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Alliance Gaming Reports Q2 EPS Up 64%15 January 2004LAS VEGAS – (Press Release) -- Alliance Gaming Corporation (NYSE: AGI) today announced earnings for its second fiscal quarter ending December 31, 2003. Second quarter income from continuing operations totaled $14.2 million, or $0.28 per diluted share, on revenues of $108.6 million. For the comparable quarter ended December 31, 2002, the Company reported income from continuing operations of $8.6 million or $0.17 per diluted share, on revenues of $98.2 million. The results for the Company's continuing operations for the current and prior year periods are presented after classifying the results of the Rail City Casino as discontinued operations, which had the effect of reclassifying EPS of $0.02 in both quarters from income from continuing operations to income from discontinued operations. Consolidated results for the December 31, 2003 quarter include: -- Revenues from continuing operations of $108.6 million, an increase of 11% from the $98.2 million in the prior year quarter. -- Operating income from continuing operations of $27.5 million, an increase of 30% from the $21.2 million in the prior year quarter. -- EBITDA from continuing operations of $34.0 million, an increase of 30% from the $26.1 million in the prior year quarter. -- Total net income, including discontinued operations, of $0.37 per diluted share, an increase of 56%, compared to $0.24 in the prior year quarter. Earnings before interest, taxes, depreciation, amortization and refinancing charge (EBITDA) and EPS excluding the refinancing charge are not Generally Accepted Accounting Principles (GAAP) measurements. EBITDA may not be comparable to similarly titled measures reported by other companies. A reconciliation of EBITDA to income from continuing operations and a reconciliation of EPS excluding the refinancing charge to GAAP EPS are attached to this press release. Cash and Capital Expenditures: -- As of December 31, 2003, cash and cash equivalents for our continuing operations totaled $72.3 million, which included approximately $2.7 million held for operational purposes in vaults, cages and change banks and $13.7 million held in jackpot reserve accounts. These amounts exclude cash and cash equivalents of the discontinued operations, which are included in assets held for sale. -- For the quarter ended December 31, 2003, consolidated capital expenditures for our continuing operations, including costs to produce proprietary games, totaled $13.2 million compared to $7.7 million for the prior year quarter. The current period capital expenditures were driven by the continued deployment of wide-area progressive and daily-fee games. We also incurred $1.7 million for capital expenditures for our discontinued operations. Other financial highlights: -- Consolidated net interest expense for the current quarter totaled $3.8 million compared to $6.5 million in the prior year period. The Company currently has $70.0 million outstanding on its $125 million revolving credit facility, unchanged from September 2003 quarter end. During the December 2003 quarter we increased the Term Loan by $75 million, to a total of $350 million outstanding. The proceeds were used primarily to fund loans made to Sierra Design Group (SDG) in advance of the previously announced acquisition of SDG that is anticipated to close before March 31, 2004. -- The Company has advanced loans totaling $61 million to SDG to repay certain creditors. Fiscal Year 2004 Guidance -- The Company is updating its fiscal year 2004 guidance for continuing operations from $1.10 per diluted share, to at least $1.04, reflecting the reclassification of $0.06 of EPS for Rail City Casino to discontinued operations. This guidance also reflects the inclusion of SDG's results that we are now forecasting will not be dilutive to our fiscal year 2004 results, which we had previously guided could have been dilutive by as much as $(0.10). The comparative EPS for the prior fiscal year 2003 was $0.74, which has also been adjusted to reclassify the Rail City Casino as discontinued operations. Fiscal Year 2005 Guidance -- For fiscal 2005, the Company expects EPS for continuing operations of at least $1.40, representing an increase of 35% compared to fiscal year 2004. The Company will hold its conference call on Thursday, January 15, 2004 at 10 a.m. PST (1 p.m. EST). Participants may access the call by dialing (719) 457-2653. The Company will also broadcast the conference call over the Internet. Interested parties are asked to log on to the call at www.alliancegaming.com using the Investor Relations tab 10 minutes prior to the start of the call. Supplemental Business Unit Detail Bally Gaming and Systems Quarterly Revenues Increase 11%, Operating Income Increases 25% Bally Gaming and Systems business unit reported an 11% increase in revenues over the prior year's quarter. Revenues from sales of gaming devices decreased 2% over the prior year's quarter primarily as a result of a 15% decrease in new game sales. The average new-unit selling price increased 10% over prior year's quarter to $9,050 (excluding 240 OEM games). The increase in the average selling price includes the positive impact from the sale of 165 Monte Carlo premium-priced units as well as other premium-priced branded products. During fiscal year 2004, Bally Gaming has experienced an almost four fold increase in the volume of product submissions to the various domestic regulatory bodies, each of which charge fees for testing and approval of each product. The year to date fees incurred for such regulatory approvals has exceeded $5.1 million. Of these amounts incurred, during the quarter ended December 31, 2003, the Company capitalized a total of $2.4 million of such costs, as such costs were directly attributable to products which have been approved. Bally Systems revenues increased 33% over the prior year quarter driven by a 23% increase in game monitoring units shipped, a continued increase in the average selling price per unit, increased sales of software licenses for eTICKET(TM), the industry's leading single-wire TITO solution that is currently operating in 59 casinos, as well as sales of its bonusing and promotions software. Bally Systems recurring hardware and software revenues increased to $5.1 million, resulting from the larger base of installed systems. Gaming Operations revenues increased 21% compared to the prior year's quarter driven by a 23% increase in the average installed base of wide-area progressive (WAP) and daily-fee games deployed, which now total 1,840 and 2,950, respectively. During the quarter we deployed an additional 970 WAP and daily-fee games, and had returns totaling 970 games, resulting in no net increase in the installed base of games on a sequential basis as of December 31, 2003 compared to September 30, 2003. The current quarter placements included the continued roll out of "Cash for Life" WAP games and continued placement of daily fee games such as Playboy and the Saturday Night Live series, as well as an additional 130 games at Delaware race tracks. Casino Operation Rainbow Casino Quarterly Revenues Increase 6%, Operating Income Increases 45% Rainbow Casino reported a 6% increase in revenue compared to the prior year quarter, and represents the fourth consecutive quarter of revenue growth. Rainbow's EBITDA increased 42% to $4.5 million compared to the prior year quarter, which period was impacted by the internal remodeling project. Discontinued Casino Operation On December 8, 2003 the Company announced that it had entered into an agreement for the sale of its Rail City Casino for consideration consisting of $35 million in cash and a $3 million note. The sale is expected to close in early to mid calendar 2004. Accordingly the results of operations for Rail City have been reclassified as discontinued operations in both the current and prior year periods. Discontinued Route Operations For the Nevada route operations, revenue increased 9% and EBITDA increased 7% compared to prior year quarter. The average number of games deployed increased 4% over the prior year quarter and the average net win per day per gaming machine increased to $68.80 from $65.85. The increase in revenues at VSI is due to a increase in net win per day per gaming machine to $60.40 from $56.65 and the number of units deployed remained constant compared to the prior year quarter. (a) The results of the Nevada Route and Louisiana Route operations for the quarter ended December 31, 2002 reflect depreciation and amortization expense. In accordance with generally accepted accounting principles, depreciation and amortization for these discontinued operations ceased as of July 1, 2003 as a result of their designation as assets held for sale. Had depreciation and amortization expense been recorded for the current period, operating income for the discontinued operations would have decreased by $3.5 million for the current quarter. |