Alliance Gaming Corporation Form 8-K

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ihf0kB1r+7a+0RTRiZTBucFuHQ+3Fe/UHYayHnvByF3YPYpunN0/tTDS4F3wPflV L7NGDzBy5ONfSg+jQqKOYA== 0000950148-03-001916.txt : 20030805 0000950148-03-001916.hdr.sgml : 20030805 20030805164516 ACCESSION NUMBER: 0000950148-03-001916 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030804 ITEM INFORMATION: FILED AS OF DATE: 20030805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLIANCE GAMING CORP CENTRAL INDEX KEY: 0000002491 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 880104066 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-31558 FILM NUMBER: 03824166 BUSINESS ADDRESS: STREET 1: 6601 S. BERMUDA RD. CITY: LAS VEGAS STATE: NV ZIP: 89119 BUSINESS PHONE: 7028967700 MAIL ADDRESS: STREET 1: 6601 S. BERMUDA RD. CITY: LAS VEGAS STATE: NV ZIP: 89119 FORMER COMPANY: FORMER CONFORMED NAME: UNITED GAMING INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: GAMING & TECHNOLOGY INC DATE OF NAME CHANGE: 19890206 FORMER COMPANY: FORMER CONFORMED NAME: ADVANCED PATENT TECHNOLOGY INC DATE OF NAME CHANGE: 19830519 8-K 1 v92091e8vk.htm ALLIANCE GAMING CORPORATION FORM 8-K Alliance Gaming Corporation Form 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): August 4, 2003

Commission File Number 0-4281

ALLIANCE GAMING CORPORATION

(Exact name of registrant as specified in its charter)


NEVADA (State or other jurisdiction of incorporation or organization)		88-0104066 (I.R.S. Employer Identification No.)


6601 S. Bermuda Rd.
Las Vegas, Nevada		89119
(Address of principal executive offices)		(Zip Code)

(Registrant’s Telephone Number, Including Area Code): (702) 270-7600

TABLE OF CONTENTS


	ITEM 12. Results of Operations and Financial Condition
SIGNATURES
ALLIANCE GAMING CORPORATION EXHIBIT 99

ITEM 12. Results of Operations and Financial Condition

The registrant’s press release dated August 4, 2003, regarding its financial results for the periods ended June 30, 2003, including unaudited consolidated financial statements for the period ended June 30, 2003, is furnished as Exhibit 99 to this Form8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto authorized.


ALLIANCE GAMING CORPORATION
(Registrant)

By		/s/ Robert Miodunski
		President and Chief Executive Officer
		(Principal Executive Officer)

By		/s/ Robert L. Saxton
		Sr. Vice President, Chief Financial
		Officer and Treasurer (Principal
		Financial and Accounting Officer)

Date: August 4, 2003

EX-99 3 v92091exv99.txt ALLIANCE GAMING CORPORATION EXHIBIT 99 [ALLIANCE GAMING CORPORATION LOGO] FOR IMMEDIATE RELEASE Investor and Media Contact: Robert L. Saxton Alliance Gaming (702) 270-7600 ALLIANCE GAMING REPORTS FISCAL 2003 EPS OF $0.81 FROM CONTINUING OPERATIONS; REVENUES INCREASE 38% TO $407.6 MILLION; PROVIDES EPS GUIDANCE FOR FISCAL 2004 OF AT LEAST $1.10 FOURTH QUARTER REVENUES IMPROVED 40% TO $121.1 MILLION AND EPS FROM CONTINUING OPERATIONS IMPROVED 38% TO $0.30 LAS VEGAS, NEV., AUG. 4, 2003 - Alliance Gaming Corporation (NYSE: AGI) today announced earnings for its fourth fiscal quarter ending June 30, 2003. Income from continuing operations for the fourth quarter totaled $15.0 million, or $0.30 per diluted share, on revenues from continuing operations of $121.1 million. For the comparable quarter ended June 30, 2002, the Company reported income from continuing operations (before one-time tax benefit of $37 million) of $10.8 million, or $0.22 per diluted share, on revenues of $86.5 million. For the fiscal year ended June 30, 2003, income from continuing operations totaled $40.4 million or $0.81 per diluted share, compared to $30.0 million or $0.63 per diluted share for the prior year (before the one-time tax benefit). The fiscal 2002 results included no Federal income tax expense due to the utilization of net operating loss carry forwards and other tax credits. Assuming Federal income taxes had been recognized in fiscal 2002, EPS from continuing operations would have been $0.09 and $0.34 for the quarter and fiscal year ended June 30, 2002, respectively. Discontinued operations: As previously announced, the Company has entered into definitive agreements to divest certain non-core assets including its route operations (United Coin Machine Co. and Video Services, Inc.) and its German wall machine and amusement games business unit (Bally Wulff). In July 2003 the Company completed the sale of Bally Wulff and received $16.5 million in cash, and recorded a charge in the June 2003 quarter of $25.4 million for the final write down of the Bally Wulff assets to the sale price, which included a $12.0 million non-cash charge for the recognition of the cumulative translation losses. The sale of the route operations are expected to be completed in calendar 2004. For purposes of financial reporting, each of these three businesses are now treated as discontinued operations, and their results are presented net of applicable income taxes below Income From Continuing Operations in the accompanying unaudited statements of operations. The net assets of these businesses are now classified as Assets Held For Sale in the accompanying unaudited balance sheets. Consolidated results for the June 2003 quarter include: - Revenues from continuing operations of $121.1 million, an increase of 40% from the $86.5 million in the prior year quarter, led by a 49% increase in revenues at the Bally Gaming and Systems business unit. - Operating income from continuing operations of $28.4 million, an increase of 86% from the $15.3 million in the prior year quarter. - Income from continuing operations of $0.30 per diluted share, an increase of 38% compared to the prior year quarter of $0.22 per diluted share (or a 232% increase if compared to the pro forma after-tax income of $0.09 per diluted share). - Total net income (loss), including discontinued operations and the loss on the sale of Bally Wulff, totaled $(0.23) per diluted share, compared to $0.56 per diluted share in the prior year quarter. - EBITDA of $34.5 million, an increase of 76% from the $19.6 million in the prior year quarter, led by a 89% increase at Bally Gaming and Systems. Consolidated results for the June 2003 fiscal year include: - Revenues from continuing operations of $407.6 million, an increase of 38% from the $296.1 million in the prior year. - Operating income from continuing operations of $89.9 million, an increase of 57% from the $57.1 million in the prior year. - Income from continuing operations of $0.81 per diluted share, an increase of 28% compared to the prior year of $0.63 per diluted share (or a 138% increase if compared to the pro forma after-tax income of $0.34 per diluted share). - Total net income, including discontinued operations, totaled $0.39, compared to $1.34 in the prior year. - EBITDA of $111.5 million, an increase of 56% from the $71.7 million in the prior year. 2 The following chart summarizes the quarterly diluted EPS for fiscal year 2003, for continuing operations and discontinued operations and the loss on sale of Bally Wulff:
Fiscal Year 2003 Q1 Q2 Q3 Q4 Total -- -- -- -- ----- Income from continuing operations $0.13 $0.19 $0.19 $ 0.30 $0.81 Income/(loss) discontinued operations -- 0.05 0.06 (0.02) 0.09 ----- ---- ---- ----- ---- Subtotal 0.13 0.24 0.25 0.28 0.90 Loss on sale of Bally Wulff -- -- -- (0.51) (0.51) ----- ------ ----- ----- ----- Total $0.13 $0.24 $0.25 $(0.23) $0.39 ===== ===== ===== ====== ===== Wt. Avg. Diluted Shares Outstanding (in millions) 49.8 50.3 50.2 50.3 50.1
Cash and Capital Expenditures: - As of June 30, 2003, cash and cash equivalents for the Company's continuing operations totaled $40.2 million, which included approximately $3.8 million held for operational purposes in vaults, cages and change banks and $14.5 million held in jackpot reserve accounts. These amounts exclude cash and cash equivalents of the discontinued operations which are now included in Assets Held For Sale. - For the quarter ended June 30, 2003, consolidated capital expenditures, including costs to produce proprietary games, totaled $9.3 million compared to $5.2 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. A total of $1.6 million was incurred for capital expenditures for our discontinued operations. Other financial highlights: - Consolidated net interest expense for the current quarter totaled $6.1 million compared to $6.7 million in the prior year period, resulting from lower interest rates on the Company's term loan facility. - Since July 1, 2002, the Company has been recognizing Federal income tax expense based on 35% of pre-tax domestic income and State income taxes at a rate of approximately 2% of domestic income. The fiscal 2002 actual results include no Federal income tax expense as all domestic earnings were offset against net operating loss carry forwards, but does include a one-time tax benefit of $37.0 million for the reduction of previously recorded deferred tax valuation reserves. For fiscal 2003, the discontinued operations are presented net of applicable Federal and State income taxes and the Bally Wulff results are presented net of a tax benefit of $16.8 million from the capital loss resulting from the sale of the business. 3 Fiscal Year 2004 Guidance: - For fiscal 2004, the Company expects earnings from continuing operations of at least $1.10 per diluted share on revenues of approximately $460 million and EBITDA of approximately $130 million. This fiscal year 2004 earnings guidance reflects a 36% increase in earnings per share as compared to $0.81 of earnings from continuing operations for fiscal 2003. This guidance reflects the lower interest expense associated with the anticipated refinancing transaction, but is a non-GAAP financial measure as it excludes the effects of two previously reported items which are anticipated to occur in fiscal 2004, including: 1) the net gain from the sale of the Route Operations of at least $0.60 per share, and 2) an after tax charge of approximately $0.16 per share related to the refinancing transaction including $5 million for the early extinguishment of the 10% Subordinated Notes and $7 million for the non-cash write-off of unamortized debt issue costs. The Company will hold its conference call on Tuesday, August 5th at 10 a.m. PDT (1 p.m. EDT). Participants may access the call by dialing (719) 457-2629. 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. ****** 4 SUPPLEMENTAL BUSINESS UNIT DETAIL FOR CONTINUING OPERATIONS BALLY GAMING AND SYSTEMS QUARTERLY REVENUES INCREASE 49%, OPERATING INCOME INCREASES 98% The following chart summarizes the financial information for the Bally Gaming and Systems business unit (Dollars in millions):
Three Months Ended Twelve Months Ended June 30, June 30, 2003 2002 2003 2002 ---- ----- ---- ---- Revenues Game sales $ 57.3 $ 33.3 $ 188.3 $ 105.7 System sales 31.6 20.8 91.6 64.8 Gaming operations 14.0 14.8 55.6 53.2 -------- -------- --------- --------- Total revenues $ 102.9 $ 68.9 $ 335.5 $ 223.7 Gross Margin % 57% 53% 57% 56% Operating Income $ 26.9 $ 13.6 $ 82.9 $ 47.2 Add back: Depreciation & amortization 4.6 3.1 16.0 10.2 -------- -------- --------- --------- EBITDA $ 31.5 $ 16.7 $ 98.9 $ 57.4 EBITDA Margin 31% 24% 29% 26% - ----------------------------------------------------------------------------------------------- New gaming devices sold 5,650 4,400 19,635 13,200 Game monitoring units sold 10,400 9,300 35,500 40,550 End of period installed base of WAP and daily-fee games 4,400 3,635 4,400 3,635 Average installed base of WAP and daily-fee games 4,300 3,680 3,980 3,580 - -----------------------------------------------------------------------------------------------
Bally Gaming and Systems business unit reported a 49% increase in revenues over the prior year's quarter. Revenues from sales of gaming devices increased 72% over the prior year's quarter primarily as a result of a 28% increase in the number of units sold and a 11% increase in the average new-unit selling price (excluding OEM games), to $8,400. The increase in the average selling price includes the positive impact from the sale of 92 Monte Carlo premium-priced units as well as other premium-priced branded products. Bally Systems revenues increased 52% over the prior year quarter driven by a 12% increase in game monitoring units shipped, a 15% increase in the average selling price per unit, and increased sales of software licenses for the industry's leading single-wire TITO solution, eTICKET(TM) as well as its bonusing and promotions software. Bally Systems recurring hardware and software revenues increased to $4.7 million, or $16.9 million for the fiscal year, resulting from the larger base of installed systems. Gaming Operations revenues decreased 6% compared to the prior year's quarter as a 5 result of a decrease in the average revenue per unit offset by a 17% increase in the average installed base of wide-area progressive (WAP) and daily-fee games deployed, which now total 1,910 and 2,490, respectively. During the quarter we deployed an additional 1,080 WAP and daily-fee games, and had returns totaling 730 games, resulting in a net increase in the installed base of 350 games on a sequential basis as of June 30, 2003 compared to March 31, 2003. The current quarter placements included the continued roll out of the Company's latest WAP offering, "Cash for Life," which in addition to the Nevada link, was launched in both Mississippi and Native American casinos in June, and does not include units placed in Atlantic City which went live in early July. CASINO OPERATIONS REVENUES INCREASE 4%, OPERATING INCOME INCREASES 7% The following chart summarizes combined financial information for the Rainbow Casino in Vicksburg, Mississippi, and the Rail City Casino in Sparks, Nevada (Dollars in millions):
Three Months Ended Twelve Months Ended June 30, June 30, 2003 2002 2003 2002 ---- ---- ---- ---- Revenues Rainbow Casino $ 12.8 $ 12.5 $ 50.9 $ 52.2 Rail City Casino 5.4 5.1 21.2 20.2 ------- --------- ------ ------ Total revenues $ 18.2 $ 17.6 $ 72.1 $ 72.4 Operating Income Rainbow Casino $ 3.9 $ 3.7 $ 15.3 $ 17.6 Rail City Casino 1.3 1.2 5.0 4.9 ------- --------- ------ ------ Total operating income $ 5.2 $ 4.9 $ 20.3 $ 22.5 Add back: Depreciation & Amortization Rainbow Casino $ 0.6 $ 0.5 $ 2.2 $ 1.5 Rail City Casino 0.3 0.2 1.1 0.6 ------- --------- ------ ------ Total depreciation & amortization $ 0.9 $ 0.7 $ 3.3 $ 2.1 EBITDA Rainbow Casino $ 4.5 $ 4.2 $ 17.5 $ 19.1 Rail City Casino 1.6 1.4 6.1 5.5 ------- --------- ------ ------ Total EBITDA $ 6.1 $ 5.6 $ 23.6 $ 24.6 EBITDA Margin Rainbow Casino 35% 33% 34% 37% Rail City Casino 30% 28% 29% 28% - ------------------------------------------------------------------------------------ Average Number of Gaming Devices Rainbow Casino 930 975 930 975 Rail City Casino 560 530 550 530 ------- --------- ------ ------ Total Gaming Devices 1,490 1,505 1,480 1,505 Avg. Number of Table Games 23 24 23 24 - ------------------------------------------------------------------------------------
6 For the quarter, the combined casino operations business unit reported a 4% increase in revenues and a 10% increase in EBITDA. Rail City reported a 5% increase in revenues driven by a 6% increase in the average number of games and a slight increase in slot win. EBITDA at Rail City increased 17% to $1.6 million. Rainbow Casino reported a 3% increase in revenue compared with the same quarter in fiscal 2002, and represents the second consecutive quarter of revenue growth. Rainbow's EBITDA increased 8% to $4.5 million compared to the prior year quarter. DISCONTINUED OPERATIONS The following information is provided for the Company's discontinued operations: ROUTES
Three Months Ended Twelve Months Ended June 30, June 30, 2003 2002 2003 2002 ---- ---- ---- ---- Revenues Nevada $ 50.7 $ 52.7 $ 202.4 $ 208.9 Louisiana 3.7 3.9 14.9 15.1 -------- -------- -------- -------- Total revenues $ 54.4 $ 56.6 $ 217.3 $ 224.0 Operating Income Nevada $ 1.9 $ 3.0 $ 7.0 $ 13.2 Louisiana 0.5 0.7 2.1 2.3 -------- -------- -------- -------- Total operating income $ 2.4 $ 3.7 $ 9.1 $ 15.5 Add back: Depreciation & Amortization Nevada $ 3.5 $ 3.1 $ 13.9 $ 11.8 Louisiana - - 0.1 0.2 -------- -------- -------- -------- Total depreciation & amortization $ 3.5 $ 3.1 $ 14.0 $ 12.0 EBITDA Nevada $ 5.4 $ 6.1 $ 20.9 $ 25.0 Louisiana 0.5 0.7 2.2 2.5 -------- -------- -------- -------- Total EBITDA $ 5.9 $ 6.8 $ 23.1 $ 27.5 - --------------------------------------------------------------------------------------------- Average Number of Gaming Devices Nevada 7,740 8,290 8,050 8,270 Louisiana 715 710 715 700 -------- -------- -------- -------- Total Gaming Devices 8,455 9,000 8,765 8,970 - ---------------------------------------------------------------------------------------------
7 For the Nevada route operations, revenue decreased 4% and EBITDA decreased 12% compared to prior year quarter. The average number of games deployed decreased 7% over the prior year quarter and the average net win per day per gaming machine increased to $70.80 from $69.20. Contributing to the reduced game count were the loss of approximately 300 games which were destroyed in a fire at one large location owned by a third-party. The Company expects to recover its net investment in these games through proceeds from its insurance carrier. The decrease in revenues at VSI is due to a decrease in net win per day per gaming machine to $58.25 from $59.95 and the number of units deployed remained constant compared to the prior year quarter. WALL MACHINES & AMUSEMENT GAMES (BALLY WULFF)
Three Months Ended Twelve Months Ended June 30, June 30, 2003 2002 2003 2002 ---- ---- ---- ---- Revenues $ 13.8 $ 16.1 $ 60.2 $ 74.7 Operating Income (loss) $ (28.0) $ (22.5) $ (27.2) $ (16.2) Add back: Asset impairment charges 25.4 24.1 25.4 24.1 Depreciation & amortization 1.3 1.4 2.7 5.3 -------- -------- -------- -------- EBITDA, excluding non-cash impairment charges $ (1.3) $ 3.0 $ 0.9 $ 13.2 - ----------------------------------------------------------------------------------------------- Number of New Wall Machines Sold 1,200 1,700 6,025 9,850 Number of New Wall Machines Leased 1,920 1,000 5,870 5,380 Installed Base of Leased Machines 7,100 7,450 7,100 7,450 - -----------------------------------------------------------------------------------------------
The Bally Wulff business unit revenues decreased 14% as a result of a 19% increase in revenues from leased games offset by a 31% decrease in new units sold and a 9% decrease in average selling price. On July 18, 2003, the Company completed a sale of Bally Wulff to a private equity fund for $16.5 million in cash. The Company recorded a charge in the quarter totaling $25.4 million for the final write down of the Bally Wulff assets to the sale price. 8 * * * * * The disclosures herein include statements that are "forward looking" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, and are subject to the safe harbor 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 made by or on behalf of the Company. Future operating results may be adversely affected as a result of a number of factors enumerated in the Company's public reports and prospectuses such as the impact of competition, uncertainties concerning such matters as the Company's high leverage, its ability to service debt, its holding company structure, 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, 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 and 10-Q. Alliance Gaming Corporation is a diversified gaming company headquartered in Las Vegas, Nevada. The Company is engaged in the design, manufacture, operation and distribution of advanced gaming devices and systems worldwide and is currently the nation's largest gaming machine route operator and operates two casinos. Additional information about the Company can be found on the Alliance Gaming web site at: www.alliancegaming.com. (Tables Follow) 9 ALLIANCE GAMING CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In 000's, except per share amounts)
Three Months Ended June 30, 2003 2002 ---- ---- Revenues: Gaming equipment and systems $ 102,929 $ 68,876 Casino operations 18,199 17,584 ------------ ------------ 121,128 86,460 ------------ ------------ Costs and expenses: Cost of gaming equipment and systems 44,182 32,046 Cost of casino operations 8,037 7,888 Selling, general and administrative 29,189 21,758 Research and development costs 5,230 5,212 Depreciation and amortization 6,096 4,282 ------------ ------------ 92,734 71,186 ------------ ------------ Operating income 28,394 15,274 Other income (expense): Interest income 40 27 Interest expense (6,181) (6,758) Minority interest (526) (458) Other, net (244) 1,227 ------------ ------------ Income from continuing operations before income taxes 21,483 9,312 Income tax expense (benefit) 6,437 (38,503) ------------ ------------ Income from continuing operations 15,046 47,815 Discontinued Operations: Loss on sale of Wall Machines and Amusement games unit (25,358) - Loss from discontinued operations of wall machines and amusement games unit, net (2,348) (23,552) Income from discontinued operations of Nevada Route, net 944 3,050 Income from discontinued operations of Louisiana Route, net 348 393 ------------ ------------ Income (loss) from discontinued operations (26,414) (20,109) ------------ ------------ Net income (loss) $ (11,368) $ 27,706 ============ ============ Diluted earnings per share Continuing operations $ 0.30 $ 0.96 Discontinued operations (0.53) (0.40) ------------ ------------ Total $ (0.23) $ 0.56 ============ ============ Weighted average common and common share equivalents outstanding 50,263 49,967 Supplemental Information: Diluted earnings per share from continuing operations, as reported $ 0.30 $ 0.96 One-time tax benefit -- (0.74) Federal income tax charge -- (0.13)(a) ------------ ------------ Diluted earnings per share from continuing operations, as if tax effected $ 0.30 $ 0.09 ============ ============
Note: (a) For the quarter ended June 30, 2002, the domestic earnings were offset against net operating loss carry forwards resulting in no Federal income tax expense. Had Federal income tax expense been recorded, the total tax provision would have increased approximately $6.4 million, or $0.13 per share. The earnings for the quarter ended June 30, 2003 include a provision for Federal income taxes. 10 ALLIANCE GAMING CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In 000's, except per share data)
Twelve Months Ended June 30, 2003 2002 ---- ---- Revenues: Gaming equipment and systems $ 335,436 $ 223,703 Casino operations 72,124 72,371 ------------ ------------ 407,560 296,074 ------------ ------------ Costs and expenses: Cost of gaming equipment and systems 144,352 98,720 Cost of casino operations 32,643 32,193 Selling, general and administrative 99,071 78,471 Research and development costs 19,955 15,012 Depreciation and amortization 21,603 14,570 ------------ ------------ 317,624 238,966 ------------ ------------ Operating income 89,936 57,108 Other income (expense): Interest income 221 379 Interest expense (25,645) (28,230) Minority interest (2,009) (1,935) Other, net 242 1,235 ------------ ------------ Income from continuing operations before income taxes 62,745 28,557 Income tax expense (benefit) 22,316 (38,440) ------------ ------------ Income from continuing operations 40,429 66,997 Discontinued Operations: Loss on sale of wall machines and amusement games unit (25,358) - Loss from discontinued operations of wall machines and amusement games unit, net (895) (17,167) Income from discontinued operations of Nevada Route, net 4,059 12,580 Income from discontinued operations of Louisiana Route, net 1,288 1,439 ------------ ------------ Income (loss) from discontinued operations (20,906) (3,148) ------------ ------------ Net income $ 19,523 $ 63,849 ============ ============ Diluted earnings per share Continuing operations $ 0.81 $ 1.41 Discontinued operations (0.42) (0.07) ------------ ------------ Total $ 0.39 $ 1.34 ============ ============ Weighted average common and common share equivalents outstanding 50,139 47,507 Supplemental Information: Diluted earnings per share, as reported $ 0.81 $ 1.41 One-time tax benefit -- (0.78) Federal income tax charge -- (0.29)(a) ------------ ------------ Diluted earnings per share, as if tax effected $ 0.81 $ 0.34 ============ ============
Note: (a) For the twelve months ended June 30, 2002, the domestic earnings were offset against net operating loss carry forwards resulting in no Federal income tax expense. Had Federal income tax expense been recorded, the total tax provision would have increased approximately $13.9 million, or $0.29 per share for the twelve-month period ended June 30, 2002. The earnings for the twelve-month period ended June 30, 2003 include a provision for Federal income taxes. 11 ALLIANCE GAMING CORPORATION SUMMARY UNAUDITED BALANCE SHEETS (In 000's)
June 30, June 30, 2003 2002 (a) ---- -------- ASSETS Current assets: Cash and cash equivalents $ 40,158 $ 33,240 Accounts and short-term notes receivable, net 96,833 60,274 Inventories, net 32,172 30,434 Deferred tax assets, net 38,733 27,586 Other current assets 8,516 8,333 ---------- ---------- Total current assets 216,412 159,867 ---------- ---------- Short-term investments (restricted) 864 896 Long-term notes receivable, net 16,440 642 Leased equipment, net 24,124 19,560 Property, plant and equipment, net 68,198 60,134 Goodwill, net 63,291 47,713 Intangible assets, net 29,310 22,139 Assets of discontinued operations held for sale 100,737 130,396 Deferred tax assets, net 1,441 17,489 Other assets, net 580 1,044 ---------- ---------- Total assets $ 521,397 $ 459,880 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,912 $ 14,323 Accrued liabilities 30,534 32,954 Jackpot liabilities 10,604 5,855 Current maturities of long-term debt 3,537 3,990 Liabilities of discontinued operations held for sale 13,467 15,110 ---------- ---------- Total current liabilities 81,054 72,232 ---------- ---------- Long-term debt, net 341,678 337,809 Deferred tax liabilities 2,625 - Other liabilities 3,387 2,620 ---------- ---------- Total liabilities 428,744 412,661 ---------- ---------- Minority interest 1,330 1,233 Total stockholders' equity 91,323 45,986 ---------- ---------- Total liabilities and stockholders' equity $ 521,397 $ 459,880 ========== ==========
(a) The June 30, 2002 balance sheet includes certain reclassifications necessary to conform to the current year presentation, primarily due to the designation of UCMC, VSI and Bally Wulff as discontinued operations held for sale. 12 ALLIANCE GAMING CORPORATION SUMMARY UNAUDITED STATEMENTS OF CASH FLOWS (In 000's)
Twelve Months Ended June 30, 2003 2002 ---- ---- Cash flows from operating activities: Net income $ 19,523 $ 63,849 Adjustments to reconcile net income to net cash provided by operating activities: Income from discontinued operations (4,452) (20,981) Depreciation and amortization 21,603 14,570 Write down of other assets 25,358 24,129 Deferred income taxes 19,104 (43,377) Provision for losses on receivables 1,537 2,521 Other 379 5,914 Net change in operating assets and liabilities: Accounts and notes receivable (49,728) (9,401) Inventories (1,211) (1,946) Other current assets 3,545 523 Accounts payable 9,728 (4,863) Accrued liabilities 1,086 (82) ---------- ---------- Net cash provided by operating activities of continuing operations 46,472 30,856 Net cash used in investing activities of continuing operations (50,605) (38,730) Net cash provided by (used in) financing activities of continuing operations (1,616) 4,205 Effect of exchange rates changes on cash 286 709 Cash (used in) provided by discontinued operations 12,381 5,543 Cash and cash equivalents: Increase (decrease) for year 6,918 2,583 Balance, beginning of year 33,240 30,657 ---------- ---------- Balance, end of year $ 40,158 $ 33,240 ========== ==========
13 ALLIANCE GAMING CORPORATION OTHER SUPPLEMENTAL INFORMATION Earnings before interest, taxes, depreciation and amortization and non-cash impairment charges (EBITDA) for the Company's continuing operations are as follows (Dollars in millions):
Three Months Ended Twelve Months Ended June 30, June 30, -------- -------- 2003 2002 2003 2002 ---- ---- ---- ---- EBITDA FROM CONTINUING OPERATIONS Bally Gaming and Systems $ 31.5 $ 16.7 $ 98.9 $ 57.4 Casino Operations 6.1 5.6 23.6 24.6 Corporate office expense (3.1) (2.7) (11.0) (10.3) ------ ------ ------ ------- EBITDA from continuing operations $ 34.5 $ 19.6 $111.5 $ 71.7 ====== ====== ====== ======= EBITDA FROM DISCONTINUED OPERATIONS Route Operations 5.9 6.8 23.1 27.5 Bally Wulff (1.3) 3.0 0.9 13.2 ------ ------ ------ ------- EBITDA from discontinued operations, excluding non-cash asset impairment charges $ 4.6 $ 9.8 $ 24.0 $ 40.7 ====== ====== ====== =======
RECONCILIATION OF EBITDA TO NET INCOME FROM CONTINUING OPERATIONS
Three Months Ended Twelve Months Ended June 30, June 30, -------- -------- 2003 2002 2003 2002 ---- ---- ---- ---- EBITDA $ 34.5 $ 19.6 $111.5 $ 71.7 Depreciation and amortization 6.1 4.3 21.6 14.6 ------ ------ ------ ------- Operating income 28.4 15.3 89.9 57.1 Other income (expense) (7.0) (6.0) (27.2) (28.5) Income taxes (6.4) 38.5 (22.3) 38.4 ------ ------ ------ ------- Net income from continuing operations $ 15.0 $ 47.8 $ 40.4 $ 67.0 ====== ====== ====== =======
We believe that the analysis of EBITDA is a useful adjunct to operating income, net income, cash flows and other GAAP-based measures. However, EBITDA should not be construed as an alternative to net income (loss) or cash flows from operating, investing and financing activities determined in accordance with GAAP or as a measure of liquidity. EBITDA is a common measure of performance in the gaming industry but may not be comparable to similarly titled measures reported by other companies. We disclose EBITDA primarily because it is a performance measure used by management in evaluating the performance of our business units and is one of several performance measures used in our management incentive plan. Additionally, EBITDA is utilized as a performance measure in covenants for our bank credit agreement. 14 -----END PRIVACY-ENHANCED MESSAGE-----

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