With investors continuing to look askance at gaming companies last week, three such firms didn’t help the cause by announcing they were postponing filing financial documents because of accounting problems.
Shuffle Master Inc. (SHFL), the world leader in the manufacture of card-shuffling machines, followed up an announcement of an anticipated poor quarter with the revelation that it needed to restate some previous financial results.
The company said it found an accounting error related to profits recorded on inventory purchased from an Austrian subsidiary. The error resulted in a $1.2 million overstatement of net income for 2006. This required that the company restate both fourth quarter and full fiscal year 2006 results.
MTR Gaming Group Inc. (MTNG) jumped in to say it would delay its previously announced fourth quarter and 2006 financial report after an auditor’s review of the company’s asset impairment concerning its Scioto Downs harness racing facility in Ohio.
The company had purchased the track a couple of years ago when it appeared that there might be a chance Ohio would approve racetrack slot machines. The slots effort failed, however, and the track has been a drag on MTG Gaming’s earnings.
In its announcement, MTR Gaming said it expects to schedule a conference call to discuss the financial results in the next few days when it expects to have the auditor’s review.
Restating earnings was the reason given by Isle of Capri Casinos Inc. (ISLE) for delaying the filing of its fourth quarter financial statements dealing with the period that ended on January 28.
Involved in the restatement, the company explained, would be the fiscal years 2004, 2005 and 2006 and the quarterly results for fiscal 2005 and 2006, as well as, the first two quarters of fiscal 2007.
Again, the company said the reason for the restatements was the failure to properly account for a new casino lease it had arranged in Coventry, England. Through discussions with independent auditors, it said, the company found that it would be required to treat the matter as the owner of the facility’s improvements.
The company added that it expected the adjustments to result in a reduction of its retained earnings in the amount of $12 million.
Another company that has gone through the problem of late filings is Bally Technologies Inc. (BYI).
One of three companies that provide a casino operating system with a bonusing feature as well as a variety of gaming machines, Bally Technologies reported that total revenues for fiscal 2006 that ended on June 30, 2006, grew to $547.1 million from the $483.1 million recorded in fiscal 2005.
During the reporting period, the company recorded a net loss of $46.1 million or more than twice the net loss of $22.6 million recorded in fiscal 2005.
However, company officials were optimistic that the results for the coming quarters would show sharp improvement.
CEO Richard Haddrill said, "Total revenues in the third quarter and fourth quarter of fiscal 2006 increased by 28 percent and 33 percent, respectively as compared to the corresponding period of the prior year. We remain pleased with the results of our technology integration and product retooling, which resulted in significant charges in fiscal 2006 and fiscal 2005.
"As previously disclosed, we currently expect total revenue in fiscal 2007 to exceed $670 million," he said.