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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number ____________
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
INTERNATIONAL GAME TECHNOLOGY
PROFIT SHARING PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
INTERNATIONAL GAME TECHNOLOGY
9295 Prototype Drive, Reno, NV 89511
(775) 448-7777
<PAGE>
INTERNATIONAL GAME TECHNOLOGY
PROFIT SHARING PLAN
Financial Statements for the Years Ended
December 31, 1998 and 1997, Supplemental
Schedules for the Year Ended December 31, 1998,
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>
1
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, 1998 and 1997, 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, 1998
and 1997, 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 1998 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.
DELOITTE & TOUCHE LLP
May 26, 1999
Reno, Nevada
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
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<TABLE>
<CAPTION>
ASSETS 1998 1997
<S> <C> <C>
Money market and cash equivalents $ 625,827 $ 1,078,753
Investments, at fair value 87,659,661 74,964,372
Contributions receivable 237,302 384,863
Loans to participants 4,195,026 3,594,474
----------- -----------
NET ASSETS AVAILABLE FOR $92,717,816 $80,022,462
BENEFITS =========== ===========
</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, 1998 AND 1997
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<TABLE>
<CAPTION>
1998 1997
ADDITIONS TO NET ASSETS
ATTRIBUTED TO:
<S> <C> <C>
Investment income:
Net increase in fair value of investments $ 6,224,216 $12,105,169
Interest 461,061 483,870
Dividends 1,194,708 1,039,111
----------- -----------
7,879,985 13,628,150
Contributions:
Employer 8,675,950 7,556,601
Participant 3,793,454 3,156,595
----------- -----------
Total additions 20,349,389 24,341,346
----------- -----------
DEDUCTIONS FROM NET ASSETS
ATTRIBUTED TO:
Benefits paid to participants 7,171,897 7,630,107
Administrative expenses 482,138 406,812
----------- -----------
Total deductions 7,654,035 8,036,919
----------- -----------
NET INCREASE 12,695,354 16,304,427
NET ASSETS AVAILABLE FOR BENEFITS:
BEGINNING OF YEAR 80,022,462 63,718,035
----------- -----------
END OF YEAR $92,717,816 $80,022,462
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
INTERNATIONAL GAME TECHNOLOGY PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 and 1997
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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 affected 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
The Company invests employer profit sharing contributions not yet
distributed in U.S. Treasury Bills and Money Funds.
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 terminating participant's vested account balance totals $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 terminating 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. Effective December 31, 1998, the Company amended the Plan allowing
terminated participants to voluntarily defer payment of benefits until the
normal retirement date if his or her vested account balance totals $5,000 or
more.
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 $482,138 and
$406,812 in 1998 and 1997, 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.
Money Market 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.
Investments, at Fair Value - All investments of the Plan are valued at
quoted market prices as of December 31, 1998 and 1997. Investments include
employer profit sharing contributions not yet distributed, and participant
investment options.
Benefits Payable - As of December 31, 1998 and 1997, net assets available
for benefits included $8,524,708 and $7,142,347 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>
1998 1997
<S> <C> <C>
Capital Market Group Government Money Fund $12,021,465 $10,217,797
Capital Market Group Intermediate Fixed
Income Fund 5,877,761 4,267,630
Capital Market Group Small Capitalization
Growth Equity Fund 10,469,793 9,016,787
Capital Market Group Large Capitalization
Growth Equity Fund 17,934,439 12,249,943
Capital Market Group Large Capitalization
Value Equity Fund 15,289,329 12,366,679
Capital Market Group International Equity
Investment Fund 2,783,819 1,447,938
Common stock - International Game Technology 15,437,901 18,642,782
U.S. Treasury Bills - 6,754,816
Money Funds 7,845,154 -
--------- ---------
Total investments $87,659,661 $74,964,372
=========== ===========
</TABLE>
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, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
Increase (Decrease) in Fair Value of Investments:
<S> <C> <C>
Capital Market Group Intermediate Fixed
Income Fund $ 57,966 $ 51,069
Capital Market Group Small Capitalization
Growth Equity Fund 111,647 936,655
Capital Market Group Large Capitalization
Growth Equity Fund 4,824,314 2,897,027
Capital Market Group Large Capitalization
Value Equity Fund 1,412,864 2,937,130
Capital Market Group International Equity
Investment Fund 351,548 (6,793)
Common Stock - International Game Technology (534,123) 5,290,081
----------- ------------
Total $ 6,224,216 $ 12,105,169
=========== ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 1997
Interest and Dividends:
<S> <C> <C>
Capital Market Group Government Money Fund $ 593,592 $ 525,204
Capital Market Group Intermediate Fixed
Income Fund 313,828 258,525
Capital Market Group Large Capitalization
Growth Equity Fund 23,074 59,144
Capital Market Group Large Capitalization
Value Equity Fund 181,846 102,426
Capital Market Group International Equity
Investment Fund 34,922 26,445
Common Stock - International Game Technology 81,973 93,109
Loan Fund 226,471 296,223
U.S. Treasury Bills -- 161,905
Money Funds 200,063 --
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Total $1,655,769 $1,522,981
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998 1997
Employer Contributions:
<S> <C> <C>
Capital Market Group Government Money Fund $ 123,258 $ 130,932
Capital Market Group Intermediate Fixed Income Fund 75,197 69,710
Capital Market Group Small Capitalization Growth
Equity Fund 163,295 155,458
Capital Market Group Large Capitalization Growth
Equity Fund 210,055 178,810
Capital Market Group Large Capitalization Value
Equity Fund 182,801 162,517
Capital Market Group International Equity Investment
Fund 48,070 36,185
Common Stock - International Game Technology 200,725 205,003
U.S. Treasury Bills -- 6,617,986
Money Funds 7,672,549 --
--------- ---------
Total $8,675,950 $7,556,601
========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998 1997
Participant Contributions:
<S> <C> <C>
Capital Market Group Government Money Fund $ 629,091 $ 473,711
Capital Market Group Intermediate Fixed
Income Fund 463,993 209,873
Capital Market Group Small Capitalization
Growth Equity Fund 601,260 545,640
Capital Market Group Large Capitalization
Growth Equity Fund 753,373 634,414
Capital Market Group Large Capitalization
Value Equity Fund 639,951 588,132
Capital Market Group International Equity
Investment Fund 204,457 146,798
Common Stock - International Game Technology 501,329 558,027
------- -------
Total $3,793,454 $3,156,595
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
1998 1997
Benefits paid to participants:
<S> <C> <C>
Capital Market Group Government Money Fund $1,376,510 $1,719,769
Capital Market Group Intermediate Fixed
Income Fund 736,632 855,275
Capital Market Group Small Capitalization Growth
Equity Fund 728,014 1,106,511
Capital Market Group Large Capitalization Growth
Equity Fund 1,719,180 1,011,933
Capital Market Group Large Capitalization Value
Equity Fund 842,249 954,646
Capital Market Group International Equity Investment
Fund 89,800 131,835
Common Stock - International Game Technology 1,289,068 1,472,428
Loan Fund 390,444 377,710
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Total $7,171,897 $7,630,107
========== ==========
</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, 1998
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<TABLE>
<CAPTION>
(b) (c) (d) (e)
----------------------------
Maturity Interest Current
Description Date Rate Units Cost Value
<S> <C> <C> <C>
Capital Market Group Government
Money Fund 12,021,465 $12,021,465 $12,021,465
Capital Market Group Intermediate
Fixed Income Fund 714,187 5,808,464 5,877,761
Capital Market Group Small
Capitalization Growth Equity Fund 621,353 10,044,686 10,469,793
Capital Market Group Large
Capitalization Growth Equity Fund 794,262 12,043,512 17,934,439
Capital Market Group Large
Capitalization Value Equity Fund 1,172,495 14,412,431 15,289,329
Capital Market Group International
Equity Investment Fund 242,916 2,671,432 2,783,819
Common Stock - International Game
Technology 634,991 11,288,089 15,437,901
Money Funds 7,845,154 7,845,154 7,845,154
---------- ----------
Total investments $76,135,233 $87,659,661
=========== ===========
<FN>
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 investments.
(e) Fair market value of investments.
</FN>
</TABLE>
<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, 1998
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<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
<S> <C> <C> <C> <C> <C>
Salomon Smith Barney Redemption of U.S. Treasury bills $6,773,000 $6,773,000 $6,773,000 --
Salomon Smith Barney Purchase of Reserve Deposit
Account $6,769,536
Salomon Smith Barney Redemption of Reserve Deposit 5,095,086 5,095,086 5,095,086 --
Account
<FN>
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).
</FN>
</TABLE>
<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, 1998
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<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
<S> <C> <C> <C> <C> <C>
Salomon Smith Barney Purchase of Gov't Money Invts $ 8,049,487
Salomon Smith Barney Redemption of Gov't Money Invts $ 6,245,819 $ 6,245,819 $ 6,245,819 $ --
Salomon Smith Barney Purchase of Lg Cap Value Eqty 6,218,380
Salomon Smith Barney Purchase of Lg Cap Grw Invst 5,580,988
Salomon Smith Barney Redemption of Lg Cap Grw Invst 4,105,980 3,005,441 4,105,980 1,100,539
Salomon Smith Barney Purchase of Sm Cap Grw Invst 4,577,084
Salomon Smith Barney Redemption of IGT Common Stock 6,207,100 4,340,062 6,207,100 1,867,038
Salomon Smith Barney Purchase of Reserve Deposit Act 17,973,890
Salomon Smith Barney Redemption of Reserve Deposit Act 18,011,426 18,011,426 18,011,426 --
Salomon Smith Barney Redemption of U.S. Treasury Bills 9,897,000 9,897,000 9,897,000 --
<FN>
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).
</FN>
</TABLE>
<PAGE>
The Plan. Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
INTERNATIONAL GAME TECHNOLOGY
PROFIT SHARING PLAN
Date: June 28, 1999
By: /s/ Maureen T. Mullarkey
Maureen T. Mullarkey
Chief Financial Officer and
Vice President, Finance
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 26, 1999, appearing in this Annual Report on
Form 11-k of the International Game Technology Profit Sharing Plan for the
year ended December 31, 1998.
DELOITTE & TOUCHE LLP
Reno, Nevada
June 28, 1999
