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Howard Stutz

Progressive Gaming International posts quarterly loss

15 May 2007

Casino equipment supplier Progressive Gaming International Corp. on Monday reported a net loss in the first three months of 2007.

Progressive executives, however, said sales of management systems that will be recorded in the next quarter could help steer the company toward profitability.

For the period ended March 31, Progressive Gaming said it had a net loss of $8.7 million, or 25 cents per share, on revenues of $16.7 million. The company had almost similar numbers in the first quarter of 2006: a net loss of $8.8 million or 26 cents per share on revenues of $16.7 million.

Company President Russel McMeekin said Progressive's quarterly loss would have been offset by revenues of $3.8 million from the sale of several large system agreements that were completed in the first quarter but will be listed in the second quarter because of accounting regulations.

"Momentum in this business is growing on a quarterly sequential basis," McMeekin said. "Progressive Gaming now has a systems presence in over 33 countries and in 21 jurisdictions in North America. This geographic diversity provides a solid base from which we expect to generate future growth."

Progressive Gaming has three system products; one of the products expanded its placements by 2 percent during the quarter. Placements of a second product grew by 7 percent, but the company's jackpot system product grew its placements by 77 percent.

Progressive Gaming Chief Financial Officer Heather Rollo said the company is moving toward relying on the systems division more than other products.

"The timing of systems installations that are currently planned will lead to some quarterly fluctuations within this range throughout 2007," Rollo said. "With the strong level of systems placements achieved in the first quarter of 2007, we are confident in our ability to achieve our full-year revenue targets of $85 million to $95 million in total revenues."

Progressive Gaming is still trying to sell its table games division, and McMeekin said he hopes to complete the due diligence with prospective buyers by the end of May.

"The sale of this division is consistent with our goals to focus on our core systems product line, streamline our operations and improve our balance sheet," McMeekin said.

Progressive Gaming said it had filed post-trial claims with the U.S. District Court in Mississippi, challenging a $39 million verdict in antitrust lawsuit. The company is seeking either a new trial or an overturn of the verdict by a judge. If neither happens, the company expects to appeal the February verdict. Progressive Gaming said it didn't expect the case's final conclusion until next year.

Progressive Gaming shares closed at $4.75 Monday on the Nasdaq National Market, up a penny or 0.21 percent.