-----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, HlYWyjimTnRYKCpmpNII2yiqvWIeqUt+renNhvHgiy6EMeUV24PYZoEn/F4Jn2z4 3XYsSo+iz2jlPgwR2F0m/g== 0000950148-03-002470.txt : 20031015 0000950148-03-002470.hdr.sgml : 20031013 20031015120501 ACCESSION NUMBER: 0000950148-03-002470 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031015 ITEM INFORMATION: FILED AS OF DATE: 20031015 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: 03941163 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 v93630e8vk.htm FORM 8-K DATED 10/15/2003 Alliance Gaming Corporation
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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): October 15, 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

 

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

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ITEM 12. Results of Operations and Financial Condition

      The registrant’s press release dated October 15, 2003, regarding its financial results for the periods ended September 30, 2003, including unaudited consolidated financial statements for the period ended September 30, 2003, is furnished as Exhibit 99 of this Form 8-K.

2

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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: October 15, 2003

3 EX-99 3 v93630exv99.txt EXHIBIT 99 EXHIBIT 99 FOR IMMEDIATE RELEASE Investor and Media Contact: Robert L. Saxton Alliance Gaming (702) 270-7600 ALLIANCE GAMING REPORTS FIRST QUARTER EPS OF $0.20 FROM CONTINUING OPERATIONS, OR $0.05 AFTER REFINANCING CHARGE; BALLY GAMING AND SYSTEMS OPERATING INCOME INCREASES 41% ON 39% INCREASE IN REVENUES LAS VEGAS, NEV., OCT. 15, 2003 - Alliance Gaming Corporation (NYSE: AGI) today announced earnings for its first fiscal quarter ending September 30, 2003. First quarter income from continuing operations totaled $0.05 per diluted share, or $0.20 per diluted share excluding a $0.15 per share charge resulting from the Company's bank refinancing and early retirement of its subordinated notes. Excluding the refinancing charge, earnings increased 54% compared to the $0.13 per diluted share for the prior year quarter. Consolidated results for the September 2003 quarter include: - Revenues from continuing operations of $106.6 million, an increase of 31% from the $81.3 million in the prior year quarter, led by a 39% increase in revenues at the Bally Gaming and Systems business unit. - Operating income from continuing operations of $23.1 million, an increase of 33% from the $17.4 million in the prior year quarter. - EBITDA from continuing operations of $29.4 million, an increase of 34% from the $21.9 million in the prior year quarter, led by a 42% increase at Bally Gaming and Systems. - Total net income including discontinued operations and the refinancing charge of $0.12 per diluted share, or $0.20 per diluted share on a continuing basis excluding the refinancing charge, an increase of 54%. 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. 4 Cash and Capital Expenditures: - As of September 30, 2003, cash and cash equivalents for our continuing operations totaled $44.6 million, which included approximately $3.7 million held for operational purposes in vaults, cages and change banks and $13.4 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 September 30, 2003, consolidated capital expenditures for our continuing operations, including costs to produce proprietary games, totaled $7.3 million compared to $7.5 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 $2.2 million for capital expenditures for our discontinued operations. Other financial highlights: - Consolidated net interest expense for the current quarter totaled $5.7 million compared to $6.6 million in the prior year period. As we have previously reported, on September 5, 2003 we completed a refinancing transaction whereby we entered into a new senior bank facility consisting of a $275 million term loan with an initial interest rate of LIBOR plus 2.75% (currently 3.96%) and a $125 million revolving credit facility with an initial interest rate of LIBOR plus 2.50% (currently 3.71%) of which we have borrowed $70.0 million, and redemption of our $150 million 10% Subordinated Notes and our existing bank term loan of approximately $187 million. - We recorded a $12.3 million refinancing charge in the current quarter consisting primarily of a $5.0 million prepayment penalty for the redemption of our Subordinated Notes, a non-cash charge of $7.0 million to write off the deferred financing costs, and $0.3 million of fees and expenses. We recorded a tax benefit from these charges totaling approximately $4.8 million. The Company will hold its conference call on Wednesday, October 15th at 10 a.m. PDT (1 p.m. EDT). Participants may access the call by dialing (719) 457-2644. 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. ****** 5 SUPPLEMENTAL BUSINESS UNIT DETAIL FOR CONTINUING OPERATIONS BALLY GAMING AND SYSTEMS QUARTERLY REVENUES INCREASE 39%, OPERATING INCOME INCREASES 41% The following chart summarizes the financial information for the Bally Gaming and Systems business unit (Dollars in millions):
Three Months Ended September 30, 2003 2002 ---- ---- Revenues Game sales $ 42.8 $ 33.8 System sales 30.0 15.3 Gaming operations 15.7 14.4 ------- ------ Total revenues $ 88.5 $ 63.5 Gross Margin % 62% 59% Operating Income $ 21.4 $ 15.1 EBITDA $ 26.2 $ 18.4 EBITDA Margin 30% 29% New gaming devices sold 5,200 4,000 Game monitoring units sold 11,360 6,100 End of period installed base of WAP and daily-fee games 4,790 3,780 Average installed base of WAP and daily-fee games 4,670 3,695
Bally Gaming and Systems business unit reported a 39% increase in revenues over the prior year's quarter. Revenues from sales of gaming devices increased 27% over the prior year's quarter primarily as a result of a 30% increase in the number of units sold and a 6% increase in the average new-unit selling price (excluding 1,860 OEM games), to $8,400. The increase in the average selling price includes the positive impact from the sale of 81 Monte Carlo premium-priced units as well as other premium-priced branded products. Bally Systems revenues increased 96% over the prior year quarter driven by a 85% increase in game monitoring units shipped, a 36% 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 $4.9 million, resulting from the larger base of installed systems. Gaming Operations revenues increased 9% compared to the prior year's quarter driven by a 27% increase in the average installed base of wide-area progressive (WAP) and daily-fee games deployed, which now total 1,980 and 2,810, respectively. During the quarter we 6 deployed an additional 1,130 WAP and daily-fee games, and had returns totaling 740 games, resulting in a net increase in the installed base of 390 games on a sequential basis as of September 30, 2003 compared to June 30, 2003. The current quarter placements included the continued roll out of the "Cash for Life" WAP game which went live in July in Atlantic City, and continued placement of daily fee games such as Playboy and the recently introduced Saturday Night Live series. CASINO OPERATIONS REVENUES INCREASE 2%, OPERATING INCOME INCREASES 3% 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 September 30, 2003 2002 ---- ---- Revenues Rainbow Casino $ 12.8 $ 12.7 Rail City Casino 5.3 5.1 ------ ------ Total revenues $ 18.1 $ 17.8 Operating Income Rainbow Casino $ 4.0 $ 3.9 Rail City Casino 1.1 1.1 ------ ------ Total operating income $ 5.1 $ 5.0 EBITDA Rainbow Casino $ 4.7 $ 4.4 Rail City Casino 1.5 1.4 ------ ------ Total EBITDA $ 6.2 $ 5.8 EBITDA Margin Rainbow Casino 37% 35% Rail City Casino 27% 26% Average Number of Gaming Devices Rainbow Casino 905 980 Rail City Casino 570 540 ------ ----- Total Gaming Devices 1,475 1,520 Avg. Number of Table Games 19 24
For the quarter, the combined casino operations business unit reported a 2% increase in revenues and a 7% increase in EBITDA. Rail City reported a 5% increase in revenues driven by a 5% increase in the average number of games and a slight increase in slot win. Rainbow Casino reported a 1% increase in revenue compared to the prior year quarter, and represents the third consecutive quarter of revenue growth. Rainbow's EBITDA increased 7% to $4.7 million compared to the prior year quarter. 7 DISCONTINUED OPERATIONS The following information is provided for the Company's Nevada Route and Louisiana Route operations, which are classified as discontinued operations (Dollars in millions):
Three Months Ended September 30, 2003 2002 ---- ---- Revenues Nevada $ 50.3 $ 51.1 Louisiana 3.7 3.7 ------ ------ Total revenues $ 54.0 $ 54.8 Operating Income (a) Nevada $ 5.2 $ 2.2 Louisiana 0.5 0.5 ------ ------ Total operating income $ 5.7 $ 2.7 EBITDA Nevada $ 5.2 $ 5.5 Louisiana 0.5 0.5 ------ ------ Total EBITDA $ 5.7 $ 6.0 Average Number of Gaming Devices Nevada 7,840 8,340 Louisiana 715 710 ------ ------ Total Gaming Devices 8,555 9,050
For the Nevada route operations, revenue decreased 2% and EBITDA decreased 6% compared to prior year quarter. The average number of games deployed decreased 6% over the prior year quarter and the average net win per day per gaming machine increased to $68.55 from $66.60. The decrease in revenues at VSI is due to a decrease in net win per day per gaming machine to $46.85 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 September 30, 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 $3.8 million. 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 ability to service debt, 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, 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. The accompanying Unaudited condensed financial statements include comparative information for the quarter ended September 30, 2002, which have been reclassified to conform to the current presentation which includes the results of Bally Wulff, the Nevada Route and Louisiana Route operations as discontinued operations. (Tables Follow) 9 ALLIANCE GAMING CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (In 000's, except per share amounts)
Three Months Ended September 30, 2003 2002 ---- ---- Revenues: Gaming equipment and systems $ 88,468 $ 63,539 Casino operations 18,136 17,790 -------- -------- 106,604 81,329 -------- -------- Costs and expenses: Cost of gaming equipment and systems 33,237 26,258 Cost of casino operations 7,976 8,188 Selling, general and administrative 30,015 20,987 Research and development costs 5,963 3,975 Depreciation and amortization 6,348 4,550 -------- -------- 83,539 63,958 -------- -------- Operating income 23,065 17,371 Other income (expense): Interest income 43 48 Interest expense (5,729) (6,641) Minority interest (486) (445) Refinancing charge (12,293) -- Other, net (351) 101 -------- -------- Income from continuing operations before income taxes 4,249 10,434 Income tax expense (1,663) (4,195) -------- -------- Income from continuing operations 2,586 6,239 -------- -------- Discontinued operations: Loss from discontinued operations of wall machines and amusement games unit, net -- (1,620) Income from discontinued operations of Nevada Route, net 3,132 1,364 Income from discontinued operations of Louisiana Route, net 310 275 -------- -------- Income from discontinued operations 3,442 19 -------- -------- Net income $ 6,028 $ 6,258 ======== ======== Diluted earnings per share Continuing operations $ 0.05 $ 0.13 Discontinued operations 0.07 0.00 -------- -------- Total $ 0.12 $ 0.13 ======== ======== Weighted average common and common share equivalents outstanding 50,687 49,821
10 ALLIANCE GAMING CORPORATION SUMMARY UNAUDITED BALANCE SHEETS (In 000's)
Sept. 30, June 30, 2003 2003 ---- ---- ASSETS Current assets: Cash and cash equivalents $ 44,588 $ 40,158 Accounts and short-term notes receivable, net 102,274 98,408 Inventories, net 38,231 32,172 Deferred tax assets, net 44,821 44,821 Other current assets 8,978 8,516 -------- -------- Total current assets 238,892 224,075 -------- -------- Short-term investments (restricted) 2,585 864 Long-term notes receivable, net 15,159 14,865 Leased equipment, net 26,282 25,792 Property, plant and equipment, net 67,470 66,530 Goodwill, net 64,540 64,794 Intangible assets, net 25,631 26,890 Assets of discontinued operations held for sale 86,353 100,775 Deferred tax assets, net -- -- Other assets, net 6,228 580 -------- -------- Total assets $533,140 $525,165 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 25,502 $ 22,912 Accrued liabilities 20,389 30,913 Jackpot liabilities 11,320 10,604 Current maturities of long-term debt 2,288 3,537 Liabilities of discontinued operations held for sale 12,060 13,494 -------- -------- Total current liabilities 71,559 81,460 -------- -------- Long-term debt, net 350,054 341,678 Deferred tax liabilities 6,957 5,680 Other liabilities 5,048 3,387 -------- -------- Total liabilities 433,618 432,205 -------- -------- Minority interest 1,157 1,330 Total stockholders' equity 98,365 91,630 -------- -------- Total liabilities and stockholders' equity $533,140 $525,165 ======== ========
11 ALLIANCE GAMING CORPORATION SUMMARY UNAUDITED STATEMENTS OF CASH FLOWS (In 000's)
Three Months Ended September 30, 2003 2002 ---- ---- Cash flows from operating activities of continuing operations: Net income $ 6,028 $ 6,258 Adjustments to reconcile net income to net cash provided by operating activities of continuing operations: Income from discontinued operations (3,442) (19) Depreciation and amortization 6,348 4,550 Deferred income taxes 1,277 3,802 Provision for losses on receivables 938 (278) Loss on redemption of debt 12,293 - Other (1,577) (47) Net change in operating assets and liabilities: Accounts and notes receivable (5,621) (381) Inventories (5,313) (2,842) Other current assets (467) 1,599 Accounts payable 2,590 1,403 Accrued liabilities (8,167) (6,737) -------- -------- Net cash provided by operating activities of continuing operations 4,887 7,308 Net cash provided by used in investing activities of continuing operations 2,763 (8,987) Net cash used in financing activities of continuing operations (3,129) (418) Cash (used in) provided by discontinued operations (70) 5,887 Effect of exchange rates changes on cash (21) 2 -------- -------- Cash and cash equivalents: Increase for the period 4,430 3,792 Balance, beginning of period 40,158 33,240 -------- -------- Balance, end of period $ 44,588 $ 37,032 ======== ========
12 ALLIANCE GAMING CORPORATION OTHER SUPPLEMENTAL INFORMATION RECONCILIATION TO GAAP EPS The following table reconciles EPS excluding the refinancing charge to GAAP EPS from continuing operations:
Three Months Ended September 30, 2003 2002 ---- ---- Diluted earnings per share from continuing operations, as reported $ 0.05 $ 0.13 Refinance charge, net of tax 0.15 -- -------- -------- Diluted earnings per share from continuing operations, before refinance charge $ 0.20 $ 0.13 ======== ========
RECONCILIATION OF EBITDA TO INCOME FROM CONTINUING OPERATIONS The following table reconciles earnings before interest, taxes, depreciation and amortization before refinancing charge (EBITDA) for the Company's income from continuing operations (in 000s):
Three Months Ended September 30, ------------- 2003 2002 ---- ---- Net income from continuing operations $ 2,586 $ 6,239 Income taxes 1,663 4,195 Other expense, net 837 344 Interest expense, net 5,686 6,593 Refinancing charge 12,293 -- -------- -------- Operating income 23,065 17,371 Depreciation and amortization 6,348 4,550 -------- -------- EBITDA from continuing Operations $ 29,413 $ 21,921 ======== ========
The following tables reconcile operating income by business segment to EBITDA: For the quarter ended September 30, 2003 (from continuing operations) (in 000s):
Operating Depreciation Income and (Loss) Amortization EBITDA ------ ------------ ------ Bally Gaming and Systems $ 21,358 $ 4,828 $ 26,186 Casino Operations 5,146 1,014 6,160 Corporate expenses (3,439) 506 (2,933) -------- ------- -------- $ 23,065 $ 6,348 $ 29,413 ======== ======= ========
13 For the quarter ended September 30, 2002 (from continuing operations) (in 000s):
Operating Depreciation Income and (Loss) Amortization EBITDA ------ ------------ ------ Bally Gaming and Systems $ 15,135 $ 3,264 $ 18,399 Casino Operations 5,015 742 5,757 Corporate expenses (2,779) 544 (2,235) -------- ------- -------- $ 17,371 $ 4,550 $ 21,921 ======== ======= ========
RECONCILIATION OF EBITDA TO INCOME FROM DISCONTINUED OPERATIONS
Three Months Ended September 30, ------------ 2003 2002 ---- ---- Net income from discontinued operations $ 3,442 $ 19 Income taxes 1,890 897 Other expense, net 40 172 Interest expense, net 295 (238) ------- ------- Operating income 5,667 850 Depreciation and amortization - 3,449 ------- ------- EBITDA from discontinued Operations $ 5,667 $ 4,299 ======= =======
For the quarter ended September 30, 2003 (from discontinued operations) (in 000s):
Depreciation Operating and Income Amortization EBITDA ------ ------------ ------ Route Operations $ 5,667 $ - $5,667 ========= ====== ======
For the quarter ended September 30, 2002 (from discontinued operations) (in 000s):
Operating Depreciation Income and (Loss) Amortization EBITDA --------- ------------ ------ Route Operations $ 2,665 $ 3,310 $ 5,975 Wall Machines and Amusement Games (1,815) 139 (1,676) --------- ------- ------- $ 850 $ 3,449 $ 4,299 ========= ======= =======
14 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. 15 -----END PRIVACY-ENHANCED MESSAGE-----