EX-99.1 2 a13-18864_1ex99d1.htm EX-99.1

Exhibit 99.1

 

GRAPHIC

 

Investor Contact: Michael J. Carlotti

Media Contact: Laura Olson-Reyes

(702) 584-7995

(702) 584-7742

mcarlotti@ballytech.com

lolson-reyes@ballytech.com

 

BALLY TECHNOLOGIES, INC. REPORTS RECORD REVENUE OF $997 MILLION AND RECORD DILUTED EPS OF $3.45 FOR THE YEAR ENDED JUNE 30, 2013

 

·

FOURTH QUARTER REVENUE INCREASES TO A RECORD $264 MILLION WITH RECORD DILUTED EPS OF $0.95

 

 

·

SYSTEMS REVENUE SETS ANNUAL RECORD OF $252 MILLION, INCREASING 19 PERCENT FROM PRIOR YEAR

 

 

·

WIDE-AREA PROGRESSIVE INSTALLED BASE GROWS 38 PERCENT AND SETS RECORD ANNUAL REVENUE

 

LAS VEGAS, August 15, 2013 — Bally Technologies, Inc. (NYSE: BYI), a leader in slots, video machines, casino management, interactive applications, and networked and server-based systems for the global gaming industry, today announced record quarterly diluted earnings per share (“Diluted EPS”) of $0.95 and record quarterly revenue of $264 million for the three months ended June 30, 2013.  Diluted EPS was a record $3.45 on record annual revenues of $997 million for the year ended June 30, 2013.

 

“Fiscal 2013 was a truly momentous year in Bally’s history,” said Ramesh Srinivasan, the Company’s President and Chief Executive Officer.  “We made enormous progress in many different ways, including continued growth in wide-area progressive (“WAP”) units, record Gaming Operations revenue, significant success in new markets like Canada, Illinois, and South Africa, establishing new revenue records in Systems while setting up Systems for further growth in the years ahead, and the launch of Bally content in regulated online jurisdictions.  These achievements position us well for continued growth in fiscal 2014 and beyond.”

 

Srinivasan added, “The planned acquisition of SHFL entertainment will position us even better as an innovative end-to-end gaming solutions provider.  We remain steadfastly focused on executing well in our core business and are looking forward to this September’s Global Gaming Expo, where we will demonstrate our industry-leading cross-platform solutions for games, systems, and interactive.  We will also demonstrate how well positioned and ready we are to connect operators’ gaming worlds through a single view of the player.”

 

“Bally remains unwavering in its commitment to shareholder value, as demonstrated by the 38 percent two-year Diluted EPS compound annual growth rate, among many other critical metrics,” said Neil Davidson, the Company’s Chief Financial Officer.  “The growth and stability of our revenues that are recurring in nature continue to provide significant financial flexibility.  With the planned acquisition of SHFL entertainment we now expect to utilize the majority of our excess free cash flow to repay debt.  Since June 30, we have paid down an additional $45 million on our revolving credit facility placing our leverage at 1.7x.”

 



 

Fiscal Year 2013 Highlights

 

 

 

Three Months Ended June 30,

 

Year Ended June 30,

 

 

 

2013

 

%
Rev

 

2012

 

%
Rev

 

2013

 

%
Rev

 

2012

 

%
Rev

 

 

 

(dollars in millions, except per share amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming Equipment

 

$

88.7

 

34

%

$

96.8

 

39

%

$

339.8

 

34

%

$

310.7

 

35

%

Gaming Operations

 

102.8

 

39

%

93.7

 

38

%

405.0

 

41

%

357.4

 

41

%

Systems

 

72.9

 

27

%

55.3

 

23

%

252.2

 

25

%

211.7

 

24

%

Total revenues

 

$

264.4

 

100

%

$

245.8

 

100

%

$

997.0

 

100

%

$

879.8

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gaming Equipment (1)

 

$

44.0

 

50

%

$

44.8

 

46

%

$

170.6

 

50

%

$

139.8

 

45

%

Gaming Operations

 

71.0

 

69

%

67.1

 

72

%

282.8

 

70

%

257.7

 

72

%

Systems (1) 

 

57.7

 

79

%

40.9

 

74

%

192.6

 

76

%

155.9

 

74

%

Total gross margin

 

$

172.7

 

65

%

$

152.8

 

62

%

$

646.0

 

65

%

$

553.4

 

63

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

$

72.1

 

27

%

$

62.7

 

26

%

$

276.7

 

28

%

$

245.0

 

28

%

Research and development costs

 

30.3

 

11

%

25.6

 

10

%

111.1

 

11

%

96.2

 

11

%

Loss contingency accrual

 

 

 

10.0

 

4

%

 

 

10.0

 

1

%

Depreciation and amortization

 

5.7

 

3

%

5.7

 

2

%

22.7

 

3

%

22.8

 

3

%

Operating income

 

$

64.6

 

24

%

$

48.8

 

20

%

$

235.5

 

24

%

$

179.4

 

20

%

Adjusted EBITDA

 

$

87.5

 

 

 

$

81.8

 

 

 

$

332.5

 

 

 

$

282.5

 

 

 

Diluted EPS

 

$

0.95

 

 

 

$

0.61

 

 

 

$

3.45

 

 

 

$

2.28

 

 

 

 


(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
June 30,

 

Year Ended
June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

Operating Statistics

 

 

 

 

 

 

 

 

 

New gaming devices

 

4,911

 

5,322

 

19,007

 

16,504

 

New unit Average Selling Price (“ASP”)

 

$

16,224

 

$

17,182

 

$

16,411

 

$

17,044

 

 

 

 

As of June 30,

 

 

 

2013

 

2012

 

End-of-period installed base:

 

 

 

 

 

Linked progressive systems

 

2,463

 

1,792

 

Rental and daily-fee games

 

14,855

 

14,890

 

Lottery systems

 

11,846

 

11,718

 

Centrally determined systems

 

35,284

 

47,633

 

 

Highlights of Certain Results for the Three Months Ended June 30, 2013

 

Overall

 

·                Total revenue increased 8 percent to a quarterly record $264 million as compared with $246 million last year.

·                Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, including share-based compensation), a non-GAAP financial measure, increased 7 percent to a quarterly record $88 million as compared with $82 million last year.

·                Selling, general and administrative expenses (“SG&A”) increased to 27 percent of total revenues as compared with 26 percent last year, driven by an increase in payroll to support key new markets.

·                Research and development expenses (“R&D”) increased to 11 percent of total revenues as compared with 10 percent last year.

·                Operating income increased 32 percent to a quarterly record $65 million compared with $49 million last year.  Operating margin increased to 24 percent from 20 percent last year.  The prior period included a loss contingency of $10 million related to certain legal matters.

·                Diluted EPS increased 56 percent to a quarterly record $0.95 from $0.61 last year. Non-GAAP EPS increased 22 percent to $0.95 from $0.78 last year.

 

2



 

Gaming Equipment

 

·                Revenues decreased 8 percent to $89 million as compared with $97 million last year, driven by fewer new casino openings.  Current period sales included the shipment of 200 Canadian video lottery terminals (“VLT”), as well as the shipment of 713 units into the Illinois video gaming terminal (“VGT”) market.

·                ASP of new gaming devices decreased 6 percent to $16,224 per unit from $17,182 last year, primarily as a result of a higher mix of lower-ASP VLT and VGT units sold in the quarter.

·                New-unit sales to international customers were 24 percent of total new-unit shipments.

·                Gross margin increased to 50 percent from 46 percent last year, due to continued cost reductions on the Pro Series™ line of cabinets and sales mix.

 

Gaming Operations

 

·                Revenues increased 10 percent to a quarterly record $103 million as compared with $94 million last year, driven primarily by a 38 percent growth in the installed base of WAP games, as well as record quarterly lottery systems revenue.

·                Gross margin decreased to 69 percent from 72 percent last year, primarily due to higher jackpot expense and higher depreciation expense.

 

Systems

 

·                Revenues increased 32 percent to a quarterly record $73 million as compared with $55 million last year.

·                Maintenance revenues increased 25 percent to a quarterly record $25 million as compared with $20 million last year.

·                Gross margin increased to 79 percent from 74 percent last year, primarily as a result of the change in product mix.  Specifically, hardware sales were 28 percent of systems revenues, and software and service sales were 38 percent, as compared to 29 percent for hardware and 35 percent for software and services in the same period last year.

 

Highlights of Certain Results for the Fiscal Year Ended June 30, 2013

 

Overall

 

·                Total revenue increased 13 percent to a record $997 million as compared with $880 million last year.

·                Adjusted EBITDA increased 18 percent to a record $332 million as compared with $282 million last year.

·                SG&A remained constant at 28 percent of total revenues.

·                R&D remained constant at 11 percent of total revenues.

·                Operating income increased 31 percent to a record $236 million compared with $179 million last year.  Operating margin increased to 24 percent from 20 percent last year.  The prior period included a loss contingency of $10 million related to certain legal matters.

·                Diluted EPS increased 51 percent to a record $3.45 from $2.28 last year.  Non-GAAP EPS increased 41 percent to $3.45 from $2.45 last year.

 

Gaming Equipment

 

·                Revenues increased 9 percent to $340 million as compared with $311 million last year, driven by higher domestic replacement sales, including 2,226 Canadian VLT shipments, as well as by 1,943 shipments into the Illinois VGT market.

·                ASP of new gaming devices decreased 4 percent to $16,411 per unit from $17,044 last year, primarily as a result of a higher mix of lower-ASP VLT and VGT units sold.

·                New-unit sales to international customers were 19 percent of total new-unit shipments.

·                Gross margin increased to 50 percent from 45 percent last year, due to continued cost reductions on certain models of the Pro Series cabinets and sales mix.

 

3



 

Gaming Operations

 

·                  Revenues increased 13 percent to a record $405 million as compared with $357 million last year, driven by 38 percent growth in the installed base of WAP games, as well as record annual lottery systems revenue.

·                  Gross margin decreased to 70 percent from 72 percent last year, primarily due to higher jackpot expense.

 

Systems

 

·                  Revenues increased 19 percent to a record $252 million as compared with $212 million last year.

·                  Maintenance revenues increased 22 percent to a record $91 million as compared with $75 million last year.

·                  Gross margin increased to 76 percent from 74 percent last year, primarily as a result of the change in mix of products.  Specifically, hardware sales were 30 percent of systems revenues, and software and service sales were 34 percent, as compared to 32 percent for hardware and 33 percent for software and services in the same period last year.

 

Fiscal 2014 Business Update

 

The Company reiterated fiscal 2014 guidance for Diluted EPS of $3.70 to $4.05 provided on July 16, 2013.  As a result of normal seasonal trends, the timing of new openings and major systems installs, the Company expects that its Diluted EPS in the second half of fiscal 2014 will exceed the first half, with the second quarter being stronger than the first quarter.  This guidance anticipates continued year-over-year growth in each of game sales, gaming operations, and systems revenues.  This guidance does not reflect the impact of the planned acquisition of SHFL entertainment or any acquisition-related costs or savings.

 

The Company has provided this range of earnings guidance for fiscal 2014 to give investors general information on the overall direction of its business at this time. The guidance provided is subject to numerous uncertainties, including, among others, overall economic and capital-market conditions, the market for gaming devices and systems, changes in gaming legislation, the timing of new jurisdictions and casino openings, the timing and completion of new systems installations, 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 does not intend and undertakes no obligation to update its forward-looking statements, including forecasts, potential opportunities for growth in new and existing markets, and future prospects for proposed new products.  Accordingly, the Company does not intend to update guidance during the quarter.  Additional information about the factors that could potentially affect the Company’s financial results included in today’s press release can be found in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

 

Non-GAAP Financial Measures

 

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

 

 

 

Three Months Ended

 

Year Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in 000s)

 

Net income attributable to Bally Technologies, Inc.

 

$

37,337

 

$

26,521

 

$

141,444

 

$

101,148

 

Loss contingency accrual

 

 

10,000

 

 

10,000

 

Interest expense, net

 

2,986

 

2,620

 

12,792

 

12,157

 

Income tax expense

 

21,229

 

19,295

 

76,574

 

63,549

 

Depreciation and amortization

 

22,266

 

20,128

 

88,272

 

81,453

 

Share-based compensation

 

3,704

 

3,186

 

13,380

 

14,172

 

Adjusted EBITDA

 

$

87,522

 

$

81,750

 

$

332,462

 

$

282,479

 

 

4



 

Adjusted EBITDA is a supplemental non-GAAP financial measure used by the Company’s management and by some industry analysts to evaluate the Company’s ability to service debt, and is used by some 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 non-GAAP EPS:

 

 

 

Three Months Ended

 

Year Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Diluted EPS

 

$

0.95

 

$

0.61

 

$

3.45

 

$

2.28

 

Loss contingency accrual, net of tax

 

 

0.17

 

 

0.17

 

Non-GAAP EPS

 

$

0.95

 

$

0.78

 

$

3.45

 

$

2.45

 

 

Non-GAAP EPS is a supplemental non-GAAP financial measure that the Company’s management believes more accurately reflects the Company’s operating results for the periods presented.  Non-GAAP EPS should not be considered 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 today at 4:30 p.m. EDT (1:30 p.m. PDT). The conference-call dial-in number is 866-524-3160 or 412-317-6760 (International).  The webcast can be accessed by visiting 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 BallyTech.com until September 15, 2013.

 

About Bally Technologies, Inc.

 

With a history dating back to 1932, Las Vegas-based Bally Technologies designs, manufactures, operates, and distributes advanced technology-based gaming devices and systems worldwide, as well as interactive and mobile solutions.  Bally’s product line includes reel-spinning slot machines, video slot machines, wide-area progressives, and Class II, lottery, and central determination games and platforms.  Bally also offers an array of casino management, slot accounting, bonusing, cashless, and table-management solutions.  Additional Company information, including the Company’s investor presentation, can be found at BallyTech.com. Connect with Bally on Facebook, Twitter, YouTube, LinkedIn, and Pinterest.

 

This news release may contain “forward-looking” statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and is subject to the safe harbors created thereby.  Forward looking-statements are subject to change and involve risks and uncertainties that could significantly affect future results, including those risks detailed from time to time in the Company’s filings with the Securities and Exchange Commission.  Although the Company believes any expectations expressed in any forward-looking statements are reasonable, future results may differ materially from those expressed in any forward-looking statements. The Company undertakes no obligation to update the information in this press release except as required by law and represents that the information speaks only as of today’s date.

 

— BALLY TECHNOLOGIES, INC. —

 

5



 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND YEAR ENDED JUNE 30, 2013 AND JUNE 30, 2012

 

 

 

Three Months Ended

 

Twelve Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

(in 000s, except per share amounts)

 

Revenues:

 

 

 

 

 

 

 

 

 

Gaming equipment and systems

 

$

161,625

 

$

152,080

 

$

592,061

 

$

522,342

 

Gaming operations

 

102,777

 

93,715

 

404,978

 

357,417

 

 

 

264,402

 

245,795

 

997,039

 

879,759

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

Cost of gaming equipment and systems (1)

 

59,827

 

66,416

 

228,805

 

226,636

 

Cost of gaming operations

 

31,868

 

26,573

 

122,188

 

99,680

 

Selling, general and administrative

 

72,099

 

62,753

 

276,685

 

245,043

 

Research and development costs

 

30,326

 

25,581

 

111,118

 

96,182

 

Loss contingency accrual

 

 

10,000

 

 

10,000

 

Depreciation and amortization

 

5,687

 

5,686

 

22,733

 

22,775

 

 

 

199,807

 

197,009

 

761,529

 

700,316

 

Operating income

 

64,595

 

48,786

 

235,510

 

179,443

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

1,590

 

1,526

 

5,328

 

5,221

 

Interest expense

 

(4,576

)

(4,146

)

(18,120

)

(17,378

)

Other, net

 

(3,107

)

(568

)

(6,443

)

(2,827

)

Income from operations before income taxes

 

58,502

 

45,598

 

216,275

 

164,459

 

Income tax expense

 

(21,229

)

(19,295

)

(76,574

)

(63,549

)

Net income

 

37,273

 

26,303

 

139,701

 

100,910

 

Less net income (loss) attributable to noncontrolling interests

 

(64

)

(218

)

(1,743

)

(238

)

Net income attributable to Bally Technologies, Inc.

 

$

37,337

 

$

26,521

 

$

141,444

 

$

101,148

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted earnings per share attributable to Bally Technologies, Inc.:

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.96

 

$

0.63

 

$

3.53

 

$

2.35

 

Diluted earnings per share

 

$

0.95

 

$

0.61

 

$

3.45

 

$

2.28

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

38,696

 

42,238

 

40,120

 

42,985

 

Diluted

 

39,374

 

43,607

 

40,992

 

44,420

 

 


(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.

 

6



 

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2013 AND 2012

 

 

 

June 30,
2013

 

June 30,
2012

 

 

 

(in 000s, except share amounts)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

63,220

 

$

32,673

 

Restricted cash

 

12,939

 

13,645

 

Accounts and notes receivable, net of allowances for doubtful accounts of $14,813 and $14,073

 

248,497

 

264,842

 

Inventories

 

68,407

 

75,066

 

Prepaid and refundable income tax

 

21,845

 

13,755

 

Deferred income tax assets

 

38,305

 

42,822

 

Deferred cost of revenue

 

22,417

 

17,615

 

Prepaid assets

 

14,527

 

13,061

 

Other current assets

 

2,920

 

6,980

 

Total current assets

 

493,077

 

480,459

 

Restricted long-term investments

 

14,786

 

12,171

 

Long-term accounts and notes receivables, net of allowances for doubtful accounts of $1,764 and $3,029

 

65,456

 

55,786

 

Property, plant and equipment, net of accumulated depreciation of $60,556 and $58,823

 

35,097

 

30,667

 

Leased gaming equipment, net of accumulated depreciation of $209,680 and $185,846

 

113,751

 

121,151

 

Goodwill

 

172,162

 

171,971

 

Intangible assets, net

 

25,076

 

39,166

 

Deferred income tax assets

 

17,944

 

7,409

 

Income tax receivable

 

1,837

 

12,041

 

Deferred cost of revenue

 

12,105

 

16,542

 

Other assets, net

 

27,974

 

23,104

 

Total assets

 

$

979,265

 

$

970,467

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

25,863

 

$

41,414

 

Accrued and other liabilities

 

91,127

 

85,310

 

Jackpot liabilities

 

11,731

 

11,682

 

Deferred revenue

 

62,254

 

46,314

 

Income tax payable

 

11,345

 

12,226

 

Current maturities of long-term debt

 

24,615

 

17,091

 

Total current liabilities

 

226,935

 

214,037

 

Long-term debt, net of current maturities

 

580,000

 

494,375

 

Deferred revenue

 

23,696

 

26,715

 

Other income tax liability

 

12,658

 

13,922

 

Other liabilities

 

16,804

 

23,943

 

Total liabilities

 

860,093

 

772,992

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Special stock, 10,000,000 shares authorized: Series E, $100 liquidation value; 0 and 115 shares issued and outstanding

 

 

12

 

Common stock, $.10 par value; 100,000,000 shares authorized; 65,318,000 and 63,150,000 shares issued and 38,855,000 and 42,102,000 outstanding

 

6,523

 

6,309

 

Treasury stock at cost, 26,463,000 and 21,048,000 shares

 

(1,058,381

)

(790,633

)

Additional paid-in capital

 

535,759

 

489,002

 

Accumulated other comprehensive loss

 

(10,692

)

(13,477

)

Retained earnings

 

646,339

 

504,895

 

Total Bally Technologies, Inc. stockholders’ equity

 

119,548

 

196,108

 

Noncontrolling interests

 

(376

)

1,367

 

Total stockholders’ equity

 

119,172

 

197,475

 

Total liabilities and stockholders’ equity

 

$

979,265

 

$

970,467

 

 

7