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Bally Technologies, Inc. (BYI)

J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum

March 08, 2013 4:30 pm ET

Executives

Ramesh Srinivasan - Chief Executive Officer, President and Director

Michael J. Carlotti - Vice President of Treasury & Investor Relations

Analysts

Joseph Greff - JP Morgan Chase & Co, Research Division

Presentation

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay. You guys can move closer if you guys want. Well, we're excited to have the team from Bally here, Ramesh and Mike.

And I was thinking just to start off with maybe you could share with us some of the newer product sales and game op titles that you're excited about. What's in the pipeline that highlights some of the newer things that you're more excited about. And if you could share with us some of the casino operator/customer feedback, that would also be helpful.

Ramesh Srinivasan

Sure. In general, we are very happy with the entire spectrum of product momentum, right, without going into the specific details of the titles, game sales, gaming operation systems, every area you look at. And you compare where we are product-wise and where we are in the floor share, how well we are represented in casinos, I think we have tremendous growth opportunities in all the 3.

And in general, all casino operators, the feedback we get from our customers points to the fact that our products have improved a lot over the last couple of years. They are in a good state now. And also we got a lot of great product coming behind. We've added a lot of game development studios. We've added a lot of diversity to our game development as well. We have a studio in Sydney. We have partnerships with third-party developers. And also, overall, every way you look at it, our products are at a much better state relative to our floor share. So there is a lot of gravity pull. Customers want more of our products, and also we got a lot coming in the pipeline.

Now specifically, with respect to games operations, you saw in the recent research study that NASCAR is one of the most anticipated games. And that should be coming out in the next few months. The Hot Shot Dual Wheel, Hot Shot is an internal brand, we recently introduced a WAP game with a dual wheel, a big cabinet. That has just hit the floors, very small sample size, not statistically significant but very, very good start. It's off to a very good start. Pawn Stars in the premium segment, we know the reports have been very good from casinos.

So overall, we feel very good about our product momentum.

Question-and-Answer Session

Joseph Greff - JP Morgan Chase & Co, Research Division

All right. Can you review with us your share of the wide-area progressive floor here in North America? And how do you -- knowing what you have in your product backlog, how do you view the growth opportunities to improve that share?

Ramesh Srinivasan

Yes. We view the growth opportunities as very good. Our market share in WAP is probably about 10% now, give or take, around that, and that applies to the premium segment as well. So both in the WAP and premium segment, we have tremendous opportunities for growth. One of the reasons is our market share is very low, and it is not a fair reflection of where we are relative to our competitors' products now. We have a lot more products to offer to our customers, and 10% is a very low share. So the growth opportunities are very good. And also, our WAP and premium pipeline of titles that will be coming over the next year or 2 on a regular interval of few months is much better than what it was 12 months ago. And it is being managed in a very disciplined manner. And our game development studios, our game development capacity has gone up a lot. So there is a good set of WAP and premium titles that are being worked on now that will hit the market at a steady rate. And also we've become much better at handling brands and licenses. And when you do a good job with games like Grease and Michael Jackson, what tends to happen is the next set of negotiations tend to become easier. So we are becoming much better at handling brands and licenses, so good flow of titles coming up.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. How would you characterize math and video versus a few years ago?

Ramesh Srinivasan

Video, we are a very good video company now. About 4, 5 years ago, we were mostly a staple company. We made the transition to video a few years ago. Then we had ALPHA 2, an operating system that has much better processing part and is a lot more state-of-the-art, is one of the best operating systems in the market today, so that gave us a lot of strength. So every year thereafter in the last 3, 4 years, we have become a better and better and better video company. And so now we are very good video company so that gives us the opportunity to do games like Michael Jackson, Pawn Stars, if you're aware of, and a whole lot of other cool video titles as well. In a meanwhile, we've always been good at hardware cabinets. Our V32 kind of cabinets are doing extraordinarily well. We were the first ones to introduce Pro Curve, which is a curved LCD, which is doing great. And then iDeck kind of innovations we have done is performing very well. Those kinds of innovations are performing very well in the marketplace. So video wise, every way you look at it, from the game screen to user interface kind of impacts like iDeck, every which way we've gotten much better. In terms of math, that again is progressively getting better. We are now focusing on the kind of math it requires to be more successful in international areas. So international game sales is a good growth opportunity for us. So our math has always been good, but we are making it a lot more diverse now so that it does well in all regions of the world.

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