UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: NOVEMBER 24, 2004
(Date of earliest event reported) (NOVEMBER 17, 2004)
MULTIMEDIA GAMES, INC.
(Exact name of registrant as specified in its charter)
001-14551
(COMMISSION FILE NUMBER)
TEXAS 74-2611034
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
206 WILD BASIN RD., BLDG. B, SUITE 400, 78746
AUSTIN, TEXAS (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (512) 334-7500
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 2.02. RESULTS OF OPERATION AND FINANCIAL CONDITION.
On November 17, 2004, Multimedia Games, Inc. (the "Registrant") issued a press
release announcing its fiscal year 2004 results, and on the same date held a
related conference call to discuss these results. The full text of the press
release issued in connection with the announcement, and the related conference
call transcript are attached to this Current Report on Form 8-K as Exhibit Nos.
99.1 and 99.2, respectively. The November 17, 2004 press release and the
conference call transcript contain forward-looking statements regarding the
Registrant, and include cautionary statements identifying important factors that
could cause actual results to differ materially from those anticipated.
USE OF NON-GAAP FINANCIAL INFORMATION
The Registrant uses the non-GAAP measure of EBITDA in its earnings releases.
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. Although EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles ("GAAP"), the
Registrant believes the use of the non-GAAP financial measure EBITDA enhances an
overall understanding of the Registrant's past financial performance and
provides useful information to the investor, because of its historical use by
the Registrant as a performance measure, and the use of EBITDA by virtually all
companies in the gaming equipment sector as a measure of performance. However,
investors should not consider this measure in isolation or as a substitute for
net income, operating income, or any other measure for determining the
Registrant's operating performance that is calculated in accordance with GAAP.
In addition, because EBITDA is not calculated in accordance with GAAP, it may
not necessarily be comparable to similarly titled measures employed by other
companies. The Registrant has included a reconciliation of EBITDA to the most
comparable GAAP financial measure, net income, in the attached press release.
ITEM 7.01 REGULATION FD DISCLOSURE
Historically, the Registrant entered into revenue arrangements with its tribal
customers that, among other things, required the Registrant to guarantee certain
prize payout levels, to account for and collect all revenues associated with its
games, and disburse the allotment to the tribes based on the prize guarantee.
Accordingly, revenues have historically been presented on a gross basis to
accurately reflect this relationship. Since the Registrant is no longer
responsible for guaranteeing prize payouts on a majority of its games, and
customers now generally collect total revenues associated with the Registrant's
games and remit to the Registrant the net balance due, the Registrant has
reclassified its income statement, and is presenting the net amounts due as
revenue.
On November 17, 2004, in its conference call regarding its fiscal year 2004
results, the Registrant indicated that it would make available on its website
certain historical financial statements presented in accordance with this new
presentation method. The following is the information provided on the
Registrant's website:
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MULTIMEDIA GAMES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except shares and per-share amounts)
SEPTEMBER 30 JUNE 30, MARCH 31, DECEMBER 31, SEPTEMBER 30,
2004 2004 2004 2003 2003
-------- --------- --------- --------- --------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,768 $ 29,648 $ 36,634 $ 6,371 $ 26,319
Accounts receivable(1) 10,397 9,299 10,434 8,263 5,866
Inventory 930 3,915 1,882 1,107 2,122
Prepaid expenses and other 2,242 2,783 2,112 1,494 1,811
Notes receivable, net 12,299 1,939 2,900 23,487 3,659
Federal and state income tax receivable 3,714 2,718 1,190 1,101 1,539
Deferred income taxes 3,239 1,827 2,033 1,607 1,584
--------- --------- --------- --------- ---------
TOTAL CURRENT ASSETS 37,589 52,129 57,185 43,430 42,900
Restricted cash and long-term investments 1,216 1,216 1,297 1,339 1,380
Property and equipment, net 140,110 134,365 113,945 101,254 92,150
Notes receivable - non-current 20,588 7,155 4,537 1,091 500
Other assets 17,904 11,297 10,442 10,281 6,800
--------- --------- --------- --------- ---------
TOTAL ASSETS $ 217,407 $ 206,162 $ 187,406 $157,395 $ 143,730
========= ========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt and capital leases $ 9,713 $ 9,633 $ 9,293 $ 8,641 $ 4,558
Accounts payable and accrued expenses 25,780 25,603 21,535 10,704 20,138
Deferred revenue 1,847 244 429 375 24
--------- --------- --------- --------- ---------
TOTAL CURRENT LIABILITIES 37,340 35,480 31,257 19,720 24,720
Long-term debt and capital leases, 10,753 13,114 14,687 15,552 9,402
less current portion
Other long-term liabilities 3,932 4,206 4,731 3,161 3,393
Deferred revenue - non-current 2,050 -- -- -- --
Deferred income taxes 13,185 7,314 5,183 4,711 4,103
--------- --------- --------- --------- ---------
TOTAL LIABILITIES 67,260 60,114 55,858 43,144 41,618
--------- --------- --------- --------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- -- -- --
Common stock 305 304 300 292 287
Additional paid-in capital 65,157 64,405 59,745 50,845 45,487
Stockholders' notes receivable -- -- -- (1,488) (1,466)
Treasury stock (12,382) (8,562) (8,562) (6,963) (6,491)
Retained earnings 97,067 89,901 80,065 71,565 64,295
--------- --------- --------- --------- ---------
Total stockholders' equity 150,147 146,048 131,548 114,251 102,112
--------- --------- --------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 217,407 $ 206,162 $ 187,406 $ 157,395 $ 143,730
========= ========= ========= ========= =========
(1) Net of allowance for doubtful accounts of: 533 591 516 526 521
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MULTIMEDIA GAMES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per-share amounts)
Year Ended Period Ended
---------- -----------------------------------------
Sept. 30, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
---------- --------- --------- --------- ---------
REVENUES:
Gaming revenue - Class II $ 119,584 $ 30,109 $ 29,044 $ 31,184 $ 29,247
---------- --------- --------- --------- ---------
Gaming revenue - All Other 20,568 7,844 6,331 4,984 1,409
Player terminal and license sale and lease revenue 11,546 4,353 805 3,011 3,377
Other 1,977 394 740 421 422
---------- --------- --------- --------- ---------
Total revenues 153,675 42,700 36,920 39,600 34,455
---------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Bingo prizes and related costs --- --- --- --- ---
Cost of player terminals and licenses sold 6,560 2,320 666 1,886 1,688
Selling, general and administrative expenses 59,429 17,634 12,951 15,480 13,364
Amortization and depreciation 37,255 11,085 9,765 8,553 7,852
---------- --------- --------- --------- ---------
Total operating costs and expenses 103,244 31,039 23,382 25,919 22,904
---------- --------- --------- --------- ---------
Operating income 50,431 11,661 13,538 13,681 11,551
OTHER INCOME (EXPENSE):
Interest income 1,120 214 178 365 363
Interest expense (1,494) (427) (429) (415) (223)
---------- --------- --------- --------- ---------
Income before income taxes 50,057 11,448 13,287 13,631 11,691
Income tax expense (17,285) (4,282) (3,451) (5,131) (4,421)
---------- --------- --------- --------- ---------
Net income $ 32,772 $ 7,166 $ 9,836 $ 8,500 $ 7,270
========== ========= ========= ========= =========
Basic earnings per share $ 1.19 $ 0.26 $ 0.35 $ 0.31 $ 0.27
========== ========= ========= ========= =========
Diluted earnings per share $ 1.07 $ 0.24 $ 0.32 $ 0.28 $ 0.24
========== ========= ========= ========= =========
Shares used in per-share calculation
Basic 27,467 28,007 27,873 27,282 26,710
========== ========= ========= ========= =========
Diluted 30,636 30,285 30,936 30,840 30,487
========== ========= ========= ========= =========
Net income $ 32,772 $ 7,166 $ 9,836 $ 8,500 $ 7,270
Amortization and depreciation 37,255 11,085 9,765 8,553 7,852
Interest expense (income), net 374 213 251 50 (140)
Income tax expense 17,285 4,282 3,451 5,131 4,421
---------- --------- --------- --------- ---------
EBITDA $ 87,686 $ 22,746 $ 23,303 $ 22,234 $ 19,403
========== ========= ========= ========= =========
MULTIMEDIA GAMES, INC.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
(In thousands, except per-share amounts)
Year Ended Period Ended
---------- -----------------------------------------
Sept. 30, Sept. 30, June 30, March 31, Dec. 31,
2004 2004 2004 2004 2003
---------- --------- --------- --------- ---------
REVENUES:
Gaming revenue - Class II $ 102,292 $ 28,228 $ 24,051 $ 25,274 $ 24,739
---------- --------- --------- --------- ---------
Gaming revenue - All Other 4,365 1,233 1,068 1,047 1,017
Player terminal and license sale and lease revenue 16,322 699 12,489 2,491 643
Other 1,694 584 384 310 416
---------- --------- --------- --------- ---------
Total revenues 124,673 30,744 37,992 29,122 26,815
---------- --------- --------- --------- ---------
OPERATING COSTS AND EXPENSES:
Bingo prizes and related costs 1,175 4 68 383 720
Cost of player terminals and licenses sold 8,535 370 7,163 568 434
Selling, general and administrative expenses 41,946 12,160 10,599 10,127 9,060
Amortization and depreciation 22,286 6,767 5,684 5,281 4,554
---------- --------- --------- --------- ---------
Total operating costs and expenses 73,942 19,301 23,514 16,359 14,768
---------- --------- --------- --------- ---------
Operating income 50,731 11,443 14,478 12,763 12,047
OTHER INCOME (EXPENSE):
Interest income 328 65 71 82 110
Interest expense (309) (64) (187) (41) (17)
---------- --------- --------- --------- ---------
Income before income taxes 50,750 11,444 14,362 12,804 12,140
Income tax expense (19,095) (4,046) (5,498) (4,861) (4,690)
---------- --------- --------- --------- ---------
Net income $ 31,655 $ 7,398 $ 8,864 $ 7,943 $ 7,450
========== ========= ========= ========= =========
Basic earnings per share $ 1.22 $ 0.28 $ 0.34 $ 0.31 $ 0.29
========== ========= ========= ========= =========
Diluted earnings per share $ 1.08 $ 0.25 $ 0.30 $ 0.28 $ 0.25
========== ========= ========= ========= =========
Shares used in per-share calculation
Basic 25,993 26,319 25,999 25,845 25,815
========== ========= ========= ========= =========
Diluted 29,417 29,777 29,635 28,614 29,647
========== ========= ========= ========= =========
Net income $ 31,655 $ 7,398 $ 8,864 $ 7,943 $ 7,450
Amortization and depreciation 22,286 6,767 5,684 5,281 4,554
Interest expense (income), net (19) (1) 116 (41) (93)
Income tax expense 19,095 4,046 5,498 4,861 4,690
---------- --------- --------- --------- ---------
EBITDA $ 73,017 $ 18,210 $ 20,162 $ 18,044 $ 16,601
========== ========= ========= ========= =========
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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. EXHIBIT NO. DESCRIPTION
99.1 Press Release, dated November 17, 2004, announcing fiscal year 2004
results
99.2 Transcript of fiscal year 2004 earnings conference call
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MULTIMEDIA GAMES, INC.
Dated: November 24, 2004 By: /s/ Craig S. Nouis
--------------------------
Craig S. Nouis
Chief Financial Officer and
Principal Accounting Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------
99.1 Press Release, dated November 17, announcing fiscal
2004 results
99.2 Transcript of fiscal year 2004 earnings conference call
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