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News and Information Article
Company Files Form 10-Q for First Two Quarters of Fiscal Year 2006
LAS VEGAS, Dec. 22 /-FirstCall/ -- Bally Technologies, Inc.
(NYSE: BYI) announced today the following business update.
BUSINESS UPDATE - FISCAL 2007:
* Sales of approximately 9,000 gaming devices (excluding OEM sales) for
the first half of fiscal 2007 compared to 6,500 in the first half of
fiscal 2006, at higher average selling prices compared to the prior
year. Gross margins are also expected to improve in 2007 compared to
fiscal 2006.
* A record number of gaming device purchase commitments from this years
G2E trade show in November, 2006.
* 1,200 units currently installed on a participation basis at the Yonkers
Raceway in New York and expectation of another 1,600 units to be
operational by February, 2007 when expansion construction is expected to
be completed.
* Increase in the current installed base of the Hot Shot Progressive game
to 1,400 participation units. The Company also plans to introduce three
new participation products by the fourth quarter of fiscal 2007.
* Growth in the Systems business as a result of a number of new contracts
and go-lives which are expected to drive revenue to more than
$65 million in the first half of fiscal 2007 compared to $46 million in
the first half of fiscal 2006. Gross margins on Systems revenue in the
first half of fiscal 2007 are expected to be lower than the first half
of fiscal 2006 due to the mix of hardware and software sales.
* Interest expense for the first half of fiscal 2007 is expected to be
approximately $17.5 million, reflecting higher market interest rates and
fees on our bank facilities.
* The increase in costs associated with impact of the reduction in the
depreciable lives of certain leased products in fiscal 2006 (see
additional detailed discussion below) will decrease significantly in the
second quarter of fiscal 2007 and is not anticipated to have an impact
on future financial results.
"I am pleased with the customer response at the recent G2E trade show
in Las Vegas and the continued progress we are making on our strategic and
profitability plans," said Richard Haddrill, Chief Executive Officer. "In
the first half of our fiscal 2007, we are beginning to see the benefits of
our efforts."
FINANCIAL FILINGS AND RESULTS - FISCAL 2006:
Six Months Ended December 31, 2005
The Company announced today the filing of its Form 10-Qs for the
quarters ended September 30 and December 31, 2005. Information in the Form
10-Qs filed today by the Company contain prior year comparison results
which reflect the restated results for fiscal 2005.
The Company expects to file its Form 10-Q for the quarter ended March
31, 2006 and its Form 10-K for the fiscal year ended June 30, 2006 before
March 15, 2007. While the Company believes it can achieve this filing
schedule, there can be no assurance that the schedule will be met. As
previously disclosed, the Company has not filed its Form 10-Q for the
quarter ended September 30, 2006 and the Company anticipates the filing of
its Form 10-Q for the quarter ending December 31, 2006 will also be
delayed.
Robert C. Caller, Chief Financial Officer, stated, "We are pleased to
have completed these quarterly reports and continue to work diligently on
the remaining filings for fiscal 2006 and for the first quarter of fiscal
2007. I am also pleased that we continued our product retooling during the
six months ended December 31, 2005 without a material negative impact to
our working capital."
Highlights of the Six Months Ended December 31, 2005 include:
* The Company was undergoing a major product retooling during the first
half of fiscal 2006 and recorded a loss of $0.33 per share. The loss
includes $0.07 per share related to stock compensation expense and
$0.22 per share of expenses related to inventory obsolescence, increased
depreciation on participation games as a result of shortening the
estimated useful lives of those assets, accrual for the probable
settlement of class action litigation and higher than normal expenses
related to accounting and legal matters.
* Total revenues for the second quarter of fiscal 2006 increased to
$128.4 million compared to total revenues of $106.4 million for the
first quarter of fiscal 2006 and $124.5 million for the second quarter
of fiscal 2005.
* The average selling price of gaming devices in the first half of fiscal
2006 increased to approximately $10,800 per unit compared to
approximately $10,400 per unit in the first half of fiscal 2005
reflecting a shift in the mix of our gaming devices to our new Alpha
based products. Total gaming devices sold in the first half of fiscal
2006, excluding OEM units, totaled 6,463 units.
* Selling, general and administrative costs increased $4.4 million in the
first half of fiscal 2006 compared to the first half of fiscal 2005
reflecting the impact of increased legal and accounting costs related to
the restatement of financial information and other matters.
* Interest expense increased $5.4 million in the first half of fiscal 2006
compared to the first half of fiscal 2005 due to higher interest rates
and fees associated with the Companys bank facility.
* As previously disclosed, the reduction in the depreciable lives of
certain of the Companys leased gaming equipment negatively impacted
financial results for its Gaming Operations business beginning in the
second quarter of fiscal 2006. Gross margin for Gaming Operations of
39 percent in the second quarter of fiscal 2006 includes $5.8 million of
depreciation related to this change. This change has also negatively
impacted the gross margin for Gaming Operations in the third and fourth
quarters of fiscal 2006.
* Gross margin for the Systems business in the first half of fiscal 2006
was 82 percent compared to 79 percent for the first half of fiscal 2005,
reflecting a higher mix of software versus hardware sales.
* Cash and cash equivalents were $24.6 million at December 31, 2005, a
decrease from a balance of $33.2 million at June 30, 2005. Working
capital and debt levels remained relatively unchanged despite the
Companys retooling efforts. Accounts and notes receivable increased
$24.1 million and deferred revenue increased $26.4 million from June 30,
2005 to December 31, 2005.
The Company anticipates reporting a net loss per diluted share of
between $0.66 and $0.76 for the year ended June 30, 2006. This estimated
net loss includes stock compensation expense of approximately $0.16 per
share and also includes charges of approximately $0.52 per share related to
inventory obsolescence, increased depreciation on participation games as a
result of shortening the estimated useful lives of those assets, accrual
for the probable settlement of class action litigation, write offs of
certain other assets, and higher than normal expenses related to accounting
and legal matters. It also includes an impairment charge on certain of the
Companys intangible assets of approximately $0.11 per share. In addition,
as previously reported, the Company experienced lower gross margins on
newer gaming products in fiscal year 2006 as a result of introductory
pricing and high initial production costs.
Bank Covenants
As of December 31, 2005 and September 30, 2005, the Company was in
compliance with its financial covenants consisting of a leverage ratio, a
fixed charges coverage ratio and a minimum of Earnings Before Interest,
Taxes, Depreciation and Amortization ("EBITDA") (as EBITDA is defined in
the Loan Agreement).
As previously disclosed, the Company amended its bank facility to
extend the due date for the delivery of the Companys Form 10-Q for the
quarter ended March 31, 2006 and its Form 10-K for the fiscal year ended
June 30, 2006 to March 15, 2007.
Summary of Results for First and Second Quarters of Fiscal 2006
Three Months Ended Three Months Ended Six Months Ended
September 30 December 31 December 31
2005 2004 2005 2004 2005 2004
(in millions, except per share amounts)
Revenue $106.4 $119.6 $128.4 $124.5 $234.8 $244.1
Operating loss (4.8) (1.2) (6.5) (2.4) (11.3) (3.6)
Loss from
continuing
operations (8.5) (7.3) (8.9) (3.4) (17.3) (6.3)
Loss per share $(0.16) $(0.14) $(0.17) $(0.07) $(0.33) $(0.21)
Supplemental Business Unit Detail
The following chart summarizes the financial information for the Bally
Gaming and Systems business unit, as restated as applicable (dollars in
millions):
Three Months Ended Three Months Ended Six Months Ended
September 30 December 31 December 31
2005 2004 2005 2004 2005 2004
Revenues:
Game sales $37.3 $50.5 $54.1 $55.8 $91.4 $106.3
System sales 20.6 23.3 25.0 25.5 45.6 48.8
Gaming
operations 36.9 33.0 34.9 30.4 71.8 63.4
94.8 106.8 114.0 111.7 208.8 218.5
Casino
operations 11.6 12.8 14.4 12.8 26.0 25.6
Total $106.4 $119.6 $128.4 $124.5 $234.8 $244.1
Summary operating statistics:
Gross Margin %
Games 25% 31% 29% 15% 27% 23%
Systems 86% 81% 78% 77% 82% 79%
Gaming
operations 51% 54% 39% 57% 45% 55%
Casino
operations 63% 63% 66% 64% 65% 63%
New gaming
devices sold 2,800 4,057 3,663 2,677 6,463 6,734
OEM units sold 21 250 305 2,657 326 2,907
New unit ASP
(excluding
OEM) $10,647 $10,513 $10,921 $10,290 $10,802 $10,425
GMU installed
base 278,000 281,000 266,000 280,000
Casino
management
systems base 535 502 532 220
With a history dating back to 1932, Las Vegas-based Bally Technologies
designs, manufactures, operates and distributes advanced gaming devices,
systems and technology solutions worldwide. Ballys product line includes
reel-spinning slot machines, video slots, wide-area progressives and Class
II, lottery and central determination games and platforms. As the worlds
No. 1 gaming systems company, Bally also offers an array of casino
management, slot accounting, bonusing, cashless and table management
solutions. The Company also owns and operates Rainbow Casino in Vicksburg,
Miss. Additional information on the Company can be found at
http://www.BallyTech.com.
FORWARD LOOKING STATEMENTS
This news release may contain "forward-looking" statements within the
meaning of the Securities Act of 1933, as amended, and is subject to the
safe harbor created thereby. Such information involves important risks and
uncertainties that could significantly affect the results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements. Future operating results may be adversely
affected as a result of a number of risks that are detailed from time to
time in the Companys filings with the Securities and Exchange Commission.
The Company undertakes no obligation to update the information in this
press release and represents that the information is only valid as of
todays date.
Investor Contact: Media Contact:
Mark Lipparelli Marcus Prater
(702) 584-7600 (702) 584-7828
mlipparelli@ballytech.com mprater@ballytech.com
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