Business Wire: Paul-Son Gaming Reports Results for the First Quarter Ended March 31, 2004

Business Editors

LAS VEGAS--(BUSINESS WIRE)--May 17, 2004

Paul-Son Gaming Corporation (Nasdaq:PSON), a leading manufacturer and supplier of casino table game equipment, today announced financial results for its first quarter ended March 31, 2004, as well as the filing of its form 10-Q for the quarter. As anticipated in the company's fourth quarter press release, the company experienced a net loss for the quarter. However, bottom line results showed improvement from the prior year, with the loss reduced by approximately 22% from the amount reported in 2003's first quarter. The improvement was achieved despite lower revenues, which primarily reflected the timing and fulfillment of sales orders in backlog.

For the three months ended March 31, 2004, the net loss was $470,000, equal to $(0.06) per basic and diluted share, compared with a net loss of $601,000, or $(0.08) per basic and diluted share in the corresponding quarter of 2003. First quarter revenues totaled $7.3 million, a decrease of $434,000 from $7.8 million a year ago.

Results benefited from a substantially lower cost of revenues, which as a percentage of sales decreased to 63.4% in the most recent quarter from 69.4% in the same period of 2003. Gross profit strengthened by $302,000 from $2.4 million in 2003 to $2.7 million in 2004.

Total operating expenses were $3.1 million, compared with $2.9 million a year ago. The increase primarily resulted from higher marketing and sales expenses, which included costs associated with a major European trade show and patent-related expenses. General and administrative expenses were slightly less than in the first quarter of 2003. Other income (expense) benefited from a positive swing of $140,000, principally due to a decrease in the loss from foreign currency exchange.

Cash and equivalents at March 31, 2004, totaled $4.4 million, an increase of $223,000 from the total at December 31, 2003.

Gerard Charlier, president and chief executive officer, commented: "We continue to be enthusiastic about our opportunities as a leading supplier of table game equipment to the casino industry worldwide. In the balance of the year, we will continue working and investing to further enhance our product line and service quality in support of our casino customers in the U.S. and abroad.

"Our company has a significant sales backlog, and we will be striving to offset the first quarter loss as these orders are fulfilled in subsequent quarters this year. Results will continue to reflect such variables as the timing of demand from our casino customers, as well as the timing of new casino openings."

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, with offices in Beaune, France; San Luis, Mexico; Atlantic City, N.J.; 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, and fulfillment of backlog orders, and 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, and the Form 10-Q for the quarter ended March 31, 2004.

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PAUL-SON GAMING CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (dollars in thousands) MARCH 31, DECEMBER 31, 2004 2003 -------------- --------------- ASSETS Current Assets: Cash and cash equivalents $4,409 $4,186 Marketable securities 3,696 2,580 Accounts receivables, less allowance for doubtful accounts of $319 and $382, respectively 2,285 3,417 Inventories, net 6,589 5,382 Prepaid expenses 456 490 Deferred tax asset 22 24 Other current assets 446 467 ------------------- ------------------- Total current assets 17,903 16,546 Property and equipment, net 8,646 8,658 Goodwill, net 1,374 1,374 Other intangibles, net 1,817 1,897 Other assets, net 137 121 ------------------- ------------------- Total Assets $29,877 $28,596 =================== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of long- term debt $2,421 $2,609 Accounts payable 2,368 2,135 Accrued expenses 2,260 2,103 Customer deposits 3,700 1,601 Income taxes payable 60 297 Other current liabilities 334 474 ------------------- ------------------- Total current liabilities 11,143 9,219 Long-term debt, less current maturities 1,443 1,563 Deferred tax liability 48 -- ------------------- ------------------- Total liabilities 12,634 10,782 ------------------- ------------------- 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 shares issued and outstanding 76 76 Additional paid-in capital 14,253 14,253 Treasury stock, at cost; 27,293 shares (196) (196) Retained earnings 2,141 2,611 Accumulated other comprehensive income 969 1,070 ------------------- ------------------- Total stockholders' equity 17,243 17,814 ------------------- ------------------- Total Liabilities and Stockholders' Equity $29,877 $28,596 =================== =================== PAUL-SON GAMING CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (dollars in thousands, except per share amounts) THREE MONTHS ENDED MARCH 31, ------------------------------- 2004 2003 ------------------------------- Revenues $7,326 $7,760 Cost of revenues 4,648 5,384 ------------ ------------ Gross profit 2,678 2,376 Product development 41 30 Marketing and sales 865 618 Depreciation and amortization 494 519 General and administrative 1,712 1,739 ------------ ------------ Total operating expenses 3,112 2,906 ------------ ------------ Loss from operations (434) (530) Other income (expense) 31 (109) Interest expense (68) (69) ------------ ------------ Loss before income taxes (471) (708) Income tax benefit (expense) 1 107 ------------ ------------ Net loss $(470) $(601) ============ ============ Net loss per share: Basic $(0.06) $(0.08) Diluted $(0.06) $(0.08)