RENO, Nev., Aug. 30 /PRNewswire-FirstCall/ -- GameTech International, Inc. , a leading designer, developer and marketer of computerized bingo and gaming equipment, systems, and services, today announced financial results for the Company's third fiscal quarter and nine-month period ended July 31, 2007. Net income totaled $1.1 million for the quarter, or $0.08 per fully diluted share, which is down from $1.3 million and $0.10 per fully diluted share for the third quarter in fiscal 2006. Results for the quarter were impacted by a significant increase in interest expense related to the Summit acquisition as well as related amortization expense. Year-to-date net income for fiscal 2007 reached $3.4 million, or $0.26 per fully diluted share, compared with $3.3 million or $0.26 per fully diluted share for the comparable nine-month period in 2006.
Company Highlights: -- Net income for the third quarter of fiscal 2007 was $1.1 million, compared with $1.3 million for the same period in fiscal 2006; net income for the first nine months of fiscal 2007 was $3.4 million compared with $3.3 million in the same period in fiscal 2006, an increase of 0.3%. -- Net income per fully diluted share reached $0.08 for the third quarter and $0.26 for nine months, compared with $0.10 and $0.26 for the same periods in fiscal 2006. -- Revenue for the third quarter of fiscal 2007 was $16.6 million compared with $12.4 million for the same period in fiscal 2006. Revenue for the first nine months of fiscal 2007 was $42.1 million compared with $37.3 million for the same period in fiscal 2006. -- EBITDA for the third quarter of fiscal 2007 was $5.6 million compared with $4.7 million for the same period in fiscal 2006. EBITDA for the first nine months of fiscal 2007 was $14.6 million compared with $13.0 million for the same period in fiscal 2006. -- During the quarter, Donald Tateishi was named Chief Financial Officer and Nick Greenwood was named VP of Sales and Product Marketing.
Third quarter revenue totaled $16.6 million compared with $12.4 million for the comparable quarter during fiscal 2006. Revenue for the nine-month period ended July 31, 2007, was $42.1 million compared with $37.3 million for the comparable period in fiscal 2006. The increase in revenue for the three and nine-month periods ended July 31, 2007 was primarily due to a full quarter of results from the acquisition of Summit Amusement & Distributing, LTD., a manufacturer of video lottery terminals. While bingo revenue was impacted by the loss of certain accounts in the domestic market, they were offset in part by increases in the Michigan, Louisiana, Oklahoma, and the United Kingdom markets.
Jay Meilstrup, GameTech's President and Chief Executive Officer stated, "The third quarter saw continued revenue growth in some of the larger domestic bingo markets, as well as in the United Kingdom. Helping to offset erosion in some of the more mature domestic bingo markets will be continued expansion into new domestic and international markets, such as the recently announced contract with MECCA Bingo in the United Kingdom which represented the single largest contract in GameTech's history. Our Summit division's results for the quarter were impacted by delays in the Louisiana market that did not allow the opportunity to realize the full potential of the market in the third quarter. We continue to look forward to capitalizing on the both near-term and long-term opportunities for our Summit division in both existing and new gaming markets. Additionally, GameTech continues to develop its technical capabilities in wireless to serve the newly developing wireless mobile gaming market. For the balance of the fiscal year and into 2008, we anticipate developing new business from the introduction of new products in both the bingo and video lottery terminal markets as well as pursuing strategic opportunities as they arise."
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 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 July 31, 2007 2006 (Unaudited) (Unaudited) Net revenue $16,637 100.0% $12,430 100.0% Cost of revenue 8,047 48.4% 5,113 41.1% Gross profit 8,590 51.6% 7,317 58.9% Operating expenses: General and administrative 2,430 14.6% 1,885 15.2% Sales and marketing 2,528 15.2% 2,777 22.3% Research and development 1,064 6.4% 550 4.4% Loss contingencies 31 0.2% 33 0.3% Total operating expenses 6,053 36.4% 5,245 42.2% Income from operations 2,537 15.2% 2,072 16.7% Interest expense (976) (5.9%) - 0.0% Other income (expense), net 213 1.3% 129 1.0% Income before income taxes 1,774 10.7% 2,201 17.7% Provision for income taxes 695 4.2% 879 7.1% Income from operations, net of tax 1,079 6.5% 1,322 10.6% Cumulative effect of a change in accounting estimate (net of tax) - 0.0% - 0.0% Net income $1,079 6.5% $1,322 10.6% Net income per share: Basic Income from operations $0.09 $0.11 Cumulative effect of a change in accounting estimate (net of tax) $ - $ - Net income $0.09 $0.11 Diluted Income from operations $0.08 $0.10 Cumulative effect of a change in accounting estimate (net of tax) $ - $ - Net income $0.08 $0.10 Shares used in calculated net income per share: Basic 12,580 12,312 Diluted 12,890 12,969 (dollars in thousands) Nine Months Ended July 31, 2007 2006 (Unaudited) (Unaudited) Net revenue $42,065 100.0% $37,310 100.0% Cost of revenue 18,916 45.0% 14,720 39.5% Gross profit 23,149 55.0% 22,590 60.5% Operating expenses: General and administrative 6,398 15.2% 6,799 18.2% Sales and marketing 8,459 20.1% 8,288 22.2% Research and development 2,451 5.8% 2,227 6.0% Loss contingencies 124 0.3% 99 0.3% Total operating expenses 17,432 41.4% 17,413 46.7% Income from operations 5,717 13.6% 5,177 13.9% Interest expense (1,332) (3.2%) - 0.0% Other income (expense), net 539 1.3% 328 0.9% Income before income taxes 4,924 11.7% 5,505 14.8% Provision for income taxes 1,827 4.3% 2,158 5.8% Income from operations, net of tax 3,097 7.4% 3,347 9.0% Cumulative effect of a change in accounting estimate (net of tax) 261 0.6% - 0.0% Net income $3,358 8.0% $3,347 9.0% Net income per share: Basic Income from operations $0.25 $0.28 Cumulative effect of a change in accounting estimate (net of tax) $0.02 $ - Net income $0.27 $0.28 Diluted Income from operations $0.24 $0.26 Cumulative effect of a change in accounting estimate (net of tax) $0.02 $ - Net income $0.26 $0.26 Shares used in calculated net income per share: Basic 12,552 12,107 Diluted 13,029 12,684 Select Balance Sheet Data: (dollars in thousands) July 31, 2007 October 31, 2006 (Unaudited) (Unaudited) Cash and cash equivalents $8,384 $5,411 Short-term investments 5,167 7,408 Restricted short-term investments 4,515 4,515 Total current assets 33,223 23,984 Total assets 102,564 59,214 Total current liabilities 12,592 8,572 Total liabilities 49,003 9,380 Total stockholders' equity 53,561 49,834 Total liabilities and stockholders' equity 102,564 59,214
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 Nine Months Ended July 31, July 31, 2007 2006 2007 2006 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Net income $ 1,079 $ 1,322 $ 3,358 $ 3,347 Add back: Amortization and depreciation 3,045 2,567 8,635 7,698 Interest income and other (income) expense, net 763 (96) 793 (228) Provision for income taxes 695 879 1,827 2,158 EBITDA $ 5,582 $ 4,672 $ 14,613 $ 12,975
