Scientific Games reports
flat 2Q earnings

Aug 22, 2006 4:36 AM

Despite an increase of 21% in revenues, net income for the second fiscal quarter that ended on June 30 remained flat when measured against the second quarter of 2005 at Scientific Games (SGMS), one of the country’s leading providers of both lottery and horse race betting equipment.

The company said that revenues for the period reached $239.6, easily topping last year’s $197.4 million. But net income was $25 million or $0.26 per share compared to $24.8 million or $0.27 per share in 2005.

Stock compensation expense during the period amounted to $4.9 million or $0.04 per share.

For the first six months of 2006, the company’s revenues were $447.8 million compared to $382 million in the six months that ended on June 30, 2005. Net income was $47.3 million or $0.50 per diluted share compared to $45.8 million or $0.50 per diluted share.

According to Lorne Weil, chairman and CEO, the company benefited from the "licensed properties and cooperative services businesses. Despite jackpot fatigue from the two large Powerball jackpots during the first quarter, same store on-line lottery revenues grew approximately 4 percent."

Weil added that the company hoped to take advantage of "a number of exciting sports betting opportunities" that are developing in the United Kingdom.

Magna Entertainment

Debt reduction is the goal of Magna Entertainment Corp. (MECA) as it strives to reach profitability.

The racetrack operator reported increased revenues of $184.8 million but a net loss of $26.3 million for the three months that ended on June 30. In the comparable period of 2005, the company had revenues of $168.3 million and a net loss of $26.9 million.

Diluted net loss per share from continuing operations amounted to $0.26, a much higher per share loss than the $0.16 reported a year ago.

Debt was the problem, said Frank Stronach, founder and chairman of the company. He said the net loss was strongly impacted by "significant" interest charges on company debt.

He said he looked forward to receiving $175 million from the partnership of Millenium-Oaktree for the sale of The Meadows harness racetrack in Pennsylvania. The sale is expected to close in October.

Cash Systems Inc.

Hoping to return to profitability by the fourth quarter of the current fiscal year, Cash Systems Inc. (CKNN) reported strong gains in revenue and a major reduction in net loss for the second fiscal quarter of the current year.

Revenue for the period was $24.1 million, a 51% increase over the $16 million of a year ago. Net loss from operations improved to $438,000 from last year’s net loss of $2.7 million.

The loss amounted to $0.05 per diluted share, down from last year’s net loss of $0.10 per diluted share.

Mike Rumbolz, president and CEO, said he was pleased with the results and the "progress we have made toward returning to profitability. We remain confident that our focus on new product development has the potential to dramatically change the competitive landscape in the cash access industry."

Churchill Downs

A record-breaking Kentucky Derby weekend was one of several reasons why Churchill Downs Inc. (CHDN) was able to report an increase in net earnings from continuing operations of $33.4 million compared to $22.7 million of a year ago.

On a per share basis, net income amounted to $2.45 per diluted share, substantially higher that the $1.69 per diluted share reported in 2005.

Other benefits during the reporting period included higher simulcast network revenues; strong business levels at the company’s Louisiana simulcast-wagering and video poker operations, and five additional days of live racing.

During the quarter, the company also recorded $9.6 million of pre-tax net insurance recoveries stemming from storm-related damages sustained from the hurricane in Louisiana.

In making the announcement, Tom Meeker noted that he was being succeeded as president and CEO of the company by Illinois businessman Robert L. Evans. Meeker was rewarded by the board of directors with a $200,000 retirement bonus.