International Game Technology Reports First Quarter Fiscal Year 2007 Results
biz.yahoo.com
Thursday January 18, 7:30 am ET
RENO, Nev., Jan. 18 /PRNewswire-FirstCall/ -- International Game Technology (NYSE: IGT) announced today operating results for the first quarter ended December 31, 2006.
Net income in the first quarter totaled $121.0 million or $0.35 per diluted share versus $120.6 million or $0.34 per diluted share in the same quarter last year.
First quarter financial highlights:
* Consolidated revenues up 4% to $642.3 million
* Consolidated gross profits up 6% to $352.0 million
* Gaming operations revenues up 11% and gross profit up 13%
* Record gaming operations installed base of 53,100 machines
* Record Adjusted EBITDA of $259.9 million
* Cash flow from operations of $223.5 million, up 41%
"IGT posted solid first quarter results, highlighted by continued growth in our gaming operations sector and record Adjusted EBITDA," said Chairman and CEO TJ Matthews. "Our installed base of recurring revenue machines reached a record 53,100 games worldwide. We saw the first shipments into Pennsylvania, Florida racetracks and Arkansas this quarter and look forward to future development in these emerging markets. IGT continues to invest heavily in new markets and technology, and we remain focused on delivering the most complete line of industry-leading products and service to our global customers."
Gaming Operations
First quarter revenues and gross profit from gaming operations improved to $324.9 million and $186.7 million, respectively, compared to $291.7 million and $165.5 million for the same period in the prior year. Gaming operations gross margins were consistent with the prior year at 57%. Revenue and gross profit growth was primarily driven by the increase in our installed base, with 9,800 incremental units from the prior year and 3,500 incremental units from the immediately preceding quarter.
Year-over-year installed base growth was primarily the result of lease operations placements in Mexico, New York and Delaware, and casino operations placements in Oklahoma, California, Florida and Alabama. Sequential installed base growth occurred primarily in the lease operations markets of New York and Mexico, and the casino operations markets of Florida and Oklahoma.
Product Sales
Quarters Ended
December 31
2006 2005
Revenues (in millions)
North America $207.3 $206.7
International 110.1 117.8
Total $317.4 $324.5
Gross Margin
North America 55% 54%
International 46% 46%
Total 52% 51%
Units Shipped
North America 12,200 14,300
International 14,600 14,800
Total 26,800 29,100
Worldwide product sales revenues produced first quarter gross profits of $165.3 million compared to $166.5 million in the prior year. Non-machine revenues (comprised of gaming systems, parts, service and other fees) totaled $84.8 million or 27% of total product sales versus $93.0 million or 29% in the comparable prior year quarter. Non-machine revenues were lower primarily as a result of fewer gaming system sales.
North America product sales revenues improved slightly over prior year levels despite lower machine volume due to the mix of new AVP® platform sales. Non-machine revenues totaled $69.2 million or 33% of domestic product sales compared to $73.4 million or 36% in the same quarter last year, mostly due to fewer gaming systems sales partially offset by higher parts and conversion sales. Gross margins improved mainly due to product mix.
International product sales totaled $110.1 million compared to $117.8 million in the prior year. Machine shipments totaled 14,600 versus 14,800 last year, with higher shipments into Japan offset by lower shipments into the UK, Australia and Europe. Non-machine revenues totaled $15.6 million or 14% of international product sales compared to $19.6 million or 17% last year.
Operating Expenses and Other Income/Expense
First quarter operating expenses increased to $166.8 million from $146.2 million in the prior year, primarily due to additional staffing costs to support business growth, higher legal and compliance costs, and a greater investment in research and development.
Other income, net, increased to $4.5 million compared to $2.7 million in the prior year quarter, mostly as a result of higher interest income.
Cash Flows & Balance Sheet
IGT generated $223.5 million in operating cash flow on net income of $121.0 million, up 41% as compared to the same period in the prior year. First quarter capital expenditures totaled $103.8 million compared to $75.2 million in the prior year, with additional investments in property, plant and equipment in the current year.
During the quarter, IGT issued $900.0 million of 2.6% convertible debentures due 2036 and announced the redemption of its outstanding zero-coupon convertible debentures due January 29, 2033. The offering of the 2.6% debentures closed on December 20, 2006, and the redemption of the zero-coupon debentures will be finalized in the second quarter. IGT used $225.4 million of the proceeds from the new bond offering to repurchase shares of its common stock. Additionally, IGT will utilize approximately $612.0 million of the proceeds to fund the redemption and settlements of the zero-coupon convertible debentures.
Due to the timing of the new debenture issuance and subsequent redemption of the old debentures, working capital increased to $852.4 million at December 31, 2006 compared to $129.1 million at September 30, 2006. Cash equivalents and short-term investments (inclusive of restricted amounts) totaled $1.3 billion at December 31, 2006 versus $589.1 million at September 30, 2006. Debt totaled $1.5 billion (excluding accrued debenture settlements) at December 31, 2006 compared to $832.4 million at September 30, 2006.
Capital Deployment
On December 5, 2006, our Board of Directors declared a quarterly cash dividend of thirteen cents ($0.13) per share, paid on January 2, 2007 to shareholders of record on December 19, 2006.
IGT repurchased 4.9 million shares during the first quarter in conjunction with the new debenture issuance. The remaining authorization under the Company's stock repurchase program totaled 6.5 million shares at December 31, 2006.
Additionally, on December 21, 2006, IGT completed the acquisition of Venture Catalyst Incorporated ("VCAT") for a cash purchase price of $21.8 million.
As previously announced on January 4, 2007, IGT will host a conference call regarding its First Quarter Fiscal Year 2007 earnings release on Thursday, January 18, 2007 at 6:00 a.m. (Pacific Standard Time) with TJ Matthews, Chairman of the Board, and Maureen T. Mullarkey, Chief Financial Officer, of International Game Technology. The access numbers are as follows:
Domestic callers dial 888-889-4951, passcode IGT
International callers dial 517-308-9004, passcode IGT
The conference call will also be broadcast live over the Internet. A link to the webcast is available at our website igt.com. Minimum requirements to listen to the broadcast include Windows Media Player and at least a 28.8Kbps connection to the Internet. If you are unable to participate during the live webcast, the call will be archived until Friday, January 26, 2007 at igt.com.
Interested parties not having access to the Internet may listen to a taped replay of the entire conference call commencing at approximately 8:00 a.m. (Pacific Standard Time) on Thursday, January 18, 2007. This replay will run through Friday, January 26, 2007. The access numbers are as follows:
Domestic callers dial 866-429-9465
International callers dial 203-369-0919
In this release, we make some "forward looking" statements, which are not historical facts, but are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects and proposed new products, services, developments or business strategies. These statements are identified by their use of terms and phrases such as: anticipate; believe; could; estimate; expect; intend; may; plan; predict; project; forecast; on track; continue; and other similar terms and phrases including references to assumptions. These phrases and statements include, but are not limited to, the following:
* We saw the first shipments into Pennsylvania, Florida racetracks and
Arkansas this quarter and look forward to future development in these
emerging markets
* IGT continues to invest heavily in new markets and technology, and we
remain focused on delivering the most complete line of industry-leading
products and service to our global customers |
