Science & Technology
Science and Technology
Science and Technology
Wed, February 18, 2009
Wells-Gardner Electronics Corp.: Wells-Gardner Reports Improved Fourth Quarter and Fiscal 2008 Earnings
CHICAGO, IL--(Marketwire - February 18, 2009) - Wells-Gardner Electronics Corporation (
For the fiscal year 2008 ending December 31, 2008, sales were $53.8 million and net earnings were $204,000 or $0.02 per share compared to sales of $59.3 million and net earnings of $195,000 or $0.02 per share in fiscal 2007. The prior year period included other income of $338,000 made up of $278,000 from non recurring accounts receivable foreign exchange gains, $36,000 of miscellaneous other income and an increase of $24,000 in joint venture income. The joint venture was closed in Malaysia in July 2007.
"This is a good performance by Wells-Gardner in this extremely difficult gaming market environment," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "Excluding the non recurring foreign exchange gains, the fiscal 2008 net earnings of $204,000 were an improvement of $287,000 over the fiscal 2007 net earnings in spite of the sales reduction of $5.5 million or 9.3 percent. The fiscal year's sales decline led to margins declining by $1.53 million. This was offset by a reduction in operating expenses of $1.55 million or 18 percent due to very tight expense control in selling and administration. However it should be noted that investment in engineering and research & development was not reduced as management regards this as essential to the future prospects of the Company. In addition, Wells-Gardner reduced interest expense by $327,000 due to lower borrowings and reduced interest rates."
"The fourth quarter 2008 net earnings of $19,000 was an improvement of $340,000 compared to the net loss of ($321,000) in the fourth quarter 2007. This was due to a reduction in the quarter of both operating expenses of around $256,000 or 12 percent and interest expense of around $90,000."
"The balance sheet at December 31, 2008 continued to strengthen," said James Brace, Executive Vice President and CFO, "with borrowings of $5.2 million, which was a reduction of $1.5 million from the borrowings of $6.7 million at December 31, 2007. This, along with lower interest rates, contributed to the Company's reduction in interest expense. The Company's debt/equity ratio declined to 37 percent from 49 percent at the prior year end. The Company was in compliance with all bank covenants."
Outlook
2009 is expected to be a challenging year for both the gaming industry and Wells-Gardner. The Company expects 2009 sales to be between $50 million and $54 million. Management is cautiously optimistic as the Company has developed several new products including 3D products, low cost 26", 32" and 42" LCDs for the amusement market, and 19" CGA LCDs for the Class II gaming market that are expected to generate additional revenue. In addition management has already taken several proactive steps to continue to control expenses.
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 (unaudited) Three Months and Twelve Months Ended December 31, 2008 Three Months Ended Twelve Months Ended December 31, December 31, ------------------------- ------------------------ 2008 2007 2008 2007 ------------ ----------- ----------- ----------- Net sales $ 13,115,000 13,675,000 53,839,000 59,308,000 Cost of sales 11,219,000 11,821,000 45,483,000 49,442,000 ------------ ----------- ----------- ----------- Gross margin 1,896,000 1,854,000 8,356,000 9,866,000 Engineering, selling & administrative expenses 1,809,000 2,065,000 7,774,000 9,320,000 ------------ ----------- ----------- ----------- Operating earnings (loss) 87,000 (211,000) 582,000 546,000 Interest expense 68,000 158,000 356,000 683,000 Investment in Joint Venture - (57,000) (3,000) (24,000) Other (income) expense, net - (1,000) - (314,000) Income Tax expense - 10,000 25,000 6,000 ------------ ----------- ----------- ----------- Net earnings (loss) $ 19,000 $ (321,000) $ 204,000 $ 195,000 ============ =========== =========== =========== Earnings per share: Basic earnings per share $ 0.00 $ (0.03) $ 0.02 $ 0.02 Diluted earnings per share $ 0.00 $ (0.03) $ 0.02 $ 0.02 Basic average common shares outstanding 10,348,965 10,327,223 10,349,778 10,309,114 Diluted average common shares outstanding 10,348,965 10,327,223 10,349,778 10,342,076
