Multimedia Games Reports Third Quarter Revenue of $50.3 Million


CONDENSED CONSOLIDATED BALANCE SHEETS As of June 30, 2014 and September 30, 2013 (In thousands, except share and per-share amounts)
	June 30,			September 30,
ASSETS	2014			2013
CURRENT ASSETS:	(Unaudited)
Cash and cash equivalents	$	129,310		$	102,632
Accounts receivable, net of allowance for doubtful accounts
of $300 and $342, respectively		24,480			26,566
Inventory		12,675			12,429
Notes receivable, current		2,443			2,093
Deferred tax asset		7,818			7,818
Prepaid expenses and other		3,195			2,423
Federal and state income taxes receivable		4,624			2,855
Total current assets		184,545			156,816
Property and equipment and leased gaming equipment, net		76,492			77,458
Intangible assets, net		31,635			34,723
Notes receivable, non-current		2,700			4,841
Deferred tax asset, non-current		2,690			2,690
Value added tax receivable, net of allowance of $707 and $707,
respectively		2,905			2,862
Other assets		2,319			2,135
Total assets	$	303,286		$	281,525

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	3,700		$	3,700
Accounts payable and accrued liabilities		26,455			29,129
Deferred revenue		481			520
Total current liabilities		30,636			33,349
Long-term debt, less current portion		23,125			25,900
Long-term deferred tax liability		12,824			12,824
Other long-term liabilities		473			511
Total liabilities		67,058			72,584
Commitments and contingencies
Stockholders’ equity:
Preferred stock:
Series A, $0.01 par value, 1,800,000 shares authorized,
no shares issued and outstanding		—			—
Series B, $0.01 par value, 200,000 shares authorized,
no shares issued and outstanding		—			—
Common stock, $0.01 par value, 75,000,000 shares authorized,
38,535,302 and 37,802,950 shares issued, and 29,639,222
and 29,386,870 shares outstanding, respectively		385			378
Additional paid-in capital		144,485			131,232
Treasury stock, 8,896,080 and 8,416,080, respectively, common
shares at cost		(81,002	)		(66,886	)
Retained earnings		172,360			144,217
Total stockholders’ equity		236,228			208,941
Total liabilities and stockholders’ equity	$	303,286		$	281,525


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Nine Months Ended June 30, 2014 and 2013 (In thousands, except per-share amounts) (Unaudited)
	Three Months Ended June 30,						Nine Months Ended June 30,
	2014			2013			2014			2013
REVENUES:
Gaming operations	$	38,043		$	34,314		$	109,409		$	97,694
Gaming equipment and system sales		12,072			13,451			56,823			40,242
Other		155			340			1,374			1,043
Total revenues		50,270			48,105			167,606			138,979

OPERATING COSTS AND EXPENSES:
Cost of gaming operations revenue ⁽¹⁾		3,788			3,704			11,353			10,359
Cost of equipment and system sales		5,853			5,461			26,518			17,027
Selling, general and administrative expenses		12,722			12,012			40,042			34,930
Research and development		4,327			4,053			12,351			12,316
Amortization and depreciation		11,058			8,900			32,373			25,007
Total operating costs and expenses		37,748			34,130			122,637			99,639
Operating income		12,522			13,975			44,969			39,340

OTHER INCOME (EXPENSE):
Interest income		83			85			262			399
Interest expense		(223	)		(277	)		(712	)		(867	)
Other income		12			—			24			33
Income before income taxes		12,394			13,783			44,543			38,905
Income tax benefit		(4,762	)		(5,334	)		(16,400	)		(14,000	)
Net income	$	7,632		$	8,449		$	28,143		$	24,905
Basic earnings per common share	$	0.26		$	0.29		$	0.95		$	0.87
Diluted earnings per common share	$	0.25		$	0.28		$	0.91		$	0.82
Shares used in earnings per common share:
Basic		29,419			28,960			29,639			28,781
Diluted		30,641			30,710			30,971			30,487

(1)		Cost of gaming operations revenue excludes depreciation and amortization of gaming equipment, content license rights and other depreciable assets, which are included separately in the amortization and depreciation line item.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended June 30, 2014 and 2013 (In thousands) (Unaudited)

	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	28,143		$	24,905
Adjustments to reconcile net income to cash provided by
operating activities:
Amortization and depreciation		32,373			25,007
Accretion of contract rights		7,146			6,034
Share-based compensation		4,567			2,850
Other non-cash items		182			1,401
Deferred income taxes		-			548
Interest income from imputed interest		(155	)		(320	)
Changes in operating assets and liabilities		1,483			3,542
Tax benefit from exercise of stock options		(5,526	)		(3,725	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		68,213			60,242
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment
and leased gaming equipment		(25,877	)		(36,623	)
Acquisition of intangible assets and capitalized labor		(9,444	)		(6,605	)
Advances under development and placement fee agreements		—			(8,535	)
Repayments under development agreements		1,985			7,689
NET CASH USED IN INVESTING ACTIVITIES		(33,336	)		(44,074	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options		3,166			6,449
Tax benefit from exercise of stock options		5,526			3,725
Principal payments of long-term debt		(2,775	)		(2,775	)
Purchase of treasury stock		(14,116	)		(4,838	)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(8,199	)		2,561

Net increase in cash and cash equivalents		26,678			18,729
Cash and cash equivalents, beginning of period		102,632			73,755
Cash and cash equivalents, end of period	$	129,310		$	92,484

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