Inside Asian Gaming

Oct 2007 | INSIDE ASIAN GAMING 45 Briefs as the leverage we are achieving on higher revenues, is evidenced by the 250 basis point improvement in operating margin compared to the prior year and the first quarter record we established for cash flow generated from operations of US$39 million,” added Gamache. Harrah’s Buyout Clears Hurdle New Jersey casino regulators last month approved the proposed US$31 billion acquisition of Harrah’s Entertainment by two private equity firms, AP reported. The deal would be the largest ever to take a publicly held casino company private. At a hearing before the state Casino Control Commission last month, partners in Apollo Management Group and Texas Pacific Group promised to be hands-off owners. They said they don’t plan any layoffs or selling off of assets as a result of the merger. ‘We invested in Harrah’s because we have a tremendous amount of confidence in [chairman and CEO] Gary Loveman,’ said Eric Press, a partner in Apollo.‘His plans for the business are our plans.We don’t intend to change a thing. ‘Harrah’s has pursued a strategy of growing its assets and invest- ing in its assets,’Press said.‘We see no reason why that would change in Atlantic City.’ The companies still need approval from 10 other states’ regula- tors before the deal can go through. The world’s largest gambling company, Harrah’s operates 50 casi- nos worldwide, including 38 in the United States. Four are in Atlantic City: The Showboat Casino-Hotel, Harrah’s Atlantic City, Caesars At- lantic City and Bally’s Atlantic City. The Atlantic City casinos account for nearly one-third of the company’s cash flow. The US$31 billion figure includes debt transactions; the amount of equity involved is about $17.1 billion, said Kelvin Davis, a partner in Texas Pacific Group. He and Press both said they would have no role in the day-to-day operation of Harrah’s,and promised to leave existing management in place.The two men each said they envisioned holding on to Harrah’s for at least five to 10 years before selling it at a profit. ‘We view this as an unusually good opportunity to invest and hold for a very long period,’ Press said.‘The public markets saw Gary Loveman and his plans to invest billions of dollars in Atlantic City,and didn’t appreciate that. ‘Public markets wanted to know what Gary Loveman was going to do for them three months from now,’he said.‘We are a much more patient and long-term investor.’ Both sides in the deal said the takeover would give Harrah’s the time and money it needs to grow even bigger.Loveman said the deal represents the best possible merger of additional funds and permis- sion to continue on an expansion strategy without major changes being imposed by new owners. Bally Reports Results Bally Technologies, Inc announced revenue of US$682.3 million for the fiscal year ended June 30, 2007, up 26% from the previous year.The Company’s Chief Executive Officer, Richard M. Haddrill, com- mented, “Our fourth quarter fiscal 2007 financial results are begin- ning to reflect the improved financial and operational strength of Bally. In addition to a 31% increase in total revenue, we are pleased with our progress on margins, especially the 41% in game sale mar- gins.We expect this momentumwill continue to drive improved per- formance into fiscal 2008.” Net income in the financial year increased to US$22.3 million from a net loss of US$46.1 million in the prior year. IGT Earnings Rise International Game Technology, the world’s largest slot machine manufacturer, disregarded the lack of do- mestic sales opportunities in the last year and capitalized on the inter- national market, driving an increase in earnings and revenues for both the fourth quarter and fiscal 2007. IGT earned US$122.6 million in the fiscal fourth quarter ended Sept.30, up from US$114.9 million a year ago.For the2007fiscal year,IGT said its net income was US$508.2 million, com- pared with US$473.6 mil- lion in 2006. IGT’s revenues in the quarter rose 5.8% year- on-year to US$353.3 mil- lion, while revenues for the year increased 4% to US$2.6 billion. In total, IGT shipped 23,400 slot machines in the fiscal fourth quarter, a slight increase from 22,400 for the same quarter last year. However, the vol- ume shipped to casinos in North Americanwasdown from 11,700 games to 8,300. Internation- ally, the company shippedalmost 5,000 more machines in the quarter than a year ago.