Paul-Son Gaming Corp.

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Paul-Son Gaming Corp. (NasdaqSC:PSON)

1700 South Industrial Road
Las Vegas, NV 89102

Phone: (702) 384-2425
Fax: (702) 384-1965
Email: info@paulsongaming.com
Employees (last reported count): 425

Paul-Son Gaming Corporation (Paul-Son), founded in 1963, is a manufacturer and supplier of casino table game equipment in the United States. The Company's products include casino chips, table game layouts, playing cards, dice, gaming furniture and miscellaneous table accessories such as chip trays, drop boxes and dealing shoes, which are used in conjunction with casino table games such as blackjack, poker, baccarat, craps and roulette. The Company sells its products in every state in which casinos operate in the United States. The Company also makes retail sales of casino-quality products for personal use, including poker chips, "Fantasy Casino" chips, dice, playing cards and gift items made with Paul-Son components. Scaled-down gaming furniture and accessories are also offered for personal use. The Company, through its Authentic Products, Inc. subsidiary, offers many of its products to the non-gaming and specialty markets. In January 2003, the Company discontinued its Authentic Products division.

As a full-service supplier, Paul-Son manufactures products to meet particular customer and industry specifications, which may include a range of shapes and sizes, varied color schemes and other graphics, and security and anti-counterfeit features. The useful lives of the Company's products typically range from several hours in the case of playing cards and dice, to several months in the case of layouts, and several years in the case of casino chips and gaming furniture. As such, the Company's primary business is the ongoing replacement sale of these products. When a new casino opens, the Company strives to supply most of the products required to operate the casino's table games, frequently on a sole-supplier basis. When successful, revenues are generated both from the initial sale to the new casino and on a continuing basis as the new casino becomes part of the Company's primary customer base.

On April 11, 2002, Paul-Son entered into an exchange agreement (the combination agreement) for the combination of the Company, Bourgogne et Grasset SA and B&G's wholly owned subsidiary, The Bud Jones Company, Inc. The combination agreement was approved in September 2002. In January 2003, the Company merged The Bud Jones Company, Inc. and another subsidiary, Paul-Son Gaming Supplies, Inc.

Casino Chips

Paul-Son designs and manufactures casino chips to meet a variety of customer preferences and specifications, including size, weight, ability to stack, ease of handling, texture, color, graphics, durability, security and anti-counterfeit features. The Company has developed the ability to mold detailed graphics bearing casino logos or other designs onto both sides of a chip. In addition, customized security and identifying features are incorporated into a chip.

Since 1994, Paul-Son has marketed commemorative chips. Management of Paul-Son and its casino customers determined that casino patrons often retained casino chips, which commemorated certain types of events such as title boxing matches, significant anniversaries, and premier entertainment events. Casinos benefit to the extent that casino chips purchased are not redeemed, thereby resulting in added cash flow to the casino. The Company is also pursuing opportunities to sell commemorative chips outside of the gaming industry.

The casino chip product line has in recent years become an increasingly competitive area of the gaming supply business. Currently, the Company's major competitors are Chipco International Ltd. and Bud Jones.

Table Layouts

Paul-Son is a manufacturer of table layouts in the United States, utilizing high quality cloths, enhanced graphics and proprietary dye formulations. Since 2000, when Paul-Son acquired certain patent rights covering methodology and processes relating to the screening of inks on synthetic cloth for casino tabletop layouts, the Company has also offered synthetic layouts in a wide variety of colors and customer preferences. The patent rights have a remaining duration of 13 years.

The Company's layout production capacity is approximately 50,000 "steam" woolen layouts, approximately 25,000 "hand-painted" woolen layouts and 10,000 synthetic layouts per year. In fiscal 2002, the Company produced approximately 32,000 layouts.

The Company's two primary competitors for casino table layouts are Bud Jones and Midwest Game Supply Co.

Playing Cards

Paul-Son manufactures and sells its own line of paper casino playing cards. A casino typically enters into a one- or two-year purchase commitment with a supplier to supply its cards at regular intervals, generally monthly. Casinos occasionally purchase cards from more than one supplier, as casino floor managers often have preferences for a particular type of card. In fiscal 2002, the Company produced approximately seven million decks of playing cards.

The Company also distributes plastic playing cards, which are used predominately in California card clubs. Traditionally, the plastic playing cards are preferred by the California card room market, while the paper cards generally are preferred by the traditional hotel-casino markets.

The Company's major competitors in the domestic playing card market are The U.S. Playing Card Co. and Gemaco Playing Card Co.

Gaming Furniture

Paul-Son sells a variety of casino gaming furniture, including tables, seating and roulette and Big Six wheels. Paul-Son offers a Premier line of gaming furniture, which has been the staple of the Company, and a Select line in response to the industry's demand for a lower priced, quality line of blackjack tables. Paul-Son vigorously pursues gaming table sales, because the sale of a gaming table will generally bolster its ability to sell consumable products such as layouts, dice, chips, cards and other accessories to the table purchasers. The Company also manufactures its own roulette and Big Six wheels.

The Company's principal competitors for casino gaming furniture are Bud Jones and smaller regional wood shops in certain geographic areas.

Dice

Paul-Son manufactures dice at its Mexico facilities from cellulose acetate specifically formulated to provide the required clarity, hardness and dimensional stability. The Company offers a variety of spot designs, which are inserted in the body of the dice and machined flat to the surface. A casino may request the imprinting of its name and logo (in a variety and combination of colors), the insertion of a security "key" onto the reverse side of a particular spot, the addition of a security "glow" spot, the serialization of the dice, or all or a combination of the above.

Paul-Son dice are manufactured in conformity with the strictest standards of gaming regulators, which require that each die be within 3/10,000th of an inch of a perfect cube. Generally, a set of dice (two and one-half pair) does not remain in play for more than eight hours in a busy casino. The Company has the capacity to produce approximately 900,000 pairs of dice per year (based upon one production shift). In fiscal 2002, the Company produced approximately 600,000 pairs of dice.

Table Accessories and Other Products

In order to offer its customers a full product line, the Company sells a number of ancillary casino table game products, which it typically does not manufacture. However, the Company manufactures limited quantities of certain plastic products, including dealing shoes. Ancillary products include plastic money paddles, discard holders, drop boxes, dealing shoes, trays and covers, dice sticks and on/off pucks. These products are generally sold in conjunction with the sale of gaming tables and tend to have long useful lives. The Company generally maintains two suppliers for each of these products.

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