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GPI Results Up

LAS VEGAS – (PRESS RELEASE) -- Gaming Partners International Corporation (Nasdaq: GPIC) today announced that net income for the fourth quarter ended December 31, 2005 posted a 67% increase on a 23% improvement in revenues. For the full year, net income climbed 66% on a 28% increase in revenues.

Gerard Charlier, president and chief executive officer, commented: "It is gratifying to note the significant progress that our company achieved in the past year. Revenues and profits for both the fourth quarter and full fiscal year ended December 31, 2005 rose to new levels, and we continued to work diligently to build infrastructure, expand our product portfolio, execute important new agreements and set the stage for the future."

Net income for the fourth quarter was $2.1 million, compared with $1.3 million in the year earlier period. On a per share basis, net income was $0.27 (basic) and $0.26 (diluted), compared with $0.16 (basic and diluted) in the fourth quarter of 2004. Fourth quarter revenues increased to $16.2 million from $13.2 million in the corresponding quarter of the previous year.

Net income for the year 2005 totaled $4.3 million, up from $2.6 million in the prior year. Diluted, net income per share for 2005 was $0.53, compared with $0.34 diluted earnings per share in 2004. Revenues for the year advanced to $57.1 million, an increase of approximately $12.5 million, from $44.6 million one year ago.

The revenue increase in 2005 was primarily driven by the $8.0 million in sales to new casinos in Asia recorded by GPI-SAS, the company's European subsidiary. The ongoing development of casino gaming in Macao, including new and existing casinos in the past year and anticipated openings in 2006, continues to represent a substantial growth opportunity for the company. GPI-USA, the company's domestic subsidiary, posted sales of $31.0 million, up approximately $5.0 million from the previous year, due to new casino openings in Las Vegas, sales to a wholesaler and large reorders.

Cost of revenues as a percentage of sales decreased to 59.8% for 2005, compared to 61.1% in 2004. This improvement primarily reflected better absorption of fixed costs due to higher sales volume and greater efficiency of operations achieved by the realignment and restructuring of the company's production facilities.

Gross profit for 2005 recorded a 33% increase over 2004, amounting to $5.6 million in absolute dollars, due to higher revenues and the decrease in cost of revenues as a percentage of sales.

Operating expenses, which include product development, marketing and sales, depreciation and amortization, and general and administrative costs, were approximately $3.9 million higher in 2005 than 2004. The increase reflected higher general and administrative costs as well as greater product development, marketing and sales expenses.

The $3.3 million increase in G&A expenses included one-time expenses of $2.7 million, attributable to stock compensation expense, NASDAQ National Market listing expenses, salary adjustment and reorganization costs, building repairs, IT related costs and expenses associated with the Hurricane Katrina and Rita disasters. Additionally, the company incurred expenses of approximately $525,000 related to future compliance with the Sarbanes-Oxley Act of 2002.

Other income, excluding interest expense, showed an improvement of approximately $501,000, principally reflecting the strengthening of the U.S. dollar to Euro exchange rates during the past year. Interest expense decreased by approximately $54,000 due to lower average debt levels during 2005.

Charlier further commented: "We continue to showcase our RFID microchips and readers at the industry's major gaming shows including the Global Gaming Expo in Las Vegas and ICE in London and have been very pleased by rising customer interest and enthusiasm. In our view, prospects for the growing acceptance of RFID technology in casino operations are solid, and we believe that GPIC is well positioned to play a key role in what may amount to significant changes in the industry."

In January of this year, GPIC and Progressive Gaming International signed an agreement by which GPIC has the right to buy the 13.56 MHz RFID tags to make casino chip; exclusive for the U.S. market and non-exclusive for the rest of the world. "We are now able to offer customers the choice of two technologies, the faster 13.56 MHz and the 125 KHz, which is particularly attractive to casinos interested in currency control," Charlier said.

The Chief Executive continued: "With greater capabilities and decreased costs, investment in RFID microchips and readers becomes ever more compelling to casinos, seeking the benefits of chip tracking and security with protection against counterfeit chips. With appropriate software, these products also open the door for potential increases in efficiency and costs savings for our casino customers. Incorporating our RFID chips in systems developed and sold by other companies, enable casinos to more accurately and objectively track and distribute the appropriate amount of player comps."

Charlier concluded: "We are optimistic about our opportunities for the future. GPIC enters 2006 in a solid position with a greater than twice the amount of backlog of production orders at year end 2005 of $25.7 million, as compared to $14.5 million of backlog at the end of 2004.

"Our manufacturing expertise, technical know-how, strategic alliances and extensive patent position in RFID microchips and readers represent a strong platform for growth as this technology continues to gain increasing acceptance by casino operators worldwide."

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