RENO, Nevada – (PRESS RELEASE) -- International Game
Technology (NYSE: IGT) announced today operating results for the second
quarter ended March 31, 2007. The Company also announced that its Board of
Directors has increased the Company's share repurchase authorization by
50.0 million shares, bringing the total current authorization to 53.1
million shares.
For the three-month period ended March 31, 2007, net income totaled
$128.2 million or $0.38 per diluted share versus $124.0 million or $0.35
per diluted share in the same quarter last year. The second quarter of the
current year included an insurance settlement related to Gulf Coast
property damage and business interruption and a net benefit from the sale
of a corporate asset, which together totaled $13.5 million, after tax, or
$0.04 per diluted share.
For the six-month period ended March 31, 2007, net income totaled
$249.2 million or $0.73 per diluted share compared to $244.6 million or
$0.69 per diluted share in the prior year.
Second quarter financial highlights:
* Record gaming operations revenues up 10% from the prior year quarter
* Record gaming operations installed base of 54,800 machines
* Record Adjusted EBITDA totaling $277.9 million
* Year-to-date cash flow from operations of $366.5 million, up 79% from
the prior year period
"IGT's gaming operations continue to thrive and expand, with an
all-time high installed base of games driving another quarter of record
financial results for the recurring revenue sector of our business," said
Chairman and CEO TJ Matthews. "Although the current macro-trends for
domestic machine sales remain challenging, the strength and consistency of
our gaming operations business and the steadily growing contributions from
our international operations enhance IGT's ability to generate strong
operating cash flow and post record Adjusted EBITDA results. With the
increase in our share repurchase authorization announced today, we reaffirm
our confidence and optimism in the long-term future of our company and plan
to continue our stock buyback program as part of our ongoing strategy to
return significant capital to our shareholders."
Gaming Operations
For the three-month period ended March 31, 2007, revenues and gross
profit from gaming operations reached a record $341.1 million and $211.0
million, respectively, compared to $311.2 million and $183.9 million in the
prior year quarter. Gross margins on gaming operations totaled 62% versus
59% in the prior year quarter. Margins in the current period were favorably
impacted by reduced jackpot-related expense, as well as the property damage
portion of the Gulf Coast insurance settlement of $5.0 million, before tax.
For the six-month period ended March 31, 2007, revenues and gross
profit totaled $666.0 million and $397.7 million, respectively, compared to
$602.9 million and $349.4 million in the prior year period. Year-over-year
improvement was attributed to the growth and enhanced performance of our
installed base.
The installed base of recurring revenue machines ended the quarter at a
record 54,800 units, an increase of 10,400 units from the prior year
quarter and 1,700 units from the immediately preceding quarter. Growth was
primarily the result of incremental lease operations placements in Mexico,
New York, Delaware and Rhode Island, and incremental casino operations
placements in Oklahoma, California and Florida.
Second quarter worldwide product sales revenues and gross profits
totaled $268.6 million and $145.5 million, respectively, compared to $333.2
million and $166.3 million in the prior year. Domestic machine sales
declined from the prior year as a result of lower market replacement demand
and the timing of expansion opportunities. International machine sales
declined as a result of fewer shipments of low-payout machines, mostly due
to the timing of sales in Japan. Non-machine revenues increased slightly to
$89.8 million versus $88.5 million last year. Consolidated product sales
gross margins were 54% compared to 50% in the prior year quarter, primarily
due to the greater mix of higher margin non-machine sales and lower mix of
international machine sales.
Operating Expenses and Other Income/Expense
Operating expenses totaled $154.3 million for the quarter and $321.0
million for the six months ended March 31, 2007 compared to $157.5 million
and $303.6 million in the prior year periods, respectively. Operating
expenses in the current year were favorably impacted by $16.5 million,
before tax, related to the business interruption portion of the Gulf Coast
insurance settlement and the net benefit from the sale of a corporate
asset. Excluding these items, operating expenses increased primarily as a
result of additional sales and administrative staffing costs in support of
business growth initiatives, higher legal and compliance fees and a greater
investment in research and development, partially offset by lower bad debt
expense.
Cash Flows & Balance Sheet
For the six months ended March 31, 2007, IGT generated $366.5 million
in operating cash flow on net income of $249.2 million. Year-to-date
capital expenditures totaled $181.9 million compared to $134.5 million in
the prior year, with additional investments in the current year related to
the construction of our Las Vegas campus and an asset addition.
Working capital totaled $857.6 million at March 31, 2007 compared to
$129.1 million at September 30, 2006. The change in working capital was
mainly due to the refinancing of our convertible debentures in the current
year that were classified as current liabilities at September 30, 2006.
Cash equivalents and short-term investments (inclusive of restricted
amounts) totaled $623.1 million at March 31, 2007 compared to $589.1
million at September 30, 2006. Debt totaled $1.1 billion at March 31, 2007
compared to $832.4 million at September 30, 2006.
Capital Deployment
On March 5, 2007, our Board of Directors declared a quarterly cash
dividend of $0.13 per share, which was paid on April 2, 2007 to
shareholders of record on March 19, 2007.
For the six months ended March 31, 2007, IGT repurchased 8.3 million
shares of common stock for an aggregate cost of $362.7 million. The
remaining authorization under the Company's stock repurchase program, after
taking into account the increase in the authorization described above,
totaled 53.1 million shares at April 19, 2007 or approximately 16% of total
shares outstanding as of March 31, 2007. We anticipate that we will exhaust
this share repurchase authorization within three years.
