International edition
September 30, 2020

Consolidated revenues for this period were us$ 465 million

IGT reports 2011 first quarter results

(US).- IGT announced operating results for the fiscal first quarter ended December 31, 2010. Income from continuing operations for the quarter was us$ 73 million, compared to us$ 75 million in the same quarter last year. This quarter’s earnings were favorably impacted by us$ 0.04 per share from certain discrete tax benefits and gain on the sale of our equity investment in China LotSynergy Holdings.

Our first quarter results are reflective of our focus on improving our profitability and processes. While consistent top-line growth remains challenging, our internal cost cutting and operational improvement strategies are solidly taking hold,” said CEO Patti Hart. “Based on early customer feedback, we are confident that our recently released games are gaining momentum. We look forward to better demonstrating our top-line focused initiatives in the second half of this year and beyond.”

Consolidated revenues for the first quarter were us$ 465 million, of which 56% was generated from gaming operations and 44% from product sales, compared to us$ 515 million for the same quarter last year. Consolidated gross profit and operating income for the quarter were us$ 276 million and us$ 121 million, respectively, compared to us$ 296 million and us$ 144 million, in the prior year first quarter. Consolidated revenues decreased primarily due to fewer international openings and expansions in the quarter versus last year.

First quarter revenues from gaming operations totaled us$ 261 million compared to $277 million for the same quarter last year. Revenues decreased primarily due to a reduced installed base. Average revenue per unit in the first quarter was us$ 50.38, a decrease of us$ 0.48 per day from the immediately preceding quarter and an increase of us$ 1.13 year over year. The year over year increase was mainly due to fewer lower-yielding units.

Gaming operations gross profit totaled us$ 165 million in the first quarter, down 5% year over year. For the current quarter, gross margins on gaming operations were 63%, compared to 62% for the same quarter last year. Margins for this year’s quarter were positively impacted by the removal of lower yielding charitable bingo games in Alabama.

At the end of the quarter, IGT’s gaming operations installed base totaled 56,700 units, a decrease of 300 units from the immediately preceding quarter and 5,400 units from the prior year first quarter primarily due to the closure of certain charitable bingo facilities in Alabama (4,900 units) and the conversion of leased games to for-sale units in Mexico (1,000 units).

First quarter product sales revenues were us$ 204 million, down 14% from us$ 238 million a year ago. Globally, the company recognized 9,400 units in the quarter, down from 11,900 for the corresponding quarter of last year, primarily due to fewer new shipments in both International and North America regions.

Gross profit in the first quarter declined 9% to us$ 112 million while gross margin improved nearly 300 bps to 55%. The increase in gross margin resulted primarily from a stronger mix of non-machine sales and an improved geographic mix.

Operating expenses and other income/expense

First quarter operating expenses increased to us$ 155 million compared to us$ 152 million in the prior year quarter, primarily due to higher research and development expenses, partially offset by lower bad debt and depreciation expense. Other expense, net, in the first quarter decreased to us$ 18 million compared to us$ 29 million in the prior year quarter, primarily due to lower interest expense on reduced borrowings and gain on the sale of our CLS equity investment.

Cash Flows, Balance Sheet and Capital Deployment

For the quarter ended December 31, 2010, IGT generated us$ 102 million in cash from operations on net income of us$ 74 million compared to us$ 169 million on net income of us$ 73 million in the prior year period.

Working capital increased to us$ 654 million at December 31, 2010 compared to us$ 620 million at September 30, 2010. Cash equivalents and short-term investments (inclusive of restricted amounts) totaled us$ 254 million and contractual debt obligations totaled us$ 1.67 billion, with us$ 1.21 billion of available capacity on its us$ 1.24 billion line of credit as of December 31, 2010. In the first quarter, the company paid down debt obligations by us$ 80 million.

The company’s 3.25% convertible notes and warrants were excluded from diluted shares outstanding for the period ended December 31, 2010, because the conversion price and exercise price exceeded the average market price of our common stock.

In the quarter, the company recognized tax benefits of us$ 7 million from the implementation of certain tax planning strategies and the reinstatement of the Research and Development Tax Credit. As a result, the tax rate for the current quarter was 29%. The company expects the tax rate to be 36% in each of the next three quarters, or approximately 34% for the full year.

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