AGI Alamos Gold Inc New

Alliance Gaming Reports Second Quarter Revenues Of $113.7 Million Reports Net Loss of $(0.15) Per Share, Including Write-Downs and Other Charges of $(0.14) Per Share LAS VEGAS, Feb. 1 /PRNewswire-FirstCall/ -- Alliance Gaming Corporation (NYSE:AGI) today announced its results for its second fiscal quarter ending December 31, 2004. Second quarter net loss from continuing operations totaled $(7.5) million, or $(0.15) per diluted share, which includes a write-down of certain inventory and other assets and a bank amendment charge, together totaling $11.7 million (or $0.14 per share, net of tax). Revenues for the quarter totaled $113.7 million. For the comparable prior year quarter ended December 31, 2003, the Company reported income from continuing operations of $14.2 million or $0.28 per diluted share on revenues of $108.6 million. Consolidated results for the December 31, 2004 quarter include: * Revenues from continuing operations of $113.7 million, an increase of 4.7% from $108.6 million in the prior year quarter. * Operating loss from continuing operations of $(7.7) million, compared to operating income of $27.5 million in the prior year quarter. * EBITDA from continuing operations of $16.0 million, compared to EBITDA of $34.0 million in the prior year quarter. * Inventory and other asset write-downs of $11.1 million for certain discontinued products, used gaming devices and related ancillary assets, which has been included in cost of goods sold. Earnings before interest, taxes, depreciation, amortization, refinancing charges, severance charge, stock-based compensation and inventory and asset write-downs (EBITDA) is not Generally Accepted Accounting Principles (GAAP) measurement. EBITDA may not be comparable to similarly titled measure reported by other companies. A reconciliation of EBITDA to GAAP net income (loss) from continuing operations is attached to this press release. "We are on track with our new product and operational initiatives," said Richard Haddrill, President and CEO, "we are further building on our portfolio of leading technologies by putting the right strategy, people and processes in place to ensure a successful long-term future" he added. Liquidity and Capital Expenditures: * Cash flows from operations, as defined under GAAP, totaled $7.3 million for the quarter ended December 31, 2004, and $(8.2) million for the six months ended December 31, 2004. * As of December 31, 2004, cash and cash equivalents totaled $28.0 million, which included approximately $2.7 million held for operational purposes in vaults, cages and change banks and $10.4 million held in jackpot reserve accounts. * In December 2004, the Company agreed to a $40.0 million buy-out of the contingent consideration portion of the purchase price paid for Sierra Design Group. The Company made a one-time $12.0 million cash payment, and delivered a $28.0 million unsecured promissory note, payable over five years with interest at LIBOR +2%. The additional purchase consideration was recorded as goodwill on the balance sheet. * In December 2004, the Company amended its senior loan agreement. The amendment provides for an increase in the maximum allowable leverage ratio (currently 4.25x), a reduction in the revolver from $125 million to $75 million which is currently unborrowed, an increase in the term loan interest rate to LIBOR + 3.00%. The fee incurred for the amendment totaled approximately $1.0 million, which has been capitalized and will be amortized over the life of the amended loan agreement, and the Company recorded a pre-tax charge of $0.6 million to write-off a portion of the previously deferred financing costs. The Company is in compliance with the bank covenants. * For the quarter ended December 31, 2004, consolidated capital expenditures, including costs to produce proprietary games, totaled $12.3 million, compared to $13.2 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. * Net interest expense for continuing operations for the current quarter totaled $3.4 million compared to $3.8 million in the prior year period due to lower borrowings outstanding during the current period. * During the current quarter the Company completed the sale of its interest in the Louisiana route subsidiary (VSI), and received approximately $2.0 million in cash, resulting in a gain of $0.8 million which is included in discontinued operations. Guidance: Exclusive of unusual charges, the Company expects to return to profitability in both the third and fourth quarters of fiscal year 2005. The Company will hold its conference call on Tuesday, February 1, 2005 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time). Participants may access the call by dialing (913) 981-5542 and using participant passcode 312742. The Company will also broadcast the conference call over the Internet. Interested parties are asked to log on to the call at http://www.alliancegaming.com/ using the Investor Relations tab 10 minutes prior to the start of the call. Supplemental Business Unit Detail The following chart summarizes the financial information for the Bally Gaming and Systems business unit (dollars in millions): Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Revenues: Game sales $46.1 $49.6 $97.5 $92.3 Gaming operations 30.6 16.0 63.9 31.8 System sales 24.2 30.7 43.6 60.7 Total 100.9 96.3 205.0 184.8 Gross margin 47.7 57.5 100.8 112.8 Selling, general & administrative 33.2 15.5 69.4 38.6 Research and development 10.4 9.4 22.1 15.4 Depreciation & amortization 10.9 5.4 20.6 10.2 Operating income (loss) $(6.8) $27.2 $(11.3) $48.6 Summary operating statistics: Gross Margin % Games 9% 47% 17% 46% Gaming operations 80% 71% 77% 73% Systems 78% 74% 80% 77% New gaming devices sold 3,123 4,359 5,863 7,689 OEM units sold 34 242 1,954 2,105 New unit ASP (excluding OEM) $10,682 $9,050 $10,547 $8,782 Systems revenue detail (in millions): Hardware and software sales $11.7 $20.0 $20.2 $41.7 Maintenance and service revenues 12.5 10.7 23.4 19.0 Total Systems revenues $24.2 $30.7 $43.6 $60.7 GMU installed base 281,000 244,000 Casino management systems base 220 199 System managed TITO games 109,000 44,000 Recurring revenue game data: Installed base: As of December 31st: WAP games 1,746 1,840 Daily-fee games 8,768 3,103 Total 10,514 4,943 Centrally determined link count 17,725 -- Installed base: As of September 30th: WAP games 1,825 1,985 Daily-fee games 8,259 2,995 Total 10,084 4,980 Centrally determined link count 17,193 -- Revenues from game sales decreased 7.0% over the prior year's quarter resulting from a 28.4% decrease in new unit sales offset by an 18% increase in the average new-unit selling price to $10,682 (excluding OEM games). The increase in the average selling price reflects the sale of higher priced Class II and centrally determined games. Game sales gross margin decreased to 9.0% from 46.9% in the prior year quarter primarily resulting from an $11.1 million inventory write-down on discontinued products used gaming devices and ancillary assets. The gross margin for the current quarter excluding this charge was 33.0%. Gaming Operations revenues increased 91.5% to $30.6 million compared to the prior year's quarter. The gross placements for all WAP and daily-fee games totaled 1,480 units; returns totaled 1,050 units, resulting in a net increase of 430 units of installed base games on a sequential basis as of December 31, 2004 compared to September 30, 2004. The casino-owned central determination link count increased 532 units primarily due to unit placements in Oklahoma and Washington. Gaming operations gross margin increased to 80.3% from 71.4% in the prior year quarter as a result of a higher mix of daily fee and decline in the frequency of WAP jackpots awarded during the current quarter. Bally Systems revenues decreased 21.3% from the prior year quarter and increased 25% on a sequential basis compared to the quarter ended September 30, 2004. The recurring hardware and software maintenance revenues continued to increase due to the larger installed base of game monitoring units and eTicket sites, which currently stands at 281,000 and in 220 casinos world-wide managing 109,000 TITO games. Bally Systems gross margin increased to 77.9% compared to 74.3% in the prior year period reflecting the higher proportion of high margin software maintenance and services revenues. Selling, general and administrative costs increased to $33.2 million compared to $15.5 million in the prior year quarter. This increase reflects the inclusion of Class II and centrally determined gaming operations. Selling, general and administrative costs decreased on a sequential basis compared to the September 30, 2004 quarter by approximately $3.0 million or 8.4%. The recurring expenses have been reduced in the quarter ended December 31, 2004 in the areas of consulting, legal, and payroll partially as a result of the staff reductions which occurred late in the quarter ended September 30, 2004. Additional staff reductions in the March 2005 quarter are intended to further this expense reduction effort. Research and development expenses increased 9.7% to $10.4 million compared to the prior year quarter. Research and development costs declined on a sequential basis compared to the September 30, 2004 quarter by $1.4 million as a result of the consolidation of certain development projects. Depreciation and amortization expense increased to $10.9 million compared to $5.4 million. This increase reflects the higher base of WAP and daily-fee games and the amortization of the purchased intangible assets. On a sequential basis depreciation and amortization increased $1.2 million for the current quarter compared to the quarter ended September 30, 2004 due to the increased base of installed daily-fee games. Casino Operations The following chart summarizes the financial information for the Rainbow Casino in Vicksburg, Mississippi (Dollars in millions): Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Rainbow Casino Revenues $12.8 $12.3 $25.6 $25.1 Operating Income 4.1 3.8 7.9 7.8 Average No. of Gaming Devices 930 910 930 930 Average No. of Table Games 12 12 12 12 Rainbow Casino reported revenues and operating income increases of 4% and 7%, respectively compared to the prior year quarter. EBITDA increased 9% to $4.9 million and the EBITDA margin increased 200 basis points to 38.2%. When compared to the total Vicksburg gaming market, Rainbow's gaming revenues grew 5.3% over the same period in the previous year while the overall market gained 4.9%. For the period, slot revenue grew 2.5% and slot win per day grew 1% to $143 per day, while table game revenues increased 13.2% and table win per day also grew 13.2% to $872, as compared to prior year quarter. Table game revenue grew twice the rate of the market partially as a result of Rainbow installing the Mindplay table management systems early in the quarter, utilizing its player management tools. Discontinued Operations During the current quarter the Company completed the sale of its interest in VSI, and received approximately $2.0 million in cash. The Company recorded a gain of $0.8 million on the sale which is included in discontinued operations on the statement of operations. FORWARD LOOKING STATMENTS 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 including 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, the outcome of pending litigation matters including the pending securities class actions, gaming taxes and value added taxes, and other factors described in the Company's filings with the Securities and Exchange Commission, including but not limited to the Company's 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 operates the Rainbow Casino in Vicksburg, Mississippi. Additional information about the Company can be found on the Alliance Gaming web site at: http://www.alliancegaming.com/. ALLIANCE GAMING CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In 000's, except per share amounts) Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Revenues Gaming equipment & systems $100,933 $96,319 $205,010 $184,787 Casino operations 12,769 12,312 25,605 25,067 113,702 108,631 230,615 209,854 Costs and expenses: Cost of gaming equipment & systems 53,337 38,780 104,173 72,017 Cost of casino operations 4,589 4,884 9,391 9,887 Selling, general & administrative 41,051 21,548 86,141 50,613 Research & development costs 10,358 9,440 22,130 15,403 Depreciation & amortization 12,020 6,445 22,861 12,467 121,355 81,097 244,696 160,387 Operating income (loss) (7,653) 27,534 (14,081) 49,467 Other income (expense) Interest income 318 83 798 126 Interest expense (3,750) (3,869) (7,712) (9,598) Minority interest (1,145) (541) (1,644) (1,027) Refinancing / bank amendment charges (564) -- (564) (12,293) Other, net 375 (545) 528 (899) Income (loss) from continuing operations before income taxes (12,419) 22,662 (22,675) 25,776 Income tax expense (benefit) (4,879) 8,444 (8,730) 9,710 Income (loss) from continuing operations (7,540) 14,218 (13,945) 16,066 Income (loss) from discontinued operations 15 4,526 (4,376) 8,706 Net income (loss) $(7,525) $18,744 $(18,321) $24,772 Basic earnings (loss) per share Continuing operations $(0.15) $ 0.29 $(0.27) $0.32 Discontinued operations -- 0.09 (0.09) 0.18 Total $(0.15) $0.38 $(0.36) $0.50 Diluted earnings (loss) per share Continuing operations $(0.15) $0.28 $(0.27) $0.32 Discontinued operations -- 0.09 (0.09) 0.17 Total $(0.15) $0.37 $(0.36) $0.49 Weighted average diluted common and common share equivalents outstanding 50,988 50,930 50,988 50,814 ALLIANCE GAMING CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In 000's) As of December 31, June 30, ASSETS 2004 2004 Current assets: Cash and cash equivalents $27,964 $172,726 Accounts and notes receivable, net of allowances for doubtful accounts of $14,399 and $9,722 103,601 129,779 Inventories, net 72,462 61,135 Deferred tax assets, net 19,982 20,054 Other current assets 19,580 12,420 243,589 396,114 Long-term investments (restricted) 8,542 2,528 Long-term and lease receivables, net 21,383 18,132 Leased gaming equipment, net of accumulated depreciation of $44,030 and $31,105 44,273 46,634 Property, plant and equipment, net of accumulated depreciation of $30,614 and $23,127 76,654 75,838 Goodwill, net 177,961 136,989 Intangible assets, net of accumulated amortization of $14,969 and $12,489 59,474 63,623 Assets of discontinued operations held for sale -- 4,442 Other assets, net 15,286 6,354 $647,162 $750,654 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $30,478 $37,515 Income taxes payable -- 7,233 Accrued liabilities 60,991 51,469 Jackpot liabilities 10,076 12,075 Current maturities of long-term debt 5,040 5,866 Liabilities of discontinued operations held for sale -- 4,337 106,585 118,495 Long-term debt, net of current maturities 348,540 423,089 Deferred tax liabilities, Minority Interest and Other Liabilities 8,238 8,267 Total liabilities 463,363 549,851 Stockholders' equity 183,799 200,803 $647,162 $750,654 ALLIANCE GAMING CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In 000's) Six Months Ended December 31, 2004 2003 Continuing Operations Net income (loss) $(18,321) $24,772 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: (Income) loss from discontinued operations 4,376 (8,706) Depreciation and amortization 22,861 12,467 Refinancing / bank amendment charges 564 12,293 Deferred income taxes (687) 10,433 Provision for losses on receivables 5,154 526 Inventory and other discontinued asset write-downs 14,088 -- Other (11,605) (1,099) Change in operating assets and liabilities, net of effects of business acquired: Accounts and notes receivable 17,138 (2,019) Inventories (17,456) (2,493) Other current assets (4,336) (1,023) Accounts payable (7,169) (2,072) Accrued liabilities and jackpot liabilities (12,853) (2,924) Net cash provided by (used in) operating activities of continuing Operations (8,246) 40,155 Cash flows from investing activities of continuing operations: Advances of notes receivable due from Sierra Design Group -- (61,025) Additions to property, plant and equipment (5,531) (3,815) Additions to leased gaming equipment (18,183) (15,957) Additions to other long-term assets (1,521) (10,414) Acquisitions, net of cash acquired (12,000) (3,879) Proceeds from sale of net assets of discontinued operations 1,911 16,500 Net cash used in investing activities of continuing operations (35,324) (78,590) Cash flows from financing activities of continuing operations: Capitalized debt issuance costs (1,038) (6,954) Premium paid on early redemption of debt -- (5,399) Proceeds from the issuance of long-term debt -- 350,000 Net change in revolving credit facility -- 70,000 Payoff of debt due to sale of net assets of discontinued operations (101,618) (337,625) Reduction of long-term debt (2,050) (1,349) Re-purchase of treasury shares (164) -- Proceeds from exercise of stock options and warrants 1,487 2,907 Net cash (used in) provided by financing activities of continuing Operations (103,383) 71,580 Effect of exchange rates changes on cash 487 130 Discontinued operations Cash provided by discontinued operations 1,704 95 Cash and cash equivalents: Increase (decrease) for the period (144,762) 33,370 Balance, beginning of period 172,726 38,884 Balance, end of period $27,964 $72,254 ALLIANCE GAMING CORPORATION Other Supplemental Information Reconciliation of EBITDA to net income (loss) from continuing operations: The following table reconciles earnings before interest, taxes, depreciation, amortization, refinancing charges, severance charge, stock-based compensation and inventory write-down charge (EBITDA) to the Company's net income (loss) from continuing operations (in 000's): Three Months Ended Six Months Ended December 31, December 31, 2004 2003 2004 2003 Net income (loss) from continuing operations $(7,540) $14,218 $(13,945) $16,066 Income taxes (4,879) 8,444 (8,730) 9,710 Other expense, net 770 1,086 1,116 1,926 Interest expense, net 3,432 3,786 6,914 9,472 Stock-based compensation 542 -- 542 -- Inventory and other asset write-downs 11,088 -- 14,088 -- Refinancing charge 564 -- 564 12,293 Severance charge -- -- 1,435 -- Depreciation and amortization 12,020 6,445 22,861 12,467 EBITDA from continuing operations $15,997 $33,979 $24,845 $61,934 EBITDA is not a Generally Accepted Accounting Principles (GAAP) measurement. EBITDA may not be comparable to similarly titled measures reported by other companies. We believe that the analysis of EBITDA, which is not a GAAP based financial measurement, is a useful adjunct to operating income, net income, cash flows and other GAAP-based measures. 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. Additionally, EBITDA is utilized as a performance measure in covenants for our bank credit agreement. Although inventory and asset write-downs are normal and customary, they are not included in the EBITDA definition in our bank credit agreement. This non-GAAP information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States, such as operating income, net income or net cash provided by operating activities. The following tables reconcile operating income (loss) by business segment to EBITDA: For the quarter ended December 31, 2004 from continuing operations (in 000's): Severance Operating Depreciation & Inventory Income and Stock-based and Asset (loss) Amortization Compensation Write-downs EBITDA Bally Gaming & Systems $(6,840) $10,892 $-- $11,088 $15,140 Rainbow Casino 4,082 798 -- -- 4,880 Corporate Expenses (4,895) 330 542 -- (4,023) $(7,653) $12,020 $542 $11,088 $15,997 For the quarter ended December 31, 2003 from continuing operations (in 000's): Severance Operating Depreciation & Inventory Income and Stock-based and Asset (loss) Amortization Compensation Write-downs EBITDA Bally Gaming & Systems $27,217 $5,389 $-- $-- $32,606 Rainbow Casino 3,814 683 -- -- 4,497 Corporate Expenses (3,497) 373 -- -- (3,124) $27,534 $6,445 $-- $-- $33,979 For the six months ended December 31, 2004 from continuing operations (in 000's): Severance Operating Depreciation & Inventory Income and Stock-based and Asset (loss) Amortization Compensation Write-downs EBITDA Bally Gaming & Systems $(11,327) $20,621 $-- $14,088 $23,382 Rainbow Casino 7,878 1,587 -- -- 9,465 Corporate Expenses (10,632) 653 1,977 -- (8,002) $(14,081) $22,861 $1,977 $14,088 $24,845 For the six months ended December 31, 2003 from continuing operations (in 000's): Severance Operating Depreciation & Inventory Income and Stock-based and Asset (loss) Amortization Compensation Write-downs EBITDA Bally Gaming & Systems $48,575 $10,217 $-- $-- $58,792 Rainbow Casino 7,828 1,371 -- -- 9,199 Corporate Expenses (6,936) 879 -- -- (6,057) $49,467 $12,467 $-- $-- $61,934 Investor and Media Contact: Robert L. Saxton Alliance Gaming (702) 270-7600 DATASOURCE: Alliance Gaming Corporation CONTACT: Robert L. Saxton of Alliance Gaming, +1-702-270-7600 Web site: http://www.alliancegaming.com/

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