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International Game Technology PLC Reports First Quarter 2016 Results
- Adjusted EBITDA of $460 million; pro forma operating income up across all segments
- Strong global lottery growth, especially in North America and Italy; resilient global gaming revenues
- Adjusted EPS of $0.57; reported EPS of ($0.46) reflects non-cash foreign exchange impact
- Cash dividend declared of $0.20 per ordinary share
- Investor Day to be held on June 21-22, 2016

LONDON, May 26, 2016 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the first quarter ended March 31, 2016. Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call and webcast to present the first quarter results; access details are provided below.

IGT is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships...

"We begin 2016 with a solid first quarter, evidenced by good revenue growth with all operating segments contributing to an improvement in profitability," said Marco Sala, CEO of IGT. "Continuing growth across all regions, especially North America and Italy, propelled our lottery revenues. Gaming revenues were resilient despite challenging market conditions in North America, our largest gaming market. We remain focused on reenergizing gaming operations and strengthening our global leadership in lotteries. We were successful in securing the Italian Lotto concession, one of our largest contracts and a cornerstone of our Italian operations."

"The diversity of our product and geographic mix is a key element of our first quarter results," said Alberto Fornaro, CFO of IGT. "Revenue growth, disciplined cost management, and synergy savings all contributed to sharp profit expansion. Even after large interest payments during the period, we generated significant free cash flow, enabling us to reduce debt in constant currency and further improve our leverage profile."  

Summary of Consolidated First Quarter 2016 Financial Results

 

Reported

Pro forma

             

Constant

Quarter Ended March 31,

   

Change

   

Change

Currency

 

2016

2015

(%)

2016

2015

(%)

Change (%)

(In $ millions, unless otherwise noted)

             

Revenue

1,282

848

51%

1,282

1,248

3%

4%

Adjusted EBITDA

460

321

43%

460

415

11%

12%

Adjusted Operating Income

310

205

51%

310

231

34%

35%

Operating Income

188

163

15%

188

156

20%

22%

Net income (loss) per diluted share ($)

(0.46)

(0.23)

NM

(0.46)

 NA 

   

Adjusted net income (loss) per diluted share ($)

0.57

0.43

33%

0.57

 NA 

   

Net debt

7,722

2,792

NM

7,722

 NA 

   

Note: Pro forma is defined as the combined results of GTECH and legacy IGT for the first quarter of 2015. Adjusted operating income, adjusted EBITDA, and adjusted net income per diluted share are non-GAAP financial measures.  Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release.   

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise.

As a result of the combination of GTECH S.p.A. ("GTECH") and International Game Technology ("legacy IGT"), which was completed on April 7, 2015, a number of items affect the comparability of reported results.  Reported financial information for the first quarter of 2016 includes the results of operations of IGT for the entire period, while reported financial information for the first quarter of 2015 includes only GTECH operations. Pro forma figures represent the combined results of both companies. 

Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items.  Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2016 are calculated using the same foreign exchange rates as the corresponding 2015 period.

Management believes that referring to certain pro forma, constant currency, or adjusted measures is a useful way to evaluate the Company's underlying performance.

Overview of Consolidated First Quarter Results

Reported consolidated revenue grew 51% to $1,282 million from $848 million in the first quarter of 2015, reflecting GTECH's acquisition of legacy IGT. On a pro forma, constant currency basis, consolidated revenue rose 4%. Revenue growth primarily reflects strong lottery performance, particularly in North America and Italy. Global lottery same-store revenue, excluding Italy, increased 18% during the first quarter, reflecting the benefit of the record Powerball jackpot in the United States. Revenue from gaming was slightly below the prior-year period. During the quarter, the Company sold 5,695 gaming machines worldwide.

On a reported basis, adjusted EBITDA of $460 million was 43% above the first quarter of 2015.  On a pro forma, constant currency basis, adjusted EBITDA was 12% greater than in the prior-year period as overall sales growth was accentuated by favorable revenue mix and synergy savings. 

Reported operating income was $188 million compared to $163 million in the first quarter of 2015. On a pro forma, constant currency basis, adjusted operating income was 35% above the first quarter of 2015, which included significant bad debt expense. In addition, revenue growth, overall sales mix, and synergy savings all contributed to the increase in adjusted operating income. 

Interest expense was $118 million compared to $94 million in the prior-year period.

Net loss attributable to IGT was $93 million in the first quarter of 2016, reflecting the impact of $162 million in primarily non-cash foreign exchange losses. On an adjusted basis, net income attributable to IGT was $116 million. The Company reported net loss per diluted share of $(0.46) but earned $0.57 per diluted share on an adjusted basis.

Cash from operations was $206 million in the first quarter and capital expenditures were $98 million.

Cash and cash equivalents were $506 million as of March 31, 2016, compared to $627 million as of December 31, 2015. Consolidated shareholders' equity totaled $3,292 million and net debt was $7,722 million as of March 31, 2016.

Operating Segment Review

North America Gaming & Interactive
Revenue for the North America Gaming & Interactive segment was $339 million compared to $30 million in the first quarter of 2015. On a pro forma basis, revenue was essentially in line with the prior year.

Service revenue was $258 million compared to $13 million in the prior-year period. On a pro forma basis, service revenue was in line with the first quarter of 2015 as increased software revenues offset a decline in the installed base. DoubleDown revenue was unchanged from the prior year.

Product sales were $81 million compared to $17 million in the first quarter of 2015. On a pro forma basis, product sales declined 3% as lower machine unit volume was partially offset by higher systems sales. The segment shipped 3,951 units compared to 5,241 units in the first quarter of 2015, which included a large, one-off lease conversion sale in Maryland as well as sizeable VLT sales in Canada and Oregon. Excluding one-time items, commercial casino replacement units were up double-digits from the prior-year period.

Operating income for North America Gaming & Interactive was $89 million compared to $7 million in the first quarter of 2015. On a pro forma basis, North America Gaming & Interactive operating income rose 89%, largely due to the comparison with bad debt expense in the prior-year period as well as favorable revenue mix and synergy savings.

North America Lottery
North America Lottery revenue was $315 million in the first quarter of 2016, 25% higher than the prior year on a reported basis and 16% greater on a pro forma basis.

Service revenue increased 26% on a reported basis and was 16% higher than the prior year on a pro forma basis, reflecting 23% same-store revenue growth and favorable LMA comparisons. The significant increase in same-store revenue was supported by the record Powerball jackpot in the period, in addition to strong instant ticket sales and solid local draw-based game performance. Product sales were $11 million in the quarter compared to $12 million in the prior-year period.

Operating income for North America Lottery was $88 million compared to $43 million in the first quarter of 2015. On a pro forma basis, operating income for North America Lottery rose 61% on strong same-store revenue growth, operating leverage, and cost control. The first quarter results represent record profits for the North America Lottery segment, even without the Powerball benefit.

International
International revenue was $185 million compared to $131 million in the first quarter of 2015 on a reported basis. On a pro forma, constant currency basis, International revenue declined 2% from the prior year.

International lottery same-store revenue was up 2%, with broad-based strength in Europe partially offset by weaker trends in Latin America. Lottery product sales were below the prior-year period, which benefited from large sales in New Zealand and Singapore.

International gaming service revenue was $47 million compared to $13 million in the first quarter of 2015 on a reported basis, and was up 4% on a pro forma, constant currency basis, on growth in interactive and the South Africa installed base. Revenue from gaming product sales was in line with the prior year on a pro forma, constant currency basis. The segment shipped a total of 1,744 gaming machines internationally during the first quarter of 2016 compared to 1,587 units in the prior-year period, reflecting demand for new cabinets.

International operating income was $33 million compared to $27 million in the first quarter of 2015. On a pro forma, constant currency basis, International operating income was up 41%, reflecting favorable revenue mix and lower operating costs.

Italy
Revenue in the Italy segment was $444 million compared to $434 million in the first quarter of 2015.

Total Lotto wagers in the quarter were €1,928 million, a 6% increase from the prior-year period, when wagers had already posted 16% growth. Strong Lotto performance was achieved with double-digit expansion for 10eLotto and a significant contribution from late numbers that more than offset lower core wagers. Instant-ticket wagers rose 2% to €2,355 million, supported by several new product introductions.

Machine gaming service revenue declined 3%, impacted by increased Stability Law taxes and fewer AWP units. Excluding the Stability Law impact, revenues were flat as the overall productivity and mix of gaming machines improved over the prior year.  

Operating income for Italy was $148 million, 2% below the first quarter of 2015 on a reported basis but 2% higher on a pro forma, constant currency basis. The increase in operating income was driven by strong lottery performance, lower sports betting payout, and disciplined cost management, partially offset by higher Stability Law taxes.

Other Developments

The Company's Board of Directors has declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on June 23, 2016 to all shareholders of record as of the close of business on June 9, 2016.

On May 17, 2016, the Italian regulator Agenzia delle Dogane e dei Monopoli awarded the concession for the Lotto game to Lottoitalia, a joint venture led by IGT subsidiary Lottomatica. The new concession has a nine-year term, commencing on November 29, 2016. In conjunction with the award, the €350 million first installment of upfront concession payments was made in May.

In the first quarter of 2016, the Company recorded a $15 million reserve related to the anticipated cost of settling certain tax matters in Italy covering the years 2006-2014 and involving the structuring of the original leveraged buyout of GTECH Holdings Corporation by Lottomatica S.p.A. On May 26, 2016, the Company agreed to pay €11 million to the Italian Tax Agency (Agenzia delle Entrate) to settle the claim for tax years 2006-2010.

Investor Day

The Company will host an investor day on June 21-22, 2016 in Rome, Italy. At the event, presentations will be made by Marco Sala, CEO, and other members of the Company's executive team. Interested parties may contact Investor_Relations@IGT.com for additional details and to register for the event.

Outlook

The Company continues to expect to achieve adjusted EBITDA of $1,740-$1,790 million for the full year 2016 period, supported by growth in core operations and using an average euro/dollar exchange rate of 1.10 versus 1.11 last year. A modest headwind is expected from other currencies, notably the British pound, the South African rand, and certain Latin American currencies.

Capital expenditures excluding Lotto concession payments are expected to be $575-$625 million. Lotto-related capital expenditures are estimated at $695 million, including $660 million in upfront payments and approximately $35 million for infrastructure upgrades. Net debt is still expected to be $7,700-$7,900 million at the end of 2016.

Conference Call and Webcast

Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call to present the first quarter 2016 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events and Presentations" on IGT's Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the dial in number is +44 (0) 20 3427 1907 for participants in the United Kingdom and +1 212 444 0896 for listeners outside the United Kingdom. The conference ID/confirmation code is 7945074. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1-347-366-9565 using the conference ID/confirmation code 7945074.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has over 12,000 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning IGT and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, dividends, results of operations or financial condition, or otherwise, based on current beliefs of the management of IGT as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall," "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements are subject to various risks and uncertainties, many of which are outside IGT's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance or achievements. Therefore, you should not place undue reliance on the forward-looking statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the possibility that the businesses of International Game Technology and GTECH S.p.A. will not be integrated successfully, or that the combined companies will not realize estimated cost savings, synergies, growth or other anticipated benefits or that such benefits may take longer to realize than expected, or that the Company will incur unanticipated costs in connection with the integration; the possibility that the Company will be unable to pay future dividends to shareholders or that the amount of such dividends may be less than anticipated; the possibility that IGT may not obtain its anticipated financial results in one or more future periods; reductions in customer spending; a slowdown in customer payments and changes in customer demand for products and services as a result of changing economic conditions or otherwise; unanticipated changes relating to competitive factors in the industries in which the Company operates; the Company's ability to hire and retain key personnel; the impact of the consummation of the business combination on relationships with third parties, including customers, employees and competitors; the Company's ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the Company; international, national or local economic, social or political conditions that could adversely affect the Company or its customers; conditions in the credit markets; risks associated with assumptions the Company makes in connection with its critical accounting estimates; the resolution of pending and potential future legal, regulatory or tax proceedings and investigations; and the Company's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect IGT's business, including those described in IGT's annual report on Form 20-F for the financial year ended December 31, 2015 and other documents filed from time to time with the Securities and Exchange Commission (the "SEC"), which are available on the SEC website at www.sec.gov and on the investor relations section of IGT's website at www.IGT.com. Except as required under applicable law, IGT does not assume any obligation to update the forward-looking statements. Nothing in this news release is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per IGT share for the current or any future financial years will necessarily match or exceed the historical published earnings per IGT share, as applicable. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to IGT, or persons acting on its behalf, are expressly qualified in their entirety by this cautionary statement.

Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada (844) IGT-7452; outside U.S./Canada (401) 392-7452
James Hurley, Investor Relations, (401) 392-7190
Simone Cantagallo, (+39) 06 51899030; for Italian media inquiries

 

International Game Technology PLC

Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

         
   

 For the three months ended  

   

 March 31, 

   

2016

 

2015

         

Service revenue

 

1,135,121

 

790,262

Product sales

 

146,440

 

57,980

Total revenue

 

1,281,561

 

848,242

         

Cost of services

 

648,763

 

506,735

Cost of sales

 

121,776

 

35,098

Selling, general and administrative

 

227,526

 

95,551

Research and development

 

84,707

 

22,471

Restructuring expense

 

9,418

 

14,481

Transaction expense, net

 

1,474

 

11,050

Total operating expenses

 

1,093,664

 

685,386

         

Operating income

 

187,897

 

162,856

         

Interest income

 

4,293

 

613

Equity loss, net

 

-

 

(228)

Other income

 

1,226

 

614

Other expense

 

(8,552)

 

(121,121)

Foreign exchange gain (loss), net

 

(161,556)

 

7,004

Interest expense

 

(118,415)

 

(94,388)

Total non-operating expenses

 

(283,004)

 

(207,506)

         

(Loss) income before provision for income taxes

 

(95,107)

 

(44,650)

         

Provision for (benefit from) income taxes

 

(8,658)

 

(9,059)

         

Net loss

 

(86,449)

 

(35,591)

         

Less: Net income attributable to non-controlling interests

 

6,325

 

3,726

         

Net loss attributable to IGT PLC

 

(92,774)

 

(39,317)

         
         

Net loss attributable to IGT PLC per common share -basic

 

(0.46)

 

(0.23)

Net loss attributable to IGT PLC per common share - diluted

(0.46)

 

(0.23)

         

Weighted-average shares - basic

 

200,449

 

172,999

Weighted-average shares - diluted

 

200,449

 

172,999

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

 March 31,  

 

 December 31,  

 

2016

 

2015

ASSETS

     

Current assets:

     

Cash and cash equivalents

505,796

 

627,484

Restricted cash and investments

165,894

 

169,101

Trade and other receivables, net

975,383

 

959,592

Inventories

274,212

 

269,982

Other current assets

442,816

 

423,701

Income taxes receivable

36,304

 

35,514

Total current assets

2,400,405

 

2,485,374

       

Systems, equipment and other assets related to contracts, net

1,122,456

 

1,127,518

Property, plant and equipment, net

346,053

 

349,677

Goodwill, net

6,857,478

 

6,830,499

Intangible assets, net

3,228,154

 

3,335,633

Other non-current assets

928,198

 

937,917

Deferred income taxes

47,741

 

48,074

Total non-current assets

12,530,080

 

12,629,318

       

 Total Assets

14,930,485

 

15,114,692

       

LIABILITIES AND SHAREHOLDERS' EQUITY

     

Current liabilities:

     

Accounts payable

1,087,472

 

1,057,860

Other current liabilities

909,860

 

922,586

Current portion of long-term debt

167

 

160

Income taxes payable

89,810

 

30,020

Total current liabilities

2,087,309

 

2,010,626

       

Long-term debt, less current portion

8,227,845

 

8,334,013

Deferred income taxes

866,834

 

941,418

Other non-current liabilities

456,679

 

462,493

Total non-current liabilities

9,551,358

 

9,737,924

       

Total Liabilities

11,638,667

 

11,748,550

       

Commitments and contingencies

-

 

-

       

Shareholders' equity

3,291,818

 

3,366,142

       

Total liabilities and shareholders' equity

14,930,485

 

15,114,692

 

International Game Technology PLC

Consolidated Statements of Cash Flows

($ thousands)

Unaudited

         
   

 For the three months ended  

   

 March 31, 

   

2016

 

2015

Operating activities

       

Net (loss) income

 

(86,449)

 

(35,591)

Adjustments for:

       

Amortization 

 

125,496

 

33,371

Depreciation 

 

98,517

 

71,854

Amortization of upfront payments to customers

 

27,409

 

26,843

Loss on early extinguishment of debt

 

-

 

75,511

Debt issuance cost amortization

 

4,511

 

26,847

Stock-based payment expense

 

9,302

 

994

Foreign exchange loss (gain), net

 

161,556

 

(7,004)

Other, net

 

3,552

 

43,699

Cash flows before changes in operating assets and liabilities

 

343,894

 

236,524

Changes in operating assets and liabilities:

       

Trade and other receivables

 

10,259

 

(37,459)

Inventories

 

1,812

 

(16,826)

Accounts payable

 

(1,785)

 

(84,139)

Other assets and liabilities

 

(148,575)

 

(44,317)

Net cash flows from operating activities

 

205,605

 

53,783

         

Investing activities

       

Capital expenditures

 

(97,671)

 

(71,640)

Proceeds from sale of assets

 

32,504

 

114

Purchases of jackpot annuity investments

 

(1,061)

 

-

Proceeds from jackpot annuity investments

 

7,472

 

-

Other

 

(4,894)

 

1,230

Net cash flows used in investing activities

 

(63,650)

 

(70,296)

         

Financing activities

       

Principal payments on long-term debt

 

(318,832)

 

(796,443)

Proceeds from issuance of long-term debt

 

-

 

1,180,450

Payments on bridge facility

 

-

 

(51,409)

Payments in connection with the early extinguishment of debt

 

-

 

(73,375)

Debt issuance costs paid

 

-

 

(72,599)

Dividends paid 

 

-

 

(129,720)

Net receipts from (payments of) financial liabilities

 

49,564

 

(24,917)

Other

 

(2,964)

 

(30,336)

Net cash flows (used in) provided by financing activities

 

(272,232)

 

1,651

         

Net decrease in cash and cash equivalents

 

(130,277)

 

(14,862)

Effect of exchange rate changes on cash

 

8,589

 

(28,306)

Cash and cash equivalents at the beginning of the period

 

627,484

 

317,106

Cash and cash equivalents at the end of the period

 

505,796

 

273,938

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(216,834)

 

(114,000)

Income taxes paid

 

(16,319)

 

(13,466)

 

 

International Game Technology PLC

Net Debt

($ thousands)

       
       
 

March 31,

 

December 31,

 

2016

 

2015

Long-term debt, less current portion

     

6.250% Senior Secured Notes due 2022

1,492,852

 

1,468,875

6.500% Senior Secured Notes due 2025

1,084,563

 

1,084,249

4.750% Senior Secured Notes due 2023

954,551

 

912,418

4.125% Senior Secured Notes due 2020

787,193

 

752,212

5.625% Senior Secured Notes due 2020

592,663

 

592,245

Senior Secured Notes

4,911,822

 

4,809,999

       

6.625% Senior Secured Notes due 2018

559,542

 

533,915

4.750% Senior Secured Notes due 2020

545,769

 

520,649

Legacy GTECH Notes

1,105,311

 

1,054,564

       

7.500% Senior Secured Notes due 2019

528,024

 

530,009

5.500% Senior Secured Notes due 2020

126,702

 

126,833

5.350% Senior Secured Notes due 2023

61,273

 

61,303

Legacy IGT Notes

715,999

 

718,145

       

Term Loan Facilities due 2019

906,795

 

866,785

Revolving Credit Facilities due 2019

587,878

 

834,968

Capital Securities

-

 

49,472

Other

40

 

80

Long-term debt, less current portion

8,227,845

 

8,334,013

       

Current portion of long-term debt 

167

 

160

Short-term borrowings

-

 

-

Total debt

8,228,012

 

8,334,173

       

Cash and cash equivalents

505,796

 

627,484

       

Net debt

7,722,216

 

7,706,689

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except share amounts) 

                         
                         
       

Adjustments

   
   

Q1 2016

                 

Q1 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

Transaction

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

                         

 Total revenue 

 

1,281,561

 

692

 

-

 

-

 

-

 

1,282,253

                         

 Cost of services 

 

648,763

 

(45,804)

 

-

 

-

 

-

 

602,959

 Cost of product sales 

 

121,776

 

(29,664)

 

-

 

-

 

-

 

92,112

 Selling, general and administrative 

 

227,526

 

(34,746)

 

-

 

-

 

-

 

192,780

 Research and development 

 

84,707

 

(498)

 

-

 

-

 

-

 

84,209

 Restructuring expense 

 

9,418

 

-

 

-

 

(9,418)

 

-

 

-

 Transaction expense, net 

 

1,474

 

-

 

-

 

-

 

(1,474)

 

-

 Total operating expenses 

 

1,093,664

 

(110,712)

 

-

 

(9,418)

 

(1,474)

 

972,060

                         

 Operating income 

 

187,897

 

111,404

 

-

 

9,418

 

1,474

 

310,193

                         

 Foreign exchange loss, net 

 

(161,556)

 

-

 

161,556

 

-

 

-

 

-

 Other expense, net 

 

(7,326)

 

2,832

 

-

 

-

 

-

 

(4,494)

 Interest expense, net 

 

(114,122)

 

2,038

 

-

 

-

 

-

 

(112,084)

 Total non-operating expenses 

 

(283,004)

 

4,870

 

161,556

 

-

 

-

 

(116,578)

                         

 (Loss) income before provision for income taxes 

(95,107)

 

116,274

 

161,556

 

9,418

 

1,474

 

193,615

                         

 Provision for (benefit from) income taxes 

 

(8,658)

 

40,571

 

36,277

 

3,126

 

294

 

71,610

                         

 Net (loss) income 

 

(86,449)

 

75,703

 

125,279

 

6,292

 

1,180

 

122,005

                         

 Less: Net income attributable to IGT PLC 

 

6,325

 

25

 

-

 

-

 

-

 

6,350

                         

 Net (loss) income attributable to IGT PLC 

 

(92,774)

 

75,678

 

125,279

 

6,292

 

1,180

 

115,655

                         

 Net (loss) income per common share - diluted 

 

(0.46)

                 

0.57

 Weighted-average shares - diluted 

 

200,449

                 

201,526

                         

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except share amounts) 

                                 
                                 
       

Adjustments

           
   

Q1 2015

             

Transaction

 

Q1 2015

     

Q1 2015

   

As

 

Purchase

 

Foreign

 

Restructuring

 

and Refinancing

 

As

 

Pro Forma

 

Pro

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

 

Adjustments

 

Forma

                                 

 Total revenue 

 

848,242

 

(178)

 

-

 

-

 

-

 

848,064

 

399,387

 

1,247,451

                                 

 Cost of services 

 

506,735

 

(16,218)

 

-

 

-

 

-

 

490,517

 

113,306

 

603,823

 Cost of product sales 

 

35,098

 

(15)

 

-

 

-

 

-

 

35,083

 

63,355

 

98,438

 Selling, general and administrative 

 

95,551

 

3

 

-

 

-

 

-

 

95,554

 

134,166

 

229,720

 Research and development 

 

22,471

 

(568)

 

-

 

-

 

-

 

21,903

 

62,760

 

84,663

 Restructuring expense 

 

14,481

 

-

 

-

 

(14,481)

 

-

 

-

 

-

 

-

 Transaction expense, net 

 

11,050

 

-

 

-

 

-

 

(11,050)

 

-

 

-

 

-

 Total operating expenses 

 

685,386

 

(16,798)

 

-

 

(14,481)

 

(11,050)

 

643,057

 

373,587

 

1,016,644

                                 

 Operating income 

 

162,856

 

16,620

 

-

 

14,481

 

11,050

 

205,007

 

25,800

 

230,807

                                 

 Foreign exchange gain, net 

 

7,004

 

-

 

(7,004)

 

-

 

-

 

-

       

 Other expense, net 

 

(120,735)

 

(204)

 

-

 

-

 

117,244

 

(3,695)

       

 Interest expense, net 

 

(93,775)

 

13

 

-

 

-

 

-

 

(93,762)

       

 Total non-operating expenses 

 

(207,506)

 

(191)

 

(7,004)

 

-

 

117,244

 

(97,457)

       
                                 

 (Loss) income before provision for income taxes 

(44,650)

 

16,429

 

(7,004)

 

14,481

 

128,294

 

107,550

       
                                 

 Provision for (benefit from) income taxes 

 

(9,059)

 

5,759

 

(1,926)

 

4,309

 

30,475

 

29,558

       
                                 

 Net (loss) income 

 

(35,591)

 

10,670

 

(5,078)

 

10,172

 

97,819

 

77,992

       
                                 

 Less: Net income attributable to IGT PLC 

 

3,726

 

25

 

-

 

-

 

-

 

3,751

       
                                 

 Net (loss) income attributable to IGT PLC 

 

(39,317)

 

10,645

 

(5,078)

 

10,172

 

97,819

 

74,241

       
                                 

 Net (loss) income per common share - diluted 

 

(0.23)

                 

0.43

       

 Weighted-average shares - diluted 

 

172,999

                 

173,880

       
                                 

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

                 
                 
   

For the three months ended

       

March 31, 2015

   

March 31, 2016

 

As Reported

 

Legacy IGT

 

Pro Forma

                 

Net loss

 

(86,449)

 

(35,591)

 

(13,085)

 

(48,676)

Provision for income taxes

 

(8,658)

 

(9,059)

 

(4,126)

 

(13,185)

Non-operating expenses

 

283,004

 

207,506

 

10,057

 

217,563

Depreciation 

 

98,517

 

71,856

 

28,960

 

100,816

Amortization

 

125,496

 

33,372

 

6,107

 

39,479

Impairment

 

-

 

-

 

6,100

 

6,100

Amortization of upfront payments to customers

 

27,409

 

26,843

 

3,556

 

30,399

Transaction expense, net

 

1,474

 

11,050

 

18,782

 

29,832

Restructuring expense

 

9,418

 

14,481

 

-

 

14,481

Non-cash purchase accounting (excluding D&A)

 

631

 

-

 

-

 

-

Stock compensation

 

9,302

 

994

 

5,951

 

6,945

Other

 

-

 

-

 

30,956

 

30,956

Adjusted EBITDA

 

460,144

 

321,452

 

93,258

 

414,710

                 
                 
                 

Cash flows from operating activities

 

205,605

 

53,783

 

82,698

 

136,481

Capital expenditures

 

(97,671)

 

(71,640)

 

(26,096)

 

(97,736)

Free Cash Flow

 

107,934

 

(17,857)

 

56,602

 

38,745

 

 

 

 

 

International Game Technology PLC Segment Performance

   

Pro Forma Revenue Detail 

     

($ millions)

     
                           
       

INTERNATIONAL GAME TECHNOLOGY PLC

     
       

As Reported

 

Legacy IGT

 

Pro Forma

 

Pro Forma Change

       

2015

2016

 

2015

 

2015

2016

 

Percentage

Constant FX

       

Q1 

Q1 

 

Q1 

 

Q1 

Q1 

 

Q1

Q1

Gaming

 

Total Revenue

243

631

 

399

 

642

631

 

-1.8%

-0.9%

                         
 

Gaming Services

206

500

 

301

 

507

500

 

-1.5%

-0.5%

   

Terminal 

165

312

 

175

 

340

312

 

-8.1%

-7.0%

   

Social (DDI)

0

80

 

81

 

81

80

 

-0.6%

-0.6%

   

Other

41

107

 

45

 

87

107

 

23.7%

25.1%

                         
 

Product Sales

37

131

 

99

 

135

131

 

-2.9%

-2.3%

   

Terminal 

27

79

 

62

 

90

79

 

-11.7%

-11.3%

   

Other

9

52

 

37

 

46

52

 

14.3%

15.2%

                           

Lottery

 

Total Revenue

523

565

 

0

 

523

565

 

8.0%

8.8%

                         
 

Lottery Services

502

550

 

0

 

502

550

 

9.4%

10.2%

   

FM/Concessions

446

492

 

0

 

446

492

 

10.2%

10.9%

   

LMA

33

39

 

0

 

33

39

 

18.6%

18.6%

   

Other Services

23

19

 

0

 

23

19

 

-18.8%

-15.0%

                         
 

Product Sales

21

15

 

0

 

21

15

 

-27.1%

-26.9%

   

Terminal 

5

0

 

0

 

5

0

 

-100.0%

-100.0%

   

Systems/Other

15

15

 

0

 

15

15

 

-2.3%

-2.1%

                           

Other

 

Total Revenue

82

86

 

0

 

82

86

 

4.6%

7.2%

                         
 

Service Revenue

81

86

 

0

 

81

86

 

5.5%

8.1%

 

Product Sales

1

0

 

0

 

1

0

 

-84.5%

-84.1%

                           

Consolidated

 

Revenue

848

1,282

 

399

 

1,248

1,282

 

2.7%

3.7%

                         
                         
 

Operating Income:

                   
   

Segment Total

227

359

 

59

 

275

359

 

30.5%

31.5%

   

Purchase Accounting

(17)

(111)

 

(5)

 

(24)

(111)

 

366.7%

366.9%

   

Corporate Support

(47)

(59)

 

(61)

 

(95)

(59)

 

-37.6%

-36.6%

   

Total

163

188

 

(7)

 

156

188

 

20.5%

21.7%

                         
                           
       

NAGI

   
       

As Reported

 

Legacy IGT

 

Pro Forma

 

Pro Forma Change

       

2015

2016

 

2015

 

2015

2016

 

Percentage

Constant FX

       

Q1 

Q1 

 

Q1 

 

Q1 

Q1 

 

Q1

Q1

Gaming

 

Total Revenue

30

339

 

311

 

341

339

 

-0.7%

-0.5%

                         
 

Gaming Services

13

258

 

245

 

257

258

 

0.0%

0.2%

   

Terminal 

10

134

 

141

 

152

134

 

-11.4%

-11.2%

   

Social (DDI)

0

80

 

81

 

81

80

 

-0.6%

-0.6%

   

Other

2

43

 

23

 

25

43

 

70.7%

71.0%

                         
 

Product Sales

17

81

 

66

 

83

81

 

-2.9%

-2.6%

   

Terminal 

15

50

 

43

 

57

50

 

-13.0%

-12.7%

   

Other

3

31

 

23

 

26

31

 

19.0%

19.4%

                           

Total

 

Revenue

30

339

 

311

 

341

339

 

-0.7%

-0.5%

                         
 

Operating Income

7

89

 

20

 

47

89

 

88.6%

85.1%

                         
                           

NOTE: Corporate Support allocations are only applied to "As Reported" and "Pro Forma" figures.   As a result, Pro Forma Operating Income results will differ from the sum of "As Reported" and "Legacy IGT" Operating Income.

 
       

NA Lottery

     
       

As Reported

 

Legacy IGT

 

Pro Forma

 

Pro Forma Change

       

2015

2016

 

2015

 

2015

2016

 

Percentage

Constant FX

       

Q1 

Q1 

 

Q1 

 

Q1 

Q1 

 

Q1

Q1

Gaming

 

Total Revenue

18

37

 

19

 

37

37

 

0.5%

-0.9%

                         
 

Gaming Services

18

37

 

19

 

37

37

 

1.0%

-0.3%

   

Terminal 

8

25

 

18

 

26

25

 

-4.5%

-4.5%

   

Social (DDI)

0

0

 

0

 

0

0

 

0.0%

0.0%

   

Other

9

12

 

1

 

11

12

 

14.6%

9.9%

                         
 

Product Sales

0

0

 

0

 

0

0

 

-95.1%

-96.7%

   

Terminal 

0

(0)

 

(0)

 

(0)

(0)

 

2854.0%

2854.0%

   

Other

0

0

 

0

 

0

0

 

-81.2%

-82.8%

                           

Lottery

 

Total Revenue

235

278

 

0

 

235

278

 

18.1%

18.1%

                         
 

Lottery Services

224

267

 

0

 

224

267

 

19.5%

19.5%

   

FM/Concessions

165

201

 

0

 

165

201

 

21.4%

21.4%

   

LMA

33

39

 

0

 

33

39

 

18.6%

18.6%

   

Other Services

25

27

 

0

 

25

27

 

7.9%

7.9%

                         
 

Product Sales

12

11

 

0

 

12

11

 

-8.2%

-8.1%

   

Terminal 

0

0

 

0

 

0

0

 

-100.0%

-100.0%

   

Systems/Other

11

11

 

0

 

11

11

 

-6.3%

-6.2%

                           

Total

 

Revenue

253

315

 

19

 

273

315

 

15.7%

15.5%

                         
 

Operating Income

43

88

 

15

 

55

88

 

60.7%

59.3%

                         
                           

NOTE: Corporate Support allocations are only applied to "As Reported" and "Pro Forma" figures.   As a result, Pro Forma Operating Income results will differ from the sum of "As Reported" and "Legacy IGT" Operating Income.

 
       

INTERNATIONAL

     
       

As Reported

 

Legacy IGT

 

Pro Forma

 

Pro Forma Change

       

2015

2016

 

2015

 

2015

2016

 

Percentage

Constant FX

       

Q1 

Q1 

 

Q1 

 

Q1 

Q1 

 

Q1

Q1

Gaming

 

Total Revenue

31

97

 

69

 

100

97

 

-3.1%

2.1%

                         
 

Gaming Services

13

47

 

37

 

49

47

 

-5.3%

4.2%

   

Terminal 

2

13

 

15

 

17

13

 

-22.7%

-4.0%

   

Social (DDI)

0

0

 

0

 

0

0

 

0.0%

0.0%

   

Other

11

34

 

21

 

32

34

 

3.8%

8.6%

                         
 

Product Sales

18

50

 

33

 

51

50

 

-1.0%

0.1%

   

Terminal 

12

29

 

19

 

32

29

 

-8.2%

-7.5%

   

Other

6

21

 

13

 

19

21

 

11.0%

12.6%

                           

Lottery

 

Total Revenue

81

70

 

0

 

81

70

 

-13.3%

-8.6%

                         
 

Lottery Services

72

66

 

0

 

72

66

 

-8.5%

-3.2%

   

FM/Concessions

51

51

 

0

 

51

51

 

0.3%

5.9%

   

LMA

0

0

 

0

 

0

0

 

0.0%

0.0%

   

Other Services

21

15

 

0

 

21

15

 

-30.1%

-25.4%

                         
 

Product Sales

9

4

 

0

 

9

4

 

-51.9%

-51.6%

   

Terminal 

5

0

 

0

 

5

0

 

-100.0%

-100.0%

   

Systems/Other

4

4