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4Q COMMENTARY

BKC’s 4Q09 EPS of $0.43 (including a $0.07 benefit from a lower tax rate) beat the street’s $0.33 estimate.  I would say the biggest positive in the quarter was the 130 bp YOY improvement in U.S. and Canada company restaurant margins.  The biggest negative, though somewhat expected following TAST’s 2Q numbers, was the 4.5% decline in system same-store sales in the U.S. and Canada. 

 

Judging by the stock’s significant move higher today, investors seem comforted by the U.S. margin improvement and the fact that traffic trends in the U.S. have improved each month since May (but are still negative).  Traffic has been helped by the company’s shift in focus to include more value offerings, such as the $1 Whopper.  Even with traffic getting sequentially better in July (as stated by management), I would expect the overall comp number to continue to be weaker than MCD’s U.S. 2.6% same-store sales growth and Wendy’s estimated 2.0% growth.

 

4Q COMMENTARY - Big 3 SSS

 

Q4 Earnings Call Commentary


Current macro backdrop continues to adversely impact results:


-higher unemployment (July's unemployment rate in the U.S. 18 to 39-year-olds is now 12% and even more disconcerting is the 20% unemployment rate among ethnic groups in this age group which represents a disproportionate amount of the heavy user and super fan base)

-more consumers eating at home (out of home eating expenditures which are now at a 28 year low in the U.S. according to the NPD group)

 

Current comp trends (most of Q&A focused on U.S. traffic trends):


- U.S. comps and sales have improved since May although not to levels with which management is satisfied.  New value promotions will continue to put pressure on average check and it is expected to be flat to down.  Importantly, management stated that the dilution to gross profit margin, from these lower price points, has been lower than initially forecasted.

-Germany and Mexico comps and traffic have improved albeit still at negative levels.

 “I think the Mexican consumer is somewhat more confident…We have seen month over month continued improvement in our sales, and I don't think there is anything we need to do differently there.”

“In Germany I would say, again, a challenging economic environment there. We continue to move more towards affordability, and I would say there is more we can do on that front. I wouldn't say we're as far along as we are in Mexico. We certainly moved in that direction, but I think we can go further, and again I believe we have seen improvement over the last two or three months.”

 

Comments about Q1 Comp:


“I think we're not going to give you a number obviously on what we think from a comp standpoint for the quarter. You can tell from our comments we're saying the U.S. has gotten better month by month. We talked in our comments about the fact that Mexico and Germany had improved all be it we're still negative, so I think that gives you a sense of roughly how the quarter is looking, but that's all the color we really want to give at this point.”

 

Fiscal 2010 Outlook:


Management anticipates the current challenging environment will continue into fiscal 2010.  Due to the lack of visibility, the company is not providing specific EPS guidance for the year.

 

-most difficult to forecast is comps but expected to be soft in 1H10 and improve in the second half if consumer sentiment improves

-250 to 300 net new restaurants (represents a growth rate below long-term guidance due to commercial construction delays) with 80%-90% of net new units outside the U.S.

-U.S. commodities expected to be flat to slightly better (improve in the first half of the year and be up slightly YOY in 2H)

-Commodity costs outside the U.S. will be up a few percentage points YOY

-Capex of approximately $175-$200 million

 

Marketing:


After experiencing a rapid decline in traffic starting in March, BKC shifted its promotions to focus on satisfying the need for affordability with the $1 whopper junior in the U.S. and affordable combo promotions in Germany and Mexico and throughout many of the company's other international markets.

-also offering local market value promotions in the U.S., such as 2 for $3.50 Whopper® sandwiches and 2 for $3 chicken sandwiches, across many cities. Since implementing these value offerings, the company stated that it has seen a progressive improvement in traffic.

 

4Q09 commentary:


-U.S. and Canada Company Restaurant Margins: up 130 bps, benefited from 120 basis points improvement in food, paper and product costs, a 100 basis points improvement in occupancy and other operating costs primarily due to the lower accelerated depreciation expense related to the reimaging program incurred this year compared to last year and to a significant decrease in utility expenses partially offset by increases in labor costs.

-EPS increased 16% to $0.43 as compared to $0.37 in the same quarter last year. Currency translation negatively impacted earnings per share by $0.03 within the expected range for the quarter. This quarter's EPS was positively impacted by $0.07 due to a lower than forecasted tax rate of 21.6%, the result of the dissolution of in-active foreign entities. Without this tax benefit EPS would have been $0.36 for the quarter and within the company's previous guidance given in April.

 

 


CHINA: TACTICAL SHIFT

As we Follow tactical opportunities in the Chinese equity market, we have been tracking both the A shares listed domestically and H shares in Hong Kong separately in order to take maximum advantage of the divergent volatility in the two markets and share classes.

 

Currently the thirty day realized volatility for the Shanghai Composite is about 40 while the ten day realized volatility is about 54 versus 31 and 32 respectively for the Hang Seng.  Our preferred vehicle for A share exposure, CAF, has a thirty day realized volatility level exceeding FXI by 5 points despite the fact that CAF contains exposure to a larger group of individual equities, and exceeding the 30DV of EWH by almost 10 points.

 

CHINA: TACTICAL SHIFT - ssec1

 

CHINA: TACTICAL SHIFT - ssec2

 

From our perspective, this difference in volatility has created a more tolerable trading range for Hang Seng listings in the intermediate term that allows us a greater degree of tactical confidence selecting entry and exit points for now. We reserve the option to harness the greater volatility represented by the Shanghai A shares to our advantage however, in order to capture larger swings when compelling entry points present themselves.

 

One part of our thesis on this divergence of volatility is that, structurally, the closed Shanghai markets have become capable of greater volatility in recent month as an increasingly significant percentage of volume there has been driven by inexperienced investors including a large retail component (who are using margin for the first time since the practice was introduced late last year) and that the proprietary investing groups at domestic banks. These leveraged traders have been the catalyst for recent spikes in short term lending rates as the market has digested a heavy IPO calendar. Certainly there has been a significant “hot money” factor driving the Shanghai market in recent months.

 

The decision to choose exposure via an A share vehicle, H share vehicle or even through ADRs becomes increasing less important as the underlying investment duration is extended. In other words,  picking the right ETF or closed-end fund is critical for short term traders, but much less significant for longer term investors (provided that the divergence between the valuation metrics for each class are inside a band which is historically reasonable –valuation and not volatility becomes the compelling selection factor on a long tail basis). As we manage our portfolio tactically, in real time, we will continue to select our vehicles to maximize our performance to risk balance.

 

Andrew Barber

Director


2Q09 SLOT SHIP SHARE

Market shares shifted a bit sequentially but nothing material.

 

Total shipments into North America increased sequentially to 20k from 16k in 1Q09

  • We estimate new and expansion units decreased to 8,700 from 11,000 in 1Q09 and 22,500 in 2Q08
  • Replacements and Canadian shipments had a sequential uptick to 10,700 from roughly 5,000 in 1Q09 and 7,350 last year

Market shares:

  • IGT: 35%, level with last quarter and down from 41% y-o-y
  • WMS: 23%, down from 25% last quarter but up from 19% last year
  • BYI: 20%, up from 17% last quarter and level with last year
  • ALL: 1H09 results were at 12% up from 10% last year

Other “trends”

  • WMS looks capable of maintaining its share between 20% and 25% in NA especially considering the positive feedback we've been getting from the operators
  • BYI share appears to have flattened at approximately 20%
  • IGT have stabilized at around 35%
  • ALL seems to be gaining traction with its new Viridian cabinet

The chart below summarizes our slot ship share estimates for Q209:

 

                                                                           2Q09 SLOT SHIP SHARE  - slot suppliers na marketshare rg

 


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ANOTHER SYSTEMS WIN FOR BYI

This morning BYI announced that it won a new systems contract with Coushatta Casino Resort in Kindler, LA.  BYI's ACSC Version 11 system will be replacing Arisotcrat's Oasis system.  In addition to providing slot monitoring, marketing and accounting, BYI will also provide Coushatta with add on products like iView, Bally Power Bonusing, Bally Rewards, and Power Winners.

 

The installation is scheduled to take place by year end 2009, or BYI 2Q2010.  We estimate that BYI will recognize $10-11MM at installation and recurring revenue of $2MM per year from this contract.  In terms of earnings, BYI should generate one-time EPS of $0.08 and annual recurring EPS of $0.02.


RETAIL FIRST LOOK: M&A REARING ITS HEAD

RETAIL FIRST LOOK: M&A REARING ITS HEAD

25 AUGUST 2009

 

We’re still 4-6 months off of what we think will be a meaningful step-up in retail M&A. But this week’s mini-round of asset sales are definitely notable – especially for those ‘investors’ that barked at the Charlotte Ruse Board for not accepting a single digit bid 82% ago.

 

TODAY’S CALL OUT

It’s hardly a secret that M&A has picked up across the board in almost every sector. But have you noticed that on a relative basis Retail has not participated? It started off strong earlier this year, and M&A over the past few months has pretty much died down to a crawl. My view on this has been, and continues to be, that retail, in aggregate, does not NEED to sell assets right now due to the cash flow stability and visibility presented by a) stabilizing top line, b) tight inventories, and subsequent gross margin predictability, c) sg&a cuts and d) capex cuts. My extremely strong view is that the M&A ante will pick up in 1Q10 when we see who will prove to have invested properly today in proactively driving their models, instead of milking the margin structures for all it’s worth (i.e. printing too much profit today and risking growth and cash flow stability next year).

 

With all that said, I was definitely surprised by yesterday’s announcement that Advent International is purchasing Charlotte Russe for $17.50/share or a total of $380 million. Recall that in November of last year, the company’s largest shareholder at that time attempted to take over the company for $9.50 per share- a bid that the board rejected, and many major shareholders openly dismissed. Now we’re looking at a price 82% higher for a sub-par business. Here’s a great example of a severe duration mismatch between those that rented the stock last year versus the Board of Directors.

 

Other M&A Callouts

 

  • Speaking of M&A, fashion blog “Fashionista” is suggesting that DKNY is up for sale by LVMH. The blog goes on to suggest that the brand is no longer a good fit with the company’s super premium/luxury strategy. While this is certainly noteworthy and something to watch, it’s probably more interesting that the story was broken in a fashion blog. It’s only a matter of time before trolling Facebook and Twitter will yield tangible investment ideas.

 

  • Nike is looking to sell its 100% stake in the United Soccer Leagues (U.S.L), a legacy position it acquired along with the company’s purchase of Umbro in 2007. The relatively unknown league has teams in the US, Canada, and Puerto Rico. Finding a buyer for the non-core asset however, may be more of a challenge. The most obvious buyer would be Major League Soccer (M.L.S), U.S.L’s biggest and more popular competitor. However, the M.L.S has chosen not to submit a bid for the league, which is likely due to potential anti-trust issues as well as the fact that the official sponsor of M.L.S is rival Adidas.

 

 

MORNING NEWS

 

-Price is even more of a factor than last year for buying sporting goods and athletic footwear and apparel - Following on a study conducted last summer by The SportsOneSource Group that indicated that price had become the number one motivating factor in determining where to shop for sporting goods or athletic footwear and apparel, it comes as no surprise that the factor has become even more important this year.  The interesting point is how high product quality was ranked by consumers and the increased importance of convenient locations. An even higher percentage of adult consumers viewed Price as the most important factor when deciding where to shop versus the 2008 report.  Product Quality was the attribute ranked second highest and Product in Stock was the third ranked attribute. <sportsonesource.com>

 

-Lower production costs in inland China drive plants to move away from the coasts of Guangdong  - In view of the lower production costs in the inland region, Chinese leather and footwear processing are moving out in large number from the coastal belt provinces of Zhejiang and Guangdong. This is due to the ever-soaring labour costs and increasing investments in complying with the country's new environmental policies, while inland provinces such as Chongqing and Fuxin, received assistance from the local government, have been building industrial zones where offer factories comparatively lower land prices, labour, raw materials, water and electricity and modern sewage treatment systems. Exports and imports from the leather sector have dropped by 10.8% and 17.7%, respectively in June 2009. <fashionnetasia.com>

 

-Margin Boost: brands and retailers are getting the cheapest shipping rates anyone has seen in a while - Brands and retailers are enjoying some of the lowest ocean freight rates they’ve seen in years and are likely to see only slight increases going forward. It could take several years for the world’s major ocean carriers to dig themselves out of an oversupply issue that they spent the last decade or more creating. Prior to 2007, rising global economies and booming Chinese manufacturing capabilities spurred a binge of ship and container building. The number of 20-foot equivalent units, or TEU, handled by the Port of Los Angeles alone went from 1.7 million in 1998 to 8.5 million in 2006.  <wwd.com/business-news>

 

-Congress attempting to pass a bill that will raise manufacturing costs in order to create a more green environment - Greenpeace has been trying to push a bill at the US Congress that requires chemical plants to adopt environmentally friendly and safer manufacturing process. In the meantime, the organization has recently protested in front of a textile chemical plant against its use of chlorine gas in its manufacturing process which might cause danger to the nearby community. If the legislation is passed, safer technologies can be enforced throughout the country. A spokesperson for the National Association of Manufacturers termed the bill "regulatory overkill". <fashionnetasia.com>

 

-Textile and apparel manufacturers in Hong Kong and China which export to the EU could face obstacles in the coming years - Further requirements of a tough law on chemicals and their safe use will have to be considered in relation to their products from 1 June 2011. While these stringent requirements set out in Regulation 1907/2006 (REACH Regulation) are not limited to the textile and apparel sector, given the significant amount of textiles and clothing exported from Hong Kong and the mainland to the EU, an early warning is particularly important. <fashionnetasia.com>

 

-Under Armour will be sponsoring five New York high school basketball teams - UA will sponsor 5 NYC basketball teams as part of 27 high school basketball teams it will sponsor during the 2009-10 season, according to a report in the Daily News. That list includes Lincoln High, which has won seven of the last eight PSAL championships.  <sportsonesource.com>

 

-Warnaco names David Cunningham as president - Apparel maker Warnaco Group Inc. said Monday it named David Cunningham as president of its Calvin Klein Jeans division, replacing Janice Sullivan, who is leaving the company. Cunningham joined Warnaco in 2006 as president of the Chaps business. Before that, he was group president for Kenneth Cole at Paul Davril Inc.  <forbes.com>

 

-Timberland Co. appointed Jim Davey as vice president of global marketing - Prior to joining Timberland, Davey spent eight years with Nickelodeon and Viacom Consumer Products, most recently as senior vice president, global marketing, planning and retail development. <sportsonesource.com>

 

-Lowe's Bets on Australia Property Market in Woolworths Hardware Venture - Lowe’s Cos., the second-largest U.S. home-improvement chain, will team with Woolworths Ltd. to enter Australia’s A$24 billion ($20 billion) hardware market, betting on an economy where home-building approvals rose by the most in four years. <bloomberg.com>

 

-Whole Foods attempts to quell boycott cries - Protesters and unhappy customers have taken to the streets and to social networking sites to express their displeasure regarding Whole Foods chief executive John Mackey's recent Wall Street Journal op-ed column. Some are threatening to boycott the store altogether. The column, which appeared on August 12, was critical of President Obama's healthcare plan. It urged the country to embrace a more free-market healthcare system. Yesterday, members of the Washington D.C.-based United Food and Commercial Workers Union demonstrated outside of Whole Foods' stores in two locations in Ohio and plan to continue disseminating educational flyers to shoppers over the next few weeks. The group has emphasized the incongruity between Mackey's assertions and the brand image that Whole Foods has built. Online, the playwright Mark Rosenthal's "Boycott Whole Foods" Facebook group now has over 26,000 members. Though Whole Foods' own Facebook page has comments from numerous supporters stating their solidarity with Mackey and commitment to their local stores. <brandweek.com>

 

-Strong online sales growth in July - Online sales were helped by strong fashion sales and wet weather in July with customers spending £4.2bn, an increase of 16.8% on last year. <retail-week.com>

 

Thieves stole a semi-trailer full of footwear from a Wolverine Worldwide's distribution center in Howard City - Police say the thieves used their own semi-truck to steal the 40 foot long semi-trailer Monday morning. The trailer is said to have been full of footwear at the time it was stolen. Officials say the semi-trailer is is grey in color with "MAERSK" written along the side. <wwmt.com>

 

-LVMH wins trademark battle - A federal judge last week awarded more than $400,000 in damages to LVMH Moët Hennessy Louis Vuitton in a five-year-old trademark case over its Epi Leather trademark. The luxury house filed the suit in January 2004 alleging Carducci Leather Fashions Inc., a New York retailer, had sold counterfeit handbags bearing Louis Vuitton trademarks. As the case proceeded, however, the company discovered another firm, Bonini Italian Handbags Inc., supplied the items and added it as a defendant. Louis Vuitton and Carducci settled in 2006. According to court documents, Bonini never answered the allegations and the court eventually entered a default judgment against the company. <wwd.com/business-news>

 

-Tiffany & Co. won a dispute over the sale of its Little Switzerland  business - A federal judge last week affirmed a $3.6 million award that Tiffany & Co. had won at arbitration in a dispute over the sale of its Little Switzerland Inc. business. Tiffany and NXP Corp., which bought the Caribbean jewelry chain through its Oakland, Mich.-based assignee Dhirim Inc. in 2007, had fought over the final sale price because of balance sheet adjustments. The two companies entered arbitration, as called for in the purchase agreement. In April, an arbitrator at financial services firm KPMG decided in Tiffany’s favor and awarded it $3.6 million. Dhirim refused to pay and, several weeks later, brought a lawsuit in U.S. District Court in Detroit seeking to have the award vacated.  <wwd.com/business-news>

 

-Black Halo, a contemporary women's clothing line, has launched its first marketing campaign - includes photo ads in the September issues of Elle, Nylon and Interview magazines. The campaign, via Sew Branded in New York, was developed in late July and the beginning of August after the company held a photo shoot in order to update its Web site. This led Black Halo to venture into e-commerce, which in turn led to the decision to advertise. "It just made sense," said Sean Pattison, vp at the clothing company. What began as a simple project "took on a life of its own," he said. By advertising in fashion magazines, the company is looking to create "greater brand awareness for the general public," Pattison said. Black Halo ads will also run in the October and December editions of Nylon as well as the October issue of Interview. <brandweek.com>

 

-Spring Preview with The North Face - The North Face is freshening things up for spring ’10. The San Leandro, Calif.-based brand has updated its running and trail running styles (including a faster, more athletic look and a revamped logo) and is debuting two new eco collections with the men’s Kyoto and the women’s Suzy Qzy, as well as an expanded focus on casual styles. But the brand, which ranges from $80 to $130 for most styles, isn’t abandoning its technical focus, with trail running and multisport styles making a strong showing. Styles from The North Face are available at outdoor and athletic shops, as well as select sporting goods and department stores. <wwd.com/footwear-news>

RETAIL FIRST LOOK: M&A REARING ITS HEAD - 1 

 

INSIDER TRANSACTION ACTIVITY:

 

TIF: Charles Marquis, Director, exercised the right to buy 11,856shs ($29k) adding roughly 10% to total common holdings.

 

TGT:

  • James Johnson, Director, sold 2,528shs ($114k) or roughly 20% of total common holdings.
  • Troy Risch, Executive Officer, sold 1,478shs ($67k) upon the vesting of options approximately 5% of total common holdings.

 

BGFV: Jeffrey Fraley, Senior VP – Human Resources, sold 10,000shs ($141k) nearly 40% of total common holdings.


ARISTOCRAT: CONF CALL HIGHLIGHTS

ALL reported weak results, but they came in at the high end of their guidance given in April.  An intriguing 3-5 year plan was outlined.

 

 

THE ARISTOCRAT PLAN

  • Double participation share in the US
  • Improve ship share in Australia
  • Reduce volatility in Japan
  • Focus the organization on key markets while exiting the low ROI markets

 

 

ALL 1H09 EARNINGS CALL

 

Commentary on 1H09 results:

  • Revenues were down 5.3% in 1H09 vs 1H08 (would be down 20% on a constant dollar basis)
    • EBITDA of 129.4MM was down 19% (or 31% on a constant currency basis)
    • Operating profit after tax was down 38%
    • Operating cash flow was up 15.8%
  • Operating results were at the top end of their guidance in April due to better results in rest of the world - especially South America
    • North America met expectations
    • Japan was the weakest region and performed below expectations
  • North American market conditions remain challenging
    • Sold 4,264 units into North America vs 5,252 in last yrs 1H
    • Decline in unit sales was 18.8%, conversions up 18.8%
    • Systems revenue was up 9% and services revenue up 10.3%
    • Over 10k Viridian units placed
    • Ship share was improved
    • Gaming operations        
      • Expect to benefit in the second half from higher install base and successful JAWS launch
      • We saw this product at Mohegan Sun yesterday and heard good things
  • Japan units declined from 32k in 1H08 to 5k units 1H09. Overall market volumes continue to be challenged by the weak economic environment
  • Japan – absence of major game releases caused poor results – only 5,747 units sold.  Australian dollar also weakened, which increased reported results
  • Australia is a challenging market but some signs are encouraging
  • Recurring revenue was impacted by lower win per day, partially offset by mix
  • Asia Pacific was negatively affected by limited openings, tough conditions in Europe 
  • New Zealand was up 210% (profit)  
  • South Africa and South America sales decreased by 14.4% and 30.6%, respectively
  • They are outsourcing more R&D to India

 

Outlook:

  • Expect market to remain challenged
  • Pricing holding up despite low volumes
  • North America will continue to roll up JAWS and introduce new games
  • Japan will release 2 license titles
  • Will focus on Veridian rollout internationally
  • 3 to 5 year phase strategy to deliver growth - no quick fixes
    • Need to focus more on the US – participation market especially
      • Want to double their participation share over the next 5 years
    • Games that are player led, technology driver
      • “customer centric” model and more strategic approach about managing IP
      • Faster, more focused product development – more outsourcing
    • Best Games, best system
      • Focus on server based
      • Grow their presence in US systems
      • Build a stepper business
    • More strategic market focus in terms of where they want to compete
    • World Class Organization
      • Right-sizing the business, cost cutting, stream lining the organization
      • More of the team based in North America
  • Australia – need to close the gap between ship share and install base (à la IGT in the US)
  • Japan – aiming to achieve 50,000 units sales per year in the future
    • Building pipeline of license characters which have more appeal than developed characters
  • Aim to exit 30 jurisdictions that aren’t profitable so they can focus on the markets with real opportunities like Spain, Macau, Mexico, etc
  • Accordingly, bottom line priorities are
    • Double participation share in the US
    • Improve the share in Australia
    • Reduce volatility in Japan
    • Increase focus and resources on key markets while exiting low ROI markets

 

Q&A:

  • Quantify cost savings on overhead?
    • 10-15MM in costs related to implementing the strategy (due to restructuring costs)
    • Next year they expect the strategy to be break even and then, going forward, CF positive
    • Targeting the run rate they achieved 1H09 to 2H09
  • Ship share in Australia was 33%
  • Moving management and R&D to the US?
    • They have three studios in the US and are looking to add more
    • They believe they have the best math
    • US market is just too important to “export” games to the US - need to develop US centric games
    • ALL plans to keep total R&D at current level – need to invest “smarter”
  • New markets in the US? Do they want more Class 2 presence?
    • ALL has not truly competed heavily in Class 2 before but is looking at it
    • The biggest opportunity is class 3 - IL & OH
  • Jaws – install base is up by 500 net on the games ops side (900 JAWS installed)
  • How will they increase their participation share? Who will they take out per say?
    • In 6 months they increased their install base by 10%
  • Japan – how confident are they that they can manage the volatility better – timing build out of pipeline of licenses?
    • Licensed games do much better than in-house developed games
    • There is a need for at least 2 licenses per year to hit their numbers – will take a few years
  • Trying to grow the revenue line without growing the cost line by right-sizing and having better focus
    • Getting best games out/speed to market – takes 12-18 months (especially for licensed games)… so it will take some time
  • Replacement market – still see the next 6-12 months as challenging
  • In North America – why did they just have flat prices vs increases at competitors?
    • ASP has usually been higher than competitors
    • 1H09 had a large # of corporate deals (PA) that have higher than usual discounting
  • How many steppers did they ship in 1H09?
    • They launched late in the half – so only 300 units
    • They don’t yet have enough content on stepper, but a good platform.  It is a whole new segment for them
    • Discounted the steppers
  • Japan – have they procured brands already?
    • Yes – have a number of licenses that they have procured – 6 potential launches for next year – 4 are licensed, 1 is a major license
    • Need to mature licenses, buy licenses that are more nascent and then develop them over time
  • Increased use of licensing is a theme in the slot business, how to quantify the impact on margin?
    • Licensing costs are a fee per day on hardware and software
  • New Zealand 1H09 results was driven by a regulatory change – so 2H09 won’t be as good
  • Mexico strategy?
    • Class 3 is now legal, they are in the process of indentifying product for that market
  • “Can’t save your way to greatness”
  • 1,300 of the games they sold were to new sites/expansions in 1H09
  • Have a number of stepper games on trial that they hope will be converted to sales
  • They don’t see improvement in North America at this stage

 


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