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US – Scientific buoyant about Bally integration despite short term cost

By - 13 March 2015

Whilst revenues increased to $1.8bn for Scientific Games in 2014, up from $1.1bn for 2013, the cost of integrating Bally Technologies has obviously been high with an operating loss of $172m, compared to just $18.3 m in 2013.

Debt for the company stood at $8.5m up from 3.2m.

Scott Schweinfurth, Executive Vice President and Chief Financial Officer, said: “Immediately following the completion of the Bally merger, we began to implement our integration plans. Our operating teams are making meaningful progress toward achieving the goals of improving our overall cost structure, while simultaneously enhancing our ability to further support our customers and their operations.”
The company has already started a reduction in its worldwide headcount and open positions of five per cent by December 31, 2014, that has driven approximately $42m in annualized savings, primarily in selling, general and administrative and research and development expenses through elimination of duplicative positions and redundancies in the Gaming and Interactive business segments.

In addition to $14.6mof restructuring costs related to the Bally acquisition incurred in the 2014 fourth quarter, the Company expects to incur $30m to $35m of additional operating costs to achieve anticipated cost savings and $15m to $25m of capital expenditures related to integration efforts in 2015. In 2016, the Company expects to incur $15m to $25min additional operating costs to achieve anticipated cost savings and $15m to $25 million in additional integration-related capital expenditures.

Mr. Schweinfurth added: “We are on track to implement actions expected to yield 80 per cent of the targeted $235m in annualised cost savings related to the Bally merger by the end of 2015. We expect to complete our WMS integration efforts later this year, which we continue to believe will result in $115m in annual cost savings. Additionally, the integration of Bally’s acquisition of SHFL entertainment, Inc. in late 2013 has been completed, yielding $42m in annual cost savings.”

President and Chief Executive Officer Gavin Isaacs said: “With the combination of Scientific Games and Bally, we are focused on becoming the partner of choice for gaming, lottery and interactive customers. To this end, we plan to launch an exciting array of new products across our Bally, WMS, Shuffle Master, Williams, Barcrest and lottery brands throughout the world in 2015. At the same time, as we continue to invest in developing innovative new products and services to help our customers grow their businesses, we also are just as committed to quickly implement our integration plans to realize targeted cost savings and generate growing free cash flow.”

Mr. Isaacs continued, “We believe that our planned new product and service introductions will demonstrate that no other company can match the breadth and depth of our differentiated solutions to address the needs of gaming, lottery and interactive customers. The diversity of our products and services and the scale of our operations uniquely position Scientific Games to effectively serve our customers and achieve long-term growth.”

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