Alliance Gaming Reports Second-Quarter Earnings of 9 Cents Per Share.LAS VEGAS--(BUSINESS WIRE)--Feb. 9, 1998--Alliance Gaming Corp. (Nasdaq:ALLY) Monday announced net income applicable to common shareholders improved 200 percent to $3.0 million or 9 cents per basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the three months ended Dec. 31, 1997, compared with net income of $1.1 million or 3 cents per basic and diluted share in the comparable 1996 quarter. The current-quarter results were favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by $2.5 million, or 7 cents per diluted share, of non-cash, unusual items. Operating results for the three months ended Dec. 31, 1997, include: -- Consolidated revenues totaled $106.7 million for the quarter ended Dec. 31, 1997, compared to $128.7 million in the prior-year quarter, a decrease of 17 percent. Route Operations and Casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. Operations revenues increased by 17 percent and 16 percent, respectively, while revenues at Gaming Equipment and Systems and Wall Machines and Amusement Amusement is the state of experiencing humorous and usually entertaining events or situations, and is associated with enjoyment, happiness, laughter and pleasure. Amusement may also be experienced through the recollection of events which have given rise to amusement in the past. Games decreased by 35 percent and 34 percent, respectively. The impact of foreign currency exchange rates between the dollar and the deutschmark reduced revenues by $4.1 million in the current quarter. -- Consolidated earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. of $11.4 million in the 1997 quarter, compared to $13.9 million in the 1996 quarter. -- The Company recorded a net credit of $2.5 million for non-cash, unusual items consisting of a $6.0 million reduction in bad debt reserves due to final settlement of the last customer notes receivable on which the Company had recourse The right of an individual who is holding a Commercial Paper, such as a check or promissory note, to receive payment on it from anyone who has signed it if the individual who originally made it is unable, or refuses, to tender payment. obligations, partially offset by the write-off of $2.8 million of technology assets and accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. of $0.7 million for compensation arrangements for a former board member. "Excluding the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of unusual items, second-quarter results were up over first quarter and in line with our expectations," stated Morry Goldstein, President and Chief Executive Officer. "Our focus is to continue improving the performance and growth of our existing businesses by expanding Gamblers Bonus, enhancing amenities at our casinos A list of casinos. Antigua and Barbuda
Adjective, adv Brit old-fashioned, slang extreme or extremely: a bally nuisance, he's too bally charming for his own good Adj. 1. Wulff while we implement new initiatives at Bally Gaming and Systems such as our `Thrillions' progressive jackpot A progressive jackpot is a jackpot (highest payoff) for a gaming machine (usually a slot machine or video poker machine) where the value of the jackpot increases a small amount for every game played. system, `Game Magic' interactive 3-D graphic multi-games, `Roll-The-Dice' bonus games and other new products." For the six months ended Dec. 31, 1997, revenues totaled $204.7 million resulting in EBITDA of $29.7 million. The comparable amounts in the prior-year period were $231.6 million for revenues and $34.0 million for EBITDA. During the quarter ended Sept. 30, 1997, the company completed a refinancing Refinancing An extension and/or increase in amount of existing debt. transaction which resulted in substantially lower borrowing rates and eliminated the impact of non-cash preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. dividends on its 15% Series B Special Stock. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis, assuming the refinancing transaction had occurred on June 30, 1997, the Company would have reported a net income applicable to common shares of $1.3 million for the six months ended Dec. 31, 1997, or 4 cents per basic and diluted share. After deducting non-recurring charges totaling $77.6 million related to the refinancing transaction, the company reported an actual net loss applicable to common shares of $76.9 million, or $2.41 per basic and diluted share, for the six months ended Dec. 31, 1997, compared with a net loss applicable to common shares of $1.2 million or 4 cents per basic and diluted share in the 1996 six-month period. Gaming Equipment and Systems Reports Increased Gross Margin Percentage, Lower Revenues The following chart summarizes the financial information for the Gaming Equipment and Systems business unit: -0-
Three Months Ended
Dec. 31,
1997 1996
(Dollars in Millions)
Revenues $ 27.5 $ 42.3
EBITDA $ 2.8 $ 6.3
EBITDA Margin 10% 15%
Operating Income $ 1.7 $ 5.0
Approximate Number of New
Gaming Machines Sold 3,400 5,500
For the quarter ended Dec. 31, 1997, Gaming Equipment and Systems reported revenues of $27.5 million, a slight increase over the quarter ended Sept. 30, 1997, but a 35 percent decrease over the prior-year quarter. EBITDA was $2.8 million for the current quarter, a 56 percent decrease over the prior-year quarter. The revenue decrease was attributable to a 38 percent decrease in shipments of new gaming machines See video game console. and a 7 percent decrease in the average selling price The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. of new gaming machines. In addition, Systems sales decreased from $7.6 million in the prior-year quarter to $5.5 million in the current-year quarter. Second-quarter 1997 shipments for Bally Gaming included approximately 1,300 units to the Nevada and Atlantic City Atlantic City, city (1990 pop. 37,986), Atlantic co., SE N.J., an Atlantic resort and convention center; settled c.1790, inc. 1854. Situated on Absecon Island, a barrier island 10 mi (16. markets, 1,000 units to international markets and 1,100 units to riverboats, Native American casinos American Casino is a current American reality television series. The show originally aired on the Discovery Channel, but in June 2005, it was moved to The Travel Channel. and other domestic markets. Management believes the industrywide in·dus·try·wide adv. & adj. Throughout an entire industry: sales that have decreased industrywide; industrywide cooperation. decrease in number of units shipped resulted from lower replacement demand as casino operators await AWAIT, crim. law. Seems to signify what is now understood by lying in wait, or way-laying. regulatory approval for new products that gaming manufacturers displayed at the World Gaming Congress in October 1997. Gross margin for the quarter ended Dec. 31, 1997, was 44 percent, compared with 37 percent in the prior-year quarter. The increase was due principally to a higher proportion of higher-margin System revenues, and lower provisions for inventory obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. in the current-year quarter. Operating income was $1.7 million in the current-year quarter, representing a 66 percent decrease over the prior-year-quarter results. Operating income was lower due to decreased revenues, higher research and development costs, partially offset by improved gross margins and a lower provision for doubtful receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed . Wall Machines and Amusement Games Maintains 35 Percent Market Share The following chart summarizes the financial results for the Wall Machines and Amusement Games business unit: -0-
Three Months Ended
Dec. 31,
1997 1996
(Dollars in Millions)
Revenues $ 27.7 $ 42.3
EBITDA $ 5.2 $ 10.8
EBITDA Margin 19% 26%
Operating Income $ 3.4 $ 8.9
Approximate Number of
New Wall Machines Sold 4,100 6,200
Approximate Number of
New Wall Machines Leased 900 2,200
For the quarter ended Dec. 31, 1997, the Wall Machines and Amusement Games business unit reported revenues of $27.7 million, a 31 percent increase over the quarter ended Sept. 30, 1997, but a 34 percent decrease over the prior-year quarter. EBITDA was $5.2 million for the current quarter, a 52 percent decrease over the prior-year quarter. The prior-year quarter was a record quarter for this business unit due to the higher sales related to replacement of non-metered machines. Leased wall machine revenue was up 48 percent, and the company maintained its 35 percent market share for new wall machines during the current quarter. The revenue decline resulted from a 33 percent decline in new wall machine shipments and a 30 percent decrease in amusement game distribution revenue. The foreign currency fluctuation Fluctuation A price or interest rate change. between the dollar and the deutschmark reduced revenues and EBITDA by $4.1 million and $0.5 million, respectively, in the quarter ended Dec. 31, 1997. Wall Machines and Amusement Games continued to expand its leasing program whereby new wall machines are leased to customers pursuant to operating leases Operating Lease A lease contract that allows the use of an asset, but does not convey rights similar to ownership of the asset. Notes: An operating lease is not capitalized it is accounted for as a rental expense. . At Dec. 31, 1997, a total of 5,600 machines are currently out on lease vs. 4,000 at Dec. 31, 1996. Management believes a general slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the German economy has resulted in customers acquiring only enough units to replace those units whose licenses are expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. , and deferring purchases of other equipment. Gross margin for the quarter was 45 percent, compared to 52 percent in the prior-year quarter. The decrease in gross margin was due to higher fixed overhead costs overhead costs see fixed costs. per unit due to lower sales volumes, and a slightly lower average selling price for new wall machines. Operating income of $3.4 million decreased by 61 percent, primarily due to decreased revenues and lower gross margins, partially offset by lower selling, general and administrative expenses and a lower provision for doubtful receivables. Route Operations Report 17 Percent Growth in Revenues and 23 Percent Growth in Operating Income The following chart summarizes the combined financial information for the Nevada route operations and the Louisiana-based Video Services Inc. (VSI VSI Vinyl Siding Institute VSI Voltage Source Inverter VSI Virtual Switch Interface VSI Vertical Speed Indicator VSI Voluntary Separation Incentive VSI Virtual Socket Interface VSI Vision Systems International VSI Vertical Shaft Impactor ) operations: -0-
Three Months Ended
Dec. 31,
1997 1996
(Dollars in Millions)
Revenues $ 37.0 $ 31.7
EBITDA $ 6.0 $ 5.1
EBITDA Margin 16% 16%
Operating Income $ 4.1 $ 3.3
Average Number of Gaming
Machines 7,130 6,350
For the quarter ended Dec. 31, 1997, the Route Operations business unit reported revenues of $37.0 million, a 17 percent increase over the prior-year quarter, and EBITDA of $6.0 million, a 19 percent increase over the prior-year quarter. The revenue improvement resulted from an 18 percent growth in the Nevada route operations revenues and a 13 percent growth at VSI, both resulting from increases in number of units installed and win per day. For the Nevada route operations, net win per day per gaming machine was $53.60 in the 1997 quarter, compared with $52.00 in the 1996 quarter. Gamblers Bonus, a cardless slot player's club and player tracking system, continues to favorably impact net win per day. Currently, the Gamblers Bonus product is installed in 1,800 gaming machines at 160 locations, or 25 percent of the installed base of gaming machines. The improvement in revenues at VSI is primarily due to increased play and additional games being added at three of the 10 off-track betting off-track betting n. Abbr. OTB A system of placing bets away from a racetrack. locations. The net win per day per gaming machine was $74.20 in the current quarter, compared with $70.70 in the prior-year quarter. Route Operations EBITDA of $6.0 million and operating income of $4.1 million increased by 19 percent and 23 percent, respectively, during the current-year quarter. These improvements resulted primarily from the increase in revenues and a lower provision for doubtful receivables, partially offset by higher operating costs operating costs npl → gastos mpl operacionales as a percentage of revenues due to an increase in health insurance costs. Casino Operations Continue to Report Positive Trends The following chart summarizes combined financial information for the Rainbow Casino in Vicksburg, Miss., and the Rail City Casino in Sparks, Nev.: -0-
Three Months Ended
Dec. 31,
1997 1996
(Dollars in Millions)
Revenues $ 14.5 $ 12.4
EBITDA $ 5.0 $ 4.2
EBITDA Margin 34% 34%
Operating Income $ 4.4 $ 3.7
Average Number of Gaming
Machines 1,150 1,080
Average Number of Table Games 29 33
For the quarter ended Dec. 31, 1997, the Casino Operations business unit reported revenues of $14.5 million, an increase of 16 percent over the prior-year quarter, and EBITDA of $5.0 million, a 19 percent increase over the prior-year quarter. Rainbow casino revenues increased 16 percent as a result of an increase in win per day and an increase in the number of gaming machines. Rail City Casino revenues increased 17 percent due to enhanced marketing programs, including the new Rail City Casino Players Club, and an increase in the win per day resulting from a 20 percent replacement of older gaming devices with new devices. The Rainbow Casino continued to gain market share in Vicksburg for the 13th consecutive quarter. For the 1997 quarter, operating income of $4.4 million increased by 21 percent, resulting from an increase in revenues and lower costs as a percentage of revenues, partially offset by a slight increase in selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. as a percentage of revenues. The company's net interest expense in the three months ended Dec. 31, 1997, increased to $7.3 million from $5.2 million in the 1996 quarter. The increase is primarily due to a higher level of debt resulting from the refinancing of the company's capital structure which included the redemption of the 15% Series B Special Stock. The Company recorded an income tax provision of $0.4 million in the 1997 quarter, compared with $3.2 million in the prior-year quarter. The current-quarter provision is primarily due to income taxes for the Wall Machines and Amusement Games business unit and state income taxes, and is lower than the effective tax rate in the prior year due to a change in the organization structure in Germany effective Jan. 1, 1997, which resulted in a lower effective tax rate on German earnings. Alliance Gaming Alliance Gaming NYSE: AGI is a Las Vegas, Nevada based manufacturer of slot machines and casino management software. History On June 18, 1996 merged with Bally Gaming International. is a diversified diversified (di·verˑ·s gaming company with headquarters in Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. . The company is engaged primarily in the design, manufacture and distribution of advanced gaming devices and systems worldwide and is the nation's largest gaming machine route operator and operates two regional casinos A Regional Casino, more commonly known as a Super Casino (or occasionally known as Mega Casino or variants) is the term given to the largest category of casino permitted under English law. . -0- The disclosures herein include statements that are "forward-looking" within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Act of 1934, as amended, and are subject to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created thereby. Such forward-looking information involves important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made by or on behalf of the company. Future operating results may be adversely affected as a result of a number of factors enumerated This term is often used in law as equivalent to mentioned specifically, designated, or expressly named or granted; as in speaking of enumerated governmental powers, items of property, or articles in a tariff schedule. in the company's public reports and prospectuses such as the impact of competition, and uncertainties concerning such matters as the company's high leverage, its ability to service debt, its holding company structure, its operating history and recent losses, competition, product development, customer financing, sales to non-traditional gaming markets, foreign operations, dependence on key personnel, strict regulation by gaming authorities, gaming taxes and value-added taxes value-added tax (VAT), levy imposed on business at all levels of the manufacture and production of a good or service and based on the increase in price, or value, provided by each level. , the uncertain effect of the National Gambling Commission, change in control, and other risk factors listed from time to time in the company's SEC reports, including but not limited to the most recent reports on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and 10-Q. -0-
ALLIANCE GAMING CORP.
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
(In 000s, except per-share amounts)
Three Months Ended
Dec. 31,
1997 1996
Revenues $106,714 $ 128,703
Cost of operations 65,404 76,027
Selling, general and administrative expenses 26,604 32,847
Unusual items (2,545) --
EBITDA 17,251 19,829
Depreciation and amortization 5,809 5,920
Operating income 11,442 13,909
Net interest expense (7,287) (5,157)
Rainbow royalty -- (1,125)
Minority interest and other (382) (232)
Income before income taxes 3,773 7,395
Income tax provision 427 3,250
Net income 3,346 4,145
Special stock dividends (373) (2,753)
Premium on redemption of Series B special stock -- (341)
Net income applicable to common shares $2,973 $ 1,051
Basic earnings per share $0.09 $0.03
Diluted earnings per share $0.09 $0.03
Weighted average shares outstanding 31,974 31,834
Weighted average common and common
share equivalents outstanding 34,058 32,540
-0-
ALLIANCE GAMING CORP.
SUMMARY CONSOLIDATED STATEMENT OF OPERATIONS
(In 000s, except per-share amounts)
Six Months Ended
Dec. 31,
1997 1996
Revenues $204,685 $ 231,615
Cost of operations 126,656 140,208
Selling, general and administrative expenses 50,876 56,702
Unusual items (2,545) 700
EBITDA 29,698 34,005
Depreciation and amortization 10,812 11,141
Operating income 18,886 22,864
Net interest expense (13,125) (10,845)
Rainbow royalty (587) (2,276)
Rainbow royalty buyout (19,000) --
Minority interest and other (784) (374)
Income (loss) before income taxes (14,610) 9,369
Income tax provision 920 4,588
Income (loss) before extraordinary item (15,530) 4,781
Extraordinary loss with no tax benefit (42,033) --
Net income (loss) (57,563) 4,781
Special stock dividends (2,773) (5,419)
Premium on redemption of Series B special stock (16,553) (572)
Net loss applicable to common shares $(76,889) $ (1,210)
Basic earnings (loss) per share $(2.41) $(0.04)
Diluted earnings (loss) per share $(2.41) $(0.04)
Weighted average shares outstanding 31,913 31,802
Weighted average common and common
share equivalents outstanding 31,913 32,334
CONTACT: Alliance Gaming Corp., Las Vegas Scott Schweinfurth, 702/270-7625 |
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