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Multimedia Games’ Fourth Quarter Revenue Rises 15.8% To $41.4 Million; Diluted EPS Of $0.28, Inclusive Of $0.04 Net Benefit From Taxes And Other Items

Stocks in this article: MGAM

Gaming equipment and system sales in the fiscal 2012 fourth quarter increased 15.7% to $11.4 million, from $9.9 million in the prior-year period. During the quarter, the Company recorded revenue of $9.9 million related to the sale of 538 new units and $0.8 million in revenue related to parts and equipment sales, compared to $8.5 million in revenue related to the sale of 458 new proprietary units and $0.6 million related to parts and equipment sales in the year-ago period. Washington State and California were Multimedia Games’ largest markets for product sales, representing approximately 58% of total unit sales. The Company sold units into a quarterly record 16 states in its fiscal 2012 fourth quarter, including first-time sales in Arizona and Michigan. There was $0.7 million and $0.8 million of deferred revenues for the sale of player stations and systems in a prior-year period recognized in the fiscal 2012 and fiscal 2011 fourth quarter periods, respectively.

Other revenue, primarily comprised of service revenue, was approximately $0.3 million in the fiscal 2012 fourth quarter compared to $0.4 million in the fiscal 2011 fourth quarter.

Total operating expenses for the fiscal 2012 fourth quarter rose $3.1 million, or 9.6% year over year, to $35.5 million. Total cost of goods sold increased by $1.0 million, driven primarily by an increase in the number of units sold, higher shipping costs reflecting the Company’s expansion into more states, and costs related to expedited shipping fees in the supply chain to meet demand requirements for certain products. Selling, general and administrative (“SG&A”) expenses rose 20.0%, or $2.2 million, to $12.9 million, primarily reflecting higher stock compensation expense and an increase in variable compensation related to the growth in revenues as well as increased trade show expenses related to the 2012 Global Gaming Expo. SG&A expenses for the fiscal 2012 and fiscal 2011 fourth quarter periods include non-cash stock compensation costs of approximately $0.8 million and $0.2 million, respectively. Depreciation and amortization declined to $9.6 million from $10.4 million in the prior-year period and research and development expense of $4.0 million compares to $3.2 million in the prior-year period. The increase in research and development expenses is attributable to Multimedia Games’ ongoing initiative to develop innovative and differentiated gaming content that delivers a high-value player entertainment experience.

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