SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________________
Date of report (date of earliest event reported):
April 29, 1999
INTERNATIONAL GAME TECHNOLOGY
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(Exact name of registrant as specified in its charter)
Nevada 001-10684 88-0173041
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(State or Other (Commission (I.R.S. Employer
Jurisdiction File Number) Identification
of Formation) Number)
9295 Prototype Drive, Reno, Nevada 89511
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(Address of principal executive offices) (Zip Code)
(775) 448-7777
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(Registrant's telephone number, including area code)
not applicable
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events
ON APRIL 22, 1999, INTERNATIONAL GAME TECHNOLOGY ANNOUNCED
RESULTS FOR ITS SECOND QUARTER AND SIX MONTHS ENDED APRIL 3,
1999. THE FULL TEXT OF THE PRESS RELEASE IS INCLUDED AS EXHIBIT
99 TO THIS REPORT AND IS INCORPORATED HEREIN BY REFERENCE.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(c) Exhibits
The following exhibits are part of this current report on
Form 8-K and are numbered in accordance with Item 601 of
Regulation S-K.
Exhibit No. Description
99 Press release issued by International Game Technology on
April 22, 1999 announcing results for the quarter and six
month periods ended April 3, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
International Game Technology
(Registrant)
Date: April 29, 1999 By: /s/ Maureen Imus
Maureen Imus
Its: Chief Financial Officer and
Vice President, Finance
INTERNATIONAL GAME TECHNOLOGY REPORTS
EARNINGS OF $0.32 PER SHARE FOR THE
SECOND QUARTER OF FISCAL 1999
FOR IMMEDIATE RELEASE CONTACT: Maureen Imus
April 22, 1999 TELEPHONE: (775) 448-0127
CONTACT: Robert McIver
TELEPHONE: (775) 448-0110
(Reno, Nev.) International Game Technology (NYSE "IGT") today
announced results for its second quarter and six months ended
April 3, 1999. Earnings per diluted share for the current
quarter and six months improved to $0.32 and $0.64, respectively,
from $0.31 and $0.56 in the same periods of fiscal 1998. Net
income for the quarter totaled $33.8 million compared to net
income of $35.5 million in the year earlier period. Fiscal year-
to-date net income was $68.3 million compared to $65.2 million
for the prior year period. Total revenues for the current
quarter rose to $220.9 million, an increase of 21% over the
$182.1 million reported for the second fiscal quarter of 1998.
Revenues for the first half of fiscal 1999 totaled $442.6 million
versus $347.1 million in fiscal 1998.
Product sales revenues grew 52% to $139.6 million for the
current quarter compared to $91.7 million for the second quarter
of fiscal 1998. Year-to-date product sales were $276.2 million
versus $187.0 million for the same period of last year. Shipments
for the second quarter and year-to-date periods were 25,800 and
<PAGE>
58,000 units, respectively, compared to 12,600 and 27,200 units
in the corresponding prior year periods.
International shipments grew to 13,500 gaming machines, or
52% of total units, during the current quarter compared to 3,500
for the same quarter of fiscal 1998. For the year, IGT sold
38,400 machines in international markets compared to 9,500 last
year. The addition of the Barcrest product lines in March of
1998, along with growth in Japanese pachisuro sales, drove the
improvement.
Domestically, IGT shipped 12,300 units during the quarter
versus 9,100 last year, including an estimated 70% market share
to both the new Mandalay Bay and Venetian resorts in Las Vegas,
along with an estimated 55% market share for shipments to the
Ontario Lottery Commission. In addition, domestic volume
benefited from increased unit demand from Native American gaming
venues during both the quarter and the year-to-date periods of
fiscal 1999 compared to last year. The Company recently
announced that it will acquire Sodak Gaming, Inc. ("Sodak"), a
distributor of casino gaming products and software systems to
Native American markets, subject to certain conditions including
regulatory approvals, Sodak shareholder approval and IGT
obtaining the required financing. Total domestic year-to-date
shipments were 19,500 units versus 17,744 units for the same
period last year.
<PAGE>
As a result of the growth in product sales revenues, gross
profit on product sales grew to $51.1 million for the quarter, an
improvement of 32% compared to the year earlier period. The
gross profit margin percentage realized on product sales for both
the current quarter and six-month period was 37% compared to 42%
for the second quarter and six-month period of fiscal 1998. This
fluctuation from the prior year periods reflects changes in
product mix including a higher mix of international revenues as
well as increased sales of new platform machines domestically,
such as Vision and Game King.
Revenues from gaming operations were $81.3 million and $166.4
million for the quarter and six-month periods, respectively,
versus $90.4 million and $160.1 million for the corresponding
periods of last year. The fluctuation in quarter-to-quarter
revenues was primarily due to Nevada Megabucks. The jackpot on
Nevada Megabucks grew throughout fiscal 1998 to a record-breaking
$27.0 million in November 1998, which resulted in record play
levels in the prior year quarter. New system introductions
throughout all jurisdictions partially offset the decrease in
Nevada Megabucks and other systems. The installed base of
machines operating on MegaJackpots systems grew to 14,600 at the
end of the quarter, up from 13,100 one year earlier. Of these,
approximately 6,200 are operated in accordance with a joint
venture with Anchor Gaming.
<PAGE>
Gross profit from gaming operations was $50.1 million for the
current quarter and $96.6 million for the year-to-date period
compared to $50.8 million and $86.0 million for the corresponding
periods of fiscal 1998, respectively. The gross profit margin on
gaming operations improved to 62% for the quarter and 58% for the
first half of 1999 versus 56% and 54% for the year earlier
periods. The improvements in both periods were primarily due to
an increase in the proportion of overall gaming operations
revenues attributable to joint venture activities.
The Nevada Legislature convened on February 1, 1999, and in
March legislation was introduced that proposed business
restrictions, regulatory controls and tax obligations on the
Company. This bill was sponsored by the Nevada Resort
Association ("NRA"), and as a result of negotiations with the
NRA, IGT and other suppliers reached agreement on the proposed
legislation. The current form of the bill, if passed, would
increase regulatory review of linked slot machines and requires
both manufacturers and casino operators to pay their
proportionate share of state gaming taxes on revenues derived
from progressive and revenue participation games in Nevada. The
legislation places no restrictions on the manufacturers' ability
to sell gaming devices, on their pricing policies or on their
ability to participate in the revenue of such machines. Although
the bill is currently subject to additional review and potential
<PAGE>
revision, the Company currently believes it will pass prior to
the Nevada Legislature adjourning on May 31st.
Total operating expenses in the second quarter were $50.8
million compared to $36.2 million in the second quarter of last
year. For the year-to-date period, operating expenses were $98.7
million versus $69.2 million one year earlier. These increases
reflect the inclusion of the expenses of the Barcrest and Olympic
businesses, which were acquired in March 1998.
Other income for the current quarter totaled $444,000
compared to $1.4 million for the comparable prior year quarter.
Year-to-date other income was $3.8 million versus $4.2 million
for the year earlier period. Additional interest expense on
borrowings used for acquisitions and treasury stock purchases
resulted in the decreases in other income in both periods.
Under its stock repurchase program, IGT purchased 9.4 million
shares of its own common stock for an aggregate purchase price of
$151.0 million since January 2, 1999. Fiscal 1999 purchases of
treasury stock totaled 10.8 million shares for $177.2 million
through April 21, 1999.
IGT's Board of Directors voted to discontinue payment of cash
dividends in future quarters and redirect the funds toward the
<PAGE>
stock repurchase plan or other corporate purposes which may
result in more meaningful long-term benefit for the Company's
shareholders.
Cautionary statement for purposes of the "safe harbor"
provision of the Private Securities Litigation Reform Act of
1995: Certain statements, including the statement that the
Company currently believes the legislative bill will pass prior
to the Nevada Legislature adjourning on May 31st and the
statement that the Company believes the redirection of funds from
dividends will result in more meaningful benefit for the
Company's shareholders, 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 outcomes
from pending legislation, which 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.
<PAGE>
IGT Fiscal Year 1999
Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
Apr.3, Mar. 31, Apr. 3, Mar. 31,
1999 1998 1999 1998
(in thousands, except
per share amounts)
<S> <C> <C> <C> <C>
Revenues
Product sales $139,616 $ 91,660 $276,220 $187,016
Gaming operations 81,255 90,430 166,357 160,087
Total revenues 220,871 182,090 442,577 347,103
Costs and expenses
Cost of product sales 88,510 53,049 175,296 107,766
Cost of gaming operations 31,138 39,643 69,739 74,135
Selling, general, and
administrative 31,972 22,750 61,713 43,733
Depreciation and
amortization 6,266 3,439 12,373 6,806
Research and development 10,408 8,208 21,112 15,482
Provision for bad debts 2,148 1,778 3,521 3,164
Total costs and expenses 170,442 128,867 343,754 251,086
Income from operations 50,429 53,223 98,823 96,017
Other income (expense)
Interest income 14,570 11,161 26,113 22,336
Interest expense (12,622) (9,202) (25,185) (17,992)
Gain (loss) on sale of
assets (100) 39 3,870 1,081
Other (1,404) (617) (956) (1,192)
Other income, net 444 1,381 3,842 4,233
Income before income taxes 50,873 54,604 102,665 100,250
Provision for income taxes 17,042 19,112 34,393 35,087
Net income $ 33,831 $ 35,492 $ 68,272 $ 65,163
Basic earnings per share $ 0.32 $ 0.31 $ 0.64 $ 0.57
Diluted earnings per share $ 0.32 $ 0.31 $ 0.64 $ 0.56
Weighted average common
shares outstanding 104,921 113,870 106,480 113,820
Weighted average common and
common equivalent shares
outstanding 105,652 116,129 107,425 116,122
</TABLE>
<PAGE>
IGT Fiscal Year 1999
Condensed Balance Sheets
<TABLE>
<CAPTION>
April 3, September 30,
1999 1998
(Dollars in thousands)
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 193,160 $ 175,413
Investment securities, at market
value 13,758 19,354
Accounts receivable 169,559 189,521
Current maturities of long-term
notes and contracts receivable 64,372 63,022
Inventories 134,784 133,154
Investments to fund liabilities to
jackpot winners 41,663 41,216
Deferred income taxes 17,526 16,517
Prepaid expenses and other 29,883 32,346
Total current assets 664,705 670,543
Long-term notes and contracts
receivable 29,516 37,750
Property, plant and equipment, at
cost 288,292 278,295
Less accumulated depreciation and
amortization (115,148) (109,542)
Property, plant and
equipment, net 173,144 168,753
Investments to fund liabilities to
jackpot winners 367,567 369,427
Intangible assets 135,678 131,552
Other assets 162,331 165,603
Total Assets $1,532,941 $1,543,628
Liabilities and Stockholders' Equity
Current liabilities
Current maturities of long-term
notes payable and capital lease
obligations $ 42,536 $ 30,311
Accounts payable 52,061 57,277
Jackpot liabilities 56,208 50,659
Accrued employee benefit plan
liabilities 13,454 17,512
Other accrued liabilities 50,025 44,781
Total current liabilities 214,284 200,540
Long-term notes payable and capital
lease obligations, net of current
maturities 377,985 322,510
Long-term jackpot liabilities 471,276 479,217
Other liabilities 245 85
Total liabilities 1,063,790 1,002,352
Stockholders' equity
Common stock 95 95
Additional paid-in capital 260,277 256,656
Retained earnings 892,623 827,542
Treasury stock (676,588) (535,797)
Accumulated other comprehensive
income (7,256) (7,220)
Total stockholders' equity 469,151 541,276
Total Liabilities and
Stockholders' Equity $1,532,941 $1,543,628
</TABLE>
