Exhibit 99.1
Acres Gaming Reports Financial Results for the
Fourth Quarter and Fiscal Year-End 2003
LAS VEGAS, Aug. 26 /PRNewswire-FirstCall/ -- Acres Gaming Incorporated (Nasdaq:
AGAM), the leader in Bonusing(TM) technology for the gaming industry, today
announced financial results for its fourth quarter and fiscal year ended June
30, 2003.
Net income for the quarter was $7.1 million, or $0.64 per diluted share,
compared to net income of $3.0 million, or $.29 per diluted share in the same
quarter of fiscal 2002. Net income for the fiscal year ended June 30, 2003
totaled $17.1 million, or $1.59 per diluted share, compared to net income of
$3.9 million, or $.38 per diluted share for the prior fiscal year.
Revenues for the quarter ended June 30, 2003 were $20.0 million, compared to
$9.3 million in the same quarter of fiscal 2002. Revenues for the fiscal year
ended June 30, 2003 were $47.1 million, compared to $26.4 million in the prior
fiscal year. Revenue included patent licenses fees of $8.6 million in the
quarter- and $8.7 million in the year-ended June 30, 2003, compared to $36,000
in the quarter- and $1.3 million in the year-ended June 30, 2002.
Gross profit margin was 82 percent in the fourth quarter versus 66 percent in
the same quarter of fiscal 2002. For the fiscal year ended June 30, 2003, gross
profit margin was 73.3 percent versus 58.1 percent for fiscal 2002. Gross profit
margin excluding patent licenses fees was 68.3 percent in the quarter and 67.2
percent in the year ended June 30, 2003, compared to 66.1 percent in the quarter
and 55.9 percent in the year ended June 30, 2002. The increase in gross profit
margin was primarily attributable to software sales and patent license fees
which carry a higher gross profit margin than hardware sales and which made up a
greater percentage of revenue in the quarter and year-ended June 30, 2003 than
in the fourth quarter and year-ended June 30, 2002.
Net operating expenses were $4.9 million in the quarter and $16.5 million in the
year ended June 30, 2003, compared to $2.9 million in the quarter and $11.4
million in the year ended June 30, 2002. R & D expenses for the fourth quarter
of fiscal 2003 were 45% higher than the same quarter of fiscal 2002, and Sales
and Marketing expenses for the fourth quarter of fiscal 2003 were 47% higher
than those for the same quarter of fiscal 2002. General and administrative
expenses for the fourth quarter of fiscal 2003 increased $1.3 million due
primarily to higher legal and other professional expenses of $595,000, higher
salary and benefit expenses of $110,000, bonus accruals of $211,000 and an
increase in the provision for doubtful accounts of $289,000.
At June 30, 2003, Acres had $24.1 million in cash and equivalents, compared to
$7.3 million at June 30, 2002. During the fourth quarter of fiscal 2003, Acres
paid the outstanding principal balance of its note payable due to International
Game Technology (IGT), and the holders of Acres 6% convertible subordinated
debentures converted the remaining principal balance of the debentures into
shares of Acres common stock. Accordingly, Acres had no short- or long-term debt
outstanding at June 30, 2003.
Acres' order backlog at June 30, 2003 was $19.0 million, including deferred
revenue of $6.0 million, compared to $20.0 million, including deferred revenue
of $4.4 million, at June 30, 2002. Backlog, however, may not be a meaningful
indicator of future revenues. Acres' revenues fluctuate significantly based on
the timing of the delivery of any large order.
On June 29, 2003, IGT and Acres executed a definitive agreement pursuant to
which Acres will merge with a subsidiary of IGT. Under the terms of the
agreement, IGT will pay $11.50 per share in an all cash transaction,
representing an aggregate purchase price of approximately $130 million on a
fully diluted share basis. The merger is subject to the approval of Acres'
stockholders, various regulatory approvals and other conditions. The companies
anticipate that the transaction will be completed in the fourth calendar quarter
of 2003. Acres' Board of Directors has set September 12, 2003, as the date for a
special meeting of its stockholders to vote on the merger.
Information about Acres
Acres is a software development company serving the worldwide gaming industry.
Acres provides bonusing and cashless gaming products as well as a full suite of
integrated casino management systems via its Acres Bonusing(TM), Acres Cashless,
and Acres Advantage(TM) product lines. Acres' patented technology enables casino
operators to increase patron loyalty by differentiating their properties in an
increasingly competitive environment. Acres' products provide the tools that
increase player enjoyment and satisfaction while improving operational
efficiency and property profitability. Detailed descriptions of the promotions
made available by Acres Bonusing as well as other products offered by Acres, are
available at the company's Web site, http://www.acresgaming.com. Acres was
founded in 1992 and has offices in Las Vegas, Nevada and Corvallis, Oregon.
Additional Information
In connection with the merger, Acres filed a proxy statement and other relevant
documents with the U.S. Securities and Exchange Commission (the "SEC").
Stockholders are urged to read the proxy statement carefully and in its
entirety, together with all other relevant documents filed by Acres with the
SEC, because such documents contain important information. You may obtain these
documents free of charge at the web site maintained by the SEC at
http://www.sec.gov. In addition, you can obtain documents filed by Acres with
the SEC free of charge by requesting them in writing from Acres Gaming
Incorporated, Investor Relations, 7115 Amigo Street, Suite 150, Las Vegas,
Nevada 89119, Phone: (702) 263-7588, Fax: (702) 263-7595.
All statements in this press release that are not historical facts are
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933, as amended and other applicable securities laws. Forward-looking
statements relating to expected revenue, order backlogs (which may not be a
meaningful indicator of future revenues), gross margins, earnings projections
and the completion of the merger involve risks and uncertainties, and various
factors could cause actual results to differ materially from those in the
forward-looking statements. Factors that could cause actual results to differ
from those indicated in the forward-looking statements include: delays in the
development or regulatory approval of products; delays or changes in
installation schedules by Acres or its customers; changes in laws or the
administration of laws affecting gaming; the expense and unpredictability of
litigation; failure to obtain the approval of Acres' stockholders for the
merger; failure to obtain regulatory approvals for the merger, including gaming
regulatory approvals in various jurisdictions; failure to satisfy the conditions
to closing of the merger; and other factors detailed from time to time in Acres'
reports filed with the Securities and Exchange Commission, including Acres' Form
10-K for the year ended June 30, 2002. Actual results may differ materially from
the forward-looking statements.
ACRES GAMING INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended Year ended
------------------ ------------------
June 30, June 30,
2003 2002 2003 2002
---- ---- ---- ----
(in thousands except per share data)
NET REVENUES:
Systems and
services $11,409 $9,298 $38,360 $25,096
Patent licenses 8,623 36 8,699 1,308
------- ------ ------- -------
Total net
revenues 20,032 9,334 47,059 26,404
COST OF REVENUES 3,613 3,171 12,567 11,059
------- ------ ------- -------
GROSS PROFIT 16,419 6,163 34,492 15,345
------- ------ ------- -------
OPERATING EXPENSES:
Research and
development 1,829 1,263 6,852 5,700
Selling, general
and administrative 3,094 1,599 9,628 5,654
------- ------ ------- -------
Total operating
expenses 4,923 2,862 16,480 11,354
------- ------ ------- -------
INCOME FROM OPERATIONS 11,496 3,301 18,012 3,991
OTHER EXPENSE (390) (283) (1,074) (86)
------- ------ ------- -------
INCOME BEFORE
INCOME TAXES 11,106 3,018 16,938 3,905
INCOME TAX BENEFIT
(EXPENSE) (3,979) -- 199 --
------- ------ ------- -------
NET INCOME $7,127 $3,018 $17,137 $3,905
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NET INCOME PER SHARE
- BASIC $.72 $.33 $1.79 $.43
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NET INCOME PER SHARE
- DILUTED $.64 $.29 $1.59 $.38
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ACRES GAMING INCORPORATED
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, June 30,
2003 2002
---- ----
CURRENT ASSETS:
Cash and cash equivalents $24,067 $7,312
Receivables 9,556 7,582
Inventories 4,072 3,985
Deferred income taxes 2,909 --
Prepaid expenses 1,154 439
------- ------
Total current assets 41,758 19,318
PROPERTY AND EQUIPMENT, NET 708 768
DEFERRED INCOME TAXES 649 --
OTHER ASSETS, NET 162 786
------- ------
TOTAL ASSETS $43,277 $20,872
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,926 $2,277
Accrued expenses 1,890 908
Income taxes payable 2,302 --
Deferred revenue 5,956 4,375
Convertible subordinated debentures, current -- 3,600
Note payable, current -- 100
------- ------
Total current liabilities 12,074 11,260
Convertible subordinated debentures,
net of current portion
and discount -- 677
Note payable, net of current portion -- 369
------- ------
Total liabilities 12,074 12,306
STOCKHOLDERS' EQUITY 31,203 8,566
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $43,277 $20,872
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