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SECURITIES AND EXCHANGE COMMISSION  FORM 10-Q (Mark One) [x]
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2004
 OR [   ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934FOR THE TRANSITION PERIOD FROM
_______TO________
 Commission File Number 000-23401 GAMETECH INTERNATIONAL, INC.  DELAWARE
    
    33-0612983(State or other jurisdiction
of incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 900 SANDHILL ROAD, RENO, NEVADA
89521
(Address of principal executive offices)
(Zip code) Registrants telephone number, including area code: (775) 850-6000 Indicate by check mark whether the registrant (1) has filed all reports
required 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 [   ] Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2) Yes [   ] No [x] On March 8, 2004, the registrant had 11,752,439 outstanding shares of its
Common Stock, par value $0.001 per share.




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GAMETECH INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10 Q
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2004
INDEX  
 PageNo.Part I. Financial Information:Item 1.
    
    Financial Statements (Unaudited)Condensed Consolidated Balance Sheets October 31, 2003 and January 31, 2004
    
    
    3Condensed Consolidated Statements of Operations Three Months Ended January 31, 2003 and 2004
    
    
    4Condensed Consolidated Statements of Cash Flows Three Months Ended January 31, 2003 and 2004
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    14Item 4.
    
    Controls and Procedures
    
    
    15Part II. Other Information:Item 1.
    
    Legal Proceedings
    
    
    15Item 2.
    
    Changes in Securities, Use of Proceeds, and Issuer Purchases of Equity Securities
    
    
    16Item 3.
    
    Defaults Upon Senior Securities
    
    
    16Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    16Item 5.
    
    Other Information
    
    
    16Item 6.
    
    Exhibits and Reports on Form 8-K
    
    
    16Signatures
    
    
    17Exhibit 3.4Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
 2




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GAMETECH INTERNATIONAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts) October 31,
    
    January 31,2003
    
    2004(Note A)
    
    (Unaudited)Assets:Current assets:Cash and cash equivalents
    
    $
    10,202
    
    
    $
    9,733Short-term investments
    
    
    1,750
    
    
    
    348Accounts receivable, less allowance for
doubtful accounts of $2,287 in 2003 and
$2,360 in 2004
    
    
    3,624
    
    
    
    4,148Deposits
    
    
    28
    
    
    
    29Refundable income taxes
    
    
    231
    
    
    
    208Prepaid expenses and other current assets
    
    
    341
    
    
    
    961Deferred income taxes
    
    
    2,185
    
    
    
    2,185Total current assets
    
    
    18,361
    
    
    
    17,612Bingo equipment, furniture and other equipment, net
    
    
    22,319
    
    
    
    22,482Goodwill, net
    
    
    16,809
    
    
    
    16,809Intangibles, less accumulated amortization of
$2,089 in 2003 and $2,477 in 2004
    
    
    2,236
    
    
    
    2,032Restricted cash
    
    
    450
    
    
    
    450Total assets
    
    $
    60,175
    
    
    $
    59,385Liabilities and stockholders equity:Current liabilities:Accounts payable
    
    $
    783
    
    
    $
    1,184Accrued payroll and related obligations
    
    
    754
    
    
    
    848Other accrued liabilities
    
    
    1,743
    
    
    
    1,977Note payable and other obligations
    
    
    275
    
    
    
    194Total current liabilities
    
    
    3,555
    
    
    
    4,203Non-current employment obligations
    
    
    448
    
    
    
    433Deferred income taxes
    
    
    3,551
    
    
    
    3,551Commitments and contingenciesStockholders equity:Common stock, $0.001 par value: 40,000,000 shares
authorized; 13,592,764 shares issued at October
31, 2003 and at January 31, 2004
    
    
    14
    
    
    
    14Capital in excess of par value
    
    
    46,655
    
    
    
    46,655Retained earnings
    
    
    14,048
    
    
    
    12,625Less: Treasury stock, at cost: 1,855,325 shares
at October 31, 2003 and at January 31, 2004
    
    
    (8,096
    )
    
    
    (8,096
    )Total stockholders equity
    
    
    52,621
    
    
    
    51,198Total liabilities and stockholders equity
    
    $
    60,175
    
    
    $
    59,385
 See accompanying notes. 3




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GAMETECH INTERNATIONAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts) Three Months EndedJanuary 31,2003
    
    2004(Unaudited)Revenue
    
    $
    13,198
    
    
    $
    12,615Cost of revenue
    
    
    5,264
    
    
    
    5,874Gross profit
    
    
    7,934
    
    
    
    6,741Operating expenses:General and administrative
    
    
    2,902
    
    
    
    2,780Sales and marketing
    
    
    3,193
    
    
    
    3,035Research and development
    
    
    996
    
    
    
    957Total operating expenses
    
    
    7,091
    
    
    
    6,772Income (loss) from operations
    
    
    843
    
    
    
    (31
    )Interest and other income, net
    
    
    7
    
    
    
    6Income (loss) before provision for income taxes
    
    
    850
    
    
    
    (25
    )Provision for (benefit from) income taxes
    
    
    328
    
    
    
    (10
    )Net income (loss)
    
    $
    522
    
    
    $
    (15
    )Basic net income (loss) per share
    
    $
    0.05
    
    
    $
    (0.00
    )Diluted net income (loss) per share
    
    $
    0.04
    
    
    $
    (0.00
    )Shares used in the calculation of net income
(loss) per share:Basic
    
    
    11,588,396
    
    
    
    11,737,439Diluted
    
    
    11,705,393
    
    
    
    11,737,439Cash dividends per common share
    
    $
    
    
    
    $
    0.12
 See accompanying notes. 4




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GAMETECH INTERNATIONAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) Three Months EndedJanuary 31,2003
    
    2004(unaudited)Cash flows from operating activities:Net income (loss)
    
    $
    522
    
    
    $
    (15
    )Adjustments to reconcile net income (loss) to net cash provided by
operating activities net of effects of acquired business:Depreciation, amortization and obsolescence
    
    
    2,560
    
    
    
    2,899Loss on disposals of furniture and other equipment
    
    
    38
    
    
    
    2Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (540
    )
    
    
    (524
    )Deposits
    
    
    550
    
    
    
    (1
    )Refundable income taxes
    
    
    322
    
    
    
    23Prepaid expenses and other current assets
    
    
    (170
    )
    
    
    (620
    )Accounts payable
    
    
    (443
    )
    
    
    401Accrued payroll and related obligations
    
    
    (179
    )
    
    
    94Other accrued liabilities
    
    
    17
    
    
    
    234Non-current employment obligations
    
    
    (4
    )
    
    
    (15
    )Net cash provided by operating activities
    
    
    2,673
    
    
    
    2,478Cash flows from investing activities:Proceeds from sale of short-term investments
    
    
    1,624
    
    
    
    1,402Payments for purchase of short-term investments
    
    
    (693
    )
    
    
    Capital expenditures for bingo equipments, furniture and equipment
    
    
    (2,317
    )
    
    
    (2,676
    )Payment for the acquisition of International Gaming Systems, Inc.
    
    
    (3,435
    )
    
    
    Payments for buy out of distributor agreements
    
    
    (406
    )
    
    
    Payments for acquisitions of intangible assets and capitalized costs
of developed software
    
    
    
    
    
    
    (184
    )Net cash used in investing activities
    
    
    (5,227
    )
    
    
    (1,458
    )Cash flows from financing activities:Payments on long-term debt
    
    
    (35
    )
    
    
    (81
    )Payment of dividends
    
    
    
    
    
    
    (1,408
    )Proceeds from sales of common stock
    
    
    501
    
    
    
    Net cash provided by (used in) financing activities
    
    
    466
    
    
    
    (1,489
    )Net decrease in cash and cash equivalents
    
    
    (2,088
    )
    
    
    (469
    )Cash and cash equivalents at beginning of period
    
    
    4,233
    
    
    
    10,202Cash and cash equivalents at end of period
    
    $
    2,145
    
    
    $
    9,733Supplemental disclosure of non-cash investing activities:Purchase of intangible assets through the incurrence of long-term debt
    
    $
    537
    
    
    $
    
 See accompanying notes. 5




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GAMETECH INTERNATIONAL, INC.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JANUARY 31, 2004
(UNAUDITED) NOTES TO FINANCIAL STATEMENTS NOTE A. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as
of January 31, 2004 have been prepared in accordance with accounting principles
generally accepted in the United States for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States for complete
financial statements. In our opinion, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended January 31, 2004
are not necessarily indicative of the results that may be expected for the year
ending October 31, 2004. The balance sheet at October 31, 2003 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements. For further information,
refer to the consolidated financial statements and footnotes thereto included
in our annual report on Form 10-K for the year ended October 31, 2003. Certain amounts in the prior periods condensed consolidated financial
statements have been reclassified to conform to the current periods
presentation. NOTE B. SIGNIFICANT ACCOUNTING POLICIES REVENUE RECOGNITION Revenue is recognized for bingo terminals placed in bingo halls under
contracts based on (1) a fixed fee per use per session; (2) a fixed weekly fee
per terminal; or (3) a percentage of the revenue generated by each terminal.
Our revenue recognition is a key component of our results of operations, and
determines the timing of certain expenses, such as commissions and royalties.
We recognize revenue when all of the following factors exist: (a) evidence of
an arrangement with the customer; (b) play or availability of the bingo
terminals; (c) a fixed or determinable fee; and (d) collectibility is
reasonably assured. We exercise judgment in assessing the credit worthiness of
our customers to determine whether collectibility is reasonably assured. Should
changes in conditions cause us to determine the factors are not met for future
transactions, revenue recognized for future reporting periods could be
adversely affected. ALLOWANCE FOR DOUBTFUL ACCOUNTS We estimate the possible losses resulting from non-payment of outstanding
accounts receivable. Our customer base consists primarily of entities operating
in charitable, Native American, and commercial bingo halls located throughout
the United States. In some jurisdictions, the billing and collection function
is performed as part of a distributor relationship, and in those instances, we
maintain allowances for possible losses resulting from non-payment by both the
customer and distributor. We perform ongoing evaluations of customers and
distributors for credit worthiness, economic trends, changes in customer
payment terms, and historical collection experience when evaluating the
adequacy of its allowance for doubtful accounts. We also reserve a percentage
of our accounts receivable based on aging category. In determining these
percentages, we review historical write-offs of our receivables, payment
trends, and other available information. While such estimates have been within
our expectations and the provisions established, a change in financial
condition of specific customers or in overall trends experienced may result in
future adjustments of our estimates of recoverability of our receivables. 6




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BINGO EQUIPMENT, FURNITURE AND OTHER EQUIPMENT Bingo equipment includes file servers, callers units, point-of-sale
units, other support equipment and the portable and fixed-base player
terminals. Bingo equipment, furniture and equipment are stated at cost and
depreciated using the straight-line method over the estimated useful lives of
the assets. The estimated useful lives are as follows: Bingo equipment
    
    3-5 yearsOffice furniture and equipment
    
    3-7 yearsLeasehold improvements
    
    10 years
 We provide reserves for excess or obsolete bingo terminals on hand that we
do not expect to be used. Our reserves are based upon several factors,
including our estimated forecast of bingo terminal demand for placement into
halls. Our estimates of future bingo terminal demand may prove to be
inaccurate, in which case we may have understated or overstated the provision
required for excess and obsolete bingo terminals. Although we attempt to assure
the accuracy of our estimated forecasts, any significant unanticipated changes
in demand or technological developments could have a significant impact on the
value of our bingo terminals and our reported operating results. SOFTWARE DEVELOPMENT CAPITALIZATION We capitalize costs related to the development of certain software
products that meet the criteria of Statement of Financial Accounting Standards
(SFAS) No. 86  Accounting for the Costs of Computer Software to Be Sold,
Leased, or Otherwise Marketed. SFAS No. 86 provides for the capitalization of
computer software that is to be used as an integral part of a product or
process to be sold or leased, after technological feasibility has been
established for the software and all research and development activities for
the other components of the product or process have been completed. We are
capitalizing qualified costs of software developed for new products or for
significant enhancements to existing products. We cease capitalizing costs
when the product is available for general release to our customers. We
amortize the costs on a straight-line method over the estimated economic life
of the product beginning when the product is available for general release. The achievement of technological feasibility and the estimate of a
products economic life require managements judgment. Any changes in key
assumptions, market conditions or other circumstances could result in an
impairment of the capitalized asset and a charge to our operating results. GOODWILL We
are required to perform an annual goodwill impairment review, and depending
upon the results of that measurement, the recorded goodwill may be written down
and charged to income from operations when its carrying amount exceeds its
estimated fair value. In addition, we assess the impairment of goodwill
whenever events or changes in circumstances indicate that the carrying value
may not be recoverable, such as a significant adverse change in legal factors
or in the business climate, an adverse action or assessment by a regulator,
unanticipated competition, or a loss of key personnel. LONG-LIVED ASSETS We
have adopted the provisions of SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 requires impairment
losses to be recognized for long-lived assets and identifiable intangibles,
other than goodwill, used in operations when indicators of impairment are
present and the estimated undiscounted cash flows are not sufficient to recover
the assets carrying amount. The impairment loss is measured by comparing the
fair value of the asset to its carrying amount. LEGAL CONTINGENCIES We are currently involved in various legal claims and legal proceedings.
Periodically, we review the status of each significant matter and assess our
potential financial exposure. If the potential loss from any claim or legal
proceeding is considered probable and the amount can be estimated, we accrue a
liability for the estimated loss. Significant judgment is required in both the
determination of probability and the determination as to whether an exposure
can be reasonably estimated. Because of uncertainties related to these
matters, accruals are based only on 7




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the best information available at the time. As additional information
becomes available, we reassess the potential liability related to our pending
claims and litigation and may revise our estimates. Such revisions in the
estimates of the potential liabilities could have a material impact on our
consolidated results of operations and financial position. See Note E of Notes
to these Condensed Consolidated Financial Statements for a description of our
material legal proceedings. PRO FORMA STOCK  BASED COMPENSATION INFORMATION Pro forma information regarding net income (loss) and net income (loss)
per share is required by SFAS No. 123, Accounting for Stock-Based Compensation,
as amended by SFAS No. 148, Accounting for Stock-Based Compensation 
Transition and Disclosure,and has been determined as if we had accounted for
our employee stock options under the fair value method of that statement. Our pro forma information follows: (In thousands, except per share amounts) Three Months EndedJanuary 31,2003
    
    2004Net income (loss), as reported
    
    $
    522
    
    
    $
    (15
    )Deduct: Total stock-based employee
compensation expense determined
under fair value based method, net of
related tax effects
    
    
    (113
    )
    
    
    (67
    )Pro forma net income (loss)
    
    $
    409
    
    
    $
    (82
    )Net income (loss) per share:Basic  as reported
    
    $
    0.05
    
    
    $
    (0.00
    )Basic  pro forma
    
    $
    0.04
    
    
    $
    (0.01
    )Diluted  as reported
    
    $
    0.04
    
    
    $
    (0.00
    )Diluted  pro forma
    
    $
    0.03
    
    
    $
    (0.01
    )
 NEW ACCOUNTING PRONOUNCEMENTS In November 2002, the EITF reached a consensus on Issue 00-21,
Multiple-Deliverable Revenue Arrangements(Issue 00-21). Issue 00-21
addresses how to account for arrangements that may involve the delivery or
performance of multiple products, services, and/or rights to use assets. The
consensus mandates how to identify whether goods or services or both that are
to be delivered separately in a bundled sales arrangement should be accounted
for separately because they are separate units of accounting. The guidance
can affect the timing of revenue recognition for such arrangements, even though
it does not change rules governing the timing or pattern of revenue recognition
of individual items accounted for separately. The final consensus will be
applicable to agreements entered into in fiscal years beginning after June 15,
2003 with early adoption permitted. Additionally, companies will be permitted
to apply the consensus guidance to all existing arrangements as the cumulative
effect of a change in accounting principle in accordance with APB Opinion No.
20, Accounting Changes. The adoption of Issue 00-21 did not have a material
impact on our financial position, cash flows or results of operations. In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities - an Interpretation of ARB No. 51(FIN 46). In
December 2003, FIN 46 was revised to clarify certain provisions and effective
dates for application. FIN 46 addresses consolidation by business enterprises
of variable interest entities that have certain characteristics. Transferors to
qualifying special-purpose entities and grandfathered qualifying
special-purpose entities subject to the reporting requirements of SFAS No. 140,
Accounting for Transfers and 8




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Servicing of Financial Assets and Extinguishments of Liabilities,are
excluded from the scope of FIN 46. FIN 46 is applicable no later than the end
of the first interim or annual reporting period ending after March 15, 2004,
unless we have an interest in a special purpose entity, which the effective
date for application is no later than the end of the first interim or annual
reporting period ending after December 15, 2003. We currently have no
contractual relationship or other business relationship with a variable
interest entity. However, if we entered into any such arrangement with a
variable interest entity in the future, the financial position, cash flows or
results of operations may be adversely impacted. NOTE C. ACQUISITION OF ASSETS On November 7, 2002, we acquired certain assets of International Gaming
Systems, Inc. for a cash purchase price of $3.5 million, which included
approximately $69,000 of acquisition costs. The transaction was accounted for
as a purchase of a business in accordance with SFAS No. 141, Business
Combinations, and accordingly, the operating results have been included in our
consolidated financial statements since the date of acquisition. The total purchase price of the transaction has been allocated to the
identifiable intangible assets and tangible assets acquired, based on their
estimated fair values at the date of acquisition, with any residual amount
allocated to goodwill as follows: (In thousands) Acquired assets:Bingo equipment
    
    $
    582Intellectual property
    
    
    750Distributor contracts
    
    
    260Trademarks
    
    
    28Goodwill
    
    
    1,849$
    3,469
 The maximum potential contingent payments relating to the acquisition were
$2,043,000, which was placed in escrow pending the outcome of certain events.
The escrow was comprised of the following four components: $900,000 (the New
York Escrow Amount); $413,000 (the Title Transfer Escrow Amount); $230,000
(the Bingo Unit Escrow Amount); and $500,000 (the Holdback Escrow Amount).
The full amount of the Title Transfer Escrow Amount, the Bingo Unit Escrow
Amount and the Holdback Escrow Amount has been released to IGS as a result of
the successful transfer of title of certain assets to us, the verification of
the number of bingo terminals acquired and the satisfaction of certain
representations and warranties made by IGS. These amounts have been included
in the purchase price allocated to the assets acquired. The release of the New
York Escrow Amount is contingent upon the negotiation of new contracts with
IGSs former New York customers or the receipt by us of continuing revenues
from the New York customers. As of January 31, 2004, $648,750 of the New York
Escrow Amount has been released to IGS. The entire amount of the New York
Escrow Amount has been included in the purchase price allocated to the assets
acquired as we currently consider it probable that the remaining funds will be
paid to IGS. NOTE D. NET INCOME (LOSS) PER SHARE OF COMMON STOCK The calculation of the basic and diluted net income (loss) per share is
the same except for the dilutive effect of outstanding stock options. The
dilution was 116,997 shares for the three months ended January 31, 2003. There
is no effect of outstanding options on the diluted loss per share for the
period ended January 31, 2004 because their effect would be anti-dilutive.
Employee stock options to purchase 813,975 and 704,535 shares of our common
stock for the three months ended January 31, 2004 and 2003, respectively, were
not included in the computation of diluted loss per share because the effect
would be anti-dilutive (determined using the treasury stock method). NOTE E. LITIGATION On March 22, 2001, we filed a claim in the United States District Court,
District of Arizona, GAMETECH INTERNATIONAL, INC. V. TREND GAMING SYSTEMS, LLC,
CV 01-540 PHX PGR, seeking a declaratory judgment that we are not in material
breach of our November 1, 1999 distribution agreement with Trend Gaming
Systems, LLC and seeking damages for past due payments and wrongful
withholdings by Trend. Trend has counterclaimed, alleging that its payments
are in compliance with its contractual obligations and that it is entitled to
withhold certain monies. Trend also contends that we are in breach of certain
of our contractual obligations to Trend or its customers. On December 16, 2002,
the court entered at our request an order enjoining Trend from using
approximately $540,000 in funds it had collected on our behalf, pending a trial
on our ownership interest in those funds. The money has been placed in a bank
account subject to the courts control. In addition, collections of 9




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accounts receivable by Trend, if any, will also be placed in that account,
pending the trial of the case. Trend filed a motion for summary judgment
alleging that the termination of the distribution agreement was improper. On
May 16, 2003, the court dismissed Trends motion for summary judgment. On
December 2, 2003, Trend filed a renewed motion for summary judgment alleging
that we did not have the right to terminate the distribution agreement based
upon Trends failure to insure that we received our minimum rate of return. We
have prepared a response and the motion will be heard on March 17, 2004. A May
10, 2004 trial date has been set. We have denied the allegations and intend to
vigorously pursue and defend this matter. However, we cannot provide assurance
that we will obtain a favorable outcome. An unfavorable outcome could have a
material adverse effect on our financial position, cash flows and results of
operations. On October 30, 2002, Capital Gaming Supplies filed a claim in the United
States District Court, Southern District of Mississippi, CAPITAL GAMING
SUPPLIES, INC. V. GAMETECH INTERNATIONAL, INC., 3:02 CV 1636 WS, seeking a
judgment that we tortiously interfered with alleged existing and prospective
customer accounts. We have denied the allegations and filed a counter-claim
seeking a judgment that Capital tortiously interfered with our customer
accounts. On April 18, 2003, Capital filed an amended complaint adding other
claims against us and other defendants, including a claim for malicious breach
of contract against IGS, and its principals. In November 2002, we acquired
certain assets of IGS and we assumed certain claims filed by Capital against
IGS and its principals. Capital seeks compensatory and punitive damages from
all defendants. The January 28, 2004 trial date has been postponed
indefinitely. We intend to defend and pursue vigorously this matter. We
believe that Capitals claims are without merit. However, we cannot provide
assurance that we will obtain a favorable outcome. An unfavorable outcome could
have a material adverse effect on our financial position, cash flows and
results of operations. In March 2003, the South Carolina Department of Revenue issued a notice to
all persons and entities that use electronic daubing devices (such as our
portable and fixed-base bingo terminals) to cease and desist using the devices
as of September 4, 2003. The notice is a reversal of the Departments previous
position provided to us in 1995 regarding the use of such devices. The
Departments decision was not made due to any violation or improper conduct on
our part. We have filed a Request for Contested Case Hearing regarding the
Departments reversal. We disagree with the Departments position and are
actively seeking legal and legislative relief so that our electronic daubing
devices may continue to be used. Historically, South Carolina has accounted
for less than 5% of our revenues. On February 18, 2004, the state of South
Carolina adopted new statutory provisions allowing for the continued lawful use
of electronic daubing devices such as our products. We are involved in various other legal proceedings arising out of the
ordinary course of our business. We do not believe that any of those
proceedings will have a material adverse effect on our financial position, cash
flows or results of operations. NOTE F. CREDIT AGREEMENTS Effective April 2, 2003, we renewed our revolving line-of-credit agreement
with a bank. The maximum amount available under the terms of the agreement is
$10.0 million, and borrowings bear interest based on the banks prime rate or
LIBOR plus 2.0 percent, at our option. Interest is payable monthly and the
agreement expires on April 2, 2004. The agreement is secured by substantially
all our assets. The agreement contains certain restrictive covenants, which
among other things require that specified financial balances and ratios be
maintained, quarterly profitability be maintained, restrictions on the payment
of dividends and the incurrence of additional indebtedness. We have received a
waiver from the bank for the payment of cash dividends and non-compliance with
the quarterly profitability requirement for the three months ended January 31,
2004. At January 31, 2004, there was no outstanding balance under the
line-of-credit. ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our condensed
consolidated financial statements and notes thereto included elsewhere in this
report, as well as our audited consolidated financial statements for the fiscal
year ended October 31, 2003 contained in our annual report on Form 10-K. The
following discussion contains certain forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from the
results anticipated in these forward-looking statements as a result of the
factors set forth in this report and those risk factors included in our annual
report on Form 10-K for the fiscal year ended October 31, 2003. 10




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OVERVIEW We design, develop, and market interactive electronic bingo systems. We
currently market portable systems that can be played anywhere within a bingo
hall and a fixed-base system with touchscreen-activated monitors. For our three
most recent fiscal years ended October 31, 2001, 2002 and 2003, our portable
terminals generated approximately 77%, 77% and 73% of our revenues,
respectively, while, during those same years, our fixed-base terminals
generated the balance of our revenues. For the three months ended January 31,
2004, portable terminals accounted for 74% of our revenues and fixed-based
terminals accounted for 26% of our revenues. As of January 31, 2004, we had
systems in service in 35 states and in five foreign countries. We generate revenue by placing electronic bingo systems in bingo halls
under contracts based on (1) a fixed fee per use per session; (2) a fixed
weekly fee per terminal; or (3) a percentage of the revenues generated by each
terminal. Revenue growth is affected by player acceptance of electronic bingo
as an addition or an alternative to paper bingo, and our ability to expand
operations into new markets. Fixed-base bingo terminals generate greater
revenue per terminal than portable bingo terminals, but also require a greater
initial capital investment. We typically install our electronic bingo systems at no charge to our
customers, and we capitalize the costs. We record depreciation of bingo
equipment over a three- and five-year estimated useful life using the
straight-line method of depreciation. Our expenses consist primarily of (a) cost of revenue, consisting of
expenses associated with technical and operational support of the bingo systems
within bingo halls, depreciation of bingo systems, repair, refurbishment, and
disposals of bingo terminals and related support equipment, and excess or
obsolescence reserve; (b) general and administrative, consisting of activities
associated with management of our company and related support, which includes
finance and accounting, legal, compliance, information systems, human resources
and accounts receivable reserve; (c) sales and marketing, consisting primarily
of commissions paid to distributors for promoting and supporting our products
and an internal sales force with a focus upon generating new customers and
upgrades for existing customers; and (d) research and development, consisting
of company sponsored research and development activities to provide players
with new or enhanced products on which to play bingo. During the first quarter of fiscal 2004, the following events occurred
that affected, or may in the future affect, our results of operations or
liquidity and capital resources. We have incurred significant expenses in aggressively defending or
pursuing certain legal issues, including defense of a patent infringement
lawsuit in Nevada, our litigation with a former distributor in Texas, and
litigation with a former distributor for IGS in Mississippi. The terms of the
terminated distributor agreement with the former Texas distributor contain
certain contingent commission liabilities, which if a final judgment were
rendered unfavorable to us, could have an adverse effect on our financial
position, results of operation and liquidity. The contingent commission
liabilities, only if determined at trial to be payable, would be calculated
based on terms included in the terminated distributor agreement. Assuming
revenues for the three-year period following termination of the distributor
agreement remained constant at the rate earned over the first 17 months
following termination of the distributor agreement, the contingent liability
would amount to approximately $2.2 million. Regarding the patent infringement
matter, an unfavorable outcome at trial could result in substantial damages and
payment of the plaintiffs fees and costs. The Mississippi distributor lawsuit
could result in a punitive damages award which could be materially adverse to
the company. However, because we do not currently believe it probable that
there will be unfavorable outcomes in any of these matters, we have not accrued
any amount related to these contingent liabilities or the other potential
lawsuits. We are involved in various other legal proceedings arising out of the
ordinary course of our business. While we do not believe that any of those
proceedings will have a material adverse effect on our financial position, cash
flows or results of operations, they do sometimes result in significant
expenses in defending or pursuing our legal position. One such matter
involving a terminated distributor in Virginia and Kentucky went to trial
during February 2004. On March 2, 2004 the jury rendered a unanimous verdict
in our favor awarding compensatory and punitive damages against the defendants
in the total amount of approximately $1.7 million, subject to approval of the
court and entry of judgment. We will now petition the court for an award
against the defendants for our legal fees and costs. We can make no assurances
that the court, when entering its final judgment will not reduce the damages
awarded, or whether we will be able to collect any award from the defendants. While this particular matter appears to be resolved, we anticipate that
our legal expenses will continue at an elevated level as trial dates in two
other proceedings have been set for fiscal 2004 and the trial date in a third
matter, originally scheduled for January 2004, has been postponed but could be
rescheduled to take place in fiscal 2004. 11




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We have significantly increased the staffing in our research and
development and quality assurance departments. We expect to maintain a high
level of expenditures in these areas as we focus on new product development and
new features that can be added to our existing equipment. On January 16, 2004, we paid our first ever cash dividend. The one-time
special dividend of $0.12 per share aggregated to approximately $1.4 million.
Additionally, at the March 9, 2004 meeting of our Board of Directors, a regular
quarterly dividend of $0.03 per share was declared payable on March 31, 2004 to
stockholders of record as of March 22, 2004. During the first three-month period of fiscal 2004, our capital
expenditures were approximately $2.7 million, $2.3 million of which represented
investments in bingo and related support equipment. The investment in bingo
equipment included installations in two racinos (racetracks with casinos), a
new venue for our products. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Managements Discussion and Analysis of Financial Condition and Results of
Operations discusses our condensed consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities at the
balance sheet date and reported amounts of revenue and expenses during the
reporting period. On an ongoing basis, we evaluate our estimates and judgments,
including those related to revenue recognition, bad debts, bingo terminal
depreciation, goodwill impairment, and contingencies and litigation. We base
our estimates and judgments on historical experience and on various other
factors that are reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions. These estimates and assumptions are affected by the application of our
significant accounting policies. Our significant accounting policies are
described in Note B to the Condensed Consolidated Financial Statements
contained elsewhere in this report. Critical accounting policies are those that require management to make the
most difficult, subjective, or complex judgments, often as a result of
inherently uncertain matters that may change in subsequent periods. Our
critical accounting policies include revenue recognition, allowance for
doubtful accounts, reserves for bingo terminal obsolescence, capitalization of
software development costs, impairment of assets, and assessment and evaluation
of litigation and contingencies. Changes in internal or external conditions could cause actual results to
differ from our estimates and could cause future reporting periods to be
adversely affected. If changes in conditions lead us to believe that our
criteria for revenue recognition are not met for future transactions, revenue
recognized for future reporting periods could be significantly less. Changes
in financial conditions of specific customers or in overall collection trends
may result in adjustments to our reserves for doubtful accounts. Changes in
technology, our competitors offerings, market conditions or other factors
affecting our business prospects, could result in an increase in reserves for
bingo terminal obsolescence or in an impairment to the carrying value of
goodwill, other intangible assets or the capitalized cost of developed
software. As additional information becomes available and we reassess our
potential liability related to litigation or other contingencies, we may revise
our estimates and such revisions could have an adverse effect on our results of
operations, cash flows and financial position. RESULTS OF OPERATIONS Three Months Ended January 31, 2004 Compared with Three Months Ended January
31, 2003 REVENUE. We generated revenue of $12.6 million for the three months ended
January 31, 2004 compared to $13.2 million for the comparable prior-year
period. The $583,000, or 4.4%, net decrease in revenue from the first quarter
of fiscal 2003 was due to several factors, including fewer installed terminals
in some geographical markets and price erosion due to competition in others. We
believe the introduction of feature enhancements to existing products and the
availability of new products will eventually provide for revenue growth.
However, the time required to move newly developed features and products
through beta testing and regulatory approvals, where required, is difficult to
predict. Our newest portable color terminal, the Traveler, began beta testing
in December and testing continues into the second fiscal quarter. 12




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COST OF REVENUE. Cost of revenue increased $610,000, or 11.6%, to $5.9
million for the three months ended January 31, 2004 from $5.3 million for the
comparable prior-year period. Cost of revenue as a percent of revenue for the
current three-month period increased to 46.6% compared to 39.9% for the three
months ended January 31, 2003. The increase in cost of revenue over the prior
year first quarter was the result of an increase of nearly $300,000 in
depreciation and amortization expense, primarily due to our investment in
TED2C portable color terminals, an increase of $240,000 in service cost due to
increased staffing in field and product support centers and an $84,000 increase
in operations expense that includes our quality assurance function that we have
expanded to keep pace with the development of new features and new products. GENERAL AND ADMINISTRATIVE. General and administrative costs decreased
$122,000, or 4.2%, to $2.8 million for the three months ended January 31, 2004
from $2.9 million for the comparable prior-year period. General and
administrative costs as a percent of revenue for the current and
prior year three-month period were 22.0%. The first quarter of fiscal 2003 and fiscal
2004 included elevated levels of legal expenses, including those related to
defense of a patent infringement lawsuit in Nevada, litigation with a former
distributor in Texas, litigation with a former distributor of IGS in
Mississippi, and other legal proceedings including our successful litigation
against a former distributor in Virginia and Kentucky. Outside legal costs
associated with our more significant litigation amounted to approximately
$488,000 and $575,000 in the first quarters of fiscal 2003 and 2004,
respectively. The improvement in general and administrative costs came as a
result of a decrease of $68,000 in the accrual for management incentive plan
bonuses, a favorable change of $63,000 in bad debt expense, the receipt of back
due rent from a sub-lessee of $40,000 and a decrease of $22,000 in employee
benefits as the result of changes in the administration of our benefit
offerings implemented in January of 2004. SALES AND MARKETING. Sales, marketing, and commission expenses decreased
$158,000, or 4.9%, to $3.0 million for the three months ended January 31, 2004
from $3.2 million for the comparable prior-year period. Sales, marketing, and
commission expenses as a percent of revenue for the current three-month period
were 24.1% compared to 24.2% for the three months ended January 31, 2003.
Distributor commissions decreased $147,000 to $2.1 million for the three months
ended January 31, 2004. Distributor commission expenses, as a percentage of
revenue for the current quarter were 16.6% compared to 17.0% for the three
months ended January 31, 2003. Commissions will fluctuate because the mix of
revenue generated by distributors and those customers we serve directly varies. RESEARCH AND DEVELOPMENT. Research and development costs decreased
$39,000, or 3.9%, to $957,000 for the three months ended January 31, 2004 from
$996,000 for the comparable prior-year period. Research and development costs
as a percent of revenue for the current three-month period were 7.6% compared
to 7.5% for the three months ended January 31, 2003. The emphasis on new
product development and feature enhancements for existing products continues as
a major focus. During the first quarter of fiscal 2004, we capitalized approximately
$150,000 of costs, from our research and development and quality assurance
functions, connected with the internal development of software that meets
technological feasibility and recoverability tests in accordance with FASB
Statement No. 86. We had no such capitalized costs in the first quarter of
fiscal 2003. PROVISION FOR (BENEFIT FROM) INCOME TAXES. Our income tax provision
(benefit) is recorded at an effective rate of 42.9% for the quarter ended
January 31, 2004 compared to 38.6% for the quarter ended January 31, 2003. The
actual effective tax rate is different from the expected federal rate of 35% due to
certain permanent differences between financial and tax accounting and state
income taxes. LIQUIDITY AND CAPITAL RESOURCES Operating activities provided $2.5 million of cash for the three months
ended January 31, 2004 compared to $2.7 million for the three months ended
January 31, 2003. The $2.5 million consisted primarily of our net loss of
$15,000 adjusted by $2.9 million from depreciation, amortization, and
obsolescence provisions, less a net use of funds of $405,000 from changes in
other operating assets and liabilities. During the three months ended January
31, 2003, the $2.7 million provided by operating activities consisted primarily
of net income of $522,000 adjusted by $2.6 million of depreciation,
amortization and obsolescence reserves, less a net use of funds of $447,000
from changes in other operating assets and liabilities. We used approximately $1.5 million of cash in investing activities for the
three months ended January 31, 2004 compared to $5.2 million of cash for the
three months ended January 31, 2003. The $1.5 million consisted of 13




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$2.7 million of capital expenditures ($2.3 million of which was expended on
bingo terminals and associated support equipment), and the purchase and
development of other intangible assets for a total of $184,000; partially
offset with a decrease in short-term investments of $1.4 million. During fiscal
2003, the $5.2 million consisted of $2.3 million of capital expenditures ($2.2
million of which was expended on bingo terminals and associated support
equipment), the purchase of certain assets of IGS and other intangible assets
for a total of $3.8 million and a decrease in short-term investments of
$931,000. We used net cash of $1.5 million in financing activities for the three
months ended January 31, 2004 compared to $466,000 provided for the three
months ended January 31, 2003. The $1.5 million used for the three months ended
January 31, 2004 was primarily for cash dividends of $1.4 million, and payments
of $82,000 on long-term debt. The $466,000 received for the three months ended
January 31, 2003 was primarily proceeds from stock option exercises of
$501,000, offset by payments of $35,000 on long-term debt. As of January 31, 2004, we had cash and cash equivalents and short-term
investments of approximately $10.1 million. In addition to our cash and cash
equivalents and short-term investments, we have a $10.0 million line of credit
with Wells Fargo Bank, N.A., which has an interest rate based on the prime rate
or London InterBank Offered Rate (LIBOR) plus 2.0%, at our option, on which
there was no outstanding balance at January 31, 2004. The revolving credit
facility expires on April 2, 2004. We expect to renew the revolving credit
facility with similar terms. We believe that cash flows from operations and
cash, cash equivalents, and short-term investments on hand will be sufficient
to support our operations, provide for budgeted capital expenditures, make
dividend payments, and meet liquidity requirements through the remainder of
fiscal 2004. Our long-term liquidity requirements will depend on many factors,
including the rate at which we expand our business, and whether we do so
internally or through acquisitions. In addition, strategic opportunities we may
pursue could require us to fund our portion of operating expenses of such
ventures and may require us to advance additional amounts should any partners
in such ventures be unable to meet unanticipated capital calls or similar
funding events. To the extent that the funds generated from the sources
described above are insufficient to fund our activities in the long term, we
may be required to raise additional funds through public or private financing.
No assurance can be given that additional financing will be available or that,
if it is available, it will be on terms acceptable to us. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We maintain an investment portfolio, of approximately $350,000, in
available-for-sale debt securities of the U.S. Government and its agencies, and
in investment grade corporate issues. The values of these investments are
subject to changes in interest rates. However, because these investments are
short-term and are generally allowed to mature, we do not believe that any risk
inherent in our portfolio is likely to have a material effect on expected cash
flows. We monitor these investments for impairment and make appropriate
reductions in carrying value when necessary. Our revolving credit facility with Wells Fargo is a $10.0 million line of
credit with an interest rate based on the prime rate or LIBOR plus 2.0%, at our
option. The agreement contains certain restrictive covenants, which among
other things require that specified financial balances and ratios be
maintained, quarterly profitability be maintained, restrictions on the payment
of dividends and the incurrence of additional indebtedness. We have received a
waiver from the bank for the payment of cash dividends and non-compliance with
the quarterly profitability requirement for the three months ended January 31,
2004. The line of credit expires on April 2, 2004. Because the interest rate on the revolving credit facility is variable,
our cash flow may be affected by increases in interest rates, in that we would
be required to pay more interest in the event that both the prime and LIBOR
interest rates increase. We do not believe, however, that any risk inherent in
the variable-rate nature of the loan is likely to have a material effect on our
interest expense or available cash. We currently maintain a zero balance on the
revolving credit facility. Sensitivity Analysis.Assuming we had a $2.0 million balance
outstanding as of January 31, 2004, the rate of interest calculated using the
prime rate option would be 4.0%. Our monthly interest payment, if the rate
stayed constant, would be $6,667. If the prime rate rose to 8.0%, which assumes
an unusually large increase, our monthly payment would be $13,333. A more
likely increase of 1.0% or 2.0%, given the recent trend of decreasing or
relatively low interest rates, would result in a monthly payment of $8,333 or
$10,000, respectively. We do not believe the risk resulting from such
fluctuations is material or that the payment required would have a material
effect on cash flow. 14




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ITEM 4. CONTROLS AND PROCEDURES We have evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of January 31, 2004. Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer have each concluded that
our disclosure controls and procedures are effective to ensure that we record, process, summarize, and
report information required to be disclosed by us in our quarterly reports
filed under the Securities Exchange Act within the time periods specified by
the Securities and Exchange Commissions rules and forms. During the quarterly
period covered by this report, there have not been any changes in our internal
controls over financial reporting that have materially affected, or
are
reasonably likely to materially affect, our internal control over financial
reporting. CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document includes various forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Sections
21E of the Securities Exchange Act of 1934, as amended, which represent our
expectations or beliefs concerning future events. Statements containing
expressions, such as believes, anticipates, or expects, used in our press
releases and periodic reports on Forms 10-K and 10-Q filed with the Commission,
are intended to identify forward-looking statements. All forward-looking
statements involve risks and uncertainties. Although we believe our
expectations are based upon reasonable assumptions within the bounds of our
knowledge of our business and operations, there can be no assurances that
actual results will not materially differ from expected results. We caution
that these and similar statements included in this report are further qualified
by important factors that could cause actual results to differ materially from
those in the forward-looking statements. Such factors include those discussed
in our annual report on Form 10-K for the year ended October 31, 2003. Readers
are cautioned not to place undue reliance on forward-looking statements, which
speak only as of the date thereof. We undertake no obligation to publicly
release any revisions to such forward-looking statements to reflect events or
circumstances after the date hereof. 
 PART II. OTHER INFORMATION 
 ITEM 1. LEGAL PROCEEDINGS On March 22, 2001, we filed a claim in the United States District Court,
District of Arizona, GAMETECH INTERNATIONAL, INC. V. TREND GAMING SYSTEMS, LLC,
CV 01-540 PHX PGR, seeking a declaratory judgment that we are not in material
breach of our November 1, 1999 distribution agreement with Trend Gaming
Systems, LLC (Trend) and seeking damages for past due payments and wrongful
withholdings by Trend. Trend has counterclaimed, alleging that its payments
are in compliance with its contractual obligations and that it is entitled to
withhold certain monies. Trend also contends that we are in breach of certain
of our contractual obligations to Trend or its customers. On December 16, 2002,
the court entered at our request an order enjoining Trend from using
approximately $540,000 in funds it had collected on our behalf, pending a trial
on our ownership interest in those funds. The money has been placed in a bank
account subject to the courts control. In addition, collections of accounts
receivable by Trend, if any, will also be placed in that account, pending the
trial of the case. Trend filed a motion for summary judgment alleging that the
termination of the distribution agreement was improper. On May 16, 2003, the
court dismissed Trends motion for summary judgment. On December 2, 2003,
Trend filed a renewed motion for summary judgment alleging that we did not have
the right to terminate the distribution agreement based upon Trends failure to
insure that we received our minimum rate of return. We have prepared a
response and the motion will be heard on March 17, 2004. A May 10, 2004 trial
date has been set. We have denied the allegations and intend to vigorously
pursue and defend this matter. However, we cannot provide assurance that we
will obtain a favorable outcome. An unfavorable outcome could have a material
adverse effect on our financial position, cash flows and results of operations. On October 30, 2002, Capital Gaming Supplies filed a claim in the United
States District Court, Southern District of Mississippi, CAPITAL GAMING
SUPPLIES, INC. V. GAMETECH INTERNATIONAL, INC., 3:02 CV 1636 WS, seeking a
judgment that we tortiously interfered with alleged existing and prospective
customer accounts. We have denied the allegations and filed a counter-claim
seeking a judgment that Capital tortiously interfered with our customer
accounts. On April 18, 2003, Capital filed an amended complaint adding other
claims against us and other defendants, including a claim for malicious breach
of contract against IGS, and its principals. In November 2002, we acquired
certain assets of IGS and we assumed certain claims filed by Capital against
IGS and its principals. Capital seeks compensatory and punitive damages from
all defendants. The January 28, 2004 trial date has been postponed
indefinitely. We intend to defend and pursue vigorously this matter. We
believe that 15




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Capitals claims are without merit. However, we cannot provide assurance
that we will obtain a favorable outcome. An unfavorable outcome could have a
material adverse effect on our financial position, cash flows and results of
operations. In March 2003, the South Carolina Department of Revenue issued a notice to
all persons and entities that use electronic daubing devices (such as our
portable and fixed-base bingo terminals) to cease and desist using the devices
as of September 4, 2003. The notice is a reversal of the Departments previous
position provided to us in 1995 regarding the use of such devices. The
Departments decision was not made due to any violation or improper conduct on
our part. We have filed a Request for Contested Case Hearing regarding the
Departments reversal. We disagree with the Departments position and are
actively seeking legal and legislative relief so that our electronic daubing
devices may continue to be used. Historically, South Carolina has accounted
for less than 5% of our revenues. On February 18, 2004, the state of South
Carolina adopted new statutory provisions allowing for the continued lawful use
of electronic daubing devices such as our products. We are involved in various other legal proceedings arising out of our
operations in the ordinary course of our business. We do not believe that any
of these proceedings will have a material adverse effect on our business,
financial condition, cash flows or results of operations beyond the amounts recorded in
the accompanying condensed consolidated financial statements. However, if
settlement is not reached and the lawsuits proceed to trial, an unfavorable
outcome could have a material adverse effect on our financial
position cash flows and
results of operations. 
 ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES. Not Applicable 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not Applicable 
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable 
 ITEM 5. OTHER INFORMATION Not Applicable 
 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) EXHIBITS:3.4
    
    Second Amended and Restated Bylaws of the Registrant.31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) promulgated under the Securities
Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) promulgated under the Securities
Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.b) REPORTS ON FORM 8-K
  We filed a current report on Form 8-K on December 22, 2003 reporting our
financial results for our fourth fiscal quarter and fiscal year ended
October 31, 2003, and announcing a special cash dividend. 16




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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, thereunto duly authorized. Signature
    
    Title
    
    Date/S/ Clarence H. Thiesen
Clarence H. Thiesen
    
    Chief Executive Officer
(Principal Executive Officer)
    
    March 15, 2004/S/ John P. Hewitt
John P. Hewitt
    
    Chief Financial Officer,
(Principal Financial Officer)
    
    March 15, 2004/S/ Ann D. McKenzie
Ann D. McKenzie
    
    Corporate Controller,
(Principal Accounting Officer)
    
    March 15, 2004
 17




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EXHIBIT INDEX3.4
    
    Second Amended and Restated Bylaws of the Registrant.31.1
    
    Certification of Chief Executive Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) promulgated under the Securities
Exchange Act of 1934, as amended.31.2
    
    Certification of Chief Financial Officer pursuant to Rule
13a-14(a) and Rule 15d-14(a) promulgated under the Securities
Exchange Act of 1934, as amended.32.1
    
    Certification of Chief Executive Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.