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Arnold M. Knightly

Bally Technologies' slots paying off

14 February 2008

LAS VEGAS, Nevada -- Bally Technologies' return to financial stability continued Wednesday as the slot machine manufacturer reported its third consecutive profitable quarter while beating analyst expectations.

The Las Vegas-based company, which spent the last two years restating its earnings going back to 2005, reported a net income of $24.4 million, or 42 cents per share, in the quarter ended Dec. 31. Income for the first six months of fiscal 2008 is $45.7 million, or 79 cents per share.

The quarter and year-to-date increases were a sharp contrast to the company's posted losses of $2.5 million for the quarter and $2.7 million for the six-month period last year.

"The continued momentum at Bally is truly exciting," CEO Richard Haddrill said during a conference call with investors and gaming analysts. "Each of our technology components were at record levels for the current quarter."

Second-quarter revenues were $230.7 million, an increase of 52.9 percent compared with $150.9 million in the second quarter a year ago.

Six-month revenues rose 37.7 percent to $419.7 million from $304.7 million.

Analysts surveyed by Thomson Financial projected Bally Technologies would have second-quarter earnings of 39 cents a share and revenue of $199.1 million.

Bally also raised its yearly forecast, saying the company expected to exceed $875 million in revenues in 2008. Bally is also projecting earnings of $1.60 to $1.90 per share for the year ending June 30, up from an earlier forecast of $1.55 to $1.85 per share.

Bally reported its earnings after the stock markets closed Wednesday.

Haddrill credited the continued momentum to record revenues in gaming equipment sales, gaming operations and the sales of casino management systems.

Bally sold 52.9 percent more slot machines in the quarter, increasing the number of units sold to 7,144 machines, up from 4,672 last year. Year-to-date sales are 12,295 slot machines, an increase of 51.8 percent compared with 8,099 slot machines a year ago.

Approximately 6,100 new slot machines were sold in North America.

A new three-year agreement with the Seminole Tribe of Florida and passage of the recent referendum in California that is expected to add 17,000 slot machines in the Golden State will help continue the company's growth, Haddrill said.

The average unit sale price increased 4 percent for the quarter, $13,147 from $12,620, and 6.7 percent for the year, $13,201 from $12,363.

Second-quarter gaming equipment revenues, which account for 49 percent of the company's revenues, increased 53.9 percent to $108.4 million in the quarter. Six-month revenues increased 45.2 percent to $192.7 million.

Shares of Bally Technologies, traded on the New York Stock Exchange, increased $1.34 on Wednesday to close at $45.87, up 3.01 percent.