GameTech International Inc.(fka GMTCQ)

[makesumgravy]

March 10, 2008 - 6:00 AM EDT

GameTech Reports 1st Quarter 2008 Fiscal Results
RENO, Nev., March 10 /PRNewswire-FirstCall/ -- GameTech International, Inc. (Nasdaq: GMTC), a leading designer, developer and marketer of computerized bingo and gaming equipment, systems, and services, today announced financial results for the Company's first fiscal quarter ended January 31, 2008. Net income totaled $0.3 million for the quarter, or $0.03 per fully diluted share, which includes a pre-tax impairment charge relating to its investments in auction rate securities of $0.7 million ($0.5 million after tax, or $0.03 per fully diluted share). Adjusted net income, which excludes the impairment charge, for the quarter ended January 31, 2008, was $0.8 million or $0.06 per fully diluted share. Net income for the first quarter in fiscal 2007 was $1.1 million, or $0.08 per fully diluted share. Results for the quarter were impacted by an increase in interest and amortization expense related to the Summit acquisition, as well as the impairment charge for the investments.

Company Highlights:
-- Revenue for the first quarter of fiscal 2008 was $15.2 million compared
with $12.0 million for the same period in fiscal 2007.
-- EBITDA for the first quarter of fiscal 2008 was $4.5 million compared
with $4.2 million for the same period in fiscal 2007.
-- Net income for the first quarter of fiscal 2008 was $0.3 million,
compared with $1.1 million for the same period in fiscal 2007.
Excluding the impairment charge, adjusted net income for the first
quarter of fiscal 2008 was $0.8 million.
-- Net income per fully diluted share was $0.03 for the first quarter of
fiscal 2008 (or $0.06 excluding the impairment charge) and $0.08 for
the comparable period in fiscal 2007.
-- Interest expense and amortization expense related to the acquisition of
Summit Gaming totaled $0.7 million and $0.3 million for the first
quarter of 2008, respectively.
-- The Company recorded a pre-tax impairment charge related to its
investments in auction rate securities of approximately $0.7 million
($0.5 million after tax).


First quarter revenue totaled $15.2 million compared with $12.0 million for the comparable quarter during fiscal 2007. The increase in revenue for the three-month period ended January 31, 2008 was primarily due to results from the acquisition of Summit Amusement & Distributing, LTD., a manufacturer of video lottery terminals, which contributed $4.1 million in revenue to the first fiscal quarter. Bingo revenue for the first fiscal quarter of 2008 was $11.1 million, down from $12.0 million in the comparable quarter in fiscal 2007. While bingo revenue was impacted by increased regional competition, pricing pressures and the loss of certain accounts, they were offset in part by increases in various key states, and expansion in the United Kingdom markets.

The challenges in the credit and capital markets have caused the company to review its investments in auction rate securities. As of January 31, 2008, the estimated market value of the company's investments in auction rate securities stood at $3.2 million, which reflects an impairment charge of $0.7 million. Although these securities continue to pay interest according to their stated terms, the company has recorded an impairment charge of $0.7 million based upon an analysis of the securities and other-than-temporary factors. As of January 31, 2008, the company had $8.1 million in cash and cash equivalent balances in addition to its investment portfolio and believes that its current cash position and expected operating cash flows will be sufficient to fund its operations and debt service.

Jay Meilstrup, GameTech's President and Chief Executive Officer stated, 'While bingo revenue for the first fiscal quarter of 2008 was down 7.9% from the comparable period in 2007, we experienced continued revenue growth in certain domestic markets as well as in the United Kingdom, helping to offset erosion in some of our more mature bingo markets. When compared to the fiscal fourth quarter of 2007, we showed a 0.7% decline in revenue in the first fiscal quarter of 2008. This is an improvement over the previous sequential quarterly revenue decline the company experienced in the fourth fiscal quarter of 2007 when compared to the third fiscal quarter of 2007. Our Summit division's results for the quarter were impacted by some softness in the Montana market as well as fewer than expected shipments to the Louisiana market. With over 80% of Summit's sales coming from the Montana and Louisiana markets, financial results for this segment may continue to be volatile from quarter to quarter until we have broadened our revenue base by expanding into new markets. Additionally, GameTech continues to develop its technical capabilities in wireless technology to serve the newly developing wireless mobile gaming market. We anticipate our first commercial installment of our wireless server-based gaming system by the end of the second fiscal quarter. Finally, despite the challenges in the credit markets and the impact on our investment account, the company remains well capitalized and we believe will be able to meet its future financial obligations.'