Wednesday May 21, 6:02 pm Eastern Time
SOURCE: GameTech International, Inc.
RENO, Nev., May 21 GameTech International, Inc., a leading
supplier of electronic bingo equipment, today announced financial results for
the Company's second fiscal quarter and six-month period ended April 30, 2003.
Revenues for the quarter amounted to over $13.3 million, an improvement of $1.2
million, or 10.0%, over revenues for the second quarter of fiscal 2002. Net
income for the three months was approximately $226,000, equal to $0.02 per
diluted share, compared to the prior year's second quarter net income of
approximately $1.1 million, or $0.10 per diluted share. For the six months ended
April 30, 2003, revenues were approximately $26.5 million compared to $24.0
million for the comparable period of the previous fiscal year, up 10.7%. Net
income for the six-month period amounted to $748,000 or $0.06 per diluted share,
compared to $2.0 million, or $0.17 per diluted share, for the comparable 2002
fiscal period.
The revenue growth for fiscal 2003 to date was attributable to increases of
approximately 3.0% in the Company's installed base of bingo player units for
both the second quarter and six-month periods. The increase in units was largely
the result of the expansion of the installation of the Company's color portable
unit, the TED2C(TM), and the additional installed base acquired with the
purchase of certain assets of International Gaming Systems, LLC ("IGS") that was
completed in November 2002. The popularity and customer acceptance of the
TED2C(TM) contributed to revenue growth across all markets, while the IGS
acquisition helped drive revenue increases in the northeast and southern
domestic markets.
"We are gratified with the continued enthusiasm and customer acceptance of our
color handheld unit, the TED2C(TM), and the successful integration of
International Gaming Systems' fixed-base units into our operations," said
Clarence Thiesen, Chief Executive Officer. "These two events have contributed
significantly to the revenue increases we have achieved to date during fiscal
2003. We look forward to providing our customers with new and improved products,
such as our recently introduced Pay-n-Play credit-based feature for fast-paced
pari-mutuel bingo and RF upgrades to our handheld units allowing for automatic
daubing for faster play."
Although the Company achieved increases in revenues and gross profits, it
realized declines in net income for both the three months and six months ended
April 30, 2003 compared to the comparable periods of fiscal 2002. The declines
were primarily the result of increases in investment in research and development
costs and in general and administrative expenses. The Company's commitment to
increased research and development efforts has led to increases in these costs
of approximately $327,000 and $903,000 for the three-month and six-month period
of fiscal 2003, respectively. The increased investment was driven by significant
growth in the number of engineers committed to research and development and
increased external project costs. General and administrative expenses also grew
significantly, up $968,000 and $1.9 million for the three-month and six-month
periods, respectively. The increases in general and administrative expenses were
attributable to legal and other professional services costs. Legal costs
increased as a result of the Company's litigation with a former distributor in
Texas, a former distributor of IGS in Mississippi and other legal proceedings,
as well as costs associated with improvement of the marketability and
competitive positioning of GameTech products and services in many states.
Sales and marketing expenses also increased for the three-month and six- month
period; however, the rate of growth was at a rate less than that of revenue
growth. The increases were principally the result of increased distributor
commissions, in line with the improved revenues.
"We believe that recent and future expenses related to aggressive defense of
legal challenges will lead to substantial long-term benefits, including
protecting our current markets," Thiesen added. "In the near term, however, we
expect the increased investment in research and development and the elevated
legal costs will continue to impinge on our bottom line results."
The Company's working capital and liquidity remained healthy at April 30, 2003.
Cash and marketable securities amounted to $10.9 million on that date, and
working capital amounted to $13.9 million.
GameTech International, Inc. is a leading supplier of a comprehensive line of
electronic bingo equipment, including hand-held bingo units, fixed-base units
and turnkey accounting and management software. The Company supports its bingo
operator customers with products it believes increase play, revenues 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 the Company's plans and expectations of 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 the following: (a) the ability
of the Company to introduce products in the future that achieve commercial
success; (b) the results of the Company's cost- containment initiatives; (c) the
ability of the Company to generate significant revenue in new geographic
markets, (d) changes in the regulatory environment for the Company's products
and the ability of the Company and its products to be licensed; (e) the level of
research and development costs and legal expenses; and (f) the ability of the
Company's management, individually or collectively, to guide the Company in a
successful manner. Additional information on these and other 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, 2002.
GAMETECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(In thousands, except share and per share amounts)
Three Months Ended Six Months Ended
April 30,
April 30,
2002 2003
2002 2003
(Unaudited)
(Unaudited)
Revenue
$12,106 $13,322 $23,956
$26,520
Cost of revenues
4,536 5,600
9,499 10,864
Gross profit
7,570 7,722
14,457 15,656
Operating expenses:
General and administrative
2,130 3,098
4,127 6,001
Sales and marketing
3,115 3,201
6,117 6,395
Research and development
555 882
974 1,877
5,800 7,181
11,218 14,273
Income from operations
1,770 541
3,239 1,383
Interest income and other,
net
27 20
35 27
Income before provision for
income taxes
1,797 561
3,274 1,410
Provision for income taxes
686 335
1,250 662
Net income
$1,111 $226
$2,024 $748
Basic net income per share
$0.10 $0.02
$0.18 $0.06
Diluted net income per share
$0.10 $0.02
$0.17 $0.06
Shares used in the calculation
of net income per share:
Basic
11,190,356 11,727,439 11,086,937 11,656,765
Diluted
11,680,113 11,735,403 11,640,846 11,847,788
Balance Sheet Data
October 31, April 30,
2002 2003
(unaudited)
Cash and equivalents
$4,233 $8,288
Short-term investments
5,045 2,613
Total current assets
20,393 17,623
Total assets
58,101 59,500
Total current liabilities
3,831 3,877
Total liabilities
7,611 7,762
Total stockholders' equity
50,490 51,738
Total liabilities and
stockholders' equity
$58,101 $59,500
Source: GameTech International, Inc.