Wells-Gardner Reports Third Quarter Earnings 2010

CHICAGO, IL -- (Marketwire) -- 11/04/10 -- Wells-Gardner Electronics Corporation (NYSE Amex: WGA) announced net sales for the third quarter ending September 30, 2010 were $11.0 million, a decline of 18 per cent from $13.4 million for the third quarter 2009. The Company reported a net loss for the third quarter 2010 of $(176,000) or $(0.02) per share compared to net earnings of $266,000 or $0.02 per share for the third quarter 2009. The third quarter 2010 results included $129,000 of operating expenses related to the Illinois Video Lottery business, which is not expected to generate revenue until the third quarter 2011.

For the nine months ending September 30, 2010, net earnings were $370,000 or $0.03 per share compared to $853,000 or $0.08 per share for the first nine months 2009. The nine month 2010 earnings included $491,000 of non-recurring charges made up of $122,000 of engineering reorganization charges and $369,000 of operating expenses related to the Illinois Video Lottery business. The nine months 2009 earnings included non-recurring tax charges of $168,000. Sales for the nine months 2010 were $38.0 million, a decline of 4 per cent from $39.4 million for the nine months 2009.

"This was a difficult quarter in this tough gaming market environment," said Anthony Spier, Wells-Gardner's Chairman and Chief Executive Officer. "As expected, our decrease in earnings in the third quarter was driven by the decrease in revenue as well as the Illinois VLT operating expenses. Last quarter we had projected lower sales in the second half of the year and higher expenses related to the Illinois Video Lottery business, which is not expected to begin generating revenue until the third quarter next year. Revenue decreased by 18 per cent in the third quarter due to weak LCD sales to our slot manufacturer customers. Margin percentages and operating expenses were flat in spite of the lower sales and Illinois VLT expenses."

"The balance sheet continues to strengthen with a decline of $5 million in debt since June 30, 2010. Our total debt as of September 30, 2010 has been reduced to $827,000 compared to $2.2 million at December 31, 2009. The September 30, 2010 debt level is the lowest level of debt for the Company at a quarter end in the past twenty years. The Company's debt equity ratio is now 5 per cent compared to 14 per cent at year end 2009. The Company has generated over $1.2 million of free cash flow in 2010."

Outlook
We currently expect that sales for the full year 2010 will be approximately $47 to $49 million, compared to $52.5 million in 2009, as the worldwide gaming slot machine market remains sluggish for a longer period of time than many had anticipated. We will continue to aggressively control costs, interest expense and inventory levels ahead of the expected rebound in the slot machine replacement market and start up of new jurisdictions, and in particular the start up of the Video Lottery business in Illinois.

Founded in 1925, Wells-Gardner Electronics Corporation is a distributor and manufacturer of color video monitors and other related distribution products for a variety of markets including, but not limited to, gaming machine manufacturers, casinos, coin-operated video game manufacturers and other display integrators. The Company has the majority of its LCDs and CRT monitors manufactured in Mainland China. In addition, the Company's American Gaming & Electronics, Inc. subsidiary ("AGE"), a leading parts distributor to the gaming markets, sells parts and services to over 700 casinos in North America with offices in Las Vegas, Nevada, Hammonton, New Jersey, Miami, Florida and McCook, Illinois. AGE also sells refurbished gaming machines on a global basis as well as installs and services some brands of gaming machines in casinos in North America.

This press release contains forward-looking statements within the meaning of the federal securities laws. Those statements include statements regarding the intent, belief or expectations of the Company and its management. Readers are cautioned that the forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those expressed in any forward-looking statement. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, development of competing technologies, availability of adequate credit, interruption or loss of supply from key suppliers, increased competition, the regulatory process and regulatory and legislative changes affecting the gaming industry. Wells-Gardner assumes no obligation to update the information contained in this release to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. For additional investor information, please contact Jim Brace - Wells-Gardner at (708) 290-2120 or Alan Woinski - Gaming USA Corporation at (201) 599-8484.

WELLS-GARDNER ELECTRONICS CORPORATION
Condensed Consolidated Statements of Earnings
 (unaudited)
Three Months and Nine Months Ended September 30, 2010 and 2009

                           Three Months Ended Sept    Nine Months Ended Sept
                                     30,                       30,
                          ------------------------- ------------------------
                              2010         2009         2010         2009
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Net sales                 $11,031,000   13,446,000   37,995,000   39,426,000
Cost of sales               9,070,000   11,055,000   31,073,000   32,350,000
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Gross margin                1,961,000    2,391,000    6,922,000    7,076,000
Engineering, selling &
 administrative expenses    2,096,000    2,072,000    6,403,000    5,869,000
----------------------------------------------------------------------------
Operating Earnings           (135,000)     319,000      519,000    1,207,000
Interest expense               45,000       55,000      156,000      171,000
Other expense, net             (1,000)           -       (1,000)     166,000
Income Tax expense             (3,000)      (2,000)      (6,000)      17,000
----------------------------------------------------------------------------
Net Earnings              $  (176,000) $   266,000  $   370,000  $   853,000
============================================================================

Earnings per share:
Basic earnings per share  $     (0.02) $      0.02  $      0.03  $      0.08
Diluted earnings per
 share                    $     (0.02) $      0.02  $      0.03  $      0.08

Basic average common
 shares outstanding        10,986,171   10,942,013   10,981,228   10,936,496
Diluted average common
 shares outstanding        10,993,318   10,942,013   10,988,468   10,936,496