SHFL » Topics » 13. SUBSEQUENT EVENTS

These excerpts taken from the SHFL 10-K filed Jul 8, 2008.

16. SUBSEQUENT EVENTS

 

(The numbered items correspond to the numbered items of the Legal Proceedings):

 

2.             Awada—On December 27, 2007, the Nevada Supreme Court denied the appeal filed by the plaintiffs with regard to the District Court’s rescission judgment and its dismissal of all claims related to the breach of contract issues, and affirmed the District Court’s order granting the rescission of the “Game Option Agreement”. The Supreme Court also remanded to the District Court, on procedural grounds, the remaining non-contract claims. We now intend to seek dismissal of these claims.

 

3.             GEI—On November 16, 2007, the Court adopted the Magistrate’s ruling in our favor on the claims construction and overruled the defendants objections to the Magistrate’s ruling. The Court ordered supplemental briefing on the pending summary judgment motions as a result of this ruling. We filed supplemental briefs and the defendants did not. We are still awaiting a ruling on the summary judgment motions.

 

5.             MP Games I—Due to a scheduling conflict of certain counsel, the Court has moved the summary judgment hearing so that the hearing begins on February 28, 2008.

 

6.             Class Action Lawsuits—On November 30, 2007, the Court appointed the “Shuffle Master Institutional Investor Group,” consisting of the Tulsa Municipal Employees’ Retirement Plan and the Oklahoma Firefighters Pension and Retirement System, as Lead Plaintiff. Grant & Eisenhofer is the Lead Plaintiff’s counsel. The Lead Plaintiff has until mid-January 2008 to file an amended complaint.

 

7 & 8       WMS (U.S.) and WMS (Australia)—On December 19, 2007 both cases were dismissed with prejudice, and the parties reached a confidential settlement agreement, the terms of which are not material to the Company.

 

9.             Shareholder Derivative Suits—On October 24, 2007, the Court approved a stipulation to transfer the Hodgkins case to Judge Dawson, who had already been assigned the Pirelli case. On November 9, 2007, the Court ordered the Hodgkins case to be consolidated into the Pirelli case. Additionally, any future derivative actions alleging similar facts and legal theories will be consolidated into the Pirelli case. The Law Firm of Coughlin Stoia Geller Rudman & Robbins LLP has been appointed lead counsel. A consolidated amended complaint is due to be filed in mid-February 2008.

 

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SHUFFLE MASTER, INC.

 

16. SUBSEQUENT EVENTS



 



(The numbered
items correspond to the numbered items of the Legal Proceedings):



 



2.             Awada—On
December 27, 2007, the Nevada Supreme Court denied the appeal filed by the
plaintiffs with regard to the District Court’s rescission judgment and its
dismissal of all claims related to the breach of contract issues, and affirmed
the District Court’s order granting the rescission of the “Game Option
Agreement”. The Supreme Court also remanded to the District Court, on
procedural grounds, the remaining non-contract claims. We now intend to seek
dismissal of these claims.



 



3.             GEI—On
November 16, 2007, the Court adopted the Magistrate’s ruling in our favor
on the claims construction and overruled the defendants objections to the
Magistrate’s ruling. The Court ordered supplemental briefing on the pending
summary judgment motions as a result of this ruling. We filed supplemental
briefs and the defendants did not. We are still awaiting a ruling on the
summary judgment motions.



 



5.             MP
Games I
—Due to a scheduling conflict of certain counsel, the Court has
moved the summary judgment hearing so that the hearing begins on February 28,
2008.



 



6.             Class Action
Lawsuits
—On November 30, 2007, the Court appointed the “Shuffle Master
Institutional Investor Group,” consisting of the Tulsa Municipal Employees’
Retirement Plan and the Oklahoma Firefighters Pension and Retirement System, as
Lead Plaintiff. Grant & Eisenhofer is the Lead Plaintiff’s counsel.
The Lead Plaintiff has until mid-January 2008 to file an amended complaint.



 



7 & 8       WMS (U.S.) and WMS
(Australia)
—On December 19, 2007 both cases were dismissed with
prejudice, and the parties reached a confidential settlement agreement, the
terms of which are not material to the Company.



 



9.             Shareholder
Derivative Suits
—On October 24, 2007, the Court approved a stipulation
to transfer the Hodgkins case to Judge Dawson, who had already been assigned
the Pirelli case. On November 9, 2007, the Court ordered the Hodgkins case
to be consolidated into the Pirelli case. Additionally, any future derivative
actions alleging similar facts and legal theories will be consolidated into the
Pirelli case. The Law Firm of Coughlin Stoia Geller Rudman &
Robbins LLP has been appointed lead counsel. A consolidated amended
complaint is due to be filed in mid-February 2008.



 



35
















 



SHUFFLE MASTER, INC.



 



This excerpt taken from the SHFL 10-Q filed Jun 9, 2008.

13. SUBSEQUENT EVENTS

        Legal Proceedings update.    (The numbered items correspond to the numbered items of the Legal Proceedings set forth in Note 12):

            2.     GEI—On May 20, 2008, the Court set a hearing for June 9, 2008 on our Motion for a Default Judgment.

            4.     Class Action Lawsuit—On May 2, 2008, lead plaintiffs filed an opposition to the defendant's Motion to Dismiss. On May 30, 2008, the defendants filed a reply brief in support of the motion. No hearing date has been set by the Court.

            6.     Data Financial—On May 9, 2008, we signed a stipulation with Data Financial to stay certain actions in pending litigation matters until July 1, 2008 due to the parties' agreement to participate in mediation. On May 14, 2008, we filed a Motion to Remand the Nevada case from the United States District Court for the District of Nevada to the Eighth Judicial District Court. A mediation is now scheduled for June 24, 2008.

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This excerpt taken from the SHFL 10-Q filed Mar 17, 2008.

13. SUBSEQUENT EVENTS

        Legal Proceedings update.    (The numbered items correspond to the numbered items of the Legal Proceedings set forth in Note 12):

            1.     VendingData II—On February 1, 2008, the Court granted VendingData's Motion for Summary Judgment and denied Shuffle Master's Cross Motion for Summary Judgment. We appealed this ruling on February 29, 2008. On February 15, 2008, VendingData filed a Motion for Attorney's Fees and Costs requesting in excess of approximately $1,800, based on VendingData's theory that the case was filed by us in bad faith and that the case was a "vexatious" litigation. We

31


SHUFFLE MASTER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited, in thousands, except unit/seat and per share amounts)

13. SUBSEQUENT EVENTS (Continued)

    believe that the motion lacks merit and we intend to vigorously oppose the motion, which is pending.

            3.     GEI—On March 6, 2008, the Court ordered the Clerk to enter default against GEI. The Clerk entered default against GEI on March 6, 2008. In accordance with the Court's order of March 6, 2008, we intend to seek any appropriate damages and costs to be included in a default judgment.

            5.     MP Games I—The Court heard arguments on the parties' Summary Judgment Motions on February 28, 2008. A decision is pending.

            6.     Class Action Lawsuits—A Consolidated Class Action Complaint was filed on February 5, 2008, with the same material allegations, as in the initial lawsuits. This Consolidated Class Action Complaint supercedes all individual initial lawsuits.

            9.     Shareholder Derivative Lawsuits—Pursuant to stipulation, any consolidated amended complaint is due to be filed, at the earliest, in the middle of the Company's third fiscal quarter in 2008.

        Fractional Ownership Airplane Sale.    On May 28, 2004, we purchased a 6.25% undivided interest in a Citation X airplane at a cost of $1,123 from Net Jets Inc. ("Net Jets"). Effective July 15, 2005, we purchased an additional 3.125% interest in the same plane for an incremental $561. Effective February 27, 2008, we sold our interest in the airplane.

        Proceeds of approximately $1,309 were received from Net Jets on February 28, 2008 per sale of our interest in the airplane, which was comprised of the agreed-upon sales price of $1,290 and $19 of additional credits, which related to partial period charges, refunds for over-payment due, etc. The gain on the sale of the airplane was $738. This sale will be recognized in our second fiscal quarter, for the period ending April 30, 2008.

        Acting Chief Financial Officer.    On March 6, 2008, we announced that effective March 1, 2008, Senior Vice President and Chief Accounting Officer Coreen Sawdon was appointed as Acting Chief Financial Officer, replacing Paul Meyer in that role. Mr. Meyer will continue as our President and Chief Operating Officer.

        Ms. Sawdon, age 40, joined us in July 2005 as Vice President of Accounting. Prior to joining us, Ms. Sawdon spent three years at GES Exposition Services where she was Vice President of Finance. Ms. Sawdon has more than thirteen years of public accounting experience, the last ten years of which were spent specializing in the gaming and hospitality industry. Ms. Sawdon holds a Bachelor of Science degree in accounting from Pepperdine University. Ms. Sawdon's current Employment Agreement was included as Exhibit 10.1 to the Current Report filed on Form 8-K on March 6, 2008. No new employment contract has been entered into relating to Ms. Sawdon's role as Acting Chief Financial Officer with the Company.

32


This excerpt taken from the SHFL 10-Q filed Jun 11, 2007.

13.   SUBSEQUENT EVENTS

Class Action Lawsuit.   On June 1, 2007, a putative class action complaint for violation of the federal securities laws against us and our CEO and CFO was filed in the United States District Court for the District of Nevada on behalf of persons who purchased our stock between December 22, 2006, and March 12, 2007. The case is entitled Joseph Stocke vs. Shuffle Master, Inc., Mark L. Yoseloff and Richard L. Baldwin. We, as well as, Dr. Yoseloff and Mr. Baldwin, were served with the complaint on June 6, 2007. The complaint asserts claims pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. These claims relate to our March 12, 2007, announcement that we would restate our Fiscal Fourth Quarter and full year financial results. The complaint seeks compensatory damages in an unstated amount. Potential plaintiffs have until August 4, 2007, to move the court for appointment as lead plaintiff. At this time, we have not responded to the complaint.

VendingData II Update.   On May 23, 2007, the Court entered an order granting VendingData’s motion for a protective order staying all further discovery in the case pending resolution of VendingData’s motion for summary judgment, other than further discovery granted Shuffle Master pursuant to an emergency motion heard on May 10, 2007. On May 31, 2007, Shuffle Master opposed VendingData’s motion for summary judgment of non-infringement, and brought a cross-motion for summary judgment that the PokerOne™ does infringe. No hearing on the summary judgment motions has yet been scheduled.

We intend to continue to enforce our intellectual property rights by moving the litigation forward to resolve our patent infringement claim.

We very strongly believe that there is no factual or legal merit to the allegations in the complaint and that neither the Company nor any members of management have committed any wrongful acts or omissions. We intend to vigorously defend ourself and the individuals and oppose the complaint.

Awada Update.   Plaintiffs have appealed the Court’s order granting the rescission of the “Game Option Agreement” to the Nevada Supreme Court. The appeal is pending and oral arguments were heard on June 5, 2007. We cannot predict the date of any decision.

Awada II Update.   On May 17, 2007 Awada filed an appeal to the Ninth Circuit Court of Appeals on all issues.

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This excerpt taken from the SHFL 10-K filed Apr 23, 2007.

SUBSEQUENT EVENTS

$100,000 Revolving Credit Facility.   On November 30, 2006, we entered into a $100,000 senior secured revolving credit facility (the “New Credit Agreement”) with Deutsche Bank AG Cayman Islands Branch, as a Lender, Deutsche Bank Trust Company Americas, as Administrative Agent, Deutsche Bank Securities Inc. and Wells Fargo, N.A., as Joint Lead Arrangers and Book Managers and Wells Fargo, N.A. as Syndication Agent. We drew $71,180 on the facility, which was used to repay in its entirety the Old Credit Agreement, dated as of January 25, 2006. Any remaining amount available under the revolving credit facility will be used for working capital, capital expenditures and general corporate purposes, including share repurchases. The revolving credit facility under the New Credit Agreement will mature on November 30, 2011.

64




This excerpt taken from the SHFL 10-K filed Jan 17, 2007.

16. SUBSEQUENT EVENTS

$100,000 Revolving Credit Facility.   On November 30, 2006, we entered into a $100,000 senior secured revolving credit facility (the “New Credit Agreement”) with Deutsche Bank AG Cayman Islands Branch, as a Lender, Deutsche Bank Trust Company Americas, as Administrative Agent, Deutsche Bank Securities Inc. and Wells Fargo, N.A., as Joint Lead Arrangers and Book Managers and Wells Fargo, N.A. as Syndication Agent. We drew $71,180 on the facility, which was used to repay in its entirety the Old Credit Agreement. Any remaining amount available under the revolving credit facility will be used for working capital, capital expenditures and general corporate purposes, including share repurchases. The revolving credit facility under the New Credit Agreement will mature on November 30, 2011. Additional information on the New Credit Agreement may be found in our Current Report on Form 8-K, dated December 5, 2006.

109




This excerpt taken from the SHFL 10-K filed Jan 16, 2007.

16. SUBSEQUENT EVENTS

$100,000 Revolving Credit Facility.   On November 30, 2006, we entered into a $100,000 senior secured revolving credit facility (the “New Credit Agreement”) with Deutsche Bank AG Cayman Islands Branch, as a Lender, Deutsche Bank Trust Company Americas, as Administrative Agent, Deutsche Bank Securities Inc. and Wells Fargo, N.A., as Joint Lead Arrangers and Book Managers and Wells Fargo, N.A. as Syndication Agent. We drew $71,180 on the facility, which was used to repay in its entirety the Old Credit Agreement. Any remaining amount available under the revolving credit facility will be used for working capital, capital expenditures and general corporate purposes, including share repurchases. The revolving credit facility under the New Credit Agreement will mature on November 30, 2011. Additional information on the New Credit Agreement may be found in our Current Report on Form 8-K, dated December 5, 2006.

109




This excerpt taken from the SHFL 10-Q filed Sep 11, 2006.

13. SUBSEQUENT EVENTS

PVS.   As part of the acquisition of Stargames, we acquired Professional Vending Services Pty Ltd (“PVS”), a wholly-owned subsidiary of Stargames. PVS designs, develops and manufactures automatic vending machines. PVS offers exclusive equipment in all main vending segments including snacks, cold drinks, food (hot and cold), coffee and cigarettes. We have determined that the operations of PVS are non-core to our gaming Entertainment Products and Utility Products segments. Accordingly, on August 4, 2006, we entered into a Sale and Purchase Agreement to sell Stargames’ equity interests in PVS including settlement of all existing liabilities of PVS. There is no impact to the condensed consolidated financial statements as the sale and any related liabilities are contemplated in our purchase price allocation for Stargames. The transaction is anticipated to close in September 2006.

Further detail is included under the heading “Discontinued Operations” in Note 2 to our condensed consolidated financial statements.

25




This excerpt taken from the SHFL 10-Q filed Sep 8, 2006.

13. SUBSEQUENT EVENTS

PVS.   As part of the acquisition of Stargames, we acquired Professional Vending Services Pty Ltd (“PVS”), a wholly-owned subsidiary of Stargames. PVS designs, develops and manufactures automatic vending machines. PVS offers exclusive equipment in all main vending segments including snacks, cold drinks, food (hot and cold), coffee and cigarettes. We have determined that the operations of PVS are non-core to our gaming Entertainment Products and Utility Products segments. Accordingly, on August 4, 2006, we entered into a Sale and Purchase Agreement to sell Stargames’ equity interests in PVS including settlement of all existing liabilities of PVS. There is no impact to the condensed consolidated financial statements as the sale and any related liabilities are contemplated in our purchase price allocation for Stargames. The transaction is anticipated to close in September 2006.

Further detail is included under the heading “Discontinued Operations” in Note 2 to our condensed consolidated financial statements.

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This excerpt taken from the SHFL 10-Q filed Sep 6, 2005.

12.  SUBSEQUENT EVENTS

 

Effective August 2005, we purchased certain assets from Spur Gaming Systems (“SGS”), including the side bet proprietary games, Jackpot Pai Gow Poker™ and Progressive Jackpot Pai Gow Poker™.  At the time of this transaction there were approximately 53 SGS tables licensed throughout North America.

 

In August 2005, we entered into a strategic alliance with Ameranth Wireless, Inc. to promote and distribute Ameranth’s poker-room management products throughout the world.  Under the terms of the agreement, Ameranth will develop a software interface between our Deck Mate® poker shuffler and Ameranth’s poker-room products to provide poker-room operators broader functionality and a more robust total solution.

 

In August 2005, we purchased VIP Gaming Solutions of Sydney, Australia.  As a result of this acquisition, we strengthened our direct sales presence in the Asia-Pacific region.

 

In August 2005, we entered into a distribution agreement with Casino Solutions S.A.C. (“Casino Solutions), a corporation with offices in Lima, Peru and Buenos Aires, Argentina.  Under the terms of the agreement, Casino Solutions will be our exclusive distributor throughout South America and will be responsible for promoting, marketing, distributing and servicing our products within the region.

 

On September 2, 2005, pursuant to the terms of the previously-entered into distribution agreement between CARD, a Shuffle Master International Company, and Machines Games Automatics, S.A. (“MGA”), we received approval of our Table Master™ product by the responsible gaming lab in Barcelona.  Additionally, pursuant to the terms of the distribution agreement with MGA, the agreement will become effective fourteen (14) days upon receipt of such approval, or September 16, 2005 (the “MGA Commencement Date”).  The distribution agreement with MGA includes minimum annual purchase commitments to distribute our Table Master product to arcades throughout Spain.  We expect the distribution agreement with MGA to contribute over $5,000 in revenue during the first twelve (12) month period following the MGA Commencement Date.

 

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In early September 2005, we received an order for over 125 units of our Easy Chipper roulette chip sorting machine.  This order was placed by Genting Highlands in Malaysia through RGB, Limited, our Asia Pacific distributor.

 

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