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Bally Technologies, Inc. Reports Record Second-Quarter Fiscal 2013 Diluted EPS of $0.80, up 48 Percent from Prior Year



  Bally Technologies, Inc. Reports Record Second-Quarter Fiscal 2013 Diluted
  EPS of $0.80, up 48 Percent from Prior Year

Business Wire

LAS VEGAS -- January 31, 2013

Bally Technologies, Inc. (NYSE: BYI):

  * WIDE-AREA PROGRESSIVE INSTALLED BASE GROWS 87 PERCENT AND SETS RECORD
    QUARTERLY REVENUE
  * SYSTEMS MAINTENANCE REVENUE INCREASES 28 PERCENT AND SETS RECORD QUARTERLY
    REVENUE OF $23 MILLION
  * INCREASES FISCAL 2013 DILUTED EPS GUIDANCE TO $3.20 TO $3.40

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 second-quarter
diluted earnings per share (“Diluted EPS”) of $0.80 and record second-quarter
revenue of $238 million for the three months ended December 31, 2012.

“Our second quarter fiscal 2013 demonstrated continued momentum in all major
business areas,” said Ramesh Srinivasan, the Company’s President and Chief
Executive Officer. “We are excited about our scheduled product launches over
the next few months, including new wide-area progressive (‘WAP’) games
featuring Hot Shot Progressive® and NASCAR®, as well as the recently released
Pawn Stars™ premium daily-fee game. The Elite Bonusing Suite™ is gaining
further traction with additional customer purchases in the second quarter.
Finally, traditional domestic replacement sales were up year-over-year for the
seventh consecutive quarter, based on continued acceptance of our growing
library of game content and our increasing presence in video lottery. I am
happy with Bally’s trajectory and the steadily increasing visibility we have
into our near- and long-term future growth.”

“Operating margins increased to 24 percent, reflecting our ability to leverage
infrastructure and continue to realize efficiencies in our supply chain,” said
Neil Davidson, the Company’s Chief Financial Officer. “Further, we continued
to build revenues that are recurring in nature as we set records in both WAP
and systems maintenance revenues. We are thoughtfully allocating capital to
invest in our growth and to enhance shareholder value. This quarter represents
the 21^st quarter in a row that we have repurchased stock. During the second
quarter, we purchased 530,000 shares of common stock for $24 million at $45.43
per share.”

As of today, the Company has approximately $126 million available under its
Board-authorized share repurchase plan. Additionally, the Company’s leverage
ratio remains below 2.0 times, which leaves the Company’s share repurchases
unrestricted under the terms of its credit agreement.

Second Quarter Fiscal Year 2013 Highlights
                                                                                      
                 Three Months Ended December 31,      Six Months Ended December 31,
                 2012      %       2011       %       2012         %         2011      %
                           Rev                Rev                  Rev                 Rev
                 (dollars in millions, except per share amounts)
Revenues:                                                                                 
Gaming           $ 82.6    35  %   $  70.2    33  %     $  165.3   35   %    $ 134.6   33   %
Equipment
Gaming           99.0      41  %      86.2    41  %       200.2    42   %    171.2     42   %
Operations
Systems          56.7      24  %      54.0    26  %       108.0    23   %    99.6      25   %
Total revenues   $ 238.3   100 %   $  210.4   100 %     $  473.5   100  %    $ 405.4   100  %
                                                                                             
Gross Margin:
Gaming           $ 43.9    53  %   $  30.0    43  %     $  83.1    50   %    $ 58.4    43   %
Equipment (1)
Gaming           69.7      70  %      62.4    72  %       139.8    70   %    123.1     72   %
Operations
Systems (1)      43.2      76  %      40.1    74  %       82.7     76   %    74.6      75   %
Total gross      $ 156.8   66  %   $  132.5   63  %     $  305.6   65   %    $ 256.1   63   %
margin
                                                                                             
Selling,
general and      $ 67.9    28  %   $  61.3    29  %     $  132.4   28   %    $ 118.5   29   %
administrative
Research and
development      26.6      11  %      22.4    11  %       51.7     11   %    45.8      11   %
costs
Depreciation
and              5.7       3   %      5.8     3   %       11.3     3    %    11.4      3    %
amortization
Operating        $ 56.6    24  %   $  43.0    20  %       $        23   %    $ 80.4    20   %
income                                                    110.2
Adjusted         $ 81.1            $  67.2                $                  $ 126.3
EBITDA                                                    159.9
Diluted EPS      $ 0.80            $  0.54                $ 1.57             $ 0.99

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

                                     Three Months Ended    Six Months Ended
                                     December 31,          December 31,
                                     2012       2011       2012       2011
Operating Statistics
New gaming devices                     4,565      3,636      9,173      7,035
New unit Average Selling Price       $ 16,553   $ 17,201   $ 16,704   $ 16,922
(“ASP”)

                                        As of December 31,
                                        2012       2011
End-of-period installed base:
Linked progressive systems              2,320      1,263
Rental and daily-fee games              14,962     14,624
Lottery systems                         12,222     10,832
Centrally determined systems            37,120     47,461

Highlights of Certain Results for the Three Months Ended December 31, 2012

Overall

  * Total revenue increased 13 percent to a second-quarter record $238 million
    as compared with $210 million last year.
  * Adjusted EBITDA (earnings before interest, taxes, depreciation and
    amortization, including share-based compensation), a non-GAAP financial
    measure, increased 21 percent to a second-quarter record $81 million as
    compared with $67 million last year.
  * Selling, general and administrative expenses (“SG&A”) declined to 28
    percent of total revenues from 29 percent last year.
  * Research and development expenses (“R&D”) remained constant at 11 percent
    of total revenues.
  * Operating income increased 32 percent to $57 million compared with $43
    million last year. Operating margin increased to 24 percent from 20
    percent last year.
  * Diluted EPS increased 48 percent to a second-quarter record $0.80 from
    $0.54 last year.

Gaming Equipment

  * Revenues increased 18 percent to $83 million as compared with $70 million
    last year, driven by higher domestic replacement sales, the shipment of
    568 Canadian Video Lottery Terminals (“VLT”), and the shipments of units
    into the Illinois Video Gaming Terminal (“VGT”) market.
  * ASP of new gaming devices decreased 4 percent to $16,553 per unit from
    $17,201 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 17 percent of total
    new-unit shipments.
  * Gross margin increased to 53 percent from 43 percent last year, due to
    continued cost reductions on the Pro Series™ line of cabinets and sales
    mix, a reduction in cost due to a customer contract election, and an
    increase in conversion kit revenue.

Gaming Operations

  * Revenues increased 15 percent to a second-quarter record $99 million as
    compared with $86 million last year, driven primarily by 87 percent growth
    in the installed base of WAP games.
  * Gross margin decreased to 70 percent from 72 percent last year, primarily
    due to higher jackpot expense.

Systems

  * Revenues increased 5 percent to $57 million as compared with $54 million
    last year.
  * Maintenance revenues increased 28 percent to a record $23 million as
    compared with $18 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 27 percent of systems revenues, and software and service sales were
    32 percent, as compared to 33 percent for hardware and 33 percent for
    software and services in the same period last year.

Highlights of Certain Results for the Six Months Ended December 31, 2012

Overall

  * Total revenue increased 17 percent to a record $473 million as compared
    with $405 million last year.
  * Adjusted EBITDA increased 27 percent to a record $160 million as compared
    with $126 million last year.
  * SG&A declined to 28 percent of total revenues from 29 percent last year.
  * R&D remained constant at 11 percent of total revenues.
  * Operating income increased 37 percent to a record $110 million compared
    with $80 million last year. Operating margin increased to 23 percent from
    20 percent last year.
  * Diluted EPS increased 59 percent to a record $1.57 from $0.99 last year.

Gaming Equipment

  * Revenues increased 23 percent to $165 million as compared with $135
    million last year, driven by higher domestic replacement sales, Canadian
    VLT shipments, and shipments into the Illinois VGT market.
  * ASP of new gaming devices decreased 1 percent to $16,704 per unit from
    $16,922 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 17 percent of total
    new-unit shipments.
  * Gross margin increased to 50 percent from 43 percent last year, primarily
    due to mix and cost reductions on certain models of the Pro Series line of
    cabinets and sales mix.

Gaming Operations

  * Revenues increased 17 percent to a record $200 million as compared with
    $171 million last year, driven by 87 percent growth in the installed base
    of WAP games, as well as previously placed games at Resorts World Casino
    New York City which opened in late calendar 2011.
  * Gross margin decreased to 70 percent from 72 percent last year, primarily
    due to higher jackpot expense.

Systems

  * Revenues increased 8 percent to $108 million as compared with $100 million
    last year.
  * Maintenance revenues increased 22 percent to a record $44 million as
    compared with $36 million last year.
  * Gross margin increased to 76 percent from 75 percent last year, primarily
    as a result of the change in mix of products. Specifically, hardware sales
    were 26 percent of systems revenues, and software and service sales were
    33 percent, as compared to 31 percent for hardware and 33 percent for
    software and services in the same period last year.

Fiscal 2013 Business Update

The Company increased its fiscal 2013 guidance for Diluted EPS to a range of
$3.20 to $3.40. This guidance assumes an effective tax rate between 36 percent
and 37 percent for the fiscal year.

The Company has provided this range of earnings guidance for fiscal 2013 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    Six Months Ended
                                   December 31,          December 31,
                                   2012       2011       2012        2011
                                   (in 000s)
Income from continuing             $ 33,126   $ 24,268   $ 65,658    $ 44,660
operations, net of tax
Interest expense, net              3,135      3,339      6,608       6,612
Income tax expense                 19,389     14,688     37,818      26,541
Depreciation and amortization      22,339     20,984     43,658      41,193
Share-based compensation           3,136      3,890      6,157       7,282
Adjusted EBITDA                    $ 81,125   $ 67,169   $ 159,899   $ 126,288

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.

Earnings Conference Call and Webcast

As previously announced, the Company is hosting a conference call and webcast
today at 4:30 p.m. EST (1:30 p.m. PST). The conference-call dial-in number is
877-261-8990 or 847-619-6441 (International); passcode “Bally.” 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 March 2,
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 and LinkedIn.

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. —

NASCAR − NASCAR® is a registered trademark of the National Association for
Stock Car Auto Racing, Inc. NASCAR® is a registered trademark of NASCAR, Inc.;
Pawn Stars − ©2013 A&E Television Networks, LLC. All rights reserved. Pawn
Stars, HISTORY, the “H” and their associated logos are trademarks of A&E
Television Networks, LLC. Gold & Silver and its associated logos are
trademarks of Gold & Silver Coin Shop, Inc. All rights reserved.

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2012 AND DECEMBER 31,
2011
                              
                               Three Months Ended      Six Months Ended
                               December 31,            December 31,
                               2012        2011        2012        2011
                               (in 000s, except per share amounts)
Revenues:
Gaming equipment and systems   $ 139,323   $ 124,217   $ 273,334   $ 234,230
Gaming operations              99,016      86,240      200,156     171,194
                               238,339     210,457     473,490     405,424
Costs and expenses:
Cost of gaming equipment and   52,205      54,073      107,559     101,174
systems(1)
Cost of gaming operations      29,335      23,858      60,328      48,090
Selling, general and           67,852      61,304      132,368     118,526
administrative
Research and development       26,599      22,377      51,694      45,763
costs
Depreciation and               5,687       5,806       11,291      11,441
amortization
                               181,678     167,418     363,240     324,994
Operating income               56,661      43,039      110,250     80,430
Other income (expense):
Interest income                1,403       1,146       2,547       2,470
Interest expense               (4,538    ) (4,485    ) (9,155    ) (9,082    )
Other, net                     (1,059    ) (728      ) (1,802    ) (2,584    )
Income from operations         52,467      38,972      101,840     71,234
before income taxes
Income tax expense             (19,389   ) (14,688   ) (37,818   ) (26,541   )
Net income                     33,078      24,284      64,022      44,693
Less net income (loss)
attributable to                (48       ) 16          (1,636    ) 33
noncontrolling interests
Net income attributable to     $ 33,126    $ 24,268    $ 65,658    $ 44,660
Bally Technologies, Inc.
                                                                              
Basic and Diluted earnings
per share attributable to
Bally Technologies, Inc.:
Basic earnings per share       $ 0.82      $ 0.57      $ 1.62      $ 1.03
Diluted earnings per share     $ 0.80      $ 0.54      $ 1.57      $ 0.99
                                                                              
Weighted average shares
outstanding:
Basic                          40,399      42,870      40,633      43,296
Diluted                        41,494      44,771      41,805      45,176

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

BALLY TECHNOLOGIES, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND JUNE 30, 2012
                                            
                                             December 31,        June 30,
                                             2012                2012
                                             (in 000s, except share amounts)
ASSETS
Current assets:
Cash and cash equivalents                    $     69,563        $  32,673
Restricted cash                              13,215              13,645
Accounts and notes receivable, net of
allowances for doubtful accounts of          264,848             264,842
$18,195 and $14,073
Inventories                                  73,877              75,066
Prepaid and refundable income tax            31,457              13,755
Deferred income tax assets                   41,740              42,822
Deferred cost of revenue                     18,585              17,615
Prepaid assets                               15,520              13,061
Other current assets                         3,540               6,980
Total current assets                         532,345             480,459
Restricted long-term investments             10,577              12,171
Long-term accounts and notes receivables,
net of allowances for doubtful accounts of   34,567              55,786
$3,305 and $3,029
Property, plant and equipment, net of
accumulated depreciation of $57,557 and      33,431              30,667
$58,823
Leased gaming equipment, net of
accumulated depreciation of $202,250 and     123,504             121,151
$185,846
Goodwill                                     172,252             171,971
Intangible assets, net                       34,727              39,166
Deferred income tax assets                   8,760               7,409
Income tax receivable                        12,041              12,041
Deferred cost of revenue                     12,747              16,542
Other assets, net                            22,770              23,104
Total assets                                 $     997,721       $  970,467
                                                                              
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable                             $     32,118        $  41,414
Accrued and other liabilities                86,383              85,310
Jackpot liabilities                          9,396               11,682
Deferred revenue                             56,202              46,314
Income tax payable                           3,330               12,226
Current maturities of long-term debt         20,891              17,091
Total current liabilities                    208,320             214,037
Long-term debt, net of current maturities    538,125             494,375
Deferred revenue                             21,262              26,715
Other income tax liability                   14,646              13,922
Other liabilities                            19,210              23,943
Total liabilities                            801,563             772,992
Commitments and contingencies
Stockholders’ equity:
Special stock, 10,000,000 shares
authorized: Series E, $100 liquidation       12                  12
value;
115 shares issued and outstanding
Common stock, $.10 par value; 100,000,000
shares authorized; 64,491,000 and            6,442               6,309
63,150,000 shares issued and 41,201,000
and 42,102,000 outstanding
Treasury stock at cost, 23,290,000 and       (890,668         )  (790,633    )
21,048,000 shares
Additional paid-in capital                   522,199             489,002
Accumulated other comprehensive loss         (12,089          )  (13,477     )
Retained earnings                            570,553             504,895
Total Bally Technologies, Inc.               196,449             196,108
stockholders’ equity
Noncontrolling interests                     (291             )  1,367
Total stockholders’ equity                   196,158             197,475
Total liabilities and stockholders’ equity   $     997,721       $  970,467

Contact:

Bally Technologies, Inc.
Laura Olson-Reyes, 702-584-7742
Senior Director, Marketing & Corporate Communications
Lolson-reyes@ballytech.com
Michael Carlotti, 702-584-7995
Vice President of Treasury and Investor Relations
mcarlotti@ballytech.com
Mike Trask, 702-584-7451
Mobile: 702-330-6679
Corporate Communications Manager
MTrask@ballytech.com
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