Tuesday February 15, 9:01 AM Eastern Time
SOURCE: GameTech International, Inc.
RENO, Nev., February 15 -- GameTech International, Inc., a leading supplier of electronic bingo equipment, today announced results for its fourth quarter and year-ended October 31, 2004. Revenues for the fourth quarter were $12.6 million, compared to $13.0 million in the same period in 2003, a decline of 3.3%. Net loss for the quarter was $10.0 million, equal to ($0.84) per diluted share, compared to net income of $191,000, or $0.02 per diluted share for the same quarter a year ago. Included in the 2004 fourth quarter results is a non-cash impairment of goodwill of $6.6 million, equal to ($0.56) per diluted share after tax, pursuant to the Company's impairment test under Statement of Financial Accounting Standards (SFAS) 142 as of October 31, 2004. Also included in the 2004 fourth quarter results are charges of $3.6 million relating to a provision for a litigation loss contingency resulting from an unfavorable jury verdict entered just after the end of the fiscal year, equal to ($0.19) per diluted share after taxes and a charge related to employee severances of approximately $813,000, or ($0.05) per diluted share after taxes.
Revenues for the fiscal year 2004 were $51.5 million, compared to $52.3 million for the fiscal year 2003, down 1.6%. Net loss for the fiscal year was $9.9 million, equal to ($0.84) per diluted share, compared to net income of $1.2 million, or $0.10 per diluted share. Included in the results for 2004 are the fourth quarter's non-cash goodwill impairment of $6.6 million, the $3.6 million litigation loss contingency, and approximately $813,000 related to employee severances, all described above. Together, these charges impacted 2004 net income after provision for income taxes by $9.4 million, or ($0.80) per diluted share.
"While we are obviously disappointed by the overall performance of the Company for the fiscal year ended October 31, 2004, we recognize that a substantial portion of the loss is the result of a non-cash goodwill impairment, the litigation loss contingency, and the charges related to employee severances," said John Furman, President and Chief Executive Officer of GameTech.
Furman also indicated that the Company expects 2005 to bring positive results in product distribution. "We expect the rollout of new products will accelerate in 2005, providing the Company and our customers with the fruits of our R&D investments. In addition, we continue to pursue strategic relationships that we believe will strengthen both our core business and our overall market position. GameTech continues to maintain a significant market share advantage and our leadership team is prepared to direct the Company toward profitability and market share expansion in 2005."
GameTech International, Inc. is a leading supplier of a comprehensive line of electronic bingo equipment, including hand-held bingo terminals, fixed-base terminals and turnkey accounting and management software. The Company supports its bingo operator customers with products that typically increase play, revenue and profits, and software customized to enhance management and operations, all backed by unparalleled customer service and support.
Certain statements contained in this press release may be deemed to be forward looking statements under federal securities laws, and GameTech intends that such forward-looking statements be subject to the safe harbor created thereby. Such forward-looking statements include expectations of product distribution, rollout of new products, pursuit of strategic relationships, and the financial growth and operating results of the Company. GameTech cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward looking statements contained herein. Such factors include (a) the ability of the Company to introduce products in the future that achieve commercial success; (b) the level of research and development costs and legal expenses, (c) changes in the regulatory environment for the Company's products and the ability of the Company and its products to be licensed; (d) the ability of the Company's management, individually or collectively, to guide the Company in a successful manner; (e) the Company's need for additional cash resources; and (f) risks associated with acquisitions of other businesses. Additional information on these risk factors that could potentially affect the Company's financial results may be found in documents filed by the Company with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the fiscal year ended October 31, 2004.
GAMETECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share amounts)
Three Months Ended Twelve Months Ended
October 31, October 31,
2004 2003 2004 2003
(Unaudited) Unaudited (Audited)
Revenues $12,600 $13,033 $51,490 $52,329
Cost of revenues: 6,593 5,620 24,027 21,775
Gross profit 6,007 7,413 27,463 30,554
Operating expenses:
General and
administrative: 3,102 2,776 11,154 11,426
Sales and
marketing: 3,101 2,999 12,561 12,323
Research and
development: 1,499 1,227 5,179 4,692
Loss
contingency: 3,628 -- 3,628 --
Impairment of
goodwill: 6,625 -- 6,625 --
17,955 7,001 39,147 28,441
Income (loss)
from operations: (11,948) 411 (11,684) 2,113
Interest income
and other income
(expense), net: 47 (9) 58 3
Income (loss)
before provision
for income
taxes: (11,901) 402 (11,626) 2,116
Provision for
income taxes: (1,919) 211 (1,720) 925
Net income
(loss): $(9,982) $191 $(9,906) $1,191
Basic net
income (loss)
per share: $(0.84) $0.02 $(0.84) $0.10
Diluted net
income (loss)
per share: $(0.84) $0.02 $(0.84) $0.10
Shares used in
the calculation
of net income
per share:
Basic 11,822,579 11,737,439 11,774,795 11,696,118
Diluted 11,822,579 11,750,710 11,774,795 11,817,781
Balance Sheet Data
October 31, October 31,
2004 2003
(unaudited) (unaudited)
Cash and equivalents $6,101 $10,202
Short-term investments 2,605 1,750
Total current assets 15,327 18,361
Total assets 51,679 60,175
Total current liabilities 10,118 3,555
Total liabilities 11,009 7,554
Total stockholders' equity 40,670 52,621
Total liabilities and
stockholders' equity 51,679 60,175