INTERNATIONAL GAME TECHNOLOGY
PROFIT SHARING PLAN
Financial Statements for the Years Ended
December 31, 1997 and 1996,
Supplemental Schedules for the Year Ended
December 31, 1997,
and Independent Auditors' Report
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available
for Benefits 3
Notes to Financial Statements 4
Item 27a - Supplemental Schedule of Assets Held
for Investment Purposes 10
Item 27d - Supplemental Schedule of Reportable Transactions -
Single Transactions in Excess of 5% of
Plan Assets 11
Item 27d - Supplemental Schedule of Reportable Transactions -
Series of Transactions in Excess of 5% of
Plan Assets 12
<PAGE>
INDEPENDENT AUDITORS' REPORT
International Game Technology Profit Sharing Plan:
We have audited the accompanying statements of net assets
available for benefits of International Game Technology Profit
Sharing Plan (the "Plan") as of December 31, 1997 and 1996, and
the related statements of changes in net assets available for
benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used
and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in
all material respects, the net assets available for benefits of
the Plan at December 31, 1997 and 1996, and the changes in net
assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion
on the basic financial statements taken as a whole. The
supplemental schedules listed in the Table of Contents are
presented for the purpose of additional analysis and are not a
required part of the basic financial statements, but are
supplementary information required by the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. These
supplemental schedules are the responsibility of the Plan's
management. Such schedules have been subjected to the auditing
procedures applied in our audit of the basic 1997 financial
statements and, in our opinion, are fairly stated in all
material respects when considered in relation to the basic
financial statements taken as a whole.
May 21, 1998
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
<S> <C> <C>
Money market and cash equivalents $ 1,078,753 $ 132,686
Investments, at fair value 74,964,372 60,244,400
Contributions receivable 384,863 228,565
Loans to participants 3,594,474 3,112,384
NET ASSETS AVAILABLE FOR BENEFITS
$80,022,462 $63,718,035
</TABLE>
See accompanying notes to financial statements.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
Investment income:
Net increase in fair value of investments $12,105,169 $ 9,876,533
Interest 483,870 481,116
Dividends 1,039,111 986,629
13,628,150 11,344,278
Contributions:
Employer 7,556,601 7,274,873
Employee 3,156,595 2,929,604
Total additions 24,341,346 21,548,755
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 7,630,107 4,788,302
Administrative expenses 406,812 340,675
Total deductions 8,036,919 5,128,977
NET INCREASE 16,304,427 16,419,778
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 63,718,035 47,298,257
END OF YEAR $80,022,462 $63,718,035
</TABLE>
See accompanying notes to financial statements.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1997 and 1996
1. DESCRIPTION OF PLAN
The IGT Profit Sharing Plan ("Plan") is sponsored by International Game
Technology (the "Company") and consists of two programs: The Profit
Sharing Program and the 401(k) Program. The following is a brief
description of the Plan and provides general information. Participants
should refer to the IGT Plan Document and Summary Plan Description for
a more complete description of the Plan's provisions.
The Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"), as amended, and other provisions of the
Internal Revenue Code.
Profit Sharing Program - The Plan, adopted December 10, 1980, is a
defined contribution plan covering all eligible employees of
International Game Technology. On June 1, 1993 the Plan was restated
to offer additional investment options to participants as well as
transfer the administration to a Third-Party Administrator. Refer to
"Investment Options" below for further information of available
investment funds.
Company employees are eligible to participate in the Plan after
completing 1,000 hours of service in a calendar year and reaching the
age of 18. Once eligible, a Plan participant must be employed on the
last day of the Plan year (December 31) to receive their annual profit
sharing allocation. Participation in the Plan is retroactive to
January 1 of the year in which the employee became eligible.
The Company may make an annual profit sharing contribution, as
determined by the Company's Board of Directors, based on operating
profits. The contribution is then allocated to participant's accounts
proportionately based on annual eligible compensation. Refer to
"Benefit Payments and Vesting" below for the Profit Sharing Program
vesting schedule.
401(k) Program - Effective January 1, 1989, the Plan was amended to
allow participants to defer up to 20% of their annual salary as
contributions to their accounts, as governed by IRC Section 401(k). On
January 1, 1995, the Company again amended the Plan to lower the
elective deferrals from 20% to 15%. An employee may begin contributing
pre-tax contributions to their accounts upon completion of 90 days of
full time employment, or one year as a part-time employee. A
participant may stop contributing to the Plan at any time upon adequate
notice to the employer.
On January 1, 1993, the Company began a 401(k) contribution matching
program whereby the Company matches 100% of an employee's contributions
up to $500 and an additional 50% of the next $500 contributed by the
employee. This allows for maximum annual Company matching
contributions of $750 to each employee's account. Employees are 100%
vested in all 401(k) contributions.
The Plan also allows for rollover contributions from other qualified
retirement plans. If the rollover is by way of an individual
retirement arrangement, all assets in the prior retirement plan must
have originated as contributions made under a qualified plan.
<PAGE>
Participant Accounts - Each participant's account is credited with
employee 401(k) and employer matching contributions, the allocations of
the Company's profit sharing contribution and forfeitures of non-vested
portions of terminated participants' account balances. Additionally,
participants' accounts are effected by earnings and losses on
investments. Each participant is provided a quarterly account
statement detailing the account activity by investment fund.
Investment Options - The Company has selected seven investment options
that have a variety of growth and risk characteristics. Plan
participants are able to elect how their contributions are invested. A
participant may allocate all contributions to one investment fund or
split them between any combination of funds in increments of 1%. A
participant may change how current and/or future contributions are
invested at any time during the Plan year. The Plan's investment
options are:
Capital Market Group Government Money Fund
Capital Market Group Intermediate Fixed Income Fund
Capital Market Group Small Capitalization Growth Equity Fund
Capital Market Group Large Capitalization Growth Equity Fund
Capital Market Group Large Capitalization Value Equity Fund
Capital Market Group International Equity Investment Fund
Common Stock - International Game Technology
Benefit Payments and Vesting - Participants are immediately vested in
their pre-tax 401(k) contributions, Company 401(k) matching
contributions, and rollover contributions from other qualified plans,
plus earnings thereon. The vested portion of a participant's profit
sharing account is based upon years of continuous service. A
participant is 100% vested after seven consecutive years of service,
per the following vesting table:
Completed Years
of Vesting Service Vested Portion
0 0%
1 10%
2 20%
3 30%
4 45%
5 60%
6 80%
7 100%
A participant earns a year of vesting service for each Plan year
(January 1 to December 31) in which he or she worked at least 1,000
hours.
Upon termination of employment, a participant may receive a lump sum
payment equal to the value of his or her account. If the termination
of employment is by normal retirement (retirement after age 65), by
death or by reason of total disability, the participant is 100% vested
and has the right to receive payment in full. If a participant leaves
the Company for any other reason, he or she is entitled to a
distribution from the vested portion of his or her account.
If a participant's vested account balance is $3,500 or more, he or she
may voluntarily defer payment of benefits until the normal retirement
date. In any case, he or she may not defer payment past the age of 70
1/2. The only form of benefit payments are lump-sum payments, however,
<PAGE>
a participant may take a partial lump-sum payment and defer the balance
of his or her account as long as the remaining balance is at least
$3,500.
Hardship Withdrawals - The Plan allows for hardship withdrawals under
defined circumstances. The necessity of the hardship withdrawal is
reviewed by the Company's Benefits Committee and includes allowance for
major medical expenses, purchase of a primary residence, college
expenses for a family member, and prevention of eviction from or
foreclosure on a principal residence. A participant must stop making
pre-tax 401(k) contributions for a year following the hardship
withdrawal.
Plan Termination - In the event of Plan termination, participants will
become 100% vested in their accounts. Although the Company has not
expressed any intent to do so, International Game Technology has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA.
Loans - The Plan allows for loans to be taken against a participant's
vested account, subject to the following restrictions: the loan amount
may be no less than $1,000 and no more than the lesser of 50% of the
participant's vested account balance or $50,000; interest is charged on
a simple interest basis at the prime rate plus 1%; and repayment must
be over a period not to exceed 60 months. Payments are made by payroll
deduction on a bi-weekly basis.
Administrative Expenses - Plan administrative expenses totaling
$406,812 and $340,675 in 1997 and 1996, respectively, were paid by the
Plan. These include management fees and trustee fees. Consulting fees
and recordkeeping fees are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The Plan is accounted for on the accrual basis of
accounting.
Cash and Cash Equivalents - Securities with maturities upon purchase of
three months or less are considered cash equivalents. Such investments
are stated at cost, which approximates market, and are deemed to be
cash equivalents.
Valuation of Investments - All investments of the Plan are valued at
quoted market prices as of December 31, 1997 and 1996.
Benefits Payable - As of December 31, 1997 and 1996, net assets
available for benefits included $7,142,347 and $4,029,697 due to
participants who have withdrawn from participation in the Plan,
respectively.
<PAGE>
3. INVESTMENTS
All investments of the Plan are administered by an investment
management agent. The following table presents the fair value of
investments at quoted market prices at December 31:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Capital Market Group Government Money Fund $10,217,797 $ 9,667,152
Capital Market Group Intermediate Fixed
Income Fund 4,267,630 3,993,725
Capital Market Group Small Capitalization
Growth Equity Fund 9,016,787 7,706,054
Capital Market Group Large Capitalization
Growth Equity Fund 12,249,943 9,076,881
Capital Market Group Large Capitalization
Value Equity Fund 12,366,679 8,500,035
Capital Market Group International Equity
Investment Fund 1,447,938 836,810
Common stock - International Game Technology 18,642,782 13,970,977
U.S. Treasury Bills 6,754,816 6,492,766
Total investments $74,964,372 $60,244,400
</TABLE>
<PAGE>
4. FUND INFORMATION
Changes in fair value of investments by fund, investment income,
contributions, and benefits paid to participants are as follows for the
years ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Increase (Decrease) in Fair Value
of Investments:
Capital Market Group Intermediate Fixed
Income Fund $ 51,069 $ (97,410)
Capital Market Group Small Capitalization
Growth Equity Fund 936,655 1,156,324
Capital Market Group Large Capitalization
Growth Equity Fund 2,897,027 1,452,790
Capital Market Group Large Capitalization
Value Equity Fund 2,937,130 1,166,262
Capital Market Group International Equity
Investment Fund (6,793) 22,853
Common Stock - International Game
Technology 5,290,081 6,175,714
Total $12,105,169 $9,876,533
Interest and Dividends:
Capital Market Group Government Money
Fund $ 525,204 $ 467,789
Capital Market Group Intermediate Fixed
Income Fund 258,525 235,328
Capital Market Group Large Capitalization
Growth Equity Fund 59,144 50,862
Capital Market Group Large Capitalization
Value Equity Fund 102,426 225,870
Capital Market Group International Equity
Investment Fund 26,445 10,097
Common Stock - International Game
Technology 93,109 98,004
Loan Fund 296,223 235,158
U.S. Treasury Bills 161,905 144,637
Total $ 1,522,981 $1,467,745
Employer Contributions:
Capital Market Group Government Money
Fund $ 130,932 $ 121,226
Capital Market Group Intermediate Fixed
Income Fund 69,710 76,746
Capital Market Group Small Capitalization
Growth Equity Fund 155,458 148,198
Capital Market Group Large Capitalization
Growth Equity Fund 178,810 160,919
Capital Market Group Large Capitalization
Value Equity Fund 162,517 150,555
Capital Market Group International Equity
Investment Fund 36,185 30,818
Common Stock - International Game
Technology 205,003 219,857
U.S. Treasury Bills 6,617,986 6,366,554
Total $ 7,556,601 $7,274,873
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Participant Contributions:
Capital Market Group Government Money
Fund $ 473,711 $ 399,692
Capital Market Group Intermediate Fixed
Income Fund 209,873 205,387
Capital Market Group Small Capitalization
Growth Equity Fund 545,640 555,275
Capital Market Group Large Capitalization
Growth Equity Fund 634,414 569,053
Capital Market Group Large Capitalization
Value Equity Fund 588,132 501,981
Capital Market Group International Equity
Investment Fund 146,798 131,003
Common Stock - International Game
Technology 558,027 567,213
Total $ 3,156,595 $2,929,604
Benefits paid to participants:
Capital Market Group Government Money
Fund $ 1,719,769 $1,428,501
Capital Market Group Intermediate Fixed
Income Fund 855,275 302,837
Capital Market Group Small Capitalization
Growth Equity Fund 1,106,511 695,560
Capital Market Group Large Capitalization
Growth Equity Fund 1,011,933 666,628
Capital Market Group Large Capitalization
Value Equity Fund 954,646 706,189
Capital Market Group International Equity
Investment Fund 131,835 72,312
Common Stock - International Game
Technology 1,472,428 754,164
Loan Fund 377,710 162,111
Total $ 7,630,107 $4,788,302
</TABLE>
5. FEDERAL INCOME TAXES
The Plan has received a determination letter dated November 30, 1995
from the Internal Revenue Service qualifying it as an exempt
organization under Sections 401(a) and 501(a) of the Internal Revenue
Code. Accordingly, no provision for federal income taxes has been made
in the accompanying financial statements.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
ITEM 27a - SUPPLEMENTAL SCHEDULE OF ASSETS HELD FOR
INVESTMENT PURPOSES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
(b) (c) (d) (e)
Maturity Interest Current
Description Date Rate Units Cost Value
<S> <C> <C> <C> <C> <C>
Capital Market Group
Government Money Fund 10,217,797 $10,217,797 $10,217,797
Capital Market Group
Intermediate Fixed Income
Fund 524,924 4,242,065 4,267,630
Capital Market Group Small
Capitalization Growth
Equity Fund 532,907 8,400,999 9,016,787
Capital Market Group Large
Capitalization Growth
Equity Fund 720,585 9,467,964 12,249,943
Capital Market Group Large
Capitalization Value
Equity Fund 931,226 10,754,850 12,366,679
Capital Market Group
International Equity
Investment Fund 145,084 1,516,061 1,447,938
Common Stock - International
Game Technology 738,328 12,091,809 18,642,782
U.S. Treasury Bills 6,773,000 6,750,559 6,754,816
Total investments $63,442,104 $74,964,372
</TABLE>
Notes on Columns (a) through (e):
(a) Omitted from the Department of Labor format because the answer is none.
(b) General description of investments.
(c) Maturity dates and stated rates of interest are not applicable due to the
nature of these investments.
(d) Purchase price of investment.
(e) Fair market value of investments.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
ITEM 27d - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS - SINGLE
TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (g) (h) (i)
Identity of Description Purchase Selling Cost of Value of Net
Party Involved of Transaction Price Price Asset Transaction Gain/Loss
<S> <C> <C> <C> <C> <C> <C>
Smith Barney Shearson Redemption of U.S. Treasury bills $ - $3,393,000 $3,393,000 $3,393,000 $ -
Smith Barney Shearson Purchase of U.S. Treasury bills 3,410,000 - - - -
Smith Barney Shearson Redemption of U.S. Treasury bills - 3,410,000 3,410,000 3,410,000 -
Smith Barney Shearson Redemption of U.S. Treasury bills - 6,518,000 6,518,000 6,518,000 -
Smith Barney Shearson Purchase of U.S. Treasury bills 6,540,000 - - - -
Smith Barney Shearson Redemption of U.S. Treasury bills - 6,540,000 6,540,000 6,540,000 -
Smith Barney Shearson Purchase of U.S. Treasury bills 3,878,000 - - - -
Smith Barney Shearson Redemption of U.S. Treasury bills - 3,878,000 3,878,000 3,878,000 -
Smith Barney Shearson Purchase of U.S. Treasury bills 3,887,000 - - - -
Smith Barney Shearson Redemption of U.S. Treasury bills - 3,887,000 3,887,000 3,887,000 -
Smith Barney Shearson Purchase of U.S. Treasury bills 6,773,000 - - - -
Smith Barney Shearson Purchase of Reserve Deposit
Account 6,541,485 - - - -
Smith Barney Shearson Redemption of Reserve Deposit
Account - 5,636,492 5,636,492 5,636,492 -
</TABLE>
Notes to columns (c) through (i)
(c) Purchase price of investments bought during the year.
(d) Proceeds received from redemption of investments maturing or sold during
the year.
(e) and (f) Omitted from the Department of Labor format because the answer in
none.
(g) Purchase price of investment plus or minus the amortization of discount or
premium received or paid at the date of sale.
(h) Market value at the date of maturity or sale for each investment shown in
column (d).
(i) Difference between columns (d) and (g).
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
ITEM 27d - SUPPLEMENTAL SCHEDULE OF REPORTABLE TRANSACTIONS - SERIES OF
TRANSACTIONS IN EXCESS OF 5% OF PLAN ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
(a) (b) (c) (d) (g) (h) (i)
Identity of Description Purchase Selling Cost of Value of Net
Party Involved of Transaction Price Price Asset Transaction Gain/Loss
<S> <C> <C> <C> <C> <C> <C>
Smith Barney Shearson Purchase of Gov't Money Invts $ 6,878,877 $ - $ - $ - $ -
Smith Barney Shearson Redemption of Gov't Money Invts - 6,328,233 6,328,233 6,328,233 -
Smith Barney Shearson Purchase of Lg Cap Value Eqty 5,730,343 - - - -
Smith Barney Shearson Purchase of Lg Cap Grw Invst 5,068,013 - - - -
Smith Barney Shearson Redemption of Lg Cap Grw Invst - 3,905,687 2,914,494 3,905,687 991,193
Smith Barney Shearson Purchase of Sm Cap Grw Invst 4,209,071 - - - -
Smith Barney Shearson Redemption of Sm Cap Grw Invst - 3,269,037 2,994,337 3,269,037 274,700
Smith Barney Shearson Purchase of IGT Common Stock 3,867,890 - - - -
Smith Barney Shearson Redemption of IGT Common Stock - 4,320,528 3,658,486 4,320,528 662,042
Smith Barney Shearson Purchase of Reserve Deposit Act 17,767,857 - - - -
Smith Barney Shearson Redemption of Reserve Deposit
Act - 17,437,440 17,437,440 17,437,440 -
Smith Barney Shearson Purchase of US Treasury Bills 29,914,000 - - - -
Smith Barney Shearson Redemption of US Treasury Bills - 29,659,000 29,659,000 29,659,000 -
</TABLE>
Notes to columns (c) through (i)
(c) Purchase price of investments bought during the year.
(d) Proceeds received from redemption of investments maturing or sold during
the year.
(e) and (f) Omitted from the Department of Labor format because the answer
is none.
(g) Purchase price of investment plus or minus the amortization of discount or
premium received or paid at the date of sale.
(h) Market value at the date of maturity or sale for each investment shown in
column (d).
(i) Difference between columns (d) and (g).
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration
Statement No. 33-63608 of the International Game Technology
Profit Sharing Plan on Form S-8 of our report dated May 21, 1998,
appearing in this Annual Report on Form 11-K of the International
Game Technology Profit Sharing Plan for the year ended December
31, 1997.
DELOITTE & TOUCHE, LLP
Reno, Nevada
June 26, 1998
