Business Editors
LAS VEGAS--(BUSINESS WIRE)--March 30, 2004
Paul-Son Gaming Corp. (Nasdaq:PSON), a leading manufacturer and supplier of casino table game equipment, today announced operating results for the company's fourth quarter and fiscal year 2003, as well as the filing of the Form 10-K.
Gerard Charlier, President and Chief Executive Officer, commented: "The company recorded important progress in 2003 as we worked hard to further integrate our operations, increase our operating efficiencies, build infrastructure and begin to realize the benefits of the major business combination effected in the previous year.
"Our net income benefited from higher revenues, reduced cost of revenues as a percent of total revenues, strengthened gross profit and gross profit percentage and a decrease in operating expenses as a percent of total revenues as well as certain non-recurring items listed below."
Net income for the fourth quarter totaled $1.3 million, equal to $0.18 per basic and diluted share. This represents a positive swing from a net loss of $1.0 million, or $(0.14) basic and diluted per share on fewer shares in the comparable fourth quarter of 2002. Fourth quarter revenues increased 25 percent to $10.9 million from $8.7 million one year ago.
For the twelve months ended December 31, 2003, net income was $1.2 million, equal to $0.16 per basic and diluted share on 7,595,000 (7,672,000 diluted) weighted average shares outstanding, up from a net loss of $2.2 million, or $(0.42) per basic and diluted share on 5,131,000 weighted average shares outstanding in 2002. Revenues for 2003 advanced 65 percent to $36.2 million from $21.9 million in the prior year.
Charlier cautioned that, other than the fourth quarter results of 2003 and 2002, the financial results for the two fiscal years are not comparable. As a result of Paul-Son Gaming's business combination with Etablissements Bourgogne et Grasset ("B&G") and its former subsidiary, the Bud Jones Company, the company's size and structure underwent significant changes. The combination was accounted for as a purchase transaction and also under accounting rules, as a "reverse acquisition" because B&G's former shareholders now own a majority of the combined company's outstanding shares. As the acquirer, B&G's historical financial statements became those of the combined company.
Paul-Son's financial results are only included in the statements of the combined company from September 12, 2002, when the purchase transaction was completed. Thus, results for the fourth quarter ended December 31, 2003 are directly comparable with those of the previous year. However, results for the twelve months are primarily those of B&G and are not directly comparable with the combined company, except for the post-combination period from September 12, 2002, which included Paul-Son and its pre-combination subsidiaries.
The higher revenues in 2003 reflected the full-year contribution from the combined operations, two substantial one-time sales orders to casino customers aggregating $4.9 million, an additional $400,000 sale to a European casino recognized in the fourth quarter and post-combination selective price increases. The improvement to revenues was partially offset by a $3.2 million reduction in the sale of "Euro" denominated chips in 2003, compared with 2002, which included some sales to European casinos due to the E.U.'s conversion to a common currency.
Cost of revenues, as a percentage of sales, was lower, reflecting the full-year inclusion of Paul-Son's results, which typically has a lower cost of revenues than B&G, and enhanced production efficiencies as a result of the combination.
Gross profit rose by $6.7 million on a year-over-year basis, and gross profit margin strengthened to 38.1 percent in 2003 from 32.4 percent in the prior year. The improvement in 2003 was driven by the benefits of the business combination and certain pricing increases as previously referenced compared to the previous year.
Net income in 2003 also benefited from improvement in operating expenses, as a percentage of sales, which totaled 33.3 percent in 2003, down from 37.6 percent in 2002. In addition, a $369,000 legal settlement was received in the fourth quarter of 2003. Results for the prior year included $622,000 in restructuring costs.
At December 31, 2003, cash and cash equivalents were $4.2 million, compared with $2.3 million a year earlier. Working capital was $7.3 million in 2003, compared with $6.2 million in 2002, and current liabilities were $9.2 million, compared with $8.7 million in the prior year. Stockholders' equity at year-end was $17.8 million, a 15 percent increase from $15.5 million in 2002.
"While the first quarter of 2004 will result in a quarterly loss, we expect the company's significant sales backlog as of the date hereof, which resulted primarily from the timing of the sales orders received, to offset the first quarter loss as they are fulfilled throughout the remainder of the 2004 fiscal year," Charlier said, adding: "We will continue working to enhance our operating efficiencies and to capitalize on our opportunities to support our casino customers worldwide with state-of-the-art products and top quality service."
Paul-Son manufactures and supplies casino chips, 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. Paul-Son is headquartered in Las Vegas, Nevada, with offices in Beaune, France; San Luis, Rio Colorado, Mexico; Atlantic City, New Jersey; Kansas City, Kansas and other locations. Paul-Son sells its casino products directly to licensed casinos throughout the world.
This press release may contain certain forward-looking statements that are subject to risks and uncertainties. Paul-Son's expectations regarding operating results and efficiencies resulting from the combination with B&G and the merger of its two subsidiaries may not be met. Factors that could cause actual results to vary materially from these forward-looking statements include unexpected taxes, charges, costs or difficulties in consolidating the operations of the companies. Additional information concerning factors and risks that could affect these statements and Paul-Son's financial condition and results of operations are included in Paul-Son's Form 10-K for the year ended December 31, 2003.
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PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
(dollars in thousands, except share amounts)
2003 2002
ASSETS ---- ----
Current Assets:
Cash and cash equivalents $4,186 $2,333
Marketable equity securities 2,580 1,329
Accounts receivables, less allowance for doubtful
accounts of $382 and $390, respectively 3,417 3,814
Inventories, net 5,382 5,704
Prepaid expenses 490 531
Income tax receivable -- 846
Deferred tax asset 24 --
Other current assets 467 355
Total current assets 16,546 14,912
Property and equipment, net 8,658 9,500
Goodwill, net 1,374 1,374
Other intangibles, net 1,897 2,223
Other assets, net 121 148
Total Assets $28,596 $28,157
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $2,609 $621
Accounts payable 2,135 3,676
Accrued expenses 2,103 1,946
Customer deposits 1,601 2,176
Income taxes payable 297 47
Other current liabilities 474 206
Total current liabilities 9,219 8,672
Long-term debt, less current maturities 1,563 3,576
Deferred tax liability -- 431
Total liabilities 10,782 12,679
Commitments and Contingencies
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, 7,594,900 issued and outstanding 76 76
Additional paid-in capital 14,253 14,253
Treasury stock, at cost, 27,293 shares (196) (196)
Retained earnings 2,611 1,378
Accumulated other comprehensive income (loss) 1,070 (33)
Total stockholders' equity 17,814 15,478
Total Liabilities and
Stockholders' Equity $28,596 $28,157
PAUL-SON GAMING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31,
(dollars in thousands, except per share amounts)
2003 2002 2001
---- ---- ----
Revenues $36,171 $21,861 $23,089
Cost of revenues 22,387 14,770 15,849
Gross profit 13,784 7,091 7,240
Product development 154 142 143
Marketing and sales 3,168 2,424 1,854
Restructuring and costs associated
with Combination -- 622 --
General and administrative 8,720 5,041 3,701
Operating income (loss) 1,742 (1,138) 1,542
Other income (expense)
Gain (loss) on foreign currency
transactions (292) (529) 225
Interest expense (264) (232) (170)
Other income, net 148 128 124
Income (loss) before income taxes 1,334 (1,771) 1,721
Income tax expense 101 383 737
Net income (loss) $1,233 $(2,154) $984
Earnings (loss) per share:
Basic $0.16 $(0.42) $0.24
Diluted $0.16 $(0.42) $0.24
Weighted-average shares outstanding
Basic 7,595 5,131 4,054
Diluted 7,672 5,131 4,054
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