, of $9.9 million in November and December 2000 were $5.7
million higher than in the same period in 1999 primarily as a result of the
acquisition of Scientific Games in September 2000. On a pro forma basis,
selling, general and administrative expenses were $1.3 million higher in
November and December 2000 than in the same period in 1999 primarily as a
result of employee severance costs incurred during the period.
Depreciation and amortization expense of $8.6 million in November and
December 2000 increased $5.0 million from $3.6 million in the same period in
1999 as a result of the Scientific Games acquisition, coupled with the
expanded domestic lottery business.
Interest expense of $8.8 million in November and December 2000 increased
$6.1 million from $2.7 million in the same period in 1999 as a result of
higher debt levels, interest rates and financing costs incurred in connection
with the acquisition of Scientific Games.
INCOME TAX EXPENSE (BENEFIT)
Income tax benefit was $0.7 million in November and December 2000
compared to minimal expense in the same period in 1999. The benefit primarily
reflects the reversal of deferred taxes provided in connection with the
acquisition of Scientific Games, partially offset by federal alternative
minimum tax, state taxes and foreign taxes. No current tax benefit has been
recognized on domestic operating losses in either period.
LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL
In order to finance the Scientific Games acquisition and refinance
certain then existing indebtedness, we conducted a series of financings. As a
result, our capital structure changed significantly and, among other things,
we are a significantly leveraged company. As a result of the acquisition and
debt refinancing, at December 31, 2000 we have total indebtedness outstanding
of approximately $440.7 million. We have also recorded a substantial increase
in goodwill and other intangible assets in connection with the Scientific
Games acquisition and a corresponding increase in amortization expense.
At December 31, 2000, Autotote's available cash and borrowing capacity,
subject to limitations imposed by the debt covenants, totaled $53.1 million
compared to $67.4 million at October 31, 2000. Net cash provided by operating
activities was $2.0 million for the two month period ended December 31, 2000.
In this period, we spent $6.1 million for wagering systems and capital
expenditures, $0.5 million in software expenditures and repaid $3.6 million
on our revolving credit facility and our loans. These investments were funded
primarily with net cash provided by operating activities and available cash.
A substantial portion of our cash flows from operations must be used to
pay our interest expense and repay our indebtedness, which will reduce the
funds that would otherwise be available to us for our operations and capital
expenditures. We believe that our cash flow from operations, available cash
and available borrowings under our revolving credit facility will be
sufficient to meet our liquidity needs, including anticipated capital
expenditures, for the foreseeable future; however, we cannot assure you that
this will be the case. We also may need to refinance all or part of our
indebtedness, including the Notes, on or before their maturity; however, we
cannot assure you that we will able to refinance any of our indebtedness,
including our new senior credit facilities and the notes on commercially
reasonable terms or at all.
The Company's financing arrangements impose certain limitations on the
operations of the Company and its subsidiaries, including the maintenance of
certain financial, liquidity and net worth ratios.
The Company was in compliance with these requirements as of December
31, 2000, however, as a result of both the financial performance of
Scientific Games principally reflecting transitional and operational matters
occurring through December 31, 2000, and the timing of certain anticipated
capital expenditures and associated borrowings in 2001, management has
commenced discussions with its lenders to amend certain limitations to be
less restrictive. Management anticipates that its credit facilities will be
appropriately modified on commercially acceptable terms in the first quarter
of 2001, although there can be no assurance that this will be the case.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101, REVENUE RECOGNITION ("SAB 101"), which
provides guidance on the recognition, presentation and disclosure of revenue
in financial statements filed with the SEC. SAB 101 outlines the basic
criteria that must be met to recognize revenue and provides guidance for
disclosures
20
related to revenue recognition policies. Management believes that the
Company's revenue recognition policy is in compliance with the provisions of
SAB 101 and that SAB 101 will have no material effect on the consolidated
financial position or results of operations of the Company.
FORWARD-LOOKING STATEMENTS
Throughout this Report on Form 10-Q we make "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the "Securities Act") and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Forward-looking statements include the
words "may," "will," "estimate," "intend," "continue," "believe," "except" or
"anticipate" and other similar words. The forward-looking statements
contained in this Report on Form 10-Q are generally located in the material
set forth under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" but may be found in other
locations as well. These forward-looking statements generally relate to plans
and objectives for future operations and are based upon management's
reasonable estimates of future results or trends. Although we believe that
the plans and objectives reflected in or suggested by such forward-looking
statements are reasonable, such plans or objectives may not be achieved.
Actual results may differ from projected results due, but not limited, to
unforeseen developments, including developments relating to the following:
- the availability and adequacy of our cash flow to satisfy our obligations,
including our debt service obligations and our need for additional funds
required to support capital improvements and development;
- economic, competitive, demographic, business and other conditions in our
local and regional markets;
- changes or developments in the laws, regulations or taxes in the gaming and
lottery industries;
- actions taken or omitted to be taken by third parties, including customers,
suppliers, competitors, members and shareholders, as well as legislative,
regulatory, judicial and other governmental authorities;
- changes in business strategy, capital improvements, development plans,
including those due to environmental remediation concerns, or changes in
personnel or their compensation, including federal, state and local minimum
wage requirements; and
- the loss of any license or permit, including the failure to obtain an
unconditional renewal of a required gaming license on a timely basis.
Actual future results may be materially different from what we expect. We
will not update forward-looking statements even though our situation may
change in the future.
21
AUTOTOTE CORPORATION AND SUBSIDIARIES
TWO MONTHS ENDED DECEMBER 31, 2000
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
No significant changes have occurred with respect to legal proceedings as
disclosed in Part 1, Item 3, of the Company's 2000 Annual Report on Form 10-K.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27 Financial Data Schedule.
No current reports on Form 8-K were filed during the two month period ended
December 31, 2000.
22
AUTOTOTE CORPORATION AND SUBSIDIARIES
TWO MONTHS ENDED DECEMBER 31, 2000
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.
AUTOTOTE CORPORATION
--------------------
(Registrant)
By: /s/ DeWayne E. Laird
--------------------
Name: DeWayne E. Laird
Title: Vice President & Chief Financial
Officer
Dated: February 20, 2001
23