Entertainment Gaming Asia Inc. (NYSE Amex: EGT) (“Entertainment Gaming Asia” or “the Company”), a leading provider of electronic gaming machines on a participation basis to the Pan-Asian gaming industry, today announced that it will reschedule reporting operating results for the fourth quarter and fiscal year ended December 31, 2010 from March 1, 2011 to March 11, 2011 in order to complete an accounting quasi-reorganization. In addition, the Company released certain preliminary fourth quarter and fiscal year ended December 31, 2010 operating figures, which represent significant year-over-year improvement. A quasi-reorganization is an elective accounting method used to eliminate the deficit in retained earnings against additional paid-in capital combined with fair market value adjustment to assets and liabilities. It enables companies such as Entertainment Gaming Asia, which have undergone a shift in business focus, to establish a fresh start from an accounting perspective. The quasi-reorganization adjustments have no effect on the Company’s cash flow and result in a balance sheet that more accurately reflects the Company’s retained earnings. While the Company has dramatically improved its operating results and has the expectation of future profitability, it is believed that it is not realistic to expect to be able to recover the existing accumulated deficit in the short to medium term. Therefore, the Company’s Board of Directors authorized management to effect a quasi-reorganization in accordance with Section 210 of the Codification of Financial Reporting Policies. A necessary component of this Codification is the adjustment of assets and liabilities to fair market value as well. As such, the Company has engaged a third-party financial advisor to perform a valuation analysis of the fair value of its assets and liabilities. The results of this analysis may or may not result in a non-cash impairment charge during the fourth quarter 2010 period. Giving effect to the quasi-reorganization, the Company has eliminated its accumulated deficit account, with a commensurate reduction in its additional paid-in capital, for purposes of establishing a new earned surplus account for the accumulation of future earnings from current operations. The quasi-reorganization was effective as of December 31, 2010.
As of September 30, 2010, the Company had an accumulated deficit of approximately $383.4 million and additional paid-in capital of approximately $415.5 million. The accumulated deficit was mainly attributable to the impairment of assets including contract acquisition fees, goodwill and intangibles, and recent write-downs of gaming equipment and systems.Also today, the Company announced that based on preliminary results it expects to report strong year-over-year improvement in consolidated revenue, gaming participation revenue, and adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, stock-based compensation, and other non-cash operating income and expenses) for the fourth quarter and fiscal year 2010. Fourth quarter 2010 results declined from the prior quarter primarily due to lower gaming chip revenue, a large payout in the gaming participation operations, and cash expenses at the higher end of the guidance range due to one-time employee incentive expenses and costs associated with the quasi-reorganization. These preliminary results are summarized below.
|(In millions)||Q4:10 Estimate||Q4:09 Actual||Q3:10 Actual||FY10 Estimate||FY09 Actual|
|Gaming Participation Revenue||$||3.8||$||2.5||$||4.1||$||14.3||$||7.0|
Entertainment Gaming Asia will release its fourth quarter and fiscal year 2010 financial results on Friday, March 11, 2011 and will host a conference call that same day at 8:30 a.m. ET. The conference call number is 800/892-9785 or 212/231-2939; please call five minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at www.EGT-Group.com (select “Investor Relations”); please allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed for thirty days on the Internet at www.EGT-Group.com.About Entertainment Gaming Asia Inc. Entertainment Gaming Asia Inc. (NYSE Amex: EGT), formerly known as Elixir Gaming Technologies, Inc., is a leading provider of electronic gaming machines on a participation basis to the Pan-Asian gaming industry. The Company secures long-term contracts to provide electronic gaming machines and related systems to premier hotels and other well-located gaming venues in Asia. The Company retains ownership of the gaming machines and systems and receives recurring daily fees based on an agreed upon percentage of the net gaming win per machine and provides on-site maintenance. Entertainment Gaming Asia Inc. also is engaged in the development of casinos in Indo China where it intends to own and operate casino resorts under the “Dreamworld” brand. For more information please visit www.EGT-Group.com. Forward Looking Statements This press release contains forward-looking statements concerning Entertainment Gaming Asia, formerly known as Elixir Gaming Technologies, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Those forward-looking statements include statements regarding expectations for the business of Entertainment Gaming Asia, its working capital requirements, future revenue, Adjusted EBITDA, WUD and profitability, the project schedule for its Dreamworld Casino and Resort in Takeo and Entertainment Gaming Asia’s ability to fund the Dreamworld Casino project, and the Company’s ability to secure new casino projects and fund those projects as well. Such statements are subject to certain risks and uncertainties, and actual circumstances, events or results may differ materially from those projected in such forward-looking statements. Factors that could cause or contribute to differences include, but are not limited to, risks related to the costs incurred by Entertainment Gaming Asia in defending shareholder litigation and the outcome of any judgment or settlement with respect to such litigation, Entertainment Gaming Asia’s inability to place gaming machines at significant levels, whether the gaming machines placed generate the expected amount of net win, Entertainment Gaming Asia’s ability to successfully execute its plans to build and operate Dreamworld Casino and Resort in Takeo and any new casino projects, the ability of Entertainment Gaming Asia to acquire additional capital as and when needed, the ability of Entertainment Gaming Asia to collect revenue and protect its assets and those other risks set forth in Entertainment Gaming Asia’s annual report on Form 10-K for the year ended December 31, 2009 filed with the SEC on March 30, 2010 and subsequently filed quarterly reports on Form 10-Q. Entertainment Gaming Asia cautions readers not to place undue reliance on any forward-looking statements. Entertainment Gaming Asia does not undertake, and specifically disclaims any obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur.