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):  February 13, 2008

BALLY TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Nevada	0-4281	88-0104066
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation)		Identification No.)
6601 S. Bermuda Rd.
Las Vegas, Nevada		89119
(Address of principal executive		(Zip Code)
offices)

Registrant’s telephone number, including area code:  (702) 584-7700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02Results of Operations and Financial Conditions.

On February 13, 2008, Bally Technologies, Inc. (the “Company”), issued a press release (the “Release”) announcing the Company’s results for the second quarter of fiscal year 2008 and provided updated financial guidance for the fiscal year ended June 30, 2008.  A copy of the Release is attached hereto as Exhibit 99.1 and the portions thereof announcing the Company’s results for the second quarter of fiscal year 2008 are incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits.

(d)   Exhibits

99.1Press release issued by the Company, dated February 13, 2008.

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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 duly authorized.

BALLY TECHNOLOGIES, INC.
By:	/s/ Robert C. Caller
		Robert C. Caller
		Executive Vice President, Chief Financial Officer and Treasurer
Dated:  February 14 , 2008

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EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE
Investor Contact: Robert Caller	Media Contact: Laura Olson-Reyes
(702) 584-7982	(702) 584-7742
rcaller@ballytech.com	lolson-reyes@ballytech.com

BALLY TECHNOLOGIES, INC. ANNOUNCES RECORD REVENUE AND

EARNINGS FOR SECOND QUARTER FISCAL 2008

·REPORTS $0.42 DILUTED EPS AND OPERATING MARGIN OF 20 PERCENT ON REVENUES OF
$231 MILLION

·SYSTEMS REVENUE UP 95 PERCENT TO RECORD $56.3 MILLION FOR THE QUARTER

·RAISES FISCAL 2008 REVENUE AND DILUTED EPS GUIDANCE

LAS VEGAS, Feb. 13, 2008 — Bally Technologies, Inc. (NYSE: BYI), a leader in slots, video machines, casino management systems and networked solutions for the global gaming industry, announced today diluted earnings per share (“Diluted EPS”) of $0.42 and $0.79 and revenue of $230.7 million and $419.7 million for the three months and six months ended December 31, 2007, respectively. Diluted EPS adjusted for share-based compensation (“Adjusted EPS”) for the three months and six months ended December 31, 2007 was $0.45 and $0.86, respectively.

“We are very pleased to report record quarterly results for our second quarter,” said Richard M. Haddrill, the Company’s Chief Executive Officer.  “Our great game performance and continued system success is reflected in record quarterly revenues in each of our game sales, gaming operations and systems businesses.”

Second Quarter Fiscal 2008 Highlights

	Three Months Ended December 31,					Six Months Ended December 31,
	2007		2006			2007		2006
	(dollars in millions, except per share amounts)
Revenues:
Bally Gaming and Systems	$	218.9	$	139.7		$	396.5	$	281.6
Casino Operations	11.8		11.2			23.2		23.1
Total Revenue	$	230.7	$	150.9		$	419.7	$	304.7
Net income (loss)	$	24.4	$	(2.5	)	$	45.7	$	(2.7	)
Adjusted EBITDA	$	63.9	$	23.4		$	122.4	$	49.8
Diluted EPS	$	0.42	$	(.05	)	$	0.79	$	(.05	)

Three Months Ended December 31, 2007 Compared with Three Months Ended December 31, 2006

·Total revenues increased 53 percent to $230.7 million as compared with $150.9 million in the same period last year.

·Operating income increased by $41.1 million to $46.8 million, as compared with $5.7 million in the same period last year; operating margin was 20 percent in the three months ended December 31, 2007.

·Net income increased by $26.9 million to $24.4 million, as compared with a loss of $2.5 million in the same period last year, primarily as a result of improved margin and cost leverage.

·Adjusted EBITDA was $63.9 million, a 172 percent increase as compared with the same period last year.

·Selling, general and administrative expenses declined to 26 percent of total revenue from 33 percent as compared with the same period last year.

Six Months Ended December 31, 2007 Compared with Six Months Ended December 31, 2006

·Total revenues increased 38 percent to $419.7 million as compared with $304.7 million in the same period last year.

·Operating income increased by $74.0 million to $88.0 million, as compared with $14.0 million in the same period last year; operating margin was 21 percent in the six months ended December 31, 2007.

·Net income increased by $48.4 million to $45.7 million, as compared with a loss of $2.7 million in the same period last year, primarily as a result of improved margin and cost leverage.

·Adjusted EBITDA was $122.4 million, a 146 percent increase as compared with the same period last year.

·Selling, general and administrative expenses declined to 27 percent of total revenue from 33 percent as compared with the same period last year.

“We are again pleased with our operating leverage this quarter,” said Robert C. Caller, the Company’s Chief Financial Officer. “Our SG&A in the current quarter compared with the September 2007 quarter increased by $8.7 million primarily due to higher professional and accounting fees, Global Gaming Expo trade-show expenses, and commission and bad-debt expenses associated with higher revenue.  However, as a percent of revenue, SG&A decreased to 26 percent from 28 percent in the September 2007 quarter.”

Unaudited summary financial information for the Bally Gaming Equipment and Systems segment for the three months and six months ended December 31, 2007 and 2006 are presented below:

	Three Months Ended December 31,								Six Months Ended December 31,
			%				%				%				%
	2007		Rev		2006		Rev		2007		Rev		2006		Rev
	(dollars in millions)								(dollars in millions)
Revenues:
Gaming Equipment	$	108.4	49	%	$	70.4	50	%	$	192.7	49	%	$	132.7	47	%
Gaming Operations	54.2		25	%	40.4		29	%	108.3		27	%	81.0		29	%
Systems	56.3		26	%	28.9		21	%	95.5		24	%	67.9		24	%
Total revenues	$	218.9	100	%	$	139.7	100	%	$	396.5	100	%	$	281.6	100	%
Gross Margin:
Gaming Equipment (1)	$	47.7	44	%	$	24.1	34	%	$	86.6	45	%	$	44.1	33	%
Gaming Operations	31.4		58	%	23.3		58	%	67.4		62	%	46.4		57	%
Systems (1)	40.9		73	%	20.8		72	%	70.9		74	%	45.9		68	%
Total Gross margin	$	120.0	55	%	$	68.2	49	%	$	224.9	57	%	$	136.4	48	%
Selling, general and administrative	$	50.6	23	%	$	41.6	30	%	$	91.6	23	%	$	82.1	29	%
Research and development costs	14.7		7	%	13.3		10	%	28.0		7	%	25.9		9	%
Depreciation and amortization	3.5		2	%	4.4		3	%	7.4		2	%	8.6		3	%
Operating income	$	51.2	23	%	$	8.9	6	%	$	97.9	25	%	$	19.8	7	%

(1) Gross Margin from Gaming Equipment and Systems excludes amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

	Three Months Ended December 31,				Six Months Ended December 31,
	2007		2006		2007		2006
Operating Statistics:
New gaming devices sold	7,144		4,672		12,295		8,099
Original Equipment Manufacturer (“OEM”) units sold	—		460		—		1,605
New unit Average Selling Price (“ASP”)	$	13,147	$	12,620	$	13,201	$	12,363
End-of-period installed base:
Wide-area and local-area progressive systems					1,325		1,479
Rental and daily-fee games (2)					9,290		4,893
Lottery systems					7,851		7,164
Centrally determined systems (1)					42,773		30,987

(1)Daily fee revenue from approximately 7,400 units included in centrally determined systems end of period installed base total as of December 31, 2007 has been deferred, and is not included in gaming operations revenue until completion of certain contractual commitments necessary to recognize revenue under the Company’s revenue-recognition policy. There were no similar deferrals as of December 31, 2006.

(2)Certain devices previously included in centrally determined systems that were converted to standalone devices have been reclassified to rental and daily-fee games.

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Highlights of Certain Results for the Three Months Ended December 31, 2007

Gaming Equipment

·Revenues increased to approximately $108.4 million, a 54 percent increase as compared with the same period last year.

·A 53 percent increase in new gaming device sales to 7,144 units as compared with 4,672 units in the same period last year.

·A 4 percent increase in the ASP of new gaming devices, excluding OEM sales, primarily due to product mix and the effect of foreign currency exchange rates on international pricing.

·Gross margin increased from 34 percent in the same period last year to 44 percent, a slight decline from 46 percent in the first quarter of fiscal 2008.  The improvement in margins over the same period last year was primarily related to the increase in ASP discussed above, the elimination of lower margin OEM sales, and improved purchasing and manufacturing efficiencies due to increased volumes and lower manufacturing costs.  Game equipment margins were negatively impacted by approximately $2.0 million in one-time expenses related to the entrance into new international markets in the current quarter.

Gaming Operations

·Revenues increased 34 percent to approximately $54.2 million as compared with the same period last year.

·Gross margin remained consistent at 58 percent in this year and in the same period last year.

·Revenue and gross margin in fiscal 2007 includes daily fees that relate to certain contracts which are deferred in the first and second quarter of fiscal 2008 due to new contractual commitments made to the customers. Approximately $4.4 million in daily fees generated during the second quarter of fiscal 2008 were deferred pending delivery of the commitments.

·Revenue and gross margin was negatively impacted by $1.1 million due to the additional deferred revenue and normal seasonality and the softness in casino revenues in the domestic market compared with the September 2007 quarter.

·Gross margins were negatively impacted by the deferral of revenue discussed above and approximately $2.0 million of jackpot expenses compared with the September 2007 quarter and the same period last year.

Systems

·Revenues increased 95 percent to approximately $56.3 million as compared with the same period last year, primarily as a result of continued acceptance of the Company’s products and an increase in the number of go-lives.

·Gross margin increased slightly to 73 percent from 72 percent in the same period last year.

·Maintenance revenues increased to approximately $9.9 million from approximately $8.3 million in the same period last year.

·As of December 31, 2007, the Company had sold approximately 67,000 units of its iVIEW^™ player-communication units. iVIEW units purchased and committed to be purchased now exceed 97,000.

Highlights of Certain Results for the Six Months Ended December 31, 2007

Gaming Equipment

·Revenues increased 45 percent to approximately $192.7 million as compared with the same period last year.

·A 52 percent increase in new gaming device sales to 12,295 units as compared with 8,099 units in the same period last year.

·A 7 percent increase in the ASP of new gaming devices, excluding OEM sales, primarily due to product mix and the effect of foreign currency exchange rates on international pricing.  ASP was negatively impacted in the prior year as a result of incentive pricing and discounts offered to customers related to the roll-out of Bally’s Alpha OS™ platform products.

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·Gross margin increased to 45 percent from 33 percent in the same period last year.  The improvement in margins was primarily related to the increase in ASP discussed above, the elimination of lower margin OEM sales, and improved purchasing and manufacturing efficiencies related to increased volumes and lower manufacturing costs.

Gaming Operations

·Revenues increased 34 percent to approximately $108.3 million as compared with the same period last year.

·Revenue and gross margin in fiscal 2007 include daily fees that relate to certain contracts that were deferred in the first and second quarter of fiscal 2008 due to new contractual commitments made to customers. Approximately $7.6 million in daily fees generated during the six months ended December 31, 2007 was deferred pending delivery of the commitments.

Systems

·Revenues increased 41 percent to approximately $95.5 million as compared with the same period last year primarily as a result of continued acceptance of the Company’s products and an increase in the number of go-lives principally in the second quarter for fiscal 2008.

·Gross margin increased to 74 percent from 68 percent in the same period last year primarily as a result of an increase in the proportion of software and maintenance sales as compared with hardware sales.  Hardware sales have lower gross margins compared with software and maintenance revenue.

·Maintenance revenues increased to approximately $19.3 million from approximately $15.9 million in the same period last year.

Fiscal 2008 Business Update

The Company raised its fiscal 2008 guidance for Diluted EPS to $1.60 to $1.90, from an earlier range of $1.55 to $1.85. Adjusted EPS is now estimated between $1.75 to $2.05 from an earlier range of $1.70 to $2.00.

The Company now expects revenues in fiscal 2008 to exceed $875 million, with continued year-over-year growth in each of game sales, gaming operations and system revenues.  The Company continues to forecast an increase in the placement of premium daily-fee games and an increase in the number of gaming devices sold, and also expects margins on game sales and operations to continue to improve in fiscal 2008 as compared with fiscal 2007. The Company also continues to expect its selling, general and administrative expenses as a percentage of revenue to be lower in fiscal 2008 as compared with fiscal 2007. The Company expects its effective tax rate for fiscal 2008 will be between 37 and 38 percent.

The Company has provided this broad range of earnings guidance to give investors general information on the overall direction of its business. The guidance provided is subject to numerous uncertainties, including, among others, overall economic conditions, the market for gaming devices and systems, competitive product introductions, complex revenue recognition rules related to the Company’s business, and assumptions about the Company’s new product introductions and regulatory approvals.  The Company may update this fiscal 2008 guidance from time to time as the year progresses.

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Non-GAAP Financial Measures

The following table reconciles the Company’s net income (loss), as determined in accordance with generally accepted accounting principles (“GAAP”), to Adjusted EBITDA:

	Three Months Ended December 31,					Six Months Ended December 31,
	2007		2006			2007		2006
	(in 000s)
Net income (loss)	$	24,416	$	(2,515	)	$	45,698	$	(2,740	)
Interest expense, net	6,243		9,787			12,503		16,797
Income tax (benefit) expense	15,235		(2,358		)	28,344		(1,687		)
Depreciation and amortization	15,139		14,177			29,254		29,330
Share-based compensation	2,851		4,360			6,585		8,112
Adjusted EBITDA	$	63,884	$	23,451		$	122,384	$	49,812

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including asset charges and share-based compensation) is a supplemental non-GAAP financial measure used by the Company’s management and is commonly used by industry analysts to evaluate the Company’s financial performance. Adjusted EBITDA provides additional information about the Company’s ability to service debt and is frequently used by investors and financial analysts in the gaming industry in measuring and comparing Bally’s leverage, liquidity, and operating performance to other gaming companies.  Adjusted EBITDA should not be considered an alternative to operating income or net cash from operations as determined in accordance with GAAP.  Not all companies calculate Adjusted EBITDA the same way and the Company’s presentation may be different from those presented by other companies.

The following table reconciles the Company’s Diluted EPS, as determined in accordance with GAAP, to the Adjusted EPS:

	Three		Six
	Months Ended		Months Ended
	December 31,		December 31,		Fiscal 2008 Range
	2007		2007		Low		High
Diluted EPS	$	0.42	$	0.79	$	1.60	$	1.90
Share-based compensation, net of income tax benefit	0.03		0.07		0.15		0.15
Adjusted EPS	$	0.45	$	0.86	$	1.75	$	2.05

The Company provides Adjusted EPS for the three months and six months ended December 31, 2007 and the estimated range of Adjusted EPS for fiscal 2008 in this press release as additional information regarding the Company’s operating results for the three months and six months ended December 31, 2007 and expected operating results for fiscal 2008. Adjusted EPS adds back the impact of stock-based compensation, net of tax, to Diluted EPS as determined in accordance with GAAP. The Company believes that this presentation of Adjusted EPS facilitates investors’ understanding of Bally’s historical operating trends because it provides important supplemental information in evaluating the operating results of the business. Adjusted EPS is not an alternative to Diluted EPS as determined in accordance with GAAP.

Earnings Conference Call and Webcast

As previously announced, the Company is hosting a conference call and webcast at 4:30 p.m. EST (1:30 p.m. PST) on Wednesday, February 13. The conference-call dial-in number is 866-761-0749 or 617-614-2707 (passcode: Bally) and the webcast can be accessed by visiting www.ballytech.com and selecting “Investor Relations.” Interested parties should initiate the call and webcast process at least five minutes prior to the beginning of the presentation. For those who miss this event, an archived version will be available at www.ballytech.com until March 13, 2008.

About Bally Technologies, Inc.

With a history dating back to 1932, Las Vegas-based Bally Technologies designs, manufactures, operates and distributes advanced gaming devices, systems and technology solutions worldwide. Bally’s product line includes reel-spinning slot machines, video slots, wide-area progressives and Class II, lottery and central determination games and platforms. As the world’s No. 1 gaming systems company, Bally also offers an array of casino management, slot accounting, bonusing, cashless and table management solutions. The Company also owns and operates Rainbow Casino in Vicksburg, Miss. Additional Company information, including the Company’s investor presentations, can be found at www.BallyTech.com.

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This news release may contain “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, and is subject to the safe harbor created thereby. Such information involves important risks and uncertainties that could significantly affect the results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements.  Future operating results may be adversely affected as a result of a number of risks that are detailed from time to time in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update the information in this press release and represents that the information is only valid as of today’s date.

— BALLY TECHNOLOGIES, INC. —

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended						Six Months Ended
	December 31,						December 31,
	2007			2006			2007			2006
	(in 000s, except per share amounts)
Revenues:
Gaming equipment and systems	$	164,730		$	99,288		$	288,262		$	200,595
Gaming operations	54,178			40,420			108,256			81,039
Casino operations	11,744			11,238			23,164			23,077
	230,652			150,946			419,682			304,711
Costs and expenses:
Cost of gaming equipment and systems(1)	76,139			54,403			130,802			110,550
Cost of gaming operations	22,757			17,124			40,816			34,666
Direct cost of casino operations	4,719			4,439			9,431			8,901
Selling, general and administrative	60,992			50,427			113,263			99,847
Research and development costs	14,647			13,307			27,956			25,863
Depreciation and amortization	4,596			5,524			9,450			10,875
	183,850			145,224			331,718			290,702
Operating income	46,802			5,722			87,964			14,009
Other income (expense):
Interest income	1,027			413			2,004			1,324
Interest expense	(7,270		)	(10,200		)	(14,507		)	(18,121		)
Other, net	116			800			993			1,183
Income before income taxes and minority interest	40,675			(3,265		)	76,454			(1,605		)
Income tax (expense) benefit	(15,235		)	2,358			(28,344		)	1,687
Minority interest	(1,024		)	(1,608		)	(2,412		)	(2,822		)
Net income (loss)	$	24,416		$	(2,515	)	$	45,698		$	(2,740	)
Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share	$	0.45		$	(0.05	)	$	0.84		$	(0.05	)
Diluted earnings (loss) per share	$	0.42		$	(0.05	)	$	0.79		$	(0.05	)
Weighted average shares outstanding:
Basic	54,382			53,072			54,213			52,985
Diluted	58,524			53,072			57,970			52,985

(1) Cost of gaming equipment and systems excludes amortization related to certain intangibles, including core technology and license rights, which are included in depreciation and amortization.

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