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International Game Technology PLC Reports Third Quarter 2017 Results
- Net loss of $804 million includes $714 million non-cash impairment charge and $118 million of net foreign exchange loss; adjusted Net income of $81 million
- Adjusted EBITDA of $428 million reflects robust lottery same-store revenue growth, strong product sales, and reduced operating expenses
- The Company expects to achieve Adjusted EBITDA of $1,640 - 1,680 million for the full-year period
- Cash dividend declared of $0.20 per ordinary share

LONDON, Nov. 14, 2017 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the third quarter and nine months ended September 30, 2017. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the third 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...

"Our strong third quarter performance reflects the scope and balance of our business," said Marco Sala, CEO of IGT. "Our largest global Lottery operations are growing steadily and acceptance of our newest gaming machines is expanding around the world. The significant increase in Gaming and Lottery product sales demonstrates clear interest in our systems and technology solutions. We expect our sustained investment in innovation, led by a customer-first, player-centric focus, to drive continued momentum in both Lottery and Gaming."  

"Thanks to a favorable product sales mix and reduced operating expenses, Adjusted EBITDA improved from the prior-year period, after considering certain non-comparable items, such as the DoubleDown sale," said Alberto Fornaro, CFO of IGT. "Based on the year-to-date results and current exchange rates, we expect to achieve Adjusted EBITDA of $1,640-$1,680 million for the full-year period." 

Summary of Consolidated Third Quarter 2017 Financial Results

 

Quarter Ended
September 30,

Change

Constant
Currency
Change 

 

2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)

       

Revenue

1,221

1,266

-4%

-6%

Operating income (loss)

(556)

164

-439%

-447%

Net (loss) income per diluted share

(3.95)

(0.01)

NM

 

Net debt

7,335

7,937

-8%

 

Adjusted EBITDA

428

430

0%

-3%

Adjusted operating income

258

286

-10%

-12%

Adjusted net income per diluted share

0.40

0.45

-11%

 

 

Note: Adjusted EBITDA, adjusted operating income, 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. 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 2017 are calculated using the same foreign exchange rates as the corresponding 2016 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP.

Overview of Consolidated Third Quarter Results

Consolidated revenue was $1,221 million compared to $1,266 million in the third quarter of 2016. Revenue was down 6% in constant currency, primarily on the sale of Double Down Interactive LLC ("DoubleDown") and new Lotto concession amortization. Adjusted for these items, consolidated revenue was up 2% in constant currency, reflecting growth in global Lottery and Gaming revenue.  

Global lottery same-store revenue, excluding Italy, grew a robust 6.8% in the third quarter, led by broad-based strength in North America. In Italy, late numbers activity was considerably lower than the elevated levels in the third quarter of 2016. Excluding late numbers, Italy lottery wagers increased 6% on exceptional growth for both 10eLotto and Scratch & Win.

Gaming service revenue declined 9%, primarily impacted by the DoubleDown sale; adjusted for DoubleDown, gaming service revenue increased 5%. The global installed base grew 3,275 units from the prior-year period, including expansion for both casino and VLT units. Global gaming product revenue increased 9% from the prior-year period on strong system and software sales. The Company shipped 6,406 gaming machines worldwide during the third quarter with higher average selling prices than the prior year.

Operating loss of $556 million is due to a non-cash, non-tax deductible impairment charge of $714 million to write down the carrying value of the Company's North America Gaming and Interactive reporting unit to fair value. The impairment charge reflects a delayed recovery for the North America Gaming and Interactive reporting unit. Going forward, revenue and profit levels for the North America Gaming and Interactive reporting unit are expected to grow as new games and cabinets come to market. The impairment charge has no impact on the Company's operations, cash flow, ability to service debt, compliance with financial covenants, or underlying liquidity.

Adjusted operating income was $258 million compared to $286 million in the prior-year period. Adjusted EBITDA was $428 million compared to $430 million in the third quarter of 2016, as higher product sales and lower operating expenses essentially compensated for the DoubleDown sale and the timing of incentive contributions from the New Jersey Lottery.

Interest expense was $114 million compared to $118 million in the prior-year period.

Net loss attributable to IGT was $804 million in the third quarter of 2017, reflecting the previously mentioned impairment charge and $118 million of net foreign exchange loss. On an adjusted basis, net income attributable to IGT was to $81 million. The Company reported a net loss per diluted share of $(3.95) and earned $0.40 per diluted share on an adjusted basis.

Cash from operations was $601 million in the first nine months of the year and capital expenditures were $552 million.

Cash and cash equivalents were $300 million as of September 30, 2017, compared to $294 million as of December 31, 2016. Net debt was $7,335 million as of September 30, 2017, compared to $7,569 million as of December 31, 2016.

Operating Segment Review

North America Gaming & Interactive
Revenue for North America Gaming & Interactive was $262 million compared to $317 million in the third quarter of 2016. Comparability is affected by the DoubleDown sale; adjusted for DoubleDown, revenue for North America Gaming & Interactive rose 4% in the third quarter. 

Service revenue was $171 million compared to $241 million in the prior-year period, the decline is primarily attributed to DoubleDown and a year-over-year decrease in the installed base.

Product sales revenue increased 20% to $91 million, driven by large software and system sales. The segment shipped 3,597 gaming machine units in the quarter compared to 5,238 units in the prior-year period, when there was significant new and expansion and VLT replacement activity. Average selling price per unit was higher, supported by demand for new cabinets.

Operating income for North America Gaming & Interactive was $65 million compared to $68 million in the third quarter of 2016. The decline is entirely attributable to the DoubleDown sale, which was largely offset by a high-margin product sales mix and lower operating expenses.

North America Lottery
North America Lottery revenue of $307 million was in line with the prior-year period, which included a significant incentive contribution from the New Jersey Lottery; the 2017 New Jersey incentive was mostly recognized in the second quarter of 2017. Adjusting for the timing of the New Jersey contribution, revenue increased 9% from the prior year.

Lottery same-store revenue rose 9.4% on top of 6.3% growth in the prior year, supported by broad-based strength in draw-based games, instant tickets, and multi-state jackpots. Product sales were significantly above the prior year.

Operating income for North America Lottery was $75 million compared to $85 million in the third quarter of 2016. Adjusted for the timing of the New Jersey Lottery incentive, operating income was up double-digits on the high profit flow-through of strong same-store revenue growth.

International
International revenue increased 9% to $234 million, and was up 8% on a constant currency basis.

Lottery service revenue of $70 million was essentially in line with the prior year, as a 1.4% decline in same-store revenue was offset by a higher effective rate in the period.

Gaming service revenue increased 36% to $59 million, reflecting the benefit of discrete, non-recurring items and significant expansion in the installed base.

Product sales revenue rose 5% to $87 million, supported by Gaming system and Lottery software sales. Gaming terminal sales were below the prior year, as the segment shipped a total of 2,809 gaming machine units during the third quarter of 2017 compared to 3,742 units in the prior-year period.

International operating income of $40 million increased 7% at constant currency, reflecting higher revenue and disciplined cost management that was partially offset by product mix. 

Italy
Italy revenue was $418 million compared to $426 million in the third quarter of 2016. The decline in revenue is entirely attributable to amortization associated with the new Lotto concession and significantly lower late numbers activity.

Total Lotto wagers in the quarter were €1,815 million compared to €1,967 million in the prior-year period. Excluding late numbers, Lotto wagers increased 7% over the prior- year period reflecting strong growth in 10eLotto. Instant-ticket wagers grew 5% reaching €2,198 million on the strong acceptance of new games.

Machine gaming service revenue was down in constant currency on higher gaming machine taxes that were partially offset by improved VLT performance. Sports betting revenue rose on strong wager growth.

Italy operating income was $126 million compared to $147 million in the third quarter of 2016. The decrease was entirely attributable to the new Lotto amortization, as strong underlying performance offset higher gaming machine taxes and lower late number wagers.

Other Developments

The Company's board of directors declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on December 12, 2017 to holders of record as of the close of business on November 28, 2017.   

Outlook

Based on the year-to-date results and current exchange rates, the Company expects to achieve adjusted EBITDA of $1,640-$1,680 million for the full-year period. Net debt is expected to remain essentially in line with the third quarter level.

Conference Call and Webcast

Today, at 8:00 a.m. EST, management will host a conference call to present the third quarter 2017 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events & 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 US/Canada toll-free dial-in number is +1 844 842 7999 and the dial-in number for participants outside the US/Canada is +1 612 979 9887. The conference ID/confirmation code is 2259942. A telephone replay of the call will be available for one week at +1 855 859 2056 for the US/Canada or +1 404 537 3406 outside the US/Canada using the conference ID/confirmation code 2259942.

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 International Game Technology PLC and its consolidated subsidiaries (the "Company") 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 the Company 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 speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company'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 such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2016 and other documents filed from time to time with the SEC, which are available on the SEC's website at www.sec.gov and on the investor relations section of the Company's website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company's business. 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 International Game Technology PLC, or persons acting on its behalf, are expressly qualified in its entirety by this cautionary statement.

Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited

       
 

 For the three months ended 

 

 September 30, 

 

2017

 

2016

       

Service revenue

1,013,054

 

1,088,842

Product sales

208,147

 

176,808

Total revenue

1,221,201

 

1,265,650

       

Cost of services

625,247

 

625,235

Cost of product sales

150,358

 

136,702

Selling, general and administrative

196,862

 

242,510

Research and development

79,009

 

87,354

Restructuring expense

9,976

 

5,658

Impairment loss

715,220

 

4,230

Transaction expense, net

627

 

129

Total operating expenses

1,777,299

 

1,101,818

       

Operating (loss) income

(556,098)

 

163,832

       

Interest income

2,906

 

3,240

Other (expense) income, net

(9,802)

 

2,907

Foreign exchange loss, net

(117,526)

 

(21,143)

Interest expense

(113,711)

 

(117,618)

Total non-operating expenses

(238,133)

 

(132,614)

       

(Loss) income before (benefit from) provision for income taxes

(794,231)

 

31,218

       

(Benefit from) provision for income taxes

(19,824)

 

12,812

       

Net (loss) income

(774,407)

 

18,406

       

Less: Net income attributable to non-controlling interests

29,207

 

20,309

       

Net loss attributable to IGT PLC

(803,614)

 

(1,903)

       
       

Net loss attributable to IGT PLC per common share - basic

(3.95)

 

(0.01)

Net loss attributable to IGT PLC per common share - diluted

(3.95)

 

(0.01)

       

Weighted-average shares - basic

203,489

 

202,029

Weighted-average shares - diluted

203,489

 

202,029

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited

       
 

 For the nine months ended 

 

 September 30, 

 

2017

 

2016

       

Service revenue

3,063,477

 

3,313,917

Product sales

529,812

 

518,763

Total revenue

3,593,289

 

3,832,680

       

Cost of services

1,866,281

 

1,911,830

Cost of product sales

403,056

 

403,118

Selling, general and administrative

607,571

 

709,277

Research and development

242,142

 

256,349

Restructuring expense

30,706

 

21,514

Impairment loss

715,220

 

6,582

Transaction (income) expense, net

(26,682)

 

1,560

Total operating expenses

3,838,294

 

3,310,230

       

Operating (loss) income

(245,005)

 

522,450

       

Interest income

7,992

 

10,287

Other expense, net

(33,247)

 

(4,994)

Foreign exchange loss, net

(384,749)

 

(94,547)

Interest expense

(344,494)

 

(353,748)

Total non-operating expenses

(754,498)

 

(443,002)

       

(Loss) income before provision for income taxes

(999,503)

 

79,448

       

Provision for income taxes

53,932

 

64,593

       

Net (loss) income

(1,053,435)

 

14,855

       

Less: Net income attributable to non-controlling interests

94,870

 

36,836

       

Net loss attributable to IGT PLC

(1,148,305)

 

(21,981)

       
       

Net loss attributable to IGT PLC per common share - basic

(5.66)

 

(0.11)

Net loss attributable to IGT PLC per common share - diluted

(5.66)

 

(0.11)

       

Weighted-average shares - basic

203,002

 

201,238

Weighted-average shares - diluted

203,002

 

201,238

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

September 30,

 

 December 31, 

 

2017

 

2016

Assets

     

Current assets:

     

Cash and cash equivalents

300,079

 

294,094

Restricted cash and investments

236,731

 

247,222

Trade and other receivables, net

948,993

 

947,237

Inventories

370,911

 

347,494

Other current assets

400,991

 

424,727

Income taxes receivable

26,919

 

28,792

  Total current assets

2,284,624

 

2,289,566

       

Systems, equipment and other assets related to contracts, net

1,405,335

 

1,199,674

Property, plant and equipment, net

197,633

 

357,841

Goodwill, net

5,715,885

 

6,810,012

Intangible assets, net

2,325,960

 

2,874,031

Other non-current assets

1,485,199

 

1,497,662

Deferred income taxes

32,303

 

31,376

  Total non-current assets

11,162,315

 

12,770,596

       

Total assets

13,446,939

 

15,060,162

       

Liabilities, redeemable non-controlling interests, and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,150,748

 

1,216,079

Other current liabilities

814,161

 

1,097,045

Current portion of long-term debt

588,342

 

77

Income taxes payable

165,072

 

28,590

  Total current liabilities

2,718,323

 

2,341,791

       

Long-term debt, less current portion

7,046,678

 

7,863,085

Deferred income taxes

602,015

 

761,924

Other non-current liabilities

434,174

 

444,556

  Total non-current liabilities

8,082,867

 

9,069,565

       

Total liabilities

10,801,190

 

11,411,356

       

Commitments and contingencies

-

 

-

       

Redeemable non-controlling interests and shareholders' equity

2,645,749

 

3,648,806

       

Total liabilities, redeemable non-controlling interests, and shareholders' equity

13,446,939

 

15,060,162

 

International Game Technology PLC

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited

         
   

 For the nine months ended 

   

 September 30, 

   

2017

 

2016

Operating activities

       

Net (loss) income

 

(1,053,435)

 

14,855

Adjustments for:

       

Impairment loss

 

715,220

 

6,582

Foreign exchange loss, net

 

384,749

 

94,547

Amortization 

 

317,989

 

377,163

Depreciation 

 

289,088

 

293,284

Amortization of upfront payments to customers

 

155,318

 

85,160

Loss on early extinguishment of debt

 

35,428

 

-

Debt issuance cost amortization

 

16,602

 

13,757

Stock-based compensation expense

 

5,102

 

24,502

Non-cash gain on sale of Double Down Interactive LLC

 

(51,348)

 

-

Other, net

 

8,428

 

16,603

Cash flows before changes in operating assets and liabilities

 

823,141

 

926,453

Changes in operating assets and liabilities, net of disposition:

       

Trade and other receivables

 

42,023

 

83,085

Inventories

 

16,526

 

(46,761)

Accounts payable

 

(60,733)

 

(135,297)

Other assets and liabilities

 

(220,004)

 

(206,483)

Net cash flows provided by operating activities

 

600,953

 

620,997

         

Investing activities

       

Proceeds from sale of Double Down Interactive LLC, net of cash divested

 

823,788

 

-

Proceeds from sale of assets

 

168,201

 

55,713

Upfront payments to customers

 

(185,368)

 

(390,390)

Capital expenditures

 

(552,169)

 

(371,497)

Other

 

2,779

 

15,196

Net cash flows provided by (used in) investing activities

 

257,231

 

(690,978)

         

Financing activities

       

Principal payments on long-term debt

 

(1,601,134)

 

(177,977)

Dividends paid

 

(121,840)

 

(120,726)

Return of capital - non-controlling interests

 

(62,538)

 

(35,407)

Dividends paid - non-controlling interests

 

(51,508)

 

(27,813)

Payments in connection with the early extinguishment of debt

 

(38,832)

 

-

Net payments of financial liabilities

 

(32,495)

 

-

Debt issuance costs paid

 

(16,350)

 

(10,736)

Capital increase - non-controlling interests

 

127,211

 

151,359

Proceeds from long-term debt

 

938,160

 

-

Other

 

(24,785)

 

2,225

Net cash flows used in financing activities

 

(884,111)

 

(219,075)

         

Net decrease in cash and cash equivalents

 

(25,927)

 

(289,056)

Effect of exchange rate changes on cash

 

31,912

 

11,471

Cash and cash equivalents at the beginning of the period

 

294,094

 

627,484

Cash and cash equivalents at the end of the period

 

300,079

 

349,899

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(397,555)

 

(408,864)

Income taxes paid

 

(159,613)

 

(136,015)

 

International Game Technology PLC

Net Debt

($ thousands)

       
       
 

September 30,

 

December 31,

 

2017

 

2016

       

6.250% Senior Secured Notes due 2022

1,476,058

 

1,472,150

6.500% Senior Secured Notes due 2025

1,086,560

 

1,085,537

4.750% Senior Secured Notes due 2023

992,426

 

884,917

4.125% Senior Secured Notes due 2020

820,013

 

730,465

5.625% Senior Secured Notes due 2020

595,304

 

593,954

4.750% Senior Secured Notes due 2020

574,535

 

509,050

7.500% Senior Secured Notes due 2019

148,876

 

521,894

5.500% Senior Secured Notes due 2020

125,856

 

126,294

5.350% Senior Secured Notes due 2023

61,106

 

61,187

6.625% Senior Secured Notes due 2018

-

 

521,556

Senior Secured Notes

5,880,734

 

6,507,004

       

Term Loan Facilities due 2023

935,198

 

-

Revolving Credit Facilities due 2021

230,746

 

516,529

Term Loan Facilities due 2019

-

 

839,552

Long-term debt, less current portion

7,046,678

 

7,863,085

       

6.625% Senior Secured Notes due 2018

588,320

 

-

Other

22

 

77

Current portion of long-term debt 

588,342

 

77

       

Total debt

7,635,020

 

7,863,162

       

Cash and cash equivalents

300,079

 

294,094

       

Net debt

7,334,941

 

7,569,068

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

                         
                         
       

Adjustments

   
   

Q3 2017

         

Impairment/

 

Transaction

 

Q3 2017

   

As

 

Purchase

 

Foreign

 

Restructuring

 

and Refinancing

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

 Total revenue 

 

1,221,201

 

(182)

 

-

 

-

 

-

 

1,221,019

                         

 Cost of services 

 

625,247

 

(36,918)

 

-

 

-

 

-

 

588,329

 Cost of product sales 

 

150,358

 

(23,961)

 

-

 

-

 

-

 

126,397

 Selling, general and administrative 

 

196,862

 

(27,180)

 

-

 

-

 

-

 

169,682

 Research and development 

 

79,009

 

(15)

 

-

 

-

 

-

 

78,994

 Restructuring expense 

 

9,976

 

-

 

-

 

(9,976)

 

-

 

-

 Impairment loss 

 

715,220

 

-

 

-

 

(715,220)

 

-

 

-

 Transaction expense, net 

 

627

 

-

 

-

 

-

 

(627)

 

-

 Total operating expenses 

 

1,777,299

 

(88,074)

 

-

 

(725,196)

 

(627)

 

963,402

                         

 Operating (loss) income 

 

(556,098)

 

87,892

 

-

 

725,196

 

627

 

257,617

                         

 Foreign exchange loss, net 

 

(117,526)

 

-

 

117,526

 

-

 

-

 

-

 Other expense, net 

 

(9,802)

 

(84)

 

-

 

-

 

9,703

 

(183)

 Interest expense, net 

 

(110,805)

 

610

 

-

 

-

 

-

 

(110,195)

 Total non-operating expenses 

 

(238,133)

 

526

 

117,526

 

-

 

9,703

 

(110,378)

                         

 (Loss) income before (benefit from) provision for income taxes 

 

(794,231)

 

88,418

 

117,526

 

725,196

 

10,330

 

147,239

                         

 (Benefit from) provision for income taxes (a) 

 

(19,824)

 

30,834

 

26,056

 

2,998

 

(3,230)

 

36,834

                         

 Net (loss) income 

 

(774,407)

 

57,584

 

91,470

 

722,198

 

13,560

 

110,405

                         

 Less: Net income attributable to non-controlling interests 

 

29,207

 

26

 

-

 

-

 

-

 

29,233

                         

 Net (loss) income attributable to IGT PLC 

 

(803,614)

 

57,558

 

91,470

 

722,198

 

13,560

 

81,172

                         

 Net (loss) income per common share - diluted 

 

(3.95)

                 

0.40

 Weighted-average shares - diluted (b)  

 

203,489

                 

203,689

                         
                         

(a) Benefit from income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

                         
                         
   

 Year to date 

 

Adjustments

 

 Year to date 

   

September 2017

         

Impairment/

 

Transaction

 

September 2017

   

As

 

Purchase

 

Foreign

 

Restructuring

 

and Refinancing

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

 Total revenue 

 

3,593,289

 

(540)

 

-

 

-

 

-

 

3,592,749

                         

 Cost of services 

 

1,866,281

 

(117,658)

 

-

 

-

 

-

 

1,748,623

 Cost of product sales 

 

403,056

 

(77,261)

 

-

 

-

 

-

 

325,795

 Selling, general and administrative 

 

607,571

 

(90,277)

 

-

 

-

 

-

 

517,294

 Research and development 

 

242,142

 

(426)

 

-

 

-

 

-

 

241,716

 Restructuring expense 

 

30,706

 

-

 

-

 

(30,706)

 

-

 

-

 Impairment loss 

 

715,220

 

-

 

-

 

(715,220)

 

-

 

-

 Transaction income, net 

 

(26,682)

 

-

 

-

 

-

 

26,682

 

-

 Total operating expenses 

 

3,838,294

 

(285,622)

 

-

 

(745,926)

 

26,682

 

2,833,428

                         

 Operating (loss) income 

 

(245,005)

 

285,082

 

-

 

745,926

 

(26,682)

 

759,321

                         

 Foreign exchange loss, net 

 

(384,749)

 

-

 

384,749

 

-

 

-

 

-

 Other (expense) income, net 

 

(33,247)

 

1,567

 

-

 

-

 

35,428

 

3,748

 Interest expense, net 

 

(336,502)

 

2,415

 

-

 

-

 

-

 

(334,087)

 Total non-operating expenses 

 

(754,498)

 

3,982

 

384,749

 

-

 

35,428

 

(330,339)

                         

 (Loss) income before provision for income taxes 

 

(999,503)

 

289,064

 

384,749

 

745,926

 

8,746

 

428,982

                         

 Provision for income taxes (a) 

 

53,932

 

101,066

 

87,152

 

9,132

 

(88,159)

 

163,123

                         

 Net (loss) income 

 

(1,053,435)

 

187,998

 

297,597

 

736,794

 

96,905

 

265,859

                         

 Less: Net income attributable to non-controlling interests 

 

94,870

 

77

 

-

 

-

 

-

 

94,947

                         

 Net (loss) income attributable to IGT PLC 

 

(1,148,305)

 

187,921

 

297,597

 

736,794

 

96,905

 

170,912

                         

 Net (loss) income per common share - diluted 

 

(5.66)

                 

0.84

 Weighted-average shares - diluted (b) 

 

203,002

                 

203,303

                         
                         

(a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

(b) Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

                         
                         
       

Adjustments

   
   

Q3 2016

         

Impairment/

 

Transaction

 

Q3 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

(Income)

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

                         

 Total revenue 

 

1,265,650

 

376

 

-

 

-

 

-

 

1,266,026

                         

 Cost of services 

 

625,235

 

(46,222)

 

-

 

-

 

-

 

579,013

 Cost of sales 

 

136,702

 

(29,740)

 

-

 

-

 

-

 

106,962

 Selling, general and administrative 

 

242,510

 

(35,254)

 

-

 

-

 

-

 

207,256

 Research and development 

 

87,354

 

(465)

 

-

 

-

 

-

 

86,889

 Restructuring expense 

 

5,658

 

-

 

-

 

(5,658)

 

-

 

-

 Impairment loss 

 

4,230

 

-

 

-

 

(4,230)

 

-

 

-

 Transaction expense, net 

 

129

 

-

 

-

 

-

 

(129)

 

-

 Total operating expenses 

 

1,101,818

 

(111,681)

 

-

 

(9,888)

 

(129)

 

980,120

                         

 Operating income 

 

163,832

 

112,057

 

-

 

9,888

 

129

 

285,906

                         

 Foreign exchange loss, net 

 

(21,143)

 

-

 

21,143

 

-

 

-

 

-

 Other income, net 

 

2,907

 

(211)

 

-

 

-

 

-

 

2,696

 Interest expense, net 

 

(114,378)

 

2,073

 

-

 

-

 

-

 

(112,305)

 Total non-operating expenses 

 

(132,614)

 

1,862

 

21,143

 

-

 

-

 

(109,609)

                         

 Income before provision for income taxes 

 

31,218

 

113,919

 

21,143

 

9,888

 

129

 

176,297

                         

 Provision for income taxes (a) 

 

12,812

 

40,437

 

9,857

 

2,538

 

40

 

65,684

                         

 Net income 

 

18,406

 

73,482

 

11,286

 

7,350

 

89

 

110,613

                         

 Less: Net income attributable to non-controlling interests 

 

20,309

 

26

 

-

 

-

 

-

 

20,335

                         

 Net (loss) income attributable to IGT PLC 

 

(1,903)

 

73,456

 

11,286

 

7,350

 

89

 

90,278

                         

 Net (loss) income per common share - diluted 

 

(0.01)

                 

0.45

 Weighted-average shares - diluted 

 

202,029

                 

202,606

                         
                         

 (a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

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

                         
                         
   

 Year to date 

 

Adjustments

 

 Year to date 

   

September 2016

         

Impairment/

     

September 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

Transaction

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

                         

 Total revenue 

 

3,832,680

 

1,332

 

-

 

-

 

-

 

3,834,012

                         

 Cost of services 

 

1,911,830

 

(137,366)

 

-

 

-

 

-

 

1,774,464

 Cost of sales 

 

403,118

 

(89,091)

 

-

 

-

 

-

 

314,027

 Selling, general and administrative 

 

709,277

 

(104,857)

 

-

 

-

 

-

 

604,420

 Research and development 

 

256,349

 

(1,459)

 

-

 

-

 

-

 

254,890

 Restructuring expense 

 

21,514

 

-

 

-

 

(21,514)

 

-

 

-

 Impairment loss 

 

6,582

 

-

 

-

 

(6,582)

 

-

 

-

 Transaction expense, net 

 

1,560

 

-

 

-

 

-

 

(1,560)

 

-

 Total operating expenses 

 

3,310,230

 

(332,773)

 

-

 

(28,096)

 

(1,560)

 

2,947,801

                         

 Operating income 

 

522,450

 

334,105

 

-

 

28,096

 

1,560

 

886,211

                         

 Foreign exchange loss, net 

 

(94,547)

 

-

 

94,547

 

-

 

-

 

-

 Other expense, net 

 

(4,994)

 

3,881

 

-

 

-

 

-

 

(1,113)

 Interest expense, net 

 

(343,461)

 

6,147

 

-

 

-

 

-

 

(337,314)

 Total non-operating expenses 

 

(443,002)

 

10,028

 

94,547

 

-

 

-

 

(338,427)

                         

 Income before provision for income taxes 

 

79,448

 

344,133

 

94,547

 

28,096

 

1,560

 

547,784

                         

 Provision for income taxes (a) 

 

64,593

 

122,338

 

23,431

 

7,718

 

302

 

218,382

                         

 Net income 

 

14,855

 

221,795

 

71,116

 

20,378

 

1,258

 

329,402

                         

 Less: Net income attributable to non-controlling interests 

 

36,836

 

76

 

-

 

-

 

-

 

36,912

                         

 Net (loss) income attributable to IGT PLC 

 

(21,981)

 

221,719

 

71,116

 

20,378

 

1,258

 

292,490

                         

 Net (loss) income per common share - diluted 

 

(0.11)

                 

1.45

 Weighted-average shares - diluted 

 

201,238

                 

201,901

                         
                         

 (a) Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

   

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

         
         
   

For the three months ended

   

September 30,

   

2017

 

2016

         

Net (loss) income

 

(774,407)

 

18,406

(Benefit from) provision for income taxes

 

(19,824)

 

12,812

Non-operating expenses

 

238,133

 

132,614

Impairment loss

 

715,220

 

4,230

Depreciation 

 

103,182

 

94,403

Amortization

 

99,562

 

124,089

Amortization of upfront payments to customers

 

54,279

 

29,982

Restructuring expense

 

9,976

 

5,658

Stock-based compensation expense

 

1,829

 

7,468

Transaction expense, net

 

627

 

129

Bad debt expense

 

4

 

-

Non-cash purchase accounting (excluding D&A)

 

(126)

 

67

Adjusted EBITDA

 

428,455

 

429,858

         
         
         

Cash flows from operating activities

 

57,729

 

97,190

Capital expenditures

 

(181,579)

 

(151,865)

Free Cash Flow

 

(123,850)

 

(54,675)

         
         
   

For the nine months ended

   

September 30,

   

2017

 

2016

         

Net (loss) income

 

(1,053,435)

 

14,855

Provision for income taxes

 

53,932

 

64,593

Non-operating expenses

 

754,498

 

443,002

Impairment loss

 

715,220

 

6,582

Amortization

 

317,989

 

377,163

Depreciation 

 

289,088

 

293,284

Amortization of upfront payments to customers

 

155,318

 

85,160

Restructuring expense

 

30,706

 

21,514

Stock-based compensation expense

 

5,102

 

24,502

Non-cash purchase accounting (excluding D&A)

 

(513)

 

921

Bad debt recovery

 

(17,858)

 

-

Transaction (income) expense, net

 

(26,682)

 

1,560

Adjusted EBITDA

 

1,223,365

 

1,333,136

         
         
         

Cash flows from operating activities

 

600,953

 

620,997

Capital expenditures

 

(552,169)

 

(371,497)

Upfront payments to customers

 

(185,368)

 

(390,390)

Free Cash Flow

 

(136,584)

 

(140,890)

 

 

International Game Technology PLC Segment Performance

Revenue Detail 

($ millions)

                 
                 
       

INTERNATIONAL GAME TECHNOLOGY PLC

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q3 

Q3 

 

Q3

Q3

Gaming

 

Total Revenue

644

611

 

-5.1%

-7.1%

               
 

Gaming Services

489

443

 

-9.4%

-11.7%

   

Terminal 

322

319

 

-1.1%

-3.8%

   

Social (DDI)

66

0

 

-100.0%

-100.0%

   

Other

101

124

 

23.1%

20.8%

               
 

Product Sales

155

168

 

8.6%

7.4%

   

Terminal 

108

98

 

-9.7%

-10.7%

   

Other

47

70

 

50.8%

49.5%

                 

Lottery

 

Total Revenue

545

521

 

-4.4%

-6.0%

               
 

Lottery Services

523

487

 

-6.9%

-8.6%

   

FM/Concessions

436

448

 

2.7%

-0.4%

   

LMA

59

34

 

-42.9%

-42.9%

   

Other Services

28

5

 

-81.5%

-63.1%

               
 

Product Sales

22

34

 

55.3%

55.9%

   

Terminal 

2

1

 

-63.2%

-63.2%

   

Systems/Other

20

34

 

65.2%

65.8%

                 

Other

 

Total Revenue

77

89

 

16.1%

10.7%

               
 

Service Revenue

77

84

 

8.6%

3.2%

 

Product Sales

(0)

6

 

NM

NM

                 

Consolidated

 

Revenue

1,266

1,221

 

-3.5%

-5.5%

               
               
 

Operating Income:

         
   

Segment Total

338

305

 

-9.6%

-11.3%

   

Purchase Accounting

(112)

(802)

 

615.6%

615.6%

   

Corporate Support

(62)

(59)

 

-3.9%

-5.6%

   

Total

164

(556)

 

-439.4%

-442.2%

               
                 
                 
               
       

NORTH AMERICA GAMING & INTERACTIVE

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q3 

Q3 

 

Q3

Q3

Gaming

 

Total Revenue

317

262

 

-17.5%

-17.7%

               
 

Gaming Services

241

171

 

-29.1%

-29.2%

   

Terminal 

133

123

 

-8.0%

-8.2%

   

Social (DDI)

66

0

 

-100.0%

-100.0%

   

Other

42

48

 

14.9%

14.8%

               
 

Product Sales

76

91

 

19.7%

19.1%

   

Terminal 

51

47

 

-9.3%

-9.5%

   

Other

24

44

 

80.5%

79.2%

                 

Total

 

Revenue

317

262

 

-17.5%

-17.7%

               
 

Operating Income

68

65

 

-4.1%

-2.4%

               
                 
                 
               
                 
       

NORTH AMERICA LOTTERY

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q3 

Q3 

 

Q3

Q3

Gaming

 

Total Revenue

37

48

 

29.7%

28.9%

               
 

Gaming Services

37

40

 

8.1%

7.3%

   

Terminal 

25

25

 

0.3%

0.3%

   

Social (DDI)

0

0

 

0.0%

0.0%

   

Other

12

14

 

25.2%

22.5%

               
 

Product Sales

0

8

 

NM

NM

   

Terminal 

0

6

 

0.0%

0.0%

   

Other

0

2

 

NM

NM

                 

Lottery

 

Total Revenue

271

259

 

-4.1%

-4.2%

               
 

Lottery Services

253

237

 

-6.1%

-6.1%

   

FM/Concessions

163

171

 

4.7%

4.7%

   

LMA

59

34

 

-42.9%

-42.9%

   

Other Services

31

33

 

6.7%

6.7%

               
 

Product Sales

18

22

 

24.1%

22.9%

   

Terminal 

2

1

 

-63.2%

-63.2%

   

Systems/Other

16

22

 

33.2%

31.9%

                 

Total

 

Revenue

307

307

 

-0.1%

-0.2%

               
 

Operating Income

85

75

 

-11.6%

-11.6%

               
                 
                 
               
                 
       

INTERNATIONAL

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q3 

Q3 

 

Q3