Gaming Partners International Reports Loss Decreased

12 November 2004

LAS VEGAS -- (PRESS RELEASE) -- Gaming Partners International Corporation (Nasdaq:GPIC), formerly Paul-Son Gaming Corporation, today announced its financial results for its third quarter and nine months ended September 30, 2004, as well as the filing of its Form 10-Q for the quarter.

The company, a leading manufacturer and supplier of casino table game equipment, reported third quarter revenues, up 30% from the previous year. Net loss for the quarter was reduced by $590,000 from the corresponding quarter a year ago, with the modest loss for the current quarter reflecting the timing of casino sales and production.

For the three months ended September 30, 2004, revenues increased to $9.2 million, compared to $7.1 million in the year earlier period. Net loss decreased to $111,000, equal to $(0.01) per basic and diluted share, compared with a loss of $701,000, or $(0.09) per basic and diluted share in the corresponding quarter of 2003.

For the nine months, revenues climbed to $31.4 million from $25.2 million one year ago. Net income totaled $1.4 million, equal to $0.18 per basic and diluted share, up from a loss of $104,000, or $(0.01) per basic and diluted share in the first three quarters of the prior year.

Gerard Charlier, president and CEO, commented: "We are pleased by the company's continued progress as we posted revenue growth in both the third quarter and first nine months of 2004. Additionally, GPIC was profitable for the year to date period despite a modest loss in the most recent quarter. As we have noted previously, the company may experience fluctuations in profitability on a quarterly basis due to the timing of customer orders, production and shipments of our casino products."

Third quarter revenues benefited from higher sales by GPI-SAS, the company's French subsidiary, primarily due to sales to casinos in Asia with development of casinos in Macau and Myanmar. While GPI-USA is still implementing some of its post-combination strategies to improve revenues and efficiencies, we expect those strategies to be substantially implemented by the end of 2005. Cost of revenues as a percentage of total revenues decreased to 66.2% from 69.4% in last year's third quarter. The improvement was primarily driven by better absorption of fixed costs due to the higher sales volume and the product mix at GPI-SAS, which had a higher percentage of European chip production in the current quarter compared to 2003.

As a result of higher revenues and the improvement in cost of revenues described above, gross profit in the third quarter strengthened by 43%, or $943,000.

Total operating expenses were $168,000 higher for the quarter, but as a percentage of quarterly revenues showed significant improvement, declining to 37.6% from 46.4% in the prior year quarter. The increase in operating expenses reflects an expenditure of $93,000 to support the company's presence at the industry's major U.S. trade show, name change expenses of approximately $48,000; including catalogs and related marketing publication costs that were minimal prior to the name change expenses; partially offset by an $18,000 reduction in other sales and marketing expenses.

Other income for the quarter decreased by approximately $85,000, due to a combination of factors including a reduction of $91,000 in gain from foreign currency exchange. The variation in foreign currency exchange occurred as a result of the valuation of the Euro compared to the U.S. dollar.

In terms of liquidity, at September 30, 2004, GPIC had approximately $5.6 million in cash and cash equivalents and $2.8 million in marketable securities for a total of $8.4 million, up approximately 23% from $6.8 million at December 31, 2003. Working capital totaled approximately $9.8 million at the end of the third quarter, compared to $7.3 million at December 31, 2003.

Net cash flow provided by operating activities amounted to $3.5 million in the year to date period, up from approximately $1.8 million in the same months a year ago.

Charlier concluded: "The company's growing revenues, improved profitability and strengthened financial position and liquidity are very gratifying. We will continue striving to enhance our position as a leader in the supply of high quality table game products to the industry worldwide. In this regard, we are very pleased by our highly successful exhibition at the vitally important G2E Gaming Expo held last month in Las Vegas."

The GPIC products on display at the Gaming Expo included its gaming chips with embedded RFID technology and readers. The company has been working for several years to apply the RFID technologies to the gaming chips.

The company can offer RFID microchips with all of its brands and types of gaming chips. GPIC holds several patents concerning the embedding process of the RFID and an exclusive license for the use of these RFID chips in the USA. The company also sells several types of readers that can be used by the casinos at the cages, vaults, tables, or by the pit bosses. RFID chips and readers help to protect the casinos from buying at face value, counterfeited or stolen chips and to improve the efficiency of table game management.


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