Alliance Gaming

(AGI) - Get Report

swung to a loss in the latest quarter, as a slew of charges more than offset revenue growth.

The gambling-machine maker reported a loss of $6.9 million, or 14 cents a share, in its third quarter, which ended March 31. That compared with net income of $13.8 million, or 27 cents a share, a year before.

The latest quarter's results included pretax charges totaling $13.7 million for obsolete inventory, impairment of intellectual property and layoffs. They also included a $1.4 million tax charge related to the relocation of the company's German distribution center.

Without those items, Alliance Gaming would have earned $3.6 million, or 7 cents a share, ahead of the 4 cent-a-share average analyst estimate from Thomson First Call.

In reaction, shares gained 44 cents, or 4.2%, to $10.48 in after-hours trading.

Total revenue increased 7.9% to $125.4 million from $116.2 million a year before.

"I am pleased with our progress during the quarter on our key business initiatives, including our Alpha video product roll out," said Richard Haddrill, the company's CEO. "We tracked against our plans during the quarter, and our earnings per share, excluding charges, is encouraging."

Revenue from games and related parts sales totaled $53.1 million, up $3.9 million over the year-earlier quarter. The average new-unit selling price was $10,136, and Alliance increased the sales of used games, parts and game kits.

But gross margins for game sales slumped in the latest quarter to 20% from 45% a year before, as the company discounted slower-moving products and took a $7.9 million charge for discontinued and obsolete products.

Revenue in the company's gaming operations business jumped to $31.6 million from $21.7 million a year before. Revenue in the Bally Systems unit fell, however, to $27 million from $31.1 million.