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Bally Technologies, Inc. (NYSE:BYI)

F2Q12 Earnings Call

February 1, 2012 4:30 p.m. ET

Executives

Richard Haddrill - Chief Executive Officer

Neil Davidson - Chief Financial Officer

Ramesh Srinivasan - President and Chief Operating Officer

Analysts

Todd Eilers - Roth Capital Partners

John Moraz - JP Morgan

Darnel Bentz – Keybanc

Kelly [Libo] - Deutsche Bank

Ryan Worst – Brean Murray

Barry Jonas - Wells Fargo

Bill Lerner - Union Gaming

Operator

Good day, ladies and gentlemen, and welcome to the Second Quarter Fiscal 2012 Bally Technologies Conference Call. (Operator instructions) As a reminder, this conference is being recorded for replay purposes.

At this time, I would like to turn the call over to Mr. Richard Haddrill, Chief Executive Officer. Please proceed, sir.

Richard Haddrill

Well, thank you and welcome, everyone, to Bally Technologies' second quarter fiscal 2012 earnings call. Today's results mark the fourth consecutive quarter of year-over-year revenue and earnings per share growth. And the second consecutive quarter that we raised the bottom end of our guidance range.

This quarter all three of our businesses increased revenue. Recurring revenue increased to 57% of total revenue supporting improved visibility. We have set revenue records in each of the last four quarters for gaming operations driven by significant investments we have made in our game development studios over the past few years.

These investments combined with key platform and hardware innovations are starting to pay off in our gaming equipment sales as we believe we eclipsed 20% ship share in the quarter. We're also doing well on new openings with Revel in Atlantic City allocating over 20% of the floor to Bally products.

Finally, our iVIEW and DM strategy is continuing gaining traction. In fact, we are completing the largest floor installation of iVIEW DM at Mohegan Sun. Later this month we will help one of our customers as they plan for their global record for the world's largest slot tournament using our flexible tournament application and iVIEW DM across over 1,000 gaming devices from multiple vendors. It is an exciting time to be at Bally.

For today's call, Neil Davidson will cover our overall financial results, Ramesh Srinivasan will operating highlights and then I will have some overall comments before we open it up for questions.

Neil, over to you.

Neil Davidson

Thank you, Dick. First, let me review our Safe Harbor language. Today's call and simultaneous webcast contain forward-looking statements about Bally and our future business. These forward-looking statements are based on currently available information. Actual results could differ materially from those anticipated in the forward-looking statements and reported results should not be considered an indication of future performance. We do not intend and undertake no obligation to update our forward-looking statements, including forecast of future performance, the potential for growth of existing markets or the opening of new markets for our products, as well as future prospects and proposed new products.

More information on risks and uncertainties that may affect our business and financial results or may cause us not to achieve our forecast are included in our Annual Report on Form 10-K for the year ended June 30, 2011, and other public filings we have made with the Securities and Exchange Commission The forward-looking statements made on this call and webcast, the archived version of the webcast, and any transcripts of this call speak only to this date, February 1, 2012.

Today's call and webcast may include non-GAAP financial measures within the meaning of Regulation G. A reconciliation of all such non-GAAP financial measures to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in today's press release.

Today we reported our financial results for the quarter ended December 31, 2011 and raised the bottom end of our expectations for the remainder of fiscal 2012. Overall, net income was $24.3 million which resulted in earnings of $0.54 per fully diluted share for the three months ended December 31, 2011 on revenues of $211 million.

As Dick mentioned, this marks our fourth consecutive quarter of both year-over-year revenue and earnings per share growth. After adjusting last year's second quarter diluted earnings per share for a $0.05 benefit related to the reinstatement of the U.S. Research and Development tax credit, our diluted earnings per share grew 23% year-over-year.

Revenue from game sales were $70.2 million for the quarter, up 19% from $59.2 million in the prior year. Based on 2,734 units sold in North America during the quarter, 531 of which were opening expansion units, we believe our ship share exceeded 20% in the quarter.

Our North America placement unit sales were up 22% over the same quarter last year, which marks the second consecutive quarterly increase in replacement sales for value. In fact, we estimate that North America industry replacements were up 5% to 10% during the second half of calendar 2011 while our replacements were at 23%.

Average selling price for the quarter set a record at $17,201 driven by shipments of our newer Pro Series cabinets, which made up 80% of sales. During the quarter, sales of the Pro Curve exceeded our expectations, which contributed to the higher than expected ASP, but impacted our gross margin percentage. We do not expect similar growth in ASPs over the next few quarters due to anticipated product mix.

Game sales margins declined slightly to 43% from last quarter. However, as a result of strong ASPs generated from the Pro Series cabinets, the dollar margin contribution per unit from domestic sales have increased in each of the last four sequential quarters. We continue to expect margin percentages to improve slightly over the balance of this year. Although this expectation is dependent on product mix. Based on forecasted reductions in material costs on each of the Pro Series cabinets, we expect to approach 48% to 49% over the next several quarters.

Revenues from gaming operations set another all-time quarterly record at $86.2 million, up from $77.1 million or 12% in the comparable period last year and up 2% from the prior quarter, despite this normally weak seasonal period. Revenues were up principally as a result of the continued placements of our premium games and wide-area progressives. WAP revenue growth during the quarter and the timing of Phase II of Resorts World New York exceeded our internal expectations. The margin on gaming operations was within our expected range at 72%.

Systems revenues were $54 million for the quarter, up 16% from last year. Maintenance revenues for the quarter were a record $18.1 million, up 14% from $15.9 million in the comparable period last year and in line with our expected growth rate for fiscal 2012. The margin on systems revenue was 74% for the quarter due to a strong mix of software and services versus hardware.

The effective income tax rate for the quarter was 37.7%, higher than 2011 and our first quarter fiscal 2012, but within our expected range. The higher rate was driven by a shift in both actual and expected income from certain foreign jurisdictions with lower effective tax rates to the domestic market.

Turning to the balance sheet, as of December 31 we had unrestricted cash of $44.9 million and our DSOs remained at 108 days, down from 116 days at June 30 and within our expected range.

Bad debt as a percentage of revenue still remains at approximately 1%. Strong free cash flow generated during the quarter enabled us to reduce our leverage ratio below two turns, thereby reducing our borrowing costs by 25 basis points which will save us over 1 million a year interest expense and allow the amounts of share repurchases under our credit agreement to be unrestricted.

During the quarter we repurchased approximately 330,000 shares for 10 million and have appropriately 110 million remaining under our Board authorize share repurchase plan. Now, I'll turn the call over to Ramesh for some more discussion on our product innovations and our operating results. Ramesh?

Ramesh Srinivasan

Thank you, Neil. Overall another good quarter. Another sequential gaming operations revenue and gross margins record. In what has traditionally been a seasonally low quarter for gaming operations. High team year-over-year revenue growth in both games sales and systems, another quarterly record for systems maintenance, increasing acceptance of games based on our new core video content, increasing understanding of the kind of difference our various new innovator systems based marketing tools and provide for our customers. Yes, I would say this was another encouraging good quarter with all important indicators continuing to point in the right direction.

About the only point of serious frustration for us was our steady but very slow progress in Italy. We seemed close to receiving approval for our systems products for one of our [confessional]. Approval systems products are a requirement for placing games in Italy. However, future approvals for other [confessional] could face more delays due to more regulation requirements that have come up recently.

Please note, that there is minimal revenue expectations from Italy in our guidance for the remainder of fiscal 2012. However, we continue to carry the costs associated with entering this market. We expect Italy to be an important market for us in the long term.

On the bright side, during the quarter, Bally received two procedures manufacturing strategy awards. one of the awards was for outstanding achievements in continuous improvement, honoring our excellence in motivating employees to remove waste from processes. The other award was for demand-driven manufacturing, recognizing our ability to explicitly implement a demand driven manufacturing doctrine into our company culture. These awards were won in a competition whereas we were up against the worlds largest manufacturing companies and is a positive reflection of Bally's continuous improvement company culture. That goes far beyond just the numbers that constitute quarterly and other results.

Having said that I'll turn to the numbers and other related details in each of our business areas. Gaming operations continues to be a bright spot for us. Consolidated gaming operations revenue of $86 million, and consolidated gaming operations gross margin of $62 million, were both quarterly records. The first time we have seen fiscal Q2 establish such quarterly records.

The Resorts World Casino New York execution, was practically flawless from all angles. Getting over 2,200 games built, installed and operational within a period of four months without any hiccup, was an exceptional performance. We placed an additional 82 incremental rock units this quarter, the third consecutive quarterly increase. Our upcoming rock releases Grease and Michael Jackson, are on schedule.

We expect Grease departments to get started towards the end of fiscal Q3, and Michael Jackson in Q4. We remain optimistic about these games, based on the overwhelmingly positive feedback received so far from customers and players.

Just like with our premium games, we are beginning to see good success with our new ALPHA 2 content, with respect to game sales as well. Just like at G2E 2011, customer reception and feedback during [August] 2012 was very positive and encouraging. Driven by good demand for our Pro Series cabinets and the Pro Curve in particular, we sold 2,734 units in domestic markets, and a little more than 900 in international markets for a total of 3,636 units, the third consecutive sequential quarterly increase.

Replacement units increased for the third quarter in a row, further our six [inaudible] and new openings continue to increase. Our progress in Australia has been slower than anticipated, mainly do to product approval delays. Our games operating system was approved by regulator, the new South Wales, during the quarter.

The industry games we have placed in Australia so far, continue to perform well. We continue to expand game sale systems and welcome revenue opportunities, in various countries in Asia, including Cambodia, South Korea, and the Philippines.

Among more domestic opportunities, [inaudible], where we are making great progress, in terms of positioning ourselves very well for the upcoming expansion. With respect to systems, revenues for the quarter were $54 million, driven by record or near record levels in maintenance and services. Representing a 16% increase over second quarter last year. In terms of new deals won, we welcomed Peermont South Africa and the Valley Forge Casino in Pennsylvania, to our Bally Systems family in the quarter.

We completed 12 major go lives during the quarter, our highest number in about a year. This list included our first system go live in New Zealand. We also completed 20 significant upgrades during the quarter, making the past six months one of the best periods we've ever had. The number of upgrades during the quarter was one of the reasons for systems services revenue finishing near record levels.

A string of exciting installations coming up all across the world is going to make this calendar year a very exciting one for Bally Systems. Virtually all of them involve products like iVIEW DM and the Elite Bonusing Suite, setting up these products for a crucial breakthrough phase. We expect these installations to create a significant pull for the products going forward.

Please consider the following. One, we have more than 1600 DMs installed recently at Mohegan Sun.

Two, another customer is all set to run a world record slots tournament across opposing games powered by iVIEW DM.

Three, one of the most successful operators in the southeast is just going live with DM and the Elite Bonusing Suite across the floor.

Four, a new East Coast site is getting ready to open with all of our cutting edge products creating instant player excitement.

Five, we expect a southern Nevada site to go live with iVIEW, DM, and EDS during the coming months.

Six, the next six months will see big installs featuring all our key products all across the globe. In New Zealand, in South Africa, in Canada among other places.

Our ninth user conference coming up at Pechanga during early March is also expected to create good buzz and interest in our products. Registration for the conference is far ahead of last year's pace.

We've worked hard to reach this stage of leadership in systems. We will continue working very hard to create a clear competitive advantage for our customers.

In summary, we have seen positive forward movement in customer spending across all our business areas. We remain focused on creating powerful innovation and execution engines that can perform consistently and effectively, that can react well to changes in the marketplace and provide increasing value to our customers.

That focus is showing up in our consistent good results now. We continue to remain seriously dedicated to building our great teams of employees, on being customer centric, and ensuring we listen and act on their feedback. Our products and processes are getting better all the time.

Given all that, we remain confident that our future financial results will positively reflect that dedication and that focus.

Let me turn the call back over to Dick.

Richard Haddrill

We are executing well on our operational and on our strategic plans. We are pleased with our position in mobile and iGaming, with over 3 million players already using Bally mobile, Bally game content coming to legalized jurisdictions, free play games, and additional announcements planned between now and our systems user conference in early March.

Our many other investments in recent years are now starting to pay off. We're continuing to invest wisely in our future. We are in the process of adding hundreds of additional team members in R&D and for market expansion. We continue to seek key acquisitions that can benefit from our deep management teams and our regulatory and customer support infrastructure. The outlook for our Systems business for the coming years remains very positive with a good backlog and pipeline and grow and acceptance for iVIEW DM.

In Game Sales and Gaming Operations, are both performing very well, even better than our expectations with the ALPHA 2 games getting an excellent reception in the market and a strong pipeline of new games. Overall, our outlook for the rest of this year and fiscal year '13 and '14 is very promising. Perhaps I'm most pleased that we are consistently adhering to Bally company principle number three: We do what we say we will do in honoring our commitments to customers, investors, and each other.

In closing, I want to give a special thanks to Jacques Andre. A long-term board member who retired in December for his many contributions to the evolution and success of Bally over 15 years. And my thanks to all Bally team members who are working hard as we continue to add to the team. Thanks and now it's time to open it up for questions.

Question-and-Answer Session

Operator

(Operator instructions) And our first question is coming from the line of Steven Kent from Goldman Sachs. Please proceed.

Steven Kent - Goldman Sachs

Hi, good afternoon. A couple questions. First can you go into a little bit more detail about margin improve on Curve and some of the newer boxes and can you get those into the high 40s margins? Also, on the systems side of the business, now that you have DM running in some of the properties, are you able to now go to slot managers and give them a before and after on some of the bonusing applications and show them the economic propositions or return proposition of changing over?

Neil Davidson

Yeah, I'll take the margin ones, Steve. First I want to say, we're not disappointed by our margins frankly. In the last four consecutive quarters the dollar contribution per box has actually increased. So that's been partly because of the higher ASPs. In terms of moving forward and ultimately getting to that 48-49% margin, there's a couple of things. part of that is volume based. Part of it is raw material based as you can imagine our procurement department has a pretty good forecast say over the next six months for what they're going to be able to decrease the raw materials by and part of it is where we are in the products cycle.

For example, the Pro Series Upright, when we initially released that 24 months ago to today, we've actually educed the raw material costs greater than 15% in that cabinet but again that took a 24 month period. So you can imagine what the Pro Curve and the V32 only six months into production we just have a little bit more runway to reduce raw materials.

Richard Haddrill

And Steve, on the question of DM and iVIEW networks now that we got some good content out we do have some good case studies. Perhaps the one that's been the most documented is somebody who's been running the Enterprise Bonus Suite now for about nine months. Has got a good ROI where they can show that their coin in is up 12% when they're running the enterprise bonus application, which is a huge return on investment. It's also resulted in an increase in their carded play and certainly a lot of energy around the casino floor that carries over the hours after they stop running the special promotion on the iVIEW network. These kinds of examples are being noted by those slot managers once they get iVIEW or iVIEW DM installed and now start to employ the enterprise bonus suite.

Operator

Your next question is coming from the line of Todd Eilers with Roth Capital Partners. Please proceed.

Todd Eilers - Roth Capital Partners

Hey guys. Good afternoon. Thanks for taking my call. I wanted to ask on game sales, in terms of new openings can you give us a sense what hit in the quarter for the domestic openings?

Neil Davidson

Sure. As we said last quarter Kansas City Speedway kind of crossed over quarters so we had part of that in Q1 and then part of it in Q2. The other Kansas City property was all in this quarter. Miami was all in this quarter. Then I think there were one or two smaller expansions that happened.

Todd Eilers - Roth Capital Partners

OK, and then on international. Did you guys ship the Las Vegas Sands new opening there or is that next quarter?

Neil Davidson

Yeah, we shipped a portion of the units for partial five and six. They're staging some of those units. Some now, a few more in Q3.

Todd Eilers - Roth Capital Partners

OK, perfect. Then on the gaming apps side obviously it sounds like there's a lot of demand for the Michael Jackson and Grease WAP product. I think you guys mentioned a pretty strong backlog there. Can you, I don't know if you can quote numbers or anything like that but that might be helpful to get a sense for what we might be able to expect with these games. Do you also expect these games to be incremental to the existing kind of premium install base or do you expect a sort of cannibilization, I guess, on some of the other premium games?

Richard Haddrill

Well, all this would be speculative at this point but clearly very strong interest from customers wanting to have it first in their market. The orders for both these games are very, very positive. We're not wanting to disclose numbers at this point. We'd like to see them get out in the market first. Certainly the prelaunch interest is as high as anything we've ever seen. Anecdotally, we know other good games that we've rolled out in gaming operations. If we reach a level of 700 or 800 games in six to nine months we consider that a good roll out. We don't know what these games are going to do but we don't see any reason why we can't get to those levels.

In terms of cannibalization, because Bally doesn't have a very big WAP footprint, just over 1,000 games. Much smaller than some of our competitors. We think that the likelihood of these games cannibalizing our existing footprint is lower than our typical gaming apps games and also given the unique branding characteristics which has not been in our recent history. Again, we would expect the cannibilization rate to be lower on both Grease and Michael Jackson. The pre-launch demand is as high as anything we've seen but we'll be happy to give you a further update on our next call.

Operator

Your next question is coming from the line of Joseph Greff with JP Morgan. Please proceed.

John Moraz - JP Morgan

Hello, good afternoon. This is John Moraz for Joe Greff. We have two questions. First, given what you've seen this quarter what do you think share is of existing North American wide area progressives? Second, when you look at your internal forecast what percentage of your gross installed base is related to increases in your WAP footprint? Thanks.

Richard Haddrill

Well, I can give you a couple of sound bytes and I'm looking to see if Neil has any others. I think, in terms of the WAP footprint we've got, today, just over 1,000 white are progressives. I think public information would indicate that WMS has well over 3,000 but less than 4,000. IGT somewhere 12,000 plus. My numbers may be a little off. You can check them. We know there are other specialty makers, like AC Coin, in this space and Konami is in this space and Aristocrat as well.

You can kind of get some idea that Bally is still a pretty small player in the WAP space and with the kind of products that we have it's one reason we're very excited. We think they're unique products. We have a small footprint, it's not going to cannibalize us very much. That's about the best I think I can do.

Neil Davidson

In terms of the quarter what really gave growth to our overall game ops remember that phase 2 of Resorts World opened so you did see our overall video lottery systems units increase quarter-over-quarter. Certainly the 86 WAPs that Ramesh mentioned earlier helped to drive growth. In fact we did set a record in terms of wide area progressive revenue this quarter.

On our premium footprint, quite frankly that footprint has been expanding as well. I don't know that for this quarter I'd isolate one specific area and tell you one was greater than the other. Certainly with our expectations for Michael Jackson and Grease we look for that to be, forward, a little bit larger of our growth.

Operator

Your next question is coming from the line of Darnel Bentz from Keybanc. Please proceed.

Darnel Bentz - Keybanc

Hello, thank you for taking my question. I just had a question, I wanted to make sure I heard correctly that North American unit sales was 2,730 units. I wanted to see if you could give me the breakdown between replacement and new units. Then also I was wondering about the systems backlog. If you could expand a little bit more on how much of that backlog you think could hit in the second half of this fiscal year.

Neil Davidson

I'll take the units. 2,734 was North America of which 2,197 was replacement sales.

Darnel Bentz - Keybanc

OK. Great.

Ramesh Srinivasan

As far as the systems backlog is concerned all I can tell you is it's very healthy. It's as good as it's ever been. I don't think we can exactly tell you what portion of it will get done in FY12. What portion of the system backlog will get done in FY 12? It's in our guidance numbers that we provide.

Neil Davidson

I'll tell you from a forecasting standpoint, from my vantage point, it's just nice to have a lot more longer term visibility. Especially with some of these longer term opportunities, Sun International, and some of the Canadian opportunities to name a few.

Darnel Bentz - Keybanc

Is a lot of it due to you don't know exactly when they're going to get implemented per quarter so they could bleed into the next quarter so it's hard to give guidance on that?

Ramesh Srinivasan

No, no. We don't know. We have pretty good visibility. We have a reasonable idea of when that will go live but those are subject to changes here and there. A couple of weeks here, a couple of weeks there . They could change. But we have pretty good visibility to when those projects are going live.

Richard Haddrill

Let me just add, too. There's been a lot of attention on the backlog for the Canadian systems opportunity and for Sun International, which are some larger opportunities. We expect to begin recognizing go live revenues from those contracts starting sometime this summer and running for two to three years. Those are not in this year's forecast.

Operator

Your next question is coming from the line of Kelly [Libo] from Deutsche Bank. Please proceed.

Kelly [Libo] - Deutsche Bank

Hi guys. Thanks for taking my question. I just had a question concerning the ASPs. Obviously you guys had a strong quarter. How should we think about your ASPs on a go forward basis? You mentioned that we wouldn't see the same kind of increases so should we look more at the previous two quarters outside of this one? Or what do you think?

Neil Davidson

Yeah, I'd look back at the previous two quarters certainly the pro-curve drove some good ASPs. Just looking at the mix coming forward with Rebel and some of the new openings I think you'll have more of a mix towards our uprights and slants which is more reminiscent of the prior two quarters.

Operator

Your next question is coming from the line of Ryan Worst with Brean Murray. Please proceed.

Ryan Worst - Brean Murray

Thanks guys. Good quarter. I was wondering if you guys could help us think about the timeline for Illinois and Italy. I guess you said there wasn't that much in fiscal year 2012 for Italy and I guess Illinois as well. But what are you thinking in terms of getting those two opportunities started up?

Richard Haddrill

We would think Illinois would happen sometime early in our fiscal '13. We would begin to get some revenues from Illinois at that time. With respect to Italy we think it's likely we start some revenues in this fiscal year but Italy is still likely to be a net cost for us for fiscal '12 due to all of the many investments we've been making and the product approval and the roll out without any meaningful revenue yet, for a couple of more months at least. That's kind of how we're looking at Illinois and Italy.

Operator

Your next question is coming from the line of Cameron McKnight with Wells Fargo. Please proceed.

Barry Jonas - Wells Fargo

Hi, this is Barry Jonas filling in for Cameron. Most of my questions have been answered but just two quick follow ups. First, in terms of international ASPs is there a wide differential with domestic?

Neil Davidson

I'd say in total, no, but depending on whether we sell different regions certainly have different ASPs, but in total, not a wild difference. Remember today we have more Pro Series sales in the US than we do international so there is a little bit bigger spread than historical.

Barry Jonas - Wells Fargo

Got it. OK. Just in terms of Italy, it seems that several manufactures are running into these regulatory delays. At what point, if at any, are the contracts at risk with continued delays?

Richard Haddrill

Well, clearly, our contracts do allow flexibility on both sides based on market conditions, game performance, and other things. I think as we said in look at Italy today, we first of all, think Italy will be slower than we thought 6-9 months ago and probably less profitable to us just given these time delays. So we'll keep you posted as that happens but I think we are looking at Italy today less optimistically as a profit generator than we did a year ago. The good news is other parts of our business are doing better than we thought.

Operator

Your next question is coming from the line of Bill Lerner from Union Gaming. Please proceed.

Bill Lerner - Union Gaming

Two questions. One for Neil and then one for Dick. Neil, what percentage of game ops is variable versus fixed? I think there's been an impression that you have less leverage to yield recovery and that said, what have yields on non-daily fee games done? I suspect they've grown and it's not obvious to see that based on the numbers.

Neil Davidson

Yeah, I'd traditionally when you compare us to our competitors certainly our fixed fees heavier weighted than variable. A big part of that really is the fact that WMS has about twice our lap footprint and like Dick mentioned IGT has somewhere 12,000 plus on a lap basis. Certainly there lat products are more geared towards consumer spend. Having said that, you're right. When we actually looked at our results this quarter, looking at our premium units and our lap units that are participation we typically have a seasonality in this quarter. We actually saw less of a seasonal impact and we're actually pretty happy with our overall yields. I'd say today, it's probably about 55% to 57% fixed, the rest variable. But with Greece and Michael Jackson, I'd expect that dynamic to change over the next 12 months.

Bill Lerner - Union Gaming

OK. Towards variable you mean?

Neil Davidson

Towards variable, correct.

Bill Lerner - Union Gaming

OK. And then the follow-up for Dick is it seems like stars are aligning in the last couple of few quarters. I guess two related comments I’d love to hear is what's next? I guess generally we know the pipeline and what your segments look like, but what's next for your perspective and what concerns you in general.

Richard Haddrill

Well, I never felt better about the business than right now. We've discussed the disappointment somewhat with Italy, although its still going to be a good market for us. And I would say that another area that we could execute a little better on is just general product approvals and international markets, are a little bit slower then we'd like. But boy the rest of the end cylinders are really clicking along well.

As I look forward, rather it's game sales with more new openings, and new markets like Illinois, and for us the Canadian BLT market. Some slight up ticket sales like in replacement cycle, and our ship share, and game ops with aqua duct, there for a whole year. And we've talked a lot about Michael Jackson and Greece, eventually Italy and maybe the country of Greece come on stream over the next year or two. And then in systems between Canada and Sun, all lined up for 2013, and '14, and great momentum with iVIEW DM, we just got a real laundry list of positive things to take advantage of through great execution.

And I'm also very happy with our I gaming strategy it's very focused around our existing customers. Mobile is doing every bit as good as we expected. And we're going to have Bally games on the internet this summer. And we have another couple of announcements to help our customers in this area over the next month or so. So I think we're doing well, and the main thing is to execute well. And the team is very focused on that.

Bill Lerner - Union Gaming

Thank you, Dick.

Richard Haddrill

Thank you Bill, and I think we're about ready to wrap up with Derek, any other questions, and if not we'll say thanks to the investors and call it a call.

Operator

No further questions, and thank you, sir.

Richard Haddrill

Thank you very much.

Operator

Ladies and Gentlemen that concludes today's conference, we thank you for your participation you may now disconnect, have a great day.

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