International Game Technology Reports Second Quarter Fiscal Year 2012 Results
Second Quarter Summary and Highlights (compared to last year's second quarter)
- Total revenues increased 13% to $541 million
- GAAP income from continuing operations decreased 5% to $0.21 per share
- Adjusted income from continuing operations increased 23% to $0.27 per share
LAS VEGAS, Apr. 24, 2012 /PRNewswire/ -- International Game Technology (NYSE: IGT) today reported operating results for the fiscal second quarter ended March 31, 2012.
"As expected, our financial results are strengthening as we move through the fiscal year – evidenced by our growth in both revenues and earnings in our second quarter," said Patti Hart, CEO of IGT. "Every aspect of our business is providing a meaningful contribution to our strong financial performance. It's gratifying to see the effort of our employees and the proficiency of our strategic investments generating returns for our shareholders."
| Consolidated Results |
||||||||||||
| ($ in millions, except per share amounts) |
Quarters Ended |
Six Months Ended |
||||||||||
| March 31, |
March 31, |
|||||||||||
| 2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
|||||||
| GAAP Results |
||||||||||||
| Revenue |
$541.2 |
$477.0 |
13% |
$986.8 |
$928.2 |
6% |
||||||
| Operating income |
$118.0 |
$128.1 |
-8% |
$217.9 |
$248.3 |
-12% |
||||||
| Income from continuing operations |
$ 62.4 |
$ 67.7 |
-8% |
$112.7 |
$140.5 |
-20% |
||||||
| Earnings per share from continuing operations |
$ 0.21 |
$ 0.22 |
-5% |
$ 0.38 |
$ 0.47 |
-19% |
||||||
| Net operating cash flows |
$176.7 |
$263.7 |
-33% |
|||||||||
| Non-GAAP Results |
||||||||||||
| Adjusted operating income |
$144.2 |
$131.3 |
10% |
$243.9 |
$252.0 |
-3% |
||||||
| Adjusted income from continuing operations |
$ 79.5 |
$ 67.7 |
17% |
$130.6 |
$129.2 |
1% |
||||||
| Adjusted earnings per share from continuing operations |
$ 0.27 |
$ 0.22 |
23% |
$ 0.44 |
$ 0.43 |
2% |
||||||
| Free cash flow (before dividends) |
$ 53.1 |
$174.4 |
-70% |
|||||||||
| Adjusted operating income, adjusted income from continuing operations, adjusted earnings per share from continuing operations and free cash flow are non-GAAP financial measures. Reconciliations between GAAP and non-GAAP measures are provided at the end of this release. |
- Revenues increased 13% to $541 million in the second quarter, primarily due to increases in North America product sales and interactive businesses.
- Non-GAAP adjusted measures primarily reflect the exclusion of charges related to the acquisition of Double Down and a distributor settlement.
| Gaming Operations |
||||||||||||
| ($ in millions, unless otherwise noted) |
Quarters Ended |
Six Months Ended |
||||||||||
| March 31, |
March 31, |
|||||||||||
| 2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
|||||||
| Revenue |
$ 300.4 |
$ 269.8 |
11% |
$ 565.0 |
$ 522.7 |
8% |
||||||
| Gross profit |
$ 181.6 |
$ 167.4 |
8% |
$ 342.0 |
$ 326.3 |
5% |
||||||
| Gross margin |
60% |
62% |
-3% |
61% |
62% |
-2% |
||||||
| Installed base |
56,100 |
52,500 |
7% |
56,100 |
52,500 |
7% |
||||||
| Average revenue per unit per day (0.00) |
$ 59.09 |
$ 56.40 |
5% |
$ 56.44 |
$ 54.48 |
4% |
||||||
- Revenues increased 11% to $300 million in the second quarter, primarily due to increases in the interactive businesses and installed base.
- Gross margin decreased to 60% from 62% in the second quarter, primarily due to higher depreciation expense and the inclusion of the interactive businesses.
- Installed base increases were primarily driven by an increase in North America and International lease operations.
- Excluding the positive impact from the interactive businesses, average revenue per unit per day in the second quarter was $52.34, up 3% sequentially but down 4% over the prior year quarter, mainly due to normal seasonality and a higher mix of lower-yielding units, respectively.
- DoubleDown Casino increased its monthly users by 24% to 5.6 million as of March 31, 2012 when compared to December 31, 2011.
| Product Sales |
||||||||||||
| ($ in millions, unless otherwise noted) |
Quarters Ended |
Six Months Ended |
||||||||||
| March 31, |
March 31, |
|||||||||||
| 2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
|||||||
| Revenue |
$240.8 |
$207.2 |
16% |
$421.8 |
$405.5 |
4% |
||||||
| Gross profit |
$132.0 |
$115.2 |
15% |
$223.6 |
$225.7 |
-1% |
||||||
| Gross margin |
55% |
56% |
-2% |
53% |
56% |
-5% |
||||||
| Units recognized ('000) |
10.2 |
9.0 |
13% |
17.5 |
17.3 |
1% |
||||||
| Average machine sales price ('000) |
$ 15.8 |
$ 14.6 |
8% |
$ 15.8 |
$ 14.4 |
10% |
||||||
- Revenues increased 16% to $241 million in the second quarter, driven by higher unit sales and average selling price.
- Gross margin decreased to 55% from 56% in the second quarter, primarily due to higher international non-standard manufacturing costs.
- North America product sales gross margin increased 210 bps year-over-year and 480 bps sequentially, due to favorable mix and lower non-standard manufacturing costs.
- Units recognized increased 13% in the second quarter, primarily due to a 32% increase in North America replacement units.
- Average machine sales price increased 8%, mainly due to a favorable mix of higher priced boxes, including G23 MLD and Universal Slant MLD boxes.
| Operating Expenses and Other Income/Expense |
||||||||||||
| ($ in millions) |
Quarters Ended |
Six Months Ended |
||||||||||
| March 31, |
March 31, |
|||||||||||
| 2012 |
2011 |
% Change |
2012 |
2011 |
% Change |
|||||||
| Operating Expenses |
||||||||||||
| Selling, general & administrative |
$109.3 |
$ 89.1 |
23% |
$199.1 |
$171.3 |
16% |
||||||
| Research & development |
55.3 |
48.7 |
14% |
102.2 |
97.6 |
5% |
||||||
| Depreciation & amortization |
19.3 |
16.7 |
16% |
34.7 |
34.8 |
- |
||||||
| Contingent acquisition related costs |
11.7 |
- |
- |
11.7 |
- |
- |
||||||
| Total operating expenses |
$195.6 |
$154.5 |
27% |
$347.7 |
$303.7 |
14% |
||||||
- Operating expenses increased primarily due to additional expenses related to the interactive businesses, including recently completed acquisitions.
- Other expense, net, in the second quarter totaled $21 million compared to $23 million in the prior year quarter, primarily attributable to reduced interest expense.
| Cash Flows, Balance Sheet and Capital Deployment |
|||||
| ($ in millions) |
Quarters Ended |
||||
| March 31, |
Sept. 30 |
||||
| 2012 |
2011 |
% Change |
|||
| Cash and equivalents (including restricted amounts) |
$ 360.6 |
$ 552.0 |
-35% |
||
| Working capital |
$ 667.0 |
$ 875.2 |
-24% |
||
| Contractual debt obligations |
$1,650.0 |
$1,650.0 |
- |
||
- Cash and working capital decreased 35% and 24%, respectively, mainly as a result of cash deployed associated with the acquisition of Double Down.
- During the second quarter, the company repurchased 3.0 million shares of common stock at an average price of $15.43 per share for a total cost of $46 million.
- Over the past four quarters, the company has repurchased 6.4 million shares of common stock at an average price of $15.65 per share for a total cost of $100 million.
References to per share amounts in this release are based on diluted shares of common stock, unless otherwise specified.
Outlook
Based on current expectations and the operating results for the second quarter of fiscal 2012, the company is raising its fiscal year 2012 guidance for adjusted earnings from continuing operations to $0.98 to $1.04 per share.
Earnings Conference Call
As previously announced on Apr. 10, 2012, IGT will host a conference call to discuss its Second Quarter Fiscal Year 2012 earnings results on Tuesday, Apr. 24, 2012, at 2:00 p.m. PDT. The access numbers are as follows:
Domestic callers dial +1 888-829-8676, passcode IGT
International callers dial +1 773-756-4709, passcode IGT
The conference call will also be broadcast live over the Internet. A link to the webcast is available at the IGT website: http://www.IGT.com/InvestorRelations. The call will be archived until Thursday, May 3, 2012 at http://www.IGT.com/InvestorRelations, for those interested parties that are unable to participate during the live webcast.
A taped replay of the conference call will be available beginning at approximately 4:00 p.m. PDT on Tuesday, Apr. 24, 2012. This replay will run through Thursday, May 3, 2012. The access numbers are as follows:
Domestic callers dial +1 866-382-4784
International callers dial +1 203-369-0363
Q2 FY 2012 PDF of this press release
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that involve risks and uncertainties. These statements include our expected future financial and operational performance (including our guidance for fiscal year 2012) and our strategic and operational plans. Actual results may differ materially from the results predicted, and reported results should not be considered an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, general economic conditions and changes in economic conditions affecting the gaming industry; difficulties or delays in obtaining or maintaining necessary licenses or approvals; slow growth in the number of new gaming jurisdictions or new casinos or the rate of replacement of existing gaming machines; changes in operator or player preferences for our products; our ability to compete in the gaming industry with new or existing competitors; changes in laws or regulations affecting our business; our ability to develop and introduce new products and their acceptance by our customers; risks related to our international operations; our ability to protect our intellectual property; adverse results of litigation, including intellectual property infringement claims; risks related to business combinations, investments in intellectual property and the integration of acquisitions and the additional risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for fiscal 2011 filed with the SEC on November 30, 2011 and our Quarterly Report on Form 10-Q for our fiscal quarter ended December 31, 2011 filed with the SEC on February 8, 2012, and available on the SEC website at www.sec.gov and on the investor relations section of our website at www.IGT.com. Additional information will also be set forth in our Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, 2012, which we expect to file with the SEC in the second quarter of calendar 2012. All information provided in this release is as of April 24, 2012, and IGT undertakes no duty to update this information.
About IGT
International Game Technology (NYSE: IGT) is a global leader in the design, development and manufacture of gaming machines and systems products, as well as online and mobile gaming solutions for regulated markets. More information about IGT is available at www.IGT.com or follow IGT on Twitter at @IGTNews or Facebook at www.facebook.com/IGT.
| CONSOLIDATED STATEMENTS OF INCOME (Unaudited and Condensed) |
|||||
| Quarters Ended |
Six Months Ended |
||||
| March 31, |
March 31, |
||||
| 2012 |
2011 |
2012 |
2011 |
||
| (In millions, except per share amounts) |
|||||
| Revenues |
|||||
| Gaming operations |
$ 300.4 |
$ 269.8 |
$ 565.0 |
$ 522.7 |
|
| Product sales |
240.8 |
207.2 |
421.8 |
405.5 |
|
| Total revenues |
541.2 |
477.0 |
986.8 |
928.2 |
|
| Costs and operating expenses |
|||||
| Cost of gaming operations |
118.8 |
102.4 |
223.0 |
196.4 |
|
| Cost of product sales |
108.8 |
92.0 |
198.2 |
179.8 |
|
| Selling, general and administrative |
109.3 |
89.1 |
199.1 |
171.3 |
|
| Research and development |
55.3 |
48.7 |
102.2 |
97.6 |
|
| Depreciation and amortization |
19.3 |
16.7 |
34.7 |
34.8 |
|
| Contingent acquisition related costs |
11.7 |
- |
11.7 |
- |
|
| Total costs and operating expenses |
423.2 |
348.9 |
768.9 |
679.9 |
|
| Operating income |
118.0 |
128.1 |
217.9 |
248.3 |
|
| Other income (expense) |
|||||
| Interest income |
10.8 |
13.3 |
22.9 |
26.6 |
|
| Interest expense |
(30.0) |
(35.6) |
(60.1) |
(71.0) |
|
| Other |
(2.0) |
(1.0) |
(4.8) |
3.4 |
|
| Total other income (expense) |
(21.2) |
(23.3) |
(42.0) |
(41.0) |
|
| Income from continuing operations before tax |
96.8 |
104.8 |
175.9 |
207.3 |
|
| Income tax provision |
34.4 |
37.1 |
63.2 |
66.8 |
|
| Income from continuing operations |
62.4 |
67.7 |
112.7 |
140.5 |
|
| Income (loss) from discontinued operations, net of tax |
(0.5) |
1.9 |
(1.5) |
2.8 |
|
| Net income |
$ 61.9 |
$ 69.6 |
$ 111.2 |
$ 143.3 |
|
| Basic earnings (loss) per share |
|||||
| Continuing operations |
$ 0.21 |
$ 0.22 |
$ 0.38 |
$ 0.47 |
|
| Discontinued operations |
- |
0.01 |
(0.01) |
0.01 |
|
| Net income |
$ 0.21 |
$ 0.23 |
$ 0.37 |
$ 0.48 |
|
| Diluted earnings (loss) per share |
|||||
| Continuing operations |
$ 0.21 |
$ 0.22 |
$ 0.38 |
$ 0.47 |
|
| Discontinued operations |
- |
0.01 |
(0.01) |
0.01 |
|
| Net income |
$ 0.21 |
$ 0.23 |
$ 0.37 |
$ 0.48 |
|
| Weighted average shares outstanding |
|||||
| Basic |
296.7 |
298.4 |
297.0 |
298.0 |
|
| Diluted |
298.1 |
299.9 |
298.6 |
299.4 |
|
| CONSOLIDATED BALANCE SHEET (Unaudited and Condensed) |
|||
| March 31, |
September 30, |
||
| 2012 |
2011 |
||
| (In millions) |
|||
| Assets |
|||
| Current assets |
|||
| Cash and equivalents |
$ 271.1 |
$ 460.0 |
|
| Restricted cash and investments |
89.5 |
92.0 |
|
| Jackpot annuity investments |
61.5 |
63.2 |
|
| Receivables, net |
511.4 |
487.2 |
|
| Inventories |
90.6 |
73.0 |
|
| Other assets and deferred costs |
217.4 |
234.5 |
|
| Total current assets |
1,241.5 |
1,409.9 |
|
| Property, plant and equipment, net |
582.0 |
552.1 |
|
| Jackpot annuity investments |
313.0 |
324.6 |
|
| Contracts and notes receivable, net |
128.2 |
126.4 |
|
| Goodwill and other intangibles, net |
1,725.1 |
1,401.8 |
|
| Other assets and deferred costs |
358.7 |
339.6 |
|
| Total Assets |
$ 4,348.5 |
$ 4,154.4 |
|
| Liabilities and Shareholders' Equity |
|||
| Current liabilities |
|||
| Accounts payable |
$ 89.1 |
$ 103.0 |
|
| Jackpot liabilities, current portion |
150.4 |
143.0 |
|
| Dividends payable |
17.7 |
17.8 |
|
| Other accrued liabilities |
317.3 |
270.9 |
|
| Total current liabilities |
574.5 |
534.7 |
|
| Long-term debt |
1,656.4 |
1,646.3 |
|
| Jackpot liabilities |
346.4 |
365.4 |
|
| Other liabilities |
260.4 |
163.2 |
|
| Total Liabilities |
2,837.7 |
2,709.6 |
|
| Total Equity |
1,510.8 |
1,444.8 |
|
| Total Liabilities and Shareholders' Equity |
$ 4,348.5 |
$ 4,154.4 |
|
| CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited and Condensed) |
|||
| Six Months Ended |
|||
| March 31, |
|||
| 2012 |
2011 |
||
| (In millions) |
|||
| Operating |
|||
| Net income |
$ 111.2 |
$ 143.3 |
|
| Depreciation and amortization |
115.2 |
109.2 |
|
| Other non-cash items |
42.1 |
39.6 |
|
| Changes in operating assets and liabilities, excluding acquisitions: |
|||
| Receivables |
(28.5) |
3.8 |
|
| Inventories |
(14.6) |
(6.2) |
|
| Accounts payable and accrued liabilities |
3.8 |
(35.4) |
|
| Jackpot liabilities |
(21.9) |
(56.4) |
|
| Income taxes |
(13.8) |
47.7 |
|
| Other assets and deferred costs |
(16.8) |
18.1 |
|
| Net operating cash flows |
176.7 |
263.7 |
|
| Investing |
|||
| Capital expenditures |
(123.6) |
(89.3) |
|
| Jackpot annuity investments, net |
23.6 |
26.6 |
|
| Changes in restricted cash |
3.2 |
23.0 |
|
| Loans receivable, net |
14.9 |
14.3 |
|
| Business/VIE acquisition/deconsolidation |
(233.0) |
- |
|
| Other |
19.8 |
25.7 |
|
| Net investing cash flows |
(295.1) |
0.3 |
|
| Financing |
|||
| Debt related proceeds (payments), net |
- |
(100.0) |
|
| Employee stock plans |
14.3 |
16.7 |
|
| Share repurchases |
(50.1) |
- |
|
| Noncontrolling interest acquired |
(2.5) |
- |
|
| Dividends paid |
(35.7) |
(35.8) |
|
| Net financing cash flows |
(74.0) |
(119.1) |
|
| Foreign exchange rates effect on cash |
3.5 |
2.6 |
|
| Net change in cash and equivalents |
(188.9) |
147.5 |
|
| Beginning cash and equivalents |
460.0 |
158.4 |
|
| Ending cash and equivalents |
$ 271.1 |
$ 305.9 |
|
| SUPPLEMENTAL DATA (Unaudited) |
|||||
| Revenue Metrics |
Quarters Ended |
Six Months Ended |
|||
| March 31, |
March 31, |
||||
| 2012 |
2011 |
2012 |
2011 |
||
| In millions, unless otherwise noted |
|||||
| Gaming Operations |
|||||
| Revenues |
$ 300.4 |
$ 269.8 |
$ 565.0 |
$ 522.7 |
|
| North America |
254.7 |
232.9 |
474.3 |
450.9 |
|
| International |
45.7 |
36.9 |
90.7 |
71.8 |
|
| Gross margin |
60% |
62% |
61% |
62% |
|
| North America |
59% |
61% |
59% |
61% |
|
| International |
67% |
71% |
67% |
71% |
|
| Installed base ('000) |
56.1 |
52.5 |
56.1 |
52.5 |
|
| North America |
42.7 |
40.5 |
42.7 |
40.5 |
|
| International |
13.4 |
12.0 |
13.4 |
12.0 |
|
| Average revenue per unit per day (0.00) |
$59.09 |
$56.40 |
$56.44 |
$54.48 |
|
| Double Down Average User Statistics* |
|||||
| Daily users |
1.4 |
||||
| Monthly users |
5.0 |
||||
| Bookings per daily user (0.00) |
$ 0.24 |
||||
| *as a single application with multiple games, active users equal unique users |
|||||
| Product Sales |
|||||
| Revenues |
$ 240.8 |
$ 207.2 |
$ 421.8 |
$ 405.5 |
|
| North America |
160.8 |
135.0 |
263.9 |
268.7 |
|
| International |
80.0 |
72.2 |
157.9 |
136.8 |
|
| Machines |
$ 161.1 |
$ 131.1 |
$ 276.8 |
$ 249.7 |
|
| North America |
101.4 |
77.8 |
160.5 |
153.3 |
|
| International |
59.7 |
53.3 |
116.3 |
96.4 |
|
| Non-machine |
$ 79.7 |
$ 76.1 |
$ 145.0 |
$ 155.8 |
|
| North America |
59.4 |
57.2 |
103.4 |
115.4 |
|
| International |
20.3 |
18.9 |
41.6 |
40.4 |
|
| Gross margin |
55% |
56% |
53% |
56% |
|
| North America |
57% |
55% |
55% |
56% |
|
| International |
50% |
56% |
49% |
55% |
|
| Units recognized ('000) |
10.2 |
9.0 |
17.5 |
17.3 |
|
| North America |
6.8 |
5.7 |
10.6 |
10.8 |
|
| International |
3.4 |
3.3 |
6.9 |
6.5 |
|
| Units shipped ('000) [includes units where revenues deferred] |
10.5 |
8.9 |
17.0 |
16.4 |
|
| North America |
6.7 |
5.3 |
10.2 |
9.8 |
|
| New |
1.7 |
1.5 |
2.4 |
2.9 |
|
| Replacement |
5.0 |
3.8 |
7.8 |
6.9 |
|
| International |
3.8 |
3.6 |
6.8 |
6.6 |
|
| New |
2.0 |
2.3 |
3.3 |
3.1 |
|
| Replacement |
1.8 |
1.3 |
3.5 |
3.5 |
|
| Average revenue per unit ('000) |
$ 23.6 |
$ 23.0 |
$ 24.1 |
$ 23.4 |
|
| North America |
23.6 |
23.7 |
24.9 |
24.9 |
|
| International |
23.5 |
21.9 |
22.9 |
21.0 |
|
| Average machine sales price ('000) |
$ 15.8 |
$ 14.6 |
$ 15.8 |
$ 14.4 |
|
| North America |
14.9 |
13.6 |
15.1 |
14.2 |
|
| International |
17.6 |
16.2 |
16.9 |
14.8 |
|
| Reconciliations of GAAP to Non-GAAP Measures (In millions, except EPS) |
||||||||
| Quarters Ended |
Six Months Ended |
|||||||
| March 31, |
March 31, |
|||||||
| 2012 |
2011 |
2012 |
2011 |
|||||
| Adjusted Income from Continuing Operations |
||||||||
| GAAP income from continuing operations |
$ 62.4 |
$ 67.7 |
$112.7 |
$140.5 |
||||
| Acquisition related charges (primarily related to Double Down) |
||||||||
| Contingent retention & earn-out |
Contingent acquisition related costs |
11.7 |
- |
11.7 |
- |
|||
| Amortization of intangibles |
Cost of gaming operations |
2.3 |
- |
2.3 |
- |
|||
| Amortization of intangibles |
Depreciation & amortization |
3.9 |
- |
3.9 |
- |
|||
| Professional fees |
Selling, general & administrative |
4.5 |
- |
5.7 |
- |
|||
| Severance |
Selling, general & administrative |
1.2 |
- |
1.2 |
- |
|||
| Distributor settlement |
Selling, general & administrative |
3.1 |
- |
3.1 |
- |
|||
| Investment gain (no tax benefit) |
Other income (expense), net |
- |
- |
- |
(4.3) |
|||
| Total adjustments before tax |
26.7 |
- |
27.9 |
(4.3) |
||||
| Tax effect at 36% |
Income tax provision |
(9.6) |
- |
(10.0) |
- |
|||
| Certain discrete tax items (benefits) |
Income tax provision |
- |
- |
- |
(7.0) |
|||
| Total adjustments after tax |
17.1 |
- |
17.9 |
(11.3) |
||||
| Adjusted income from continuing operations |
$ 79.5 |
$ 67.7 |
$130.6 |
$129.2 |
||||
| Adjusted EPS from Continuing Operations |
||||||||
| GAAP EPS from continuing operations |
$ 0.21 |
$ 0.22 |
$ 0.38 |
$ 0.47 |
||||
| Acquisition related charges: |
||||||||
| Contingent retention & earn-out |
0.03 |
- |
0.03 |
- |
||||
| Amortization of intangibles |
- |
- |
- |
- |
||||
| Amortization of intangibles |
0.01 |
- |
0.01 |
- |
||||
| Professional fees |
0.01 |
- |
0.01 |
- |
||||
| Severance |
- |
- |
- |
- |
||||
| Distributor settlement |
0.01 |
- |
0.01 |
- |
||||
| Investment gain |
- |
- |
- |
(0.01) |
||||
| Certain discrete tax items (benefits) |
- |
- |
- |
(0.03) |
||||
| Total adjustments |
0.06 |
- |
0.06 |
(0.04) |
||||
| Adjusted EPS from continuing operations |
$ 0.27 |
$ 0.22 |
$ 0.44 |
$ 0.43 |
||||
| Adjusted income from continuing operations and adjusted EPS from continuing operations are supplemental non-GAAP financial measures commonly used by management and industry analysts to evaluate our financial performance. Adjusted income from continuing operations should not be construed as an alternative to income from continuing operations, and Adjusted EPS from continuing operations should not be construed as an alternative to EPS from continuing operations, as indicators of our operating performance determined in accordance with GAAP (generally accepted accounting principles). All companies do not calculate Adjusted income from continuing operations or Adjusted EPS from continuing operations in the same manner, and IGT's presentation may not be comparable to that of other companies. |
| Quarters Ended |
Six Months Ended |
||||||
| March 31, |
March 31, |
||||||
| 2012 |
2011 |
2012 |
2011 |
||||
| Adjusted Operating Income and Margin |
|||||||
| GAAP operating income |
$ 118.0 |
$ 128.1 |
$ 217.9 |
$ 248.3 |
|||
| Amortization of acquired intangibles in cost of gaming operations |
2.3 |
- |
2.3 |
- |
|||
| Total adjustments to operating expenses (below) |
23.9 |
3.2 |
23.7 |
3.7 |
|||
| Adjusted operating income |
$ 144.2 |
$ 131.3 |
$ 243.9 |
$ 252.0 |
|||
| Adjusted operating margin |
27% |
28% |
25% |
27% |
|||
| Adjusted Operating Expenses |
|||||||
| GAAP operating expenses |
$ 195.6 |
$ 154.5 |
$ 347.7 |
$ 303.7 |
|||
| Acquisition related charges: |
|||||||
| Contingent costs |
(11.7) |
- |
(11.7) |
- |
|||
| Amortization of intangibles |
(3.9) |
- |
(3.9) |
- |
|||
| Professional fees |
(4.5) |
- |
(5.7) |
- |
|||
| Severance |
(1.2) |
- |
(1.2) |
- |
|||
| Distributor settlement |
(3.1) |
- |
(3.1) |
- |
|||
| Bad debt provision |
0.5 |
(3.2) |
1.9 |
(3.7) |
|||
| Total adjustments |
(23.9) |
(3.2) |
(23.7) |
(3.7) |
|||
| Adjusted operating expenses |
$ 171.7 |
$ 151.3 |
$ 324.0 |
$ 300.0 |
|||
| % of revenue |
32% |
32% |
33% |
32% |
|||
| Adjusted operating income, Adjusted operating margin, and Adjusted operating expenses are supplemental non-GAAP financial measures commonly used by management and industry analysts to evaluate our financial and operating performance. Adjusted operating margin is a measure of adjusted operating income as a percentage of total revenues. Adjusted operating income, adjusted operating margin, and adjusted operating expenses, should not be construed as alternatives to operating income, operating margin, and operating expenses, respectively, as indicators of operating performance determined in accordance with GAAP (generally accepted accounting principles). All companies do not calculate adjusted operating income, adjusted operating margin, and adjusted operating expenses in the same manner and IGT's presentation may not be comparable to that of other companies. |
| Quarters Ended |
Six Months Ended |
||||||
| March 31, |
March 31, |
||||||
| 2012 |
2011 |
2012 |
2011 |
||||
| Adjusted EBITDA |
|||||||
| GAAP Income from continuing operations |
$ 62.4 |
$ 67.7 |
$ 112.7 |
$ 140.5 |
|||
| Other (income) expense, net |
21.2 |
23.3 |
42.0 |
41.0 |
|||
| Income tax provision |
34.4 |
37.1 |
63.2 |
66.8 |
|||
| Depreciation and amortization |
60.6 |
52.8 |
115.2 |
106.1 |
|||
| Other charges: |
|||||||
| Share-based compensation |
8.5 |
10.9 |
16.7 |
22.3 |
|||
| Contingent acquisition related costs |
11.7 |
- |
11.7 |
- |
|||
| Adjusted EBITDA |
$ 198.8 |
$ 191.8 |
$ 361.5 |
$ 376.7 |
|||
| Adjusted EBITDA (income from continuing operations before interest and other non-operating income/expense-net, income tax provision, depreciation and amortization, and other charges noted in the reconciliation) is a supplemental non-GAAP financial measure commonly used by our management and industry analysts to evaluate our financial performance. Adjusted EBITDA provides useful information to investors regarding our ability to service debt and is a commonly used financial analysis tool for measuring and comparing gaming companies in several areas of liquidity, operating performance, valuation and leverage. Adjusted EBITDA should not be construed as an alternative to operating income (as an indicator of our operating performance) or net cash from operations (as a measure of liquidity) determined in accordance with GAAP (generally accepted accounting principles). All companies do not calculate Adjusted EBITDA in the same manner, and IGT's presentation may not be comparable to that of other companies. |
|||||||
| Six Months Ended |
|||
| March 31, |
|||
| 2012 |
2011 |
||
| Free Cash Flow |
|||
| GAAP net operating cash flows |
$ 176.7 |
$ 263.7 |
|
| Investment in property, plant and equipment |
(34.5) |
(8.4) |
|
| Investment in gaming operations equipment |
(87.1) |
(80.2) |
|
| Investment in intellectual property |
(2.0) |
(0.7) |
|
| Free Cash Flow (before dividends) |
53.1 |
174.4 |
|
| Dividends paid |
(35.7) |
(35.8) |
|
| Free Cash Flow (after dividends) |
$ 17.4 |
$ 138.6 |
|
| Free cash flow is a supplemental non-GAAP financial measure commonly used by our management and industry analysts to evaluate the discretionary amount of operating cash flows. Free cash flow should not be construed as an alternative to net operating cash flows or other cash flow measurements determined in accordance with GAAP (generally accepted accounting principles). All companies do not calculate free cash flow in the same manner, and IGT's presentation may not be comparable to that of other companies. |
| Guidance for Adjusted Earnings from Continuing Operations for Fiscal 2012 |
|||
| Range Estimate |
|||
| For Fiscal Year 2012 |
|||
| (In millions, except EPS) |
|||
| Low |
High |
||
| Guidance for GAAP EPS from continuing operations |
$ 0.82 |
$ 0.88 |
|
| Acquisition related charges |
0.15 |
0.15 |
|
| Distributor settlement |
0.01 |
0.01 |
|
| Guidance for Adjusted EPS from continuing operations |
$ 0.98 |
$ 1.04 |
|
| Adjusted EPS from continuing operations for the fiscal year is a supplemental non-GAAP financial measure commonly used by management and industry analysts to evaluate our financial performance. Adjusted EPS from continuing operations should not be construed as an alternative to EPS from continuing operations, as an indicator of our operating performance determined in accordance with generally accepted accounting principles. All companies do not calculate adjusted EPS from continuing operations in the same manner, and IGT's presentation may not be comparable to that of other companies. This guidance is as of April 24, 2012, and IGT undertakes no duty to update this guidance. |
SOURCE International Game Technology
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