Year-end Revenues of $74 Million, a 29.5% Increase over 2005 LAS
VEGAS, May 15 /PRNewswire-FirstCall/ -- Gaming Partners
International Corporation (NASDAQ:GPIC), a leading worldwide
provider of casino currency and table gaming equipment, today
announced financial results for the fourth quarter and year-end
2006. For the fourth quarter of 2006, the Company reported revenues
of $16.1 million compared to $16.2 million for the fourth quarter
of 2005. Gross profit for the quarter was $4.4 million, or 27% of
revenues, compared to $5.8 million, or 36% of revenues, in the same
period a year ago. Net income for the fourth quarter was $115,000,
or $0.01 per basic and diluted share, compared to $2.1 million, or
$0.27 per basic and $0.26 per diluted share, in the three months
ended December 31, 2005. In anticipation of several large potential
orders in the fourth quarter of 2006, the Company's subsidiary, GPI
SAS, maintained its labor force for full production; however, the
orders were unexpectedly delayed. Results for the fourth quarter
were negatively impacted due to higher expenses resulting from
increased labor costs as GPI SAS could not immediately reduce its
labor force under French law. The Company had expected to begin to
recognize revenue from these orders in the first quarter of 2007.
The potential orders remain unsigned and first quarter results will
show a significant loss. For the year-ended December 31, 2006
revenues were $74.0 million, an increase of 29.5% compared to
revenues of $57.1 million in the full-year 2005. Gross profit for
the period was $24.4 million, or 33.0% of revenues, compared to
$21.0 million, or 36.7% of revenues, in the comparable period in
2005. Net income for the year increased 18.5% to $5.1 million, or
$0.64 per basic and $0.62 per diluted share, compared to net income
of $4.3 million or $0.55 per basic and $0.53 per diluted share for
the year ended December 31, 2005. Weighted average shares
outstanding were 8.0 million basic and 8.2 million diluted for the
year ended 2006, and 7.8 million basic and 8.2 million diluted for
2005. As of December 31, 2006, the Company had cash and marketable
securities of $10.6 million compared to $13.6 million on December
31, 2005. Working capital increased to $14.8 million from $9.6
million on December 31, 2005. Backlog of production orders, which
are expected to be filled in 2007, at the end of the fourth quarter
was approximately $3.9 million at GPI USA and $1.6 million at GPI
SAS. This compares to backlog of $4.5 million and $21.2 million for
GPI USA and GPI SAS, respectively, on December 31, 2005. The
backlog at the end of 2005 included several large pending orders
for casino openings in 2006, which were filled during the year. The
Company noted that, during its 2006 financial closing process, it
discovered certain material weaknesses in its financial reporting
process because, in the U.S. operation, which includes the
corporate reporting function, the Company did not have sufficient
personnel with requisite knowledge of generally accepted accounting
principles and related practices to ensure an effective closing
process in the United States or to properly document the Company's
important accounting policy and transaction conclusions. Management
continues to implement corrective actions where required to improve
the effectiveness and timeliness of its internal controls,
including the enhancement of systems and procedures. The Company is
in the process of evaluating accounting department needs and hired
a new Chief Financial Officer, David Grimes, in 2006. Management
also plans to provide training to existing employees and to
supplement the team in certain key positions. The Company
discovered during its 2006 year-end financial closing process that,
as the result of an error related to the conversion of fixed asset
software in late 2003, depreciation was improperly recorded on a
group of assets in 2005 and 2004. This error caused depreciation
expense to be understated by $240,000 and $54,000 for the years
ended December 31, 2005 and 2004, respectively. Following a
qualitative and quantitative analysis of these amounts, the Company
has determined that they are not material to the periods affected.
As disclosed in a press release dated April 16, 2007, the Company
identified a clerical error in the three months ended September 30,
2006 statement of operations. Correction of the clerical error
reduces net income by $100,000 and basic diluted net income per
share by $0.01 for the third quarter, but does not change net
income or net income per share for the nine months as originally
filed. Based on management's recommendation, the Company has filed
an amended quarterly report on Form 10-Q/A with the SEC. Commenting
on the results, Gerard Charlier, President and CEO said,
"Notwithstanding the recent challenges we have faced, 2006 was an
extremely successful year on all fronts. We grew revenue nearly 30%
over 2005, increased profitability and further extended our
leadership position in the casino currency market. The
manufacturing difficulties related to the high-frequency RFID chips
that we saw in the third quarter are behind us and we are well
positioned to remain at the forefront of the industry." Mr.
Charlier added, "While the fourth quarter saw some softness, which
continued into the first quarter of 2007 and will result in a
significant loss, it was due primarily to timing issues, as several
sizeable orders were pushed out. We expect to receive these orders
during the remainder of the year. With casinos throughout the world
adopting RFID technology and gaming being introduced in new
markets, we remain confident in the long-term prospects for the
Company as a leader in this market as it continues to grow." He
concluded, "We are disappointed that certain circumstances
prevented us from filing our Form 10-K on time, but we are taking
steps to address the issues that existed. We will add resources to
our finance department to support our new CFO, and believe that
this and other steps will strengthen and enhance our internal
controls for the long-term." The Company noted that, due to the
delay in filing its annual report on Form 10-K for the year ended
December 31, 2006 and the material weaknesses in its financial
reporting process that caused the delay, it will be unable to file
its quarterly report on Form 10-Q for the three months ended March
31, 2007 by the May 15, 2007 deadline. The Company will file for an
extension under Rule 12b-25, which will allow for an additional 5
days to complete the filing. About Gaming Partners International
Corporation GPIC manufactures and supplies (under the brand names
of Paulson(R), Bourgogne et Grasset and Bud Jones(R)) gaming chips
including low frequency and high frequency RFID chips, jetons and
plaques, low frequency RFID readers, wheels, table layouts, playing
cards, dice, gaming furniture, table accessories and other products
that are used with casino table games such as blackjack, poker,
baccarat, craps and roulette. GPIC is headquartered in Las Vegas,
Nev., with offices in Beaune, France; San Luis Rio Colorado,
Mexico; Atlantic City, N.J.; and Gulfport, Miss. GPIC sells its
casino products directly to licensed casinos throughout the world.
For additional information about GPIC, visit our web site at
http://www.gpigaming.com/. This release contains "forward-looking
statements" based on current expectations but involving known and
unknown risks and uncertainties, including, without limitation,
statements relating to anticipated future sales or the timing
thereof, or the long-term growth and prospects of our business.
Actual results or achievements may be materially different from
those expressed or implied. GPIC's plans and objectives are based
on assumptions involving judgments with respect to future economic,
competitive and market conditions, its ability to consummate, and
the timing of, acquisitions and future business decisions, all of
which are difficult or impossible to predict accurately and many of
which are beyond its control. Therefore, there can be no assurance
that any forward-looking statement will prove to be accurate.
Factors that could cause actual results to vary materially from
these forward-looking statements include: any significant reduction
in the growth rate of new and existing casinos in Macau, the
failure of the industry to accept our RFID technology, any
unfavorable resolution of a significant lawsuit against us, any
patent infringement issues, the development of competing
technologies by our competitors, the failure of any supplier to
timely deliver key raw materials for our significant products, any
customer cancellation of a significant order included in our
backlog, the loss or retirement of any of our key employees, any
domestic or international terrorist incidents, and any unexpected
taxes, regulatory charges, costs or difficulty in the operations of
the companies in multiple locations or the manufacturing of our
products. Additional information concerning factors and risks that
could affect these forward-looking statements and GPIC's financial
condition and results of operations are included in GPIC's Form
10-K for the year ended December 31, 2006. For more Information
please contact: For Gaming Partners International Corporation: GPIC
Contact: KCSA Contacts: Laura McAllister Cox Todd Fromer / Lee Roth
702-384-2425 212-896-1215 / 1209 / GAMING PARTNERS INTERNATIONAL
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December
31, (in thousands, except share amounts) 2006 2005 ASSETS Current
Assets: Cash and cash equivalents $5,888 $4,573 Marketable
securities 4,710 9,075 Accounts receivables, less allowance for
doubtful accounts of $335 and $398, respectively 4,136 4,734
Inventories 9,251 9,895 Prepaid expenses 404 623 Deferred income
tax asset 355 200 Other current assets 1,497 1,288 Total current
assets 26,241 30,388 Property and equipment, net 14,567 11,212
Goodwill 1,524 1,386 Other intangibles, net 1,245 1,529 Deferred
income tax asset 2,093 2,407 Long-term investments 683 1,645 Other
assets, net 616 149 Total assets $46,969 $48,716 LIABILITIES AND
STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of
long-term debt $1,047 $716 Accounts payable 2,993 3,483 Accrued
expenses 4,557 3,587 Customer deposits 1,187 10,506 Income taxes
payable 870 1,136 Deferred income tax liability 623 1,061 Other
current liabilities 177 336 Total current liabilities 11,454 20,825
Long-term debt, less current maturities 2,749 1,892 Long-term
deferred income tax liability 182 - Total liabilities 14,385 22,717
Commitments and Contingencies (Note 9) Stockholders' Equity:
Preferred stock, authorized 10,000,000 shares, $.01 par value, none
issued and outstanding - - Common stock, authorized 30,000,000
shares, $.01 par value, 8,090,901 and 7,898,766, respectively,
issued and outstanding 81 79 Additional paid-in capital 18,429
16,904 Treasury stock, at cost, 8,061 shares (196) (196) Retained
earnings 12,690 8,766 Accumulated other comprehensive income 1,580
446 Total stockholders' equity 32,584 25,999 Total liabilities and
stockholders' equity $46,969 $48,716 GAMING PARTNERS INTERNATIONAL
CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, (in thousands, except earnings per share)
2006 2005 2004 Revenues $73,954 $57,121 $44,585 Cost of revenues
49,580 36,154 28,682 Gross profit 24,374 20,967 15,903 Product
development 422 330 259 Marketing and sales 4,316 4,284 3,768
General and administrative 11,155 10,514 7,800 Operating income
8,481 5,839 4,076 Other income (expense) Gain (loss) on foreign
currency transactions (349) 133 (155) Interest income 410 162 39
Interest expense (175) (199) (253) Other income, net 145 149 59
Income before income taxes 8,512 6,084 3,766 Income tax expense
3,383 1,756 1,152 Net income $5,129 $4,328 $2,614 Earnings per
share: Basic $0.64 $0.55 $0.34 Diluted $0.62 $0.53 $0.34
Weighted-average shares of common stock outstanding: Basic 7,974
7,829 7,608 Diluted 8,226 8,179 7,754 Selected Quarterly Financial
Information Year Ended December 31, 2006 First Second Third(1)
Fourth Total (in thousands, except per share data) Net revenues
$18,297 $19,436 $20,135 $16,086 $73,954 Gross profit(2) 7,194 7,181
5,590 4,409 24,374 Operating income 3,398 2,961 1,623 499 8,481 Net
income $2,080 $2,015 $919 $115 $5,129 Basic net income per common
share $0.26 $0.25 $0.12 $0.01 $0.64 Diluted net income per common
share $0.25 $0.25 $0.11 $0.01 $0.62 (1) These amounts have been
restated from the amounts previously reported in the Form 10-Q
issued on November 13, 2006. The amounts reported in the 10-Q
included a clerical error of $100,000; in addition, the amounts
presented above include a reclassification between Selling, general
and administrative expenses and Cost of revenues of $379,000. The
nine-month information was correct as originally reported. The
previously reported amounts in the previous quarter were as follows
(in thousands, except per share amounts): Net revenues $20,135
Gross profit 6,069 Operating income 1,723 Net income $1,019 Basic
net income per common share $0.13 Diluted net income per common
share $0.12 Year Ended December 31, 2005 First Second Third Fourth
Total (in thousands, except per share data) Net revenues $12,291
$15,187 $13,415 $16,228 $57,121 Gross profit(2) 4,431 6,459 4,322
5,755 20,967 Operating income (loss) 1,082 2,820 455 1,482 5,839
Net income (loss) $502 $1,482 $246 $2,098 $4,328 Basic net income
(loss) per common share $0.06 $0.19 $0.03 $0.27 $0.55 Diluted net
income (loss) per common share $0.06 $0.18 $0.03 $0.26 $0.53 (2)
Certain amounts have been reclassified from Selling, general and
administrative expenses to Cost of revenues; as such they would not
have had an impact on net income or earnings per share. The
reclassification related to administrative expenses associated with
our manufacturing facility in Mexico. The amounts reclassified were
$2,065,000 for 2006 ($545,000, $546,000, $535,000 and $439,000 for
first, second third and fourth quarter, respectively) and
$2,014,000 for 2005 ($402,000, $458,000, $604,000, $550,000 for
first, second third and fourth quarter, respectively). DATASOURCE:
Gaming Partners International Corporation CONTACT: Laura McAllister
Cox of Gaming Partners International Corporation, +1-702-384-2425,
; or Todd Fromer, +1-212-896-1215, , or Lee Roth, +1-212-896-1209,
, both of KCSA for Gaming Partners International Corporation Web
site: http://www.gpigaming.com/
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