RENO, Nev., March 10 /PRNewswire-FirstCall/ — GameTech International,
Inc. (Nasdaq: GMTC), a leading designer, developer and marketer of
computerized bingo and gaming equipment, systems, and services, today
announced financial results for the Company’s first fiscal quarter ended
January 31, 2008.
Net income totaled $0.3 million for the quarter, or $0.03
per fully diluted share, which includes a pre-tax impairment charge
relating to its investments in auction rate securities of $0.7 million
($0.5 million after tax, or $0.03 per fully diluted share). Adjusted net
income, which excludes the impairment charge, for the quarter ended January
31, 2008, was $0.8 million or $0.06 per fully diluted share. Net income for
the first quarter in fiscal 2007 was $1.1 million, or $0.08 per fully
diluted share. Results for the quarter were impacted by an increase in
interest and amortization expense related to the Summit acquisition, as
well as the impairment charge for the investments.
Company Highlights:
— Revenue for the first quarter of fiscal 2008 was $15.2 million compared
with $12.0 million for the same period in fiscal 2007.
— EBITDA for the first quarter of fiscal 2008 was $4.5 million compared
with $4.2 million for the same period in fiscal 2007.
— Net income for the first quarter of fiscal 2008 was $0.3 million,
compared with $1.1 million for the same period in fiscal 2007.
Excluding the impairment charge, adjusted net income for the first
quarter of fiscal 2008 was $0.8 million.
— Net income per fully diluted share was $0.03 for the first quarter of
fiscal 2008 (or $0.06 excluding the impairment charge) and $0.08 for
the comparable period in fiscal 2007.
— Interest expense and amortization expense related to the acquisition of
Summit Gaming totaled $0.7 million and $0.3 million for the first
quarter of 2008, respectively.
— The Company recorded a pre-tax impairment charge related to its
investments in auction rate securities of approximately $0.7 million
($0.5 million after tax).
First quarter revenue totaled $15.2 million compared with $12.0 million
for the comparable quarter during fiscal 2007. The increase in revenue for
the three-month period ended January 31, 2008 was primarily due to results
from the acquisition of Summit Amusement & Distributing, LTD., a
manufacturer of video lottery terminals, which contributed $4.1 million in
revenue to the first fiscal quarter. Bingo revenue for the first fiscal
quarter of 2008 was $11.1 million, down from $12.0 million in the
comparable quarter in fiscal 2007. While bingo revenue was impacted by
increased regional competition, pricing pressures and the loss of certain
accounts, they were offset in part by increases in various key states, and
expansion in the United Kingdom markets.
The challenges in the credit and capital markets have caused the
company to review its investments in auction rate securities. As of January
31, 2008, the estimated market value of the company’s investments in
auction rate securities stood at $3.2 million, which reflects an impairment
charge of $0.7 million. Although these securities continue to pay interest
according to their stated terms, the company has recorded an impairment
charge of $0.7 million based upon an analysis of the securities and
other-than-temporary factors. As of January 31, 2008, the company had $8.1
million in cash and cash equivalent balances in addition to its investment
portfolio and believes that its current cash position and expected
operating cash flows will be sufficient to fund its operations and debt
service.
Jay Meilstrup, GameTech’s President and Chief Executive Officer stated,
“While bingo revenue for the first fiscal quarter of 2008 was down 7.9%
from the comparable period in 2007, we experienced continued revenue growth
in certain domestic markets as well as in the United Kingdom, helping to
offset erosion in some of our more mature bingo markets. When compared to
the fiscal fourth quarter of 2007, we showed a 0.7% decline in revenue in
the first fiscal quarter of 2008. This is an improvement over the previous
sequential quarterly revenue decline the company experienced in the fourth
fiscal quarter of 2007 when compared to the third fiscal quarter of 2007.
Our Summit division’s results for the quarter were impacted by some
softness in the Montana market as well as fewer than expected shipments to
the Louisiana market. With over 80% of Summit’s sales coming from the
Montana and Louisiana markets, financial results for this segment may
continue to be volatile from quarter to quarter until we have broadened our
revenue base by expanding into new markets. Additionally, GameTech
continues to develop its technical capabilities in wireless technology to
serve the newly developing wireless mobile gaming market. We anticipate our
first commercial installment of our wireless server-based gaming system by
the end of the second fiscal quarter. Finally, despite the challenges in
the credit markets and the impact on our investment account, the company
remains well capitalized and we believe will be able to meet its future
financial obligations.”
About GameTech International, Inc.
GameTech International, Inc. is in the business of designing,
manufacturing, and marketing computerized bingo and gaming equipment,
systems, and services. Under the GameTech(R) brand the company provides
electronic bingo systems and equipment, and is an innovator in advanced
wireless gaming applications and devices. Under the Summit Gaming (TM)
brand the company provides video lottery terminal devices and related
software and content. GameTech International, Inc. serves customers in 43
U.S. States, Canada, Japan, Mexico, Norway, Philippines, and the United
Kingdom. The company was incorporated in 1994 and is headquartered in Reno,
Nevada.
Statements contained in this press release that are not historical
facts are intended to be forward-looking statements subject to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements include our potential expansion of business
internationally, our potential expansion of the Summit division’s business,
new product and product feature developments, the success of our strategic
opportunities and initiatives, and expectations relating to financial and
operating results. GameTech cautions that these statements are subject to
risks and uncertainties that could cause actual results to differ
materially from those reflected by the forward-looking statements contained
herein. Such factors include our ability to successfully integrate, operate
and grow Summit’s business, our dependence on the bingo and video lottery
terminal businesses, risks associated with rapid technological change, our
ability to retain customers and secure new customers, and other factors
disclosed in documents filed by the Company with the Securities and
Exchange Commission, including the Company’s most recently filed Annual
Report on Form 10-K and Form 10-K/A and Quarterly Reports on Form 10-Q.
Forward-looking statements speak only as of the date of this release, and
we undertake no obligation to update such statements.
(dollars in thousands)
Three Months Ended January 31,
2008 2007
(Unaudited) (Unaudited)
Net revenue $15,184 100.0 % $12,016 100.0 %
Cost of revenue 6,600 43.5 % 4,922 41.0 %
Gross profit 8,584 56.5 % 7,094 59.0 %
Operating expenses:
General and administrative 2,758 18.2 % 1,972 16.4 %
Sales and marketing 2,537 16.7 % 2,908 24.2 %
Research and development 1,489 9.8 % 602 5.0 %
Loss contingencies 0 0.0 % 46 0.4 %
Total operating expenses 6,784 44.7 % 5,528 46.0 %
Income from operations 1,800 11.9 % 1,566 13.0 %
Interest expense (714) (4.7)% - 0.0 %
Impairment of investment (691) (4.6)% - 0.0 %
Other income, net 123 0.8 % 155 1.3 %
Income before income taxes 518 3.4 % 1,721 14.3 %
Provision for income taxes 187 1.2 % 649 5.4 %
Net income $331 2.2 % $1,072 8.9 %
Net income per share:
Basic
Income from operations $0.14 $0.12
Net income $0.03 $0.09
Diluted
Income from operations $0.14 $0.12
Net income $0.03 $0.08
Shares used in calculated
net income per share:
Basic 12,426 12,614
Diluted 12,677 13,261
Select Balance Sheet Data:
(dollars in thousands)
January 31, 2008 October 31, 2007
(Unaudited) (Unaudited)
Cash and cash equivalents $7,632 $3,630
Short-term investments 500 7,763
Receivables, net 6,452 8,585
Inventory 4,230 4,298
Total current assets 22,620 27,835
Restricted cash 506 502
Investments 3,167 -
Total assets 89,660 93,882
Total current liabilities 12,128 13,882
Total liabilities 36,595 39,403
Total stockholders’ equity 53,065 54,479
Total liabilities and stockholders’ equity 89,660 93,882
EBITDA is defined as earnings before interest, taxes, depreciation and
amortization. Although EBITDA is not a measure of performance calculated in
accordance with generally accepted accounting principles (”GAAP”), GameTech
believes the use of the non-GAAP financial measure EBITDA enhances an
overall understanding of GameTech’s past financial performance, and
provides useful information to the investor because EBITDA is used by
virtually all companies in the gaming equipment sector as a measure of
performance. However, investors should not consider this measure in
isolation or as a substitute for net income, operating income, or any other
measure for determining GameTech’s operating performance that is calculated
in accordance with GAAP. In addition, because EBITDA is not calculated in
accordance with GAAP, it may not necessarily be comparable to similarly
titled measures employed by other companies. A reconciliation of EBITDA to
the most comparable GAAP financial measure, net income, follows:
Reconciliation of U.S. GAAP Net Income to EBITDA:
(dollars in thousands)
Three Months Ended January 31,
2008 2007
(Unaudited) (Unaudited)
Net income $331 $1,072
Add back:
Amortization and depreciation 2,691 2,676
Interest expense and other (income)
expense, net 591 (155)
Impairment charge 691 -
Provision for income taxes 187 649
EBITDA $4,491 $4,242
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