GameTech reports Q2 results

RENO, Nevada -- (PRESS RELEASE) -- GameTech International, Inc. (Nasdaq: GMTC), a leading designer, developer and marketer of computerized bingo and gaming equipment, systems, and services, today announced financial results for the Company's second fiscal quarter and six-month period ended April 30, 2008.

Company Highlights:

-- Net income for the second quarter of fiscal 2008 was $0.1 million, compared with $1.2 million for the same period in fiscal 2007. Excluding the impairment charge resulting from the company's investment in auction rate securities, adjusted net income for the second quarter of fiscal 2008 was $0.3 million.

-- Net income for the first half of fiscal 2008 was $0.4 million compared with $2.3 million in the same period in fiscal 2007. Excluding the impairment charge resulting from the company's investment in auction rate securities, adjusted net income for the first half of 2008 was $1.0 million.

-- The Company recorded a pre-tax impairment charge related to its investments in auction rate securities of approximately $0.3 million ($0.2 million after tax) and $1.0 million ($0.6 million after tax) for the second quarter and six months ended April 30, 2008, respectively.

-- Net income per fully diluted share was $0.01 for the second quarter of 2008 (or $0.02 excluding the impairment charge) and $0.04 for the six months ended April 30, 2008 (or $0.08 excluding the impairment charge), compared with $0.09 and $0.17 for the same periods in fiscal 2007.

-- Revenue for the second quarter of fiscal 2008 was $13.9 million compared with $13.4 million for the same period in fiscal 2007. Revenue for the first half of fiscal 2008 was $29.1 million compared with $25.4 million for the same period in fiscal 2007.

-- For the first six months of fiscal 2008 EBITDA approximated $8.1 million, a decrease of $1.1 million from 2007.

-- Interest expense related to the acquisition of Summit Gaming totaled $0.7 million and $1.4 million for the quarter and six months ended April 30, 2008, respectively. Amortization expense related to the acquisition of Summit Gaming totaled $0.3 million and $0.6 million for the quarter and six months ended April 30, 2008, respectively.

Second quarter revenue totaled $13.9 million compared with $13.4 million for the comparable quarter during fiscal 2007. Revenue for the six-month period ended April 30, 2008, was $29.1 million compared with $25.4 million for the comparable period in fiscal 2007. Bingo revenue decreased due to the loss of certain accounts in other domestic markets, offset partially by increases in Michigan, Louisiana, Oklahoma and the United Kingdom. The overall increase in revenue for the three- and six-month periods ended April 30, 2008 was primarily due to the completion of the acquisition of Summit Amusement & Distributing, Ltd., a manufacturer of video lottery.

The challenges in the credit and capital markets have caused the company to review its investments in auction rate securities. As of April 30, 2008, the estimated market value of the company's investments in auction rate securities stood at $2.9 million, which reflects an impairment charge of $0.3 million for the quarter and $1.0 million for the six months ended April 30, 2008. Although these securities continue to pay interest according to their stated terms, the company has recorded an impairment charge of $0.3 million and $1.0 million based upon an analysis of the securities and other-than-temporary factors for the quarter and six months ended April 30, 2008, respectively. As of April 30, 2008, the company had $6.5 million in cash and cash equivalent balances in addition to its investment portfolio and believes that its current cash position and expected operating cash flows will be sufficient to fund its operations and debt service.

Jay Meilstrup, GameTech's President and Chief Executive Officer stated, "Our revenue remains strong in Michigan, Louisiana, Oklahoma and in the United Kingdom, as we have emphasized growing our core business and integrating Summit. We look forward to capitalizing on Summit's potential for its products in new markets as well as expanding the sale of our bingo products and services into new domestic and international markets. In addition, GameTech intends to leverage its years of technical capabilities in wireless to expand into the newly developing mobile gaming market. For the remainder of the year, we also anticipate new business from the introduction of new wireless gaming products and we will continue to pursue strategic opportunities if and when they arise."