Printer Friendly


    COUNCIL BLUFFS, Iowa, Aug. 13 /PRNewswire/ -- Stuart Entertainment Inc. (NASDAQ: STUA) today reported record sales for the second quarter and six-month periods ended June 30, 1993.  Net income for both periods declined, however, as a result of increased selling, general and administrative (SG&A) expenses and lower gross profit margins due primarily to lower selling prices caused by increased sales competition.
    In the six months ended June 30, 1993, the company earned net income of $998,000, or 28 cents per share, on record sales of $27,826,000. This compares with net income of $1,185,000, or 34 cents per share, on sales of $25,683,000 during the like period of the prior year.
    For the quarter ended June 30, 1993, Stuart Entertainment earned net income of $371,000, or 10 cents per share, on record second quarter sales of $13,896,000.  This compares with net income of $556,000, or 16 cents per share, on sales of $13,312,000 during the like period in 1992.
    Leonard A. Stuart, chairman and chief executive officer, stated that while second quarter sales and earnings were below expectations, he remains "very positive about the company's near and long-term potential."  He noted that the outlook for the continuing growth of the company's core Bingo business remains strong, despite recent pressures on sales, and he emphasized positive developments related to two of the company's newest projects.  He noted that the company's wholly owned subsidiary, Video King Gaming Systems Inc. ("Video King"), completed its first substantial shipment of electronic gaming products during the second quarter and has received a number of additional orders that are expected to be shipped during the fourth quarter.  He also noted that the company and its joint venture partners have recently assembled a sales and marketing staff in England and have begun producing Bingo paper.  This should enable the company to begin penetrating the extensive United Kingdom Bingo market in the near future.
    Operating Results
    Stuart stated that "sales competition in the Bingo industry has intensified, resulting in slight declines in selling prices and unit sales in certain product lines.  This trend is expected to continue in the short term."
    Stuart noted that gross profit margins during the second quarter and six-month periods were adversely effected by decreases in selling prices and increases in labor rates and raw material costs.
    "The company has continued to incur significant research and development and marketing costs related to its new electronic gaming equipment product line during the second quarter," Stuart reported.  He added that significant expenses related to this product line are expected to continue for the foreseeable future.  During the second quarter and six-month periods, these expenses impacted earnings by approximately 5 cents and 10 cents per share, respectively.
    Stuart stated that the cost saving program initiated in late 1992 has been expanded and is expected to produce significant additional savings, both in manufacturing costs and SG&A expenses, during the last two quarters in 1993 and beyond.  The cost savings are anticipated to be generated through a number of means including the acquisition of equipment to increase manufacturing efficiency and labor force reductions.
    Electronic Gaming Equipment
    Stuart stated that "we are now aggressively marketing our new electronic gaming products and have received several orders which are expected to be shipped in the fourth quarter."  During the second quarter, Video King completed its first significant shipment of electronic gaming systems to the Manitoba Lotteries Foundation ("MLF") and recorded the sale during that quarter.  Stuart noted that the MLF is currently utilizing only selected features of the electronic gaming systems, while at their request modifications and enhancements are being made which are expected to render the system fully operational by Sept. 1, 1993.
    Stuart added, "Although it has taken longer than anticipated to bring this product line to market, we feel we have developed a line of electronic gaming products that is state-of-the-art.  We believe that this product line will become a major contributor to the future growth and profitability of our company."
    Entry Into British Market
    Stuart reported that its joint venture in England has recently assembled a sales staff and has begun the production of Bingo paper. The first sales in England are expected late in the third quarter.  As previously announced, Stuart Entertainment and Bingo Press & Specialty Ltd., a Canadian company of which Stuart is the majority owner, recently entered into an agreement with Mitre Printing Co. Ltd., a major manufacturer of Bingo paper in England, to jointly provide Mitre Printing with special technology for printing presses to be installed in England.  Under terms of the agreement, the company and Bingo Press will be jointly responsible for the marketing of Bingo paper from these presses.  Mitre Printing is a subsidiary of Gala Leisure Ltd., which is the operator of over 150 Bingo clubs in the United Kingdom.
    Stuart expressed confidence that this venture will "open the extensive British and European Bingo and gaming markets to the company."
    Change in Accounting Principle
    As required by the Financial Accounting Standards Board, the company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"), effective Jan. 1, 1993.  The company did not restate prior period financial statements in adopting SFAS 109, but during the first quarter of 1993 recognized an income tax benefit of $187,000, which equates to 5 cents earnings per share, in recording the cumulative effect of the accounting change relating to prior year's activity.
    Stuart Entertainment manufactures and distributes a broad line of fund-raising products associated primarily with the Bingo, electronic gaming and lottery industries.
                     STUART ENTERTAINMENT INC.
              Condensed Consolidated Summary of Income
                      Three Months Ended          Six Months Ended
                            June 30,                   June 30,
                       1993          1992         1993         1992
    Net sales       $13,896,000  $13,312,000   $27,826,000  $25,683,000
    Net income         $371,000     $556,000      $998,000   $1,185,000
    Earnings per share     $.10         $.16          $.28         $.34
    Average shares
     outstanding      3,542,000    3,501,000     3,528,000    3,496,000
               Condensed Consolidated Balance Sheets
                                June 30, 1993      Dec. 31, 1992
     Current assets              $19,664,000         $17,271,000
     Property, plant
      & equipment - net           11,528,000          11,607,000
     Other assets                  5,256,000           4,886,000
      Total                      $36,448,000         $33,764,000
    Liabilities and
     Stockholders' Equity
     Current liabilities         $15,292,000         $13,811,000
     Long-term debt
      (less current portion)       4,439,000           4,748,000
     Other liabilities             1,475,000           1,037,000
     Stockholders' equity         15,242,000          14,168,000
      Total                      $36,448,000         $33,764,000
    Unaudited and subject to year-end adjustments.
    -0-             08/13/93
    CONTACT:  Richard H. Ellison of Stuart Entertainment, 303-794-9040

-- DV003 -- X608 08/13/93
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Aug 13, 1993

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters