PDS Gaming Reports Financial Results

LAS VEGAS—(BUSINESS WIRE)—Aug. 15, 2003—PDS Gaming Corporation (Nasdaq:PDSG), a company that finances, leases and sells gaming equipment for the casino industry and operates Rocky`s Casino & Sports Bar in Reno, Nevada, today reported its operating results for the second quarter ended June 30, 2003.
For the three months ended June 30, 2003, the Company reported net income of $182,000, or $0.05 per diluted share, compared with a net loss of $(513,000), or $(0.14) per diluted share, for the three months ended June 30, 2002. The prior year quarter included a loss from discontinued operations of $(484,000), or $(0.13) per diluted share. Revenues from continuing operations were $9.8 million in the second quarter of 2003 and $8.8 million in the second quarter of 2002. Operating lease rentals increased from $3.1 million in the 2002 quarter to $6.1 million in the 2003 quarter, reflecting higher levels of operating lease originations. Fee income for the second quarter 2003 increased to $668,000 compared to $43,000 in the year-earlier quarter. The increase primarily reflects a large engagement to provide advisory services. The Company completed $42.6 million in originations during the second quarter 2003, compared with $20.4 million in the second quarter 2002. Originations in the second quarter 2003 included $23.0 million sourced through a single customer, including a $20.8 million note syndicated by the Company, of which $1.0 million was retained by the Company for its portfolio.
Revenues from equipment sales and sales-type leases decreased to $1.6 million for the second quarter of 2003, compared to $4.1 million for the year-earlier quarter, due primarily to lower sales of equipment coming off lease and lower revenues from sales-type leases. Interest expense increased by $613,000 to $2.4 million for the second quarter of 2003, compared to $1.8 million for the year-earlier period, as a result of higher debt levels which financed growth in the portfolio and a higher weighted average cost of funds in the second quarter of 2003.
Casino operations resulted in a pre-tax loss, before depreciation, of $105,000 in the second quarter 2003, compared to a pre-tax loss of $197,000 in the second quarter 2002. The reduced loss reflects efforts to reduce costs in light of the continued weakness of the Reno, Nevada gaming market as well as strong competition from Native American casinos operating in Northern California.
For the six month period ended June 30, 2003, the Company reported net income of $443,000, or $0.12 per diluted share, compared with a net loss of $2.4 million, or $(0.63) per diluted share, for the six months ended June 30, 2002. The prior year period included a loss from discontinued operations of $1.9 million, or $(0.50) per diluted share. Revenues from continuing operations were $19.3 million in the first six months of 2003 compared with $18.2 million in the same period last year. The higher level of revenues in 2003 is primarily the result of significantly higher operating lease rental revenue in the current year, partially offset by lower revenues from equipment sales and sales-type leases. The Company completed $74.1 million in originations in the first six months of 2003, compared with $29.9 million in the same period of 2002.
Interest expense increased by $951,000 to $4.6 million for the six months ended June 30, 2003, compared to $3.7 million for the year-earlier period, as a result of higher debt levels and a higher weighted average cost of funds in the first six months of 2003.
Casino operations resulted in a pre-tax loss, before depreciation, of $253,000 in the six months ended June 30, 2003, compared to a pre-tax loss of $564,000 in the first six months of 2003. Casino costs in the year-earlier period included one-time pre-opening expenses of $238,000.
PDS Gaming Corporation provides customized finance and leasing solutions to the casino industry in the United States. The Company also operates Rocky`s Casino & Sports Bar in Reno, Nevada. PDS Gaming Corporation is headquartered in Las Vegas, Nevada, and its common stock trades on The Nasdaq Stock Market under the symbol “PDSG”.
This press release includes statements that may constitute “forward-looking” statements, usually containing the words “believe,” “estimate,” “project,” “expect” or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, factors to complete currently anticipated finance and lease transactions, worse than expected results from casino operations, changes in regulation of the gaming industry, continued acceptance of the Company`s products and services in the marketplace, competitive factors, dependence upon third-party vendors, changes in interest rates and other risks detailed in the Company`s periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release.
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