Kinbasha Gaming International, Inc (KNBA)

[AsiaInsight]

Kinbasha Gaming International, Inc. Announces Financial Results for Fiscal Q1 2014

Company Reports Net Revenues of $18.7 Million and Fully Diluted EPS of $0.06 in the Quarter Ended June 30, 2013

HITACHI, JAPAN--(Marketwired - Aug 13, 2013) - Kinbasha Gaming International, Inc. (OTCQX: KNBA), owner and operator of retail pachinko gaming centers in Japan, has released its financial results for its fiscal first quarter ended June 30, 2013.

Summary of Fiscal Q1 2014 Financial Results

Net revenues decreased to $18.7 million in fiscal Q1 2014, compared to $23.9 million in fiscal Q1 2013.
Net income improved to $761,000 in fiscal Q1 2014, compared to a net loss of $1.9 million in fiscal Q1 2013.
Fully diluted earnings per share (EPS) improved to $0.06 in fiscal Q1 2014, compared to a loss of per share of $0.16 in fiscal Q1 2013.

Analysis of Fiscal Q1 2014 Financial Results

Kinbasha's functional currency is the yen, and accordingly its earnings and assets are denominated in yen. As a result, appreciation or depreciation in the value of the yen relative to the dollar would affect its financial results reported in dollars without giving effect to any underlying change in its business or results of operations. For fiscal Q1 2014, the yen compared to the dollar was materially weaker than for fiscal Q1 2013, as the exchange ratio increased by 23%. Accordingly, Kinbasha's results of its operations for fiscal Q1 2014 expressed in dollars appear materially weaker than when expressed in yen.

Net revenues decreased to $18.7 million for the fiscal first quarter ended June 30, 2013, from $23.9 million for the same period in 2012. The principal reason for this decrease was the change in the yen/dollar exchange rate. When expressed in yen, Kinbasha's revenues decreased less than 2% between these periods. In addition, Kinbasha sold three restaurants in July 2012, and thus had no revenues from these restaurants during fiscal Q1 2014.

Net income attributable to common shareholders improved to $761,000 for the quarter ended June 30, 2013 as compared to a net loss of $1.9 million in the same period of 2012. As a result, fully diluted EPS improved to $0.06 in the quarter ended June 30, 2013, compared to a loss per share of $0.16 in the quarter ended June 30, 2012.

The improvement to net income is generally attributed to enhanced market conditions, and the fact that in Q1 of fiscal 2013 the Company was still recovering from the March 2011 earthquake.

"We are pleased to report our financial results for fiscal Q1 2014," said Masatoshi Takahama, Chief Executive Officer of Kinbasha. "Despite slightly lower revenues due to the weaker yen, Kinbasha demonstrated the results of our continually streamlined operations by posting net income of $761,000, compared to a loss in the same quarter last year. As we continue to execute our strategic growth initiatives, we believe the decisions we have made will position Kinbasha to grow in our proven markets while also limiting expenses and reducing debt."

During the first quarter of fiscal 2014 the Company was able to reduce its total debt from $132.3 million at March 31, 2013 to $122.5 million as of June 30, 2013. As of June 30, 2013, the total debt included $100.2 million of principal and $22.3 million of accrued interest. In addition, debt in default decreased from $97.1 million at March 31, 2013 to $92.0 million at June 30, 2013. For the past several years, the Company has negotiated with its lenders and in many cases has obtained formal or informal forbearances and loan modifications that have allowed it to effectively extend the maturity of its debt through interest only and/or reduced principal payments.

Mr. Takahama concluded, "We believe the progress we have made in improving our financial metrics and continuing to negotiate deals with our banks will help us achieve our growth objectives. As the only pachinko company that is listed in the United States, Kinbasha has an advantage over our competition when it comes to building awareness and raising capital overseas. Going forward in fiscal 2014, Kinbasha's growth strategy is based on leveraging our existing brand and operational expertise to propel our expansion initiatives and to build long term shareholder value."


http://online.wsj.com/article/PR-CO-20130813-906760.html?mod=googlenews_wsj