1997 - Indeed it was a very good year
International Game Technology Reports Fourth Quarter and Fiscal Year 1997 Earnings
RENO, Nev., Nov. 4 /PRNewswire/ -- IGT, a wholly owned subsidiary of
International Game Technology (NYSE: IGT), today announced operating results
for the fourth quarter and fiscal year ended September 30, 1997. Net income
for fiscal 1997 totaled $137.2 million or $1.12 per fully diluted share as
compared to $118.0 million or $0.92 per share for fiscal 1996. Total revenues
for the year were $744.0 million, surpassing the previous record of
$733.5 million set one year earlier. The Company reported fourth quarter net
income of $41.4 million or $0.35 per share on revenues of $226.4 million
compared to net income of $36.3 million or $0.28 per share on revenues of
$220.0 million in the prior period.
For the year ended September 30, 1997, gaming operations revenue increased
12% to $282.8 million versus $251.8 million for the prior year. Fourth
quarter gaming operations revenues were $80.1 million, up from $72.0 million
during the same period in 1996. Fourth quarter gaming operations revenues
improved in most jurisdictions, most notably in the Native American and
Louisiana markets. The introduction of MegaJackpot(R) systems in Missouri
late in the third quarter also contributed to the growth in revenues. During
the quarter, the Company introduced Nevada Super Megabucks, a complementary
product to the dollar denominated Megabucks. The Wheel of Fortune(R) systems
also continued their rapid growth. As of September 30, 1997 there were in
excess of 3,100 Wheel of Fortune(R) units operating in six different
jurisdictions compared to 2,000 at the end of the third fiscal quarter. In
total, the installed base of machines operating on the Company's
MegaJackpot(R) systems increased to 11,700 at fiscal year-end compared to
9,400 last year.
The gross profit margin on gaming operations was 50% for the fourth
quarter and 49% for the fiscal year as compared to 47% and 45% for the same
periods in fiscal 1996, respectively. These improvements were primarily due
to revenues from joint venture activities, which, for accounting purposes, are
reported net of expenses, offset by higher costs of interest-sensitive assets
which the Company purchases to fund jackpot payments.
Product sales revenues totaled $146.3 million and $461.2 million for the
current fourth quarter and fiscal year, respectively, compared to
$148.0 million and $481.7 million in the comparable periods of fiscal 1996.
Worldwide sales totaled 24,200 and 78,300 machines in the fourth quarter and
fiscal year 1997, respectively, versus 29,700 and 85,400 in the same prior
year periods. Sales of over 4,100 machines in the fourth quarter in the
riverboat market were led by sales to the Blue Chip, Argosy, and Majestic Star
casinos in Indiana. Quarterly revenues also included 3,000 units sold in
Nevada and 3,100 units sold to Native American casinos. Domestic fourth
quarter shipments benefited from increased demand in Canada, where the Company
sold 900 units to the British Columbia Lottery Commission.
The gross profit margin on product sales for fiscal 1997 was 44% versus
45% in fiscal 1996. During the fourth quarter, the product sales gross margin
declined to 42% from 44% in the same period of 1996. The lower product sales
margins for the current year and quarter reflect lower unit volume and a
higher percentage of international sales in the overall mix as compared to the
same periods last year.
"Anticipating some flattening in the rate of growth of new casino
capacity, IGT has placed increased emphasis on product development," stated
IGT President Tom Baker. "Our strategy is to help casino operators enhance
their customers' gaming experience in existing facilities, as well as in new
properties, with next generation products like our new Vision(TM) series."
The Vision(TM) series, IGT's new spinning reel slot platform, features
increased micro-processing power, high fidelity sound, and a high-definition
liquid crystal display screen to offer improved communications between the
casino operator and its customers, along with an array of "second event"
bonusing features which are largely operator configurable. The Vision(TM)
series was well received at the recent World Gaming Congress & Expo and is
currently approved for sale to Native American casinos in eight states and
awaiting regulatory approval in 14 other jurisdictions including riverboat
states, additional Native American venues, and traditional gaming states such
as Nevada, New Jersey and Colorado.
In both the fourth quarter and fiscal year 1997, IGT was, for the first
time, profitable in all international regions. Internationally, sales totaled
25,300 units in the year ended September 30, 1997, up from the 22,800 units
sold during the prior year. Machine sales totaled approximately 11,000 units
in both the fourth quarter of 1997 and 1996. Australia led the international
improvement with 3,100 units in the current quarter and 7,700 units for the
current fiscal year, a 68% and 29% improvement over the same periods in the
prior year. Australian shipments for the quarter included over 500 units to
the permanent Sydney Harbor casino. "Fiscal 1997 was IGT-Australia's most
successful year in terms of product sales, margins, and earnings.
Management's focus during the year concentrated on product margins and overall
cost reductions. We are pleased with the dramatic year over year turnaround
in this important market," commented Baker.
Japan unit sales of 4,500 in the quarter resulted from the introduction of
the Company's third entry into the pachisuro market, "Jokers Wild." Fiscal
1997 shipments in Japan totaled approximately 9,500 units. In addition, over
850 machines were sold in the emerging South Africa market during the fourth
quarter. Mpumalanga is the first of six provinces to initiate gaming per the
national legislation effective June 1996. IGT sales of 650 units to the two
new casinos in this province managed by the MGM Grand represented a 100%
market share.
Operating income for fiscal 1997 was $191.4 million compared to
$169.8 million in fiscal 1996. Operating income for the three months ended
September 30, 1997 was $59.7 million compared to $58.8 million for the same
period last year. Selling, general and administrative expenses for the year
decreased by approximately 9% primarily due to abandoned building and
severance charges in 1996. Overall operating expenses declined 5% year over
year, which contributed to the increase in fiscal year operating margins from
23% in 1996 to 26% in 1997.
Other income for the year totaled $21.2 million, a $6.6 million increase
over fiscal 1996. This increase resulted primarily from gains on the sale of
investment securities.
The Company's current year-end inventory has decreased $7.9 million
compared to September 30, 1996. Inventory turns have improved to 2.8 times
per year.
Pursuant to its previously announced share repurchase program, the Company
purchased 13.1 million shares or approximately 10% of its outstanding common
stock during fiscal 1997 for an aggregate purchase price of $225.5 million.
The Company announced that its Board of Directors declared a quarterly
cash dividend of $0.03 per share, payable on December 1, 1997, to shareholders
of record at the close of business on November 3, 1997.
Cautionary statement for purposes of the "safe harbor" provisions of the
private securities litigation reform act of 1995: Certain statements,
including statements regarding new casino growth rates, level of demand in
Canada and the potential of certain markets, contained in this release are
forward-looking and represent the Company's expectations or beliefs concerning
future events. The Company cautions that these and similar statements involve
risk and uncertainties and are qualified by important factors, including
unfavorable changes in the growth rate in existing and new markets,
unfavorable public referendums or anti-gaming legislation; and political,
regulatory and economic instability in developing international markets could
cause actual results to differ materially from those in the forward-looking
statement. These factors are discussed in greater detail in the Company's
periodic filings with the Securities and Exchange Commission.
IGT is a world leader in the design, development and manufacture of
microprocessor-based gaming products and software systems in all jurisdictions
where gaming is legal.
IGT FISCAL YEAR 1997
STATEMENTS OF INCOME
Three Months Twelve Months
Ended Ended
September 30, September 30,
1997 1996 1997 1996
(in thousands, except per
share amounts)
Revenues
Product sales $146,299 $147,999 $461,150 $481,652
Gaming operations 80,068 72,048 282,820 251,800
Total revenues 226,367 220,047 743,970 733,452
Costs and expenses
Cost of product sales 85,114 83,412 256,480 265,550
Gaming operations 39,906 38,076 145,245 139,706
Selling, general, and
administrative 26,870 28,463 98,380 108,469
Depreciation and
amortization 3,249 3,235 11,846 12,570
Research and development 8,251 7,013 31,074 25,701
Provision for bad debts 3,239 1,027 9,508 11,623
Total costs and expenses 166,629 161,226 552,533 563,619
Income from operations 59,738 58,821 191,437 169,833
Other income (expense)
Interest income 11,461 10,411 41,738 39,178
Interest expense (8,522) (6,521) (30,422) (23,535)
Gain (loss) on sale
of assets 1,495 (1,208) 12,861 (5,104)
Other (495) (4,841) (2,989) 4,031
Other income, net 3,939 (2,159) 21,188 14,570
Income before income taxes 63,677 56,662 212,625 184,403
Provision for income taxes 22,287 20,399 75,378 66,386
Net income $41,390 $36,263 $137,247 $118,017
Primary earnings per share $0.36 $0.28 $1.13 $0.93
Fully diluted earnings
per share $0.35 $0.28 $1.12 $0.92
Weighted average common
and common equivalent
shares outstanding 116,426 127,369 121,829 127,412
Weighted average common
shares outstanding
assuming full dilution 117,018 127,548 122,390 128,160
IGT FISCAL YEAR 1997
CONDENSED BALANCE SHEETS
September 30, September 30,
1997 1996
(Dollars in thousands)
Assets
Current assets
Cash and cash equivalents $151,771 $169,900
Investment securities,
at market value 14,944 60,858
Accounts receivable 173,783 148,305
Current maturities of
long-term notes and
contracts receivable 74,686 72,063
Inventories 92,444 100,343
Deferred income taxes 18,229 19,354
Investments to fund
liabilities to jackpot
winners 35,088 27,343
Prepaid expenses and other 10,601 17,426
Total current assets 571,546 615,592
Long-term notes and contracts
receivable 32,524 46,473
Property, plant and equipment,
at cost 270,318 260,946
Less accumulated
depreciation and
amortization (91,842) (83,144)
Property, plant and
equipment, net 178,476 177,802
Investments to fund liabilities
to jackpot winners 313,719 244,340
Other assets 118,787 69,980
Total Assets $1,215,052 $1,154,187
Liabilities and Stockholders'
Equity
Current liabilities
Current maturities of
long-term notes payable
and capital lease
obligations $25,414 $8,119
Accounts payable 46,238 33,145
Jackpot liabilities 42,485 33,489
Accrued employee benefit plan
liabilities 17,147 16,175
Accrued dividends payable 3,411 3,767
Accrued income taxes 877 --
Other accrued liabilities 29,016 32,747
Total current liabilities 164,588 127,442
Long-term notes payable and
capital lease obligations,
net of current maturities 140,713 107,155
Long-term jackpot liabilities 389,235 292,864
Other liabilities 669 3,526
Total liabilities 695,205 530,987
Stockholders' equity
Common stock 95 94
Additional paid-in capital 243,950 237,365
Retained earnings 688,597 567,565
Treasury stock (413,617) (188,143)
Net unrealized gain on
investment securities 822 6,319
Total stockholders'
equity 519,847 623,200
Total Liabilities and
Stockholders' Equity $1,215,052 $1,154,187
SOURCE International Game Technology
CONTACT: Maureen Imus, 702-448-0127, or Robert McIver,
702-448-0110, both of IGT
c1997 PR Newswire. All rights reserved. |
