Exhibit 99.1
Acres Gaming Reports Record Financial Results for the Third Quarter
and First Nine Months of Fiscal 2003
LAS VEGAS, May 5 /PRNewswire-FirstCall/ --
Acres Gaming Incorporated (Nasdaq: AGAM), the leader in Bonusing(TM)
technology and casino management systems for the gaming industry, today
announced financial results for the quarter and nine months ended March 31,
2003. Net income for the third quarter was $7.3 million, or $0.67 per diluted
share compared to a net loss of $(259,000), or $(0.03) per diluted share
during the prior year third quarter. Net income for the first nine months was
$10.0 million, or $0.95 per diluted share, compared to net income of $889,000,
or $0.09 per diluted share during the prior year nine months. Net income for
the quarter and nine months ended March 31, 2003 includes a tax benefit of
$4.2 million from the elimination of deferred tax asset valuation reserves.
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Income before income taxes for the quarter was a record $3.1 million, or
$.29 per diluted share, compared to the net loss before income taxes of
$(259,000), or $(.03) per diluted share in the prior year quarter. Income
before income taxes for the nine months was $5.8 million, or $.56 per diluted
share, compared to $889,000, or $.09 per diluted share earned in the prior
year nine months.
Revenues for the quarter increased 70% to $9.5 million, from $5.6 million
in the prior year quarter. Revenues for the nine months increased 58% to
$27.0 million, from $17.1 million in the prior year nine months.
Gross profit margin was 76 percent in the quarter versus 49 percent in the
prior year quarter. For the nine months, gross profit margin was 67 percent
compared to 54 percent in the prior year nine months. The higher gross profit
margins were primarily attributable to an increased mix of software sales
compared to the prior year periods. During the quarter and nine months ended
March 31, 2003, the Company recognized approximately $1.9 million and
$3.8 million, respectively of revenue from bonusing modules installed at
properties operated by Station Casinos. The prior year nine-month period's
revenue and gross profit included $1.2 million in royalties received in
connection with the settlement of litigation.
Net operating expenses were $3.9 million in the quarter and $11.6 million
in the nine months, compared to $2.8 million in the prior year quarter and
$8.5 million in the prior year nine months. R & D expenses for the quarter
were 23% higher than the prior year quarter, and Sales and Marketing expenses
for the quarter were 52% higher. General and administrative expenses for the
quarter increased $592,000 due primarily to higher legal expenses of $204,000,
bonus accruals of $120,000 and higher salary and benefit expenses of $100,000.
The realizability of tax benefits associated with the company's net
operating loss carryforward, unutilized research & development tax credits and
other credits and timing differences is now more likely than not. Therefore
valuation reserves against deferred tax assets were eliminated at the end of
the third quarter, resulting in a $4.2 million income tax benefit that
contributed an equal amount to net income for the quarter. Since the benefit
of these deferred tax assets has now been fully reflected on the Company's
balance sheet and statement of operations, these tax benefits will not be
available to reduce income tax expense in future periods.
At March 31, 2003, the Company had cash and equivalents of $14.5 million,
compared to $7.3 million at June 30, 2002. The increase of $7.2 million is
primarily attributed to the cash provided by operations of $8.1 million
partially offset by cash used for fixed asset purchases of $644,000 and debt
repayment of $375,000.
The Company's order backlog at March 31, 2003 was $24.6 million, compared
to $23.8 million at December 31, 2002 and $24.3 million at March 31, 2002.
Backlog, however, may not be a meaningful indicator of future revenues. The
Company's revenues fluctuate significantly based on the timing of the delivery
of any large order. Gross profit in the March 31, 2003 order backlog is
estimated at 78%, or $19 million.
During the fourth quarter of fiscal 2003, the Company expects to recognize
revenue of approximately $8.6 million in connection with the previously
announced IGT patent license and litigation settlement agreements. The
Company cannot predict when, if ever, additional revenues will be received in
connection with the agreements. Including this $8.6 million, the Company
expects income before income taxes for the fiscal year ending June 30, 2003 to
be $15.5 to $16.5 million, and net income to be $16.0 to $16.6 million. These
amounts do not include approximately $4 million of revenue from Station
Casinos that the Company had expected to recognize in fiscal 2003, but now
expects to recognize in fiscal 2004.
Acres Gaming will hold a conference call today, May 5, 2003, at 5:00 p.m.
ET. The conference call will be broadcast live over the Internet at
www.acresgaming.com and the dial-in number is 1-800-915-4836. A replay of the
call will be available for 48 hours, beginning one hour after the call, by
dialing 1-800-428-6051 and entering access code 291463. The webcast replay
will be available on Acres Gaming's web site for 30 days.
Acres Gaming provides products and services to casinos worldwide, using
its proprietary Acres Bonusing Technology(TM) to increase player enjoyment and
casino efficiency and profitability. Detailed descriptions of the promotions
made available by Acres Bonusing(TM) as well as other products offered by
Acres Gaming, are available at the Company's Web site, www.acresgaming.com.
The Company has offices in Las Vegas, Nevada and Corvallis, Oregon.
The discussion in this press release contains forward-looking statements
(as defined in Section 27A of the Securities Act of 1933, as amended).
Forward-looking statements involve risks and uncertainties and various factors
could cause actual results to differ materially from those in the forward-
looking statements. Forward-looking statements relate to expected revenue,
order backlogs (which may not be a meaningful indicator of future revenues)
and earnings projections. The following factors, among others, could cause
actual results to differ from those indicated in the forward-looking
statements: delays in the development or regulatory approval of products,
delays or changes in installation schedules by the Company or its customers,
customer acceptance procedures, changes in laws or the administration of laws
affecting gaming, the expense and unpredictability of litigation and other
risks detailed from time to time in the company's SEC reports including the
report on Form 10-K for the year ended June 30, 2002. Actual results may
differ materially from the forward-looking statements. Acres Gaming
Incorporated does not undertake any obligation to update any such factors or
publicly announce developments or events relating to the matters described
herein.
ACRES GAMING INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Nine months ended
March 31, March 31,
2003 2002 2003 2002
(in thousands except per share data)
NET REVENUES $9,487 $5,632 $27,027 $17,069
COST OF REVENUES 2,272 2,853 8,954 7,888
GROSS PROFIT 7,215 2,779 18,073 9,181
OPERATING EXPENSES:
Research and
development 1,786 1,451 5,023 4,437
Selling, general and
administrative 2,145 1,374 6,535 4,054
Total operating
expenses 3,931 2,825 11,558 8,491
INCOME (LOSS) FROM
OPERATIONS 3,284 (46) 6,515 690
INTEREST AND OTHER
INCOME (EXPENSE), NET (211) (213) (684) 199
INCOME (LOSS) BEFORE
INCOME TAXES 3,073 (259) 5,831 889
INCOME TAX BENEFIT 4,178 -- 4,178 --
NET INCOME (LOSS) $7,251 $(259) $10,009 $889
NET INCOME (LOSS)
PER SHARE - BASIC $.75 $(.03) $1.06 $.10
NET INCOME (LOSS)
PER SHARE - DILUTED $.67 $(.03) $.95 $.09
ACRES GAMING INCORPORATED
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31,
2003 June 30,
(unaudited) 2002
(in thousands)
CURRENT ASSETS:
Cash and cash equivalents $14,481 $7,312
Receivables 10,744 7,582
Inventories 5,146 3,985
Deferred taxes 4,002 --
Prepaid expenses 363 439
Total current assets 34,736 19,318
PROPERTY AND EQUIPMENT, NET 796 768
OTHER ASSETS 696 786
$36,228 $20,872
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $3,288 $2,277
Accrued expenses 1,332 908
Deferred revenue 8,086 4,375
Convertible subordinated debentures, current 1,820 3,600
Note payable, current 100 100
Total current liabilities 14,626 11,260
Convertible subordinated debentures, net of
current portion and discount -- 677
Note payable, net of current portion 294 369
Total liabilities 14,920 12,306
STOCKHOLDERS' EQUITY 21,308 8,566
$36,228 $20,872