SOURCE: Wells-Gardner Electronics Corp.

August 06, 2008 16:05 ET

Wells-Gardner Reports Second Quarter and First Half Financial Results

9.3% Growth in Second Quarter Gaming Sales

CHICAGO, IL--(Marketwire - August 6, 2008) - Wells-Gardner Electronics Corporation (AMEX: WGA) announced net earnings for the second quarter ending June 30, 2008 were $170,000 or $0.02 per share compared to net earnings of $161,000 or $0.02 per share in the same period in the prior year. Second quarter sales were $14.5 million, a decline of 4.0% from $15.1 million in the same quarter 2007.

For the six months ending June 30, 2008, net earnings were $369,000 or $0.04 per share compared to $482,000 or $0.05 per share in the first six months 2007. Sales were $29.4 million, a decline of 5.4% from $31.1 million in the same period in 2007.

"We are pleased with this earnings performance in this difficult gaming market environment," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "We had slightly improved earnings in the second quarter 2008 in spite of the $130,000 of other income in the second quarter 2007 primarily related to foreign currency exchange gains that did not recur in the second quarter 2008. This means on a comparative basis, our earnings increased by around $140,000 on reduced sales. The main contributing factors to this performance was the reduction in operating expenses of approximately $330,000 due to tight controls and the reduction in interest expense of approximately $90,000 due to lower inventory levels and interest rates. The sales decline was caused by a reduction of $1.7 million in non-core amusement sales partly offset by the 9.3% growth in gaming sales. Margins were maintained in the second quarter 2008 at 16.1% compared to 16.4% in the first quarter 2008."

"The balance sheet has been considerably strengthened with debt being reduced to $5.2 million as of June 30, 2008 compared with $7.4 million at June 30, 2007 and $9.9 million at June 30, 2006. As a result the debt has been reduced almost 50 percent in the past two years. The Company has generated $1.6 million of operating cash flow in the first six months of 2008; being the main reason interest expenses has been reduced by almost $150,000 in the first half 2008."

Outlook

"Considering we earned more in the first six months 2008 than we did in twelve months 2007, we expect the net earnings for the full year 2008 to be better than that of last year despite reduced sales. We currently expect that sales for the full year 2008 will be in the upper fifty million dollar range, slightly less than last year, as the worldwide gaming slot machine market remains sluggish for a longer period of time than many had anticipated. We will continue to aggressively control costs, interest expense and inventory levels ahead of the expected rebound in the slot machine replacement market."

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's American Gaming & Electronics, Inc. subsidiary ("AGE"), a leading parts distributor to the gaming markets, sells parts and services to over 700 casinos in North America with offices in Las Vegas, Nevada, Egg Harbor Township, New Jersey, Miami, Florida 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, 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. For additional investor information, please contact Jim Brace - Wells-Gardner at (708) 290-2120 or Alan Woinski - Gaming USA Corporation at (201) 599-8484.

WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Consolidated Statements of Earnings (Loss) (unaudited)
Three Months and Six Months Ended June 30, 2008


                    Three Months Ended June 30, Six Months Ended June 30,
                    --------------------------- ---------------------------
                        2008          2007          2008          2007
                    ------------- ------------  ------------- ------------
Net sales           $  14,525,000   15,129,000     29,441,000   31,109,000
Cost of sales          12,193,000   12,529,000     24,668,000   25,541,000
                    ------------- ------------  ------------- ------------
Gross margin            2,332,000    2,600,000      4,773,000    5,568,000
Engineering,
 selling &
 administrative
 expenses               2,064,000    2,392,000      4,179,000    4,855,000
                    ------------- ------------  ------------- ------------
Operating earnings        268,000      208,000        594,000      713,000
Interest expense           87,000      174,000        200,000      347,000
Investment in Joint
 Venture                        -       (5,000)             -      132,000
Other expense
 (income), net                  -     (130,000)             -     (243,000)
Income Tax                 11,000        8,000         25,000       (5,000)
                    ------------- ------------  ------------- ------------
Net earnings        $     170,000 $    161,000  $     369,000 $    482,000
                    ============= ============  ============= ============

Earnings per share:
Basic earnings
 (loss) per share   $        0.02 $       0.02  $        0.04 $       0.05
Diluted earnings
 (loss) per share   $        0.02 $       0.02  $        0.04 $       0.05

Basic average
 common shares
 outstanding           10,355,655   10,323,139     10,350,595   10,298,057
Diluted average
 common shares
 outstanding           10,357,717   10,364,861     10,352,400   10,349,091

Contact Information

  • Contact:

    Jim Brace
    Wells-Gardner
    (708) 290-2120

    Alan Woinski
    Gaming USA Corporation
    (201) 599-8484