Wednesday August 28, 8:54 pm Eastern Time
SOURCE: GameTech International, Inc.
RENO, Nev., Aug. 28 -- GameTech International, Inc., a leading supplier in the electronic bingo industry, today announced that net income for the third quarter ended July 31, 2002 totaled $1.1 million, equal to $0.09 per share (fully diluted), compared with a net loss of $617,000, or $0.06 per share (fully diluted), in the corresponding quarter of the prior fiscal year. The Company noted that the fiscal 2001 third quarter included charges totaling approximately $2.2 million, primarily related to the relocation of certain individuals in research and development to GameTech's Reno headquarters, executive retirements and other employee-related separation charges. Revenues in the third quarter rose to $12.5 million from $11.9 million in the same period of fiscal 2001, an increase of $577,000.
For the nine months ended July 31, 2002, the Company posted net income of $3.1 million, equal to $0.27 per share (fully diluted), which compares with a net loss in the comparable fiscal 2001 period of $372,000, or $0.04 per share (fully diluted). Revenues for the nine months totaled $36.5 million, compared with $36.7 million one year ago.
Clarence Thiesen, Chief Executive Officer, commented: "GameTech registered its third consecutive profitable quarter. We are benefiting from revenue growth, tight cost controls, strong cash flow, quality enhancements, and substantial expansion in our installed unit base from the ongoing successful roll-out of our latest generation color portable hand-held unit, the TED2C(TM).
"Quarterly revenues grew five percent, or $577,000, from the prior year period, and on a sequential basis, were up for the third quarter in a row. Our popular new color portable unit is an important factor in GameTech's improving revenues. Also, the quarter witnessed growth in the Southern and Western regions, as well as in our international business. This strength was offset, to some degree, by weakness in the Northeastern region and continuing pricing pressures in certain major markets, notably Texas and Ohio."
"While reducing costs is a continuing process, investment in R&D is increasing to expand our new product pipeline, better serve the bingo market and provide players with greater excitement, variety and entertainment in the bingo experience," the CEO added.
"Our R&D effort is making notable progress. GameTech's new TED2C(TM) color portable unit is being well received by hall operators and bingo players alike. In addition, GameTech has introduced the latest version of our comprehensive AllTrak2(TM) system for hall management. We have standardized the system on a Microsoft SQL platform for improved reliability and better integration with our customers' information technology resources."
During the first quarter of fiscal 2002, the Company elected early adoption of Statement 142 issued by the FASB and eliminated goodwill amortization expense in the current year. The Company completed the required goodwill impairment test, as of November 1, 2001, and determined there was no impairment of goodwill as a result of the early adoption. The Company will complete a goodwill evaluation for the current fiscal year 2002 and adjust the carrying value if it exceeds the fair value. In fiscal 2001, goodwill amortization amounted to approximately $433,000 and $1,308,000 in the third quarter and first nine months, respectively.
At July 31, 2002, cash and short-term investments totaled $11.7 million, net of approximately $4.6 million in equipment purchases and $1.4 million in prepayment of long-term notes during the third quarter. "We are virtually debt-free with a strong, liquid balance sheet and the ability to finance our current growth initiatives from the Company's robust cash flow," Thiesen concluded.
The Company further announced that Clarence Thiesen, Chief Executive Officer, and Richard M. Kelley, Chief Financial Officer, will certify that the Company's 10-Q report for the third quarter ended July 31, 2002 fully complies with sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and that the information contained in the 10-Q report fairly presents, in all material respects, the financial condition and results of operation of the Company. The Certification is in compliance with Section 906 of the Sarbanes-Oxley Act of 2002. GameTech expects to file its 10-Q Report for the third quarter and Certification with the Securities & Exchange Commission prior to September 15, 2002.
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 that increase play, revenues and profits, and software customized to enhance management and operations, all backed by unparalleled customer service.
Certain statements contained in this document may be deemed to be forward looking statements under federal securities laws, and GameTech intended that such forward looking statements be subject to the safe harbor created thereby. Such forward-looking statements include but are not limited to 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, but are not limited to (a) changes in the markets for the Company's products; (b) the failure of new products to deliver commercially acceptable performance; (c) changes in the regulatory environment for the Company's products and the ability of the Company and its products to be licensed; and (d) the ability of GameTech's management, individually or collectively, to guide the Company in a successful manner. 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 & Exchange Commission.
GAMETECH INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(In thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
2002 2001 2002 2001
(Unaudited) (Unaudited)
Revenues $12,495 $11,919 $36,452 $36,713
Operating expenses:
Cost of revenues 4,836 4,433 14,335 13,805
General and
administrative 2,168 3,886 6,295 10,508
Sales and marketing 3,163 3,392 9,280 10,867
Research and
development 608 1,517 1,583 2,433
10,775 13,228 31,493 37,613
Income from operations 1,720 (1,309) 4,959 (900)
Interest income and
other, net 50 24 85 125
Income before provision
for income taxes 1,770 (1,285) 5,044 (775)
Provision for income
taxes 676 (668) 1,926 (403)
Net income $1,094 $(617) $3,118 $(372)
Basic net income per
share $0.10 $(0.06) $0.28 $(0.04)
Diluted net income per
share $0.09 $(0.06) $0.27 $(0.04)
Shares used in the
calculation of net
income per share:
Basic 11,202,609 10,625,127 11,125,926 10,553,488
Diluted 11,739,270 10,625,127 11,653,170 10,553,488
Accounting effect
of SFAS No. 142
Reported net income $1,094 $(617) $3,118 $(372)
Add back: Goodwill
amortization -- 433 -- 1,308
Adjusted net income 1,094 (184) 3,118 936
Basic net income per
share
Reported net income $0.10 $(0.06) $0.28 $(0.04)
Add back: Goodwill
amortization -- 0.04 -- 0.12
Adjusted basic net
income per share $0.10 (0.02) 0.28 0.09
Diluted net income
per share
Reported net income $0.09 $(0.06) $0.27 $(0.04)
Add back: Goodwill
amortization -- 0.04 -- 0.12
Adjusted diluted net
income per share $0.09 $(0.02) $0.27 $0.08
Balance Sheet Data
July 31, October 31,
2002 2001
(unaudited)
Cash and equivalents $6,956 $10,131
Short-term investments 4,719 2,824
Total assets 56,531 55,676
Total liabilities 5,764 9,092
Total stockholders' equity 50,767 46,584
Total liabilities and stockholders' equity $56,531 $55,676
Source: GameTech International, Inc.