SOURCE: Wells-Gardner Electronics Corp.

July 10, 2007 08:30 ET

Wells-Gardner Gives Sales Update

CHICAGO, IL--(Marketwire - July 10, 2007) - Wells-Gardner Electronics Corporation (AMEX: WGA) announced that they expect second quarter 2007 sales to be between $14.7 million and $15.0 million as compared with $18.3 million in the prior year quarter. Despite this decline in sales, management expects the margins in the second quarter 2007 to be higher than the margin of 15.1 percent experienced in the second quarter 2006. The sales decline is not due to a decline in the core business of the Company, which is to supply LCD and CRT monitors to the Las Vegas style Class III gaming manufacturers, as that business was basically flat in the second quarter 2007. Also the Company's American Gaming & Electronics subsidiary sold 2334 LCD replacement kits, an increase of 74 percent over the same quarter in 2006 generating increased sales of about $1 million.

The sales decline, year over year, in the quarter was caused by four factors:

  1.  Price declines due to decreases in sales prices to gaming
      manufacturers caused a sales decrease of over $1.0 million in the
      second quarter, as was noted in the first quarter 2007 press release.
      This sales decline consequently will not decrease profitability as a
      decrease in costs offset the decreases in sales prices.
  2.  Approximately $1 million of the sales decline was due to soft sales
      in Europe due to the current weak video markets in Italy and Spain.
      This is expected to eventually turn around either later this year or
      in 2008.
  3.  Approximately $1 million of the sales decline was due to the slower
      than expected start-up of the new Used Gaming Device business. This
      is now on track and is expected to be a major contributor in the
      third and fourth quarters. It should be noted that the Company had
      not previously projected any sales for this business in the second
      half of 2007, so this is primarily a timing issue.
  4.  Approximately $1 million of the sale decline is due to softness in
      sales of Class II gaming machines by slot manufacturers. There has
      been a slow down in openings of casinos in Class II states such as
      Oklahoma. In addition, there has been a slow down in sales of Class
      II machines into California due to the California legislature's
      approval of new and revised gaming compacts for Class III machines.
It should be noted that despite the sluggish domestic slot sales environment in the second quarter of 2007, the quarter ended on a positive note with the approval of the new gaming compacts in California and a breakthrough in negotiations for a gaming compact for Class III machines in Florida. This will result in an additional 17,000 to 25,000 slot machines in late 2007 into 2008 that was not in any slot company's projections. The Company expects to obtain a significant share of these new placements as their largest customers are continuing to increase market share in domestic placements.

The Company will give a further update on the quarter and future business prospects with the second quarter earnings release and conference call.

Founded in 1925, Wells-Gardner Electronics Corporation is a distributor and manufacturer of color video monitors and other related distribution products for a variety of markets including, but not limited to, gaming machine manufacturers, casinos, coin-operated video game manufacturers and other display integrators. The Company has the majority of its LCDs and CRT monitors manufactured in Mainland China. In addition, the Company acquired American Gaming & Electronics, Inc. ("AGE"), a leading parts distributor to the gaming markets, which sells parts and services to over 700 casinos in North America with offices in Las Vegas, Nevada, Egg Harbor Township, New Jersey and McCook, Illinois. AGE also sells refurbished gaming machines on a global basis as well as installs and services some brands of gaming machines in casinos in North America.

This press release contains forward-looking statements within the meaning of the federal securities laws. Those statements include statements regarding the intent, belief or expectations of the Company and its management. Readers are cautioned that the forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those expressed in any forward-looking statement. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, development of competing technologies, availability of adequate credit, interruption or loss of supply from key suppliers, our ability to increase production at our Malaysian joint venture, increased competition, the regulatory process and regulatory and legislative changes affecting the gaming industry. Wells-Gardner assumes no obligation to update the information contained in this release to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Contact Information

  • For additional investor information, please contact:

    Jim Brace
    Wells-Gardner
    (708) 290-2120

    Alan Woinski
    Gaming USA Corporation, USA
    (201) 599-8484