Acres Gaming Announces Receipt of $4.6 Million Order and Reports Third Quarter Results.Business Editors/Gaming Writers LAS VEGAS--(BUSINESS WIRE)--April 20, 2000 Acres Gaming Incorporated (Nasdaq:AGAM AGAM Ambiente Gas Acqua Monza SpA (Italian) ) announced receipt of a $1.2 million deposit and a letter of intent from Tsogo Sun, Ltd. to provide an Acres Advantage(TM) casino-wide slot system for the new MonteCasino in Johannesburg, South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. . When finalized See finalization. , the contract is expected to generate more than $4.6 million in revenue. Shipments of hardware to MonteCasino are expected to begin in the Company's fourth fiscal quarter with final installation scheduled for the fall of 2000. "The MonteCasino order represents our first venture into the new and exciting South African market. It also replenishes our backlog which now totals $5.7 million," commented Reed Alewel, Vice President and CFO See Chief Financial Officer. . "Our revenues continue to come in the form of large contracts which can cause significant variations in our quarterly revenues depending on the timing of order receipt and product delivery. "Through the first nine months of this fiscal year, Acres has shown notable top-line growth and significant bottom-line improvements. We expect this trend to continue in the fourth fiscal quarter." Bud Glisson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , put the last twelve months in perspective by noting, "March is the first anniversary of the initial installation of the Acres Advantage casino-wide slot system. Beginning with the Mandalay Bay installation, we have completed the development of Wizard(TM) slot accounting, Prophet prophet [Gr.,=foreteller], a religious leader and spokesperson, particularly used in the Bible. The prophets emitted messages from the divine through inspired speech, the interpretation of omens and dreams, and the casting of lots and divination. (TM) player tracking and Merlin Merlin, in Arthurian legend, magician, seer, and teacher at the court of King Vortigern and later at the court of King Arthur. He was a bard and culture hero in early Celtic folklore. In Arthurian legend he is famous as a magician and as the counselor of King Arthur. (TM) graphical analysis. "The first installation of Coinless Transit(TM) cashless wagering wa·ger n. 1. a. An agreement under which each bettor pledges a certain amount to the other depending on the outcome of an unsettled matter. b. A matter bet on; a gamble. 2. is nearly complete in Australia and the first modules of Guardian(TM) cage and credit software are in our quality assurance testing lab. We are quite proud that, since its initial introduction, the Acres Advantage product line has generated over $25 million in orders." Acres also reported its results of operations for its third fiscal quarter and nine-month period ended March 31, 2000. The Company recorded a net loss of $1.1 million ($.13 per share-basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ) in the current year quarter versus a net income of $83,000 ($.01 per share-basic and diluted) in the prior year quarter. For the nine-month period ended March 31, 2000, operating results improved $2.6 million to a net loss of $327,000 ($.04 per share-basic and diluted) versus a net loss of $2.9 million ($.33 per share-basic and diluted) for the same period in the prior year. Year-to-date EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become improved over the prior year by $2.8 million to a positive $1.0 million. Revenues for the quarter ended March 31, 2000 were $2.2 million versus $6.4 million recorded in the prior year quarter. The current quarter's revenues were primarily the result of continuing progress on the Crown Casino Coinless Transit project in Melbourne, Australia, which is scheduled for completion before the end of the Company's fiscal year. The prior year quarter's revenues were primarily related to the Acres Advantage installation at Mandalay Bay. Revenues for the first nine months of fiscal 2000 were $13.8 million versus $12.8 million recorded in the same period in the prior year. Gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. increased to 63 percent in the current quarter from 46 percent in the prior year quarter. For the first nine months of fiscal 2000, gross profit margins were 54 percent versus 46 percent in the same period of fiscal 1999. The current quarter's sales were primarily software related and carry a higher gross profit margin than the prior quarter's sales, which included hardware sales to Mandalay Bay. Net operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. decreased to $2.6 million in the current quarter from $2.9 million in the prior year quarter and decreased to $7.8 million for the first nine months of fiscal 2000 from $9.0 million in the first nine months of the prior year. Reductions in staffing generated $674,000 and $1.7 million in operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. savings in the quarter and nine-month periods ended March 31, 2000, respectively, as compared to the same periods in the prior year. The current quarter savings were partially offset by a $315,000 reduction in the amount of certain software customization costs that were allocated out of operating expenses and into cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold . The year-to-date savings were partially offset by a $371,000 reduction in amounts capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. as software development costs. At March 31, 2000, the Company had $871,000 in cash and equivalents. In April 2000, after the close of the current quarter, the Company received a $1.2 million deposit from Tsogo Sun, Ltd. The Company currently does not have any debt but has obtained a commitment from its commercial bank to provide up to $2.0 million in short-term financing. Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying balances increased over the June 30, 1999 fiscal year end balances by $1.2 million reflecting the payment terms of the Crown Casino contract, which calls for final payment upon completion of the Coinless Transit project. Inventory balances decreased by $1.4 million from the June 30, 1999 fiscal year end balances primarily due to hardware deliveries to MotorCity and Crown Casino. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. at March 31, 2000 decreased from the June 30, 1999 fiscal year end balances by $5.5 million primarily as a result of revenue recognition of the advance deposits collected from customers. The timing of cash payments and general reductions in amounts owed to vendors accounted for a $781,000 reduction in current liabilities. Additionally, the June 30, 1999 current liability balance included a $386,000 accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. related to relocating the Company's headquarters to Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. that was fully paid by March 31, 2000. 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 Corvallis (IPA: [ˌkɔɹ ˈvæl ɪs]) is a city located in central western Oregon, USA. It is the county seat of Benton CountyGR6 . The discussion in this release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (as defined in Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. ). 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 revenues, expected shipping and completion dates, opening of new markets, order backlogs (which may not be a meaningful indicator of future revenues), continuing revenue and earnings trends and the measure of progress on the Coinless Transit project. The following factors, among others, could cause actual results to differ from those indicated in the forward-looking statements: a customer's ability and intent to sign a contract based on the received letter of intent, the ability to obtain the necessary gaming licenses and product approvals in South Africa, shipping schedules and installation dates, market acceptance of the Company's products, the possibility that development, regulatory approval and installations of new software products may not be completed or may not be completed as scheduled, changes in federal or state laws or the administration of such laws, the expense and unpredictability of patent and other litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. and other risks detailed from time to time in the Company's SEC reports including the report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 30, 1999. Actual results may differ materially from the forward-looking statements.
ACRES GAMING INCORPORATED
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands except per share data)
Three months ended Nine months ended
March 31, March 31,
2000 1999 2000 1999
NET REVENUES $ 2,202 $ 6,414 $ 13,793 $ 12,761
COST OF REVENUES 811 3,485 6,381 6,875
GROSS PROFIT 1,391 2,929 7,412 5,886
OPERATING EXPENSES:
Research and development 1,335 1,498 3,867 4,702
Selling, general
and administrative 1,222 1,364 3,949 4,292
Total operating
expenses 2,557 2,862 7,816 8,994
INCOME (LOSS)
FROM OPERATIONS (1,166) 67 (404) (3,108)
OTHER INCOME 25 16 77 205
NET INCOME (LOSS) $ (1,141) $ 83 $ (327) $ (2,903)
NET INCOME (LOSS)
PER SHARE - BASIC $ (0.13) $ .01 $ (.04) $ (0.33)
NET INCOME (LOSS)
PER SHARE - DILUTED $ (0.13) $ .01 $ (.04) $ (0.33)
ACRES GAMING INCORPORATED
BALANCE SHEETS
(in thousands)
March 31, June 30,
2000 1999
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 871 $ 5,949
Receivables 2,778 1,576
Inventories 3,556 4,909
Prepaid expenses 102 265
Total current assets 7,307 12,699
PROPERTY AND EQUIPMENT, NET 1,838 2,374
OTHER ASSETS 1,098 1,024
$10,243 $16,097
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,626 $ 2,407
Accrued expenses 843 1,491
Customer deposits 54 4,152
Total current liabilities 2,523 8,050
REDEEMABLE CONVERTIBLE PREFERRED STOCK 4,948 4,948
STOCKHOLDERS' EQUITY 2,772 3,099
$10,243 $16,097
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