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International Game Technology PLC Reports Fourth Quarter And Full Year 2017 Results
- Fourth quarter net income of $80 million includes one-time, non-cash tax benefit; adjusted EBITDA of $452 million reflects strong International performance, Italy sports betting results, and lower operating expenses
- 2017 net loss of $1,069 million includes previously reported $714 million non-cash impairment charge and $444 million of primarily non-cash net foreign exchange loss
- 2017 adjusted EBITDA of $1,676 million at top of expected range
- Net debt of $7,319 million at year end, better than outlook
- Cash dividend declared of $0.20 per ordinary share

LONDON, March 8, 2018 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported financial results for the fourth quarter and year ended December 31, 2017. Today, at 8:00 a.m. EST, management will host a conference call and webcast to present the fourth quarter and full year 2017 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 had a strong finish to 2017, amplifying the progress we made throughout the year," said Marco Sala, CEO of IGT. "We delivered outstanding results in our Lottery business and improved our key performance indicators in the Gaming business. These achievements were enhanced by disciplined expense management. Bringing innovative content and technology to market remains the cornerstone of our strategy. Last year, we executed well along this path and established a solid foundation for growth in 2018 and beyond."

"We met all of our financial objectives for the year, including the top end of our EBITDA expectations. Net debt was slightly better than our outlook, despite the early Scratch & Win renewal in the fourth quarter," said Alberto Fornaro, CFO of IGT. "The results for the fourth quarter and full year highlight the diversity and resilience of the IGT franchise."

Summary of Consolidated Fourth Quarter and Full Year 2017 Financial Results

Summary of Consolidated Fourth Quarter 2017 Financial Results



Quarter Ended
December 31, 

Change

Constant

Currency
Change 


2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)





Revenue

1,346

1,321

2%

-2%

Operating income

194

138

41%

32%

Net income per diluted share

$0.39

$1.15

N/M


Net debt

7,319

7,569

-3%


Adjusted EBITDA

452

422

7%

2%

Adjusted operating income

268

281

-4%

-9%

Adjusted net income per diluted share

$0.02

$0.88

N/M








Year Ended
December 31, 

Change

Constant
Currency
Change 


2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)





Revenue

4,939

5,154

-4%

-5%

Operating income

(51)

660

-


Net income per diluted share

($5.26)

$1.05

-


Net debt

7,319

7,569

-3%


Adjusted EBITDA

1,676

1,755

-5%

-6%

Adjusted operating income

1,028

1,167

-12%

-13%

Adjusted net income per diluted share

$0.86

$2.33

N/M



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 Fourth Quarter Results

Consolidated revenue was $1,346 million compared to $1,321 million in the fourth quarter of 2016. At constant currency and scope (which adjusts for the Italy Lotto upfront payment amortization and the sale of Double Down Interactive LLC ("DoubleDown")), revenue was up 3%.

Adjusted operating income was $268 million compared to $281 million in the prior-year period. Adjusted EBITDA was $452 million compared to $422 million in the fourth quarter of 2016, on strong International performance, Italy sports betting results, and lower operating expenses.

Interest expense was $114 million compared to $116 million in the prior-year period.

Benefit from income taxes rose to $83 million from $5 million in the fourth quarter of 2016. Tax dynamics in the fourth quarter of 2017 primarily reflect the non-cash impacts of recent U.S. tax reform. Additional detail on the tax impacts is provided with the reconciliation tables in this news release.

Net income attributable to IGT was $80 million in the fourth quarter of 2017. On an adjusted basis, net income attributable to IGT was $4 million. The Company reported net income per diluted share of $0.39 and earned $0.02 per diluted share on an adjusted basis, which includes $0.66 of non-cash, net negative tax impacts.

Cash from operations was $686 million in 2017 versus $281 million in 2016. As previously disclosed, gross upfront payments for Italian license fees are now included in Cash Flows from Operating Activities. Capital expenditures were $698 million in 2017 compared to $542 million in the prior year.

Cash and cash equivalents were $1,057 million as of December 31, 2017, compared to $294 million as of December 31, 2016. Net debt was $7,319 million as of December 31, 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 $281 million compared to $368 million in the fourth quarter of 2016. At constant scope, revenue was down 9%, primarily on lower product sales. 

Gaming service revenue was $167 million compared to $230 million in the prior-year period. The decline is primarily attributed to the sale of DoubleDown and a year-over-year decrease in the installed base. Yields were stable with the prior year.

Product sales revenue of $113 million declined from $138 million in the prior year, which benefited from significant new and expansion gaming machine and systems sales, as well as higher intellectual property revenue. The segment shipped 5,295 gaming machine units in the quarter compared to 5,419 units in the prior-year period.

Operating income for North America Gaming & Interactive was $69 million compared to $102 million in the fourth quarter of 2016. The decline is attributable to the sale of DoubleDown, lower revenue, and the timing of jackpot expense, partially offset by lower operating costs.

North America Lottery
North America Lottery revenue of $304 million was up 7% from the prior-year period, on strong wager growth and product sales.

Lottery same-store revenue rose 8.3%, supported by broad-based strength in instant tickets and draw games as well as multistate jackpots.

Product sales revenue doubled to $34 million, primarily due to lottery terminal and VLT central system sales.

Operating income was relatively stable at $66 million in the fourth quarter, as revenue growth was offset by higher service delivery costs and legal fees.

International
International revenue of $280 million was up 27% from the prior year, reflecting strong growth in both Lottery and Gaming.

Lottery same-store revenue was slightly below the prior year. Broad-based strength in EMEA and Latin America was offset by weakness in Colombia.  U.K. Lottery trends were stable.

Gaming service revenue from terminals was up 1% at constant currency, as a higher installed base was offset by lower average yields due to the geographic mix of revenue. The installed base grew to 15,543 machines from 10,453 in the fourth quarter of 2016 on unit growth in Africa, Greek VLTs, and video bingo machines.

Product sales revenue rose 20%, benefiting from higher lottery software sales. The segment shipped a total of 5,565 gaming machine units during the fourth quarter of 2017 compared to 4,901 units in the prior-year period, as a 41% increase in replacement units more than offset lower new and expansion activity.

Operating income of $72 million increased 64%, reflecting higher revenue and disciplined cost management.

Italy
Italy revenue rose 7% to $481 million. At constant currency and scope, revenue was stable with the prior-year period.

Total Lotto wagers were €1,951 million compared to €2,141 million in the prior-year period. Excluding Late Numbers, Lotto wagers increased 4% over the prior-year period reflecting strong growth in 10eLotto.

Scratch & Win wagers increased 2% to €2,344 million on continued demand for Miliardario and multiplier tickets.

Machine gaming revenue was slightly below the prior year, primarily on the higher gaming machine taxes that went in effect in April 2017.

Sports betting revenues were up sharply on higher wagers and lower payout. Wagers grew over 8% as a result of recent network optimization and increased levels of online play. Total payout of 76.2% was 10 percentage points below the prior year.

Operating income was $115 million compared to $129 million in the prior-year period, reflecting higher depreciation and amortization related to the new Lotto concession. 

Overview of Consolidated Full Year 2017 Results

Consolidated revenue was $4,939 million compared to $5,154 million in 2016. At constant currency and scope, consolidated revenue was in line with the prior year.

Global lottery same-store revenue, excluding Italy, increased 0.7% in 2017, on top of 8.1% growth in 2016, which included a record Powerball jackpot. Italy lottery wagers declined 3% in 2017 primarily as a result of high Late Numbers activity in the prior year. Excluding Late Numbers, Lotto wagers increased 3% over the prior year.

The Company shipped 32,103 gaming machines worldwide in 2017. The total installed base grew over 6% to 62,236 units.

Adjusted operating income was $1,028 million compared to $1,167 million in the prior year. Adjusted EBITDA of $1,676 million declined 6% at constant currency from $1,755 million in 2016 primarily due to the high-margin contribution from elevated jackpot and Late Number activity in the prior year, in addition to the DoubleDown sale, partially offset by expense savings.

Interest expense was $459 million compared to $469 million in the prior-year period.

Benefit from income taxes was $29 million compared to a provision for taxes of $59 million in 2016, reflecting the impact of recent U.S. tax reform.

Net loss attributable to IGT was $1,069 million in 2017 and includes a $714 million non-cash impairment charge and $444 million of primarily non-cash net foreign exchange loss. On an adjusted basis, net income was $175 million. The Company reported net loss per diluted share of ($5.26) and earned $0.86 per diluted share on an adjusted basis in 2017.

Other Developments

The Company's board of directors declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on April 5, 2018 to holders of record as of the close of business on March 22, 2018.   

Outlook

The Company currently expects to achieve adjusted EBITDA of $1,700-$1,780 million in 2018. Capital expenditures are expected to be $575-$625 million. The Company's outlook assumes a 2018 average EUR/USD exchange rate of 1.22.

The Italy Scratch & Win renewal will require upfront payments of approximately €750 million during 2018, which will be reflected in Cash Flows from Operating Activities. The €270 million in contributions from minority partners for their portion of these payments will be included in Cash Flows from Financing Activities.

Conference Call and Webcast

Today, at 8:00 a.m. EST, management will host a conference call to present the fourth quarter and full year 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 4448629. 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 4448629.

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 


 December 31, 


2017


2016





Service revenue

1,073,079


1,061,669

Product sales

272,591


259,547

Total revenue

1,345,670


1,321,216





Cost of services

686,802


641,649

Cost of product sales

176,375


179,240

Selling, general and administrative

208,522


236,547

Research and development

70,946


87,182

Restructuring expense

9,170


6,420

Impairment loss

-


31,162

Transaction (income) expense, net

(58)


1,030

Total operating expenses

1,151,757


1,183,230





Operating income

193,913


137,986





Interest income

2,444


2,553

Interest expense

(114,405)


(115,520)

Foreign exchange (loss) gain, net

(59,228)


195,587

Other (expense) income, net

(146)


23,359

Total non-operating (expenses) income

(171,335)


105,979





Income before benefit from income taxes

22,578


243,965





Benefit from income taxes

(83,346)


(5,387)





Net income

105,924


249,352





Less: Net income attributable to non-controlling interests

26,195


16,034





Net income attributable to IGT PLC

79,729


233,318









Net income attributable to IGT PLC per common share - basic

0.39


1.15

Net income attributable to IGT PLC per common share - diluted

0.39


1.15





Weighted-average shares - basic

203,513


202,324

Weighted-average shares - diluted

204,104


203,146

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

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

Unaudited






 For the year ended 


 December 31, 


2017


2016





Service revenue

4,136,556


4,375,586

Product sales

802,403


778,310

Total revenue

4,938,959


5,153,896





Cost of services

2,553,083


2,553,479

Cost of product sales

579,431


582,358

Selling, general and administrative

816,093


945,824

Research and development

313,088


343,531

Restructuring expense

39,876


27,934

Impairment loss

715,220


37,744

Transaction (income) expense, net

(26,740)


2,590

Total operating expenses

4,990,051


4,493,460





Operating (loss) income

(51,092)


660,436





Interest income

10,436


12,840

Interest expense

(458,899)


(469,268)

Foreign exchange (loss) gain, net

(443,977)


101,040

Other (expense) income, net

(33,393)


18,365

Total non-operating expenses

(925,833)


(337,023)





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

(976,925)


323,413





(Benefit from) provision for income taxes

(29,414)


59,206





Net (loss) income

(947,511)


264,207





Less: Net income attributable to non-controlling interests

121,065


52,870





Net (loss) income attributable to IGT PLC

(1,068,576)


211,337









Net (loss) income attributable to IGT PLC per common share - basic

(5.26)


1.05

Net (loss) income attributable to IGT PLC per common share - diluted

(5.26)


1.05





Weighted-average shares - basic

203,130


201,511

Weighted-average shares - diluted

203,130


202,214

 

International Game Technology PLC

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited











 For the year ended December 31, 



2017


2016





Restated

Cash flows from operating activities





Net (loss) income


(947,511)


264,207

Adjustments to reconcile net (loss) income to net cash provided by operating activities:





Impairment loss


715,220


37,744

Foreign exchange loss (gain), net


443,977


(101,040)

Amortization 


401,355


492,021

Depreciation 


401,085


390,448

Service revenue amortization


209,774


116,980

Loss on early extinguishment of debt


25,733


-

Debt issuance cost amortization


23,217


18,347

Stock-based compensation expense


4,704


26,346

Non-cash gain on sale of Double Down Interactive LLC


(51,348)


-

Deferred income tax provision


(296,265)


(153,649)

Other non-cash costs, net


25,768


(142)

Changes in operating assets and liabilities, excluding the effects of disposition and acquisition:



Trade and other receivables


45,465


(23,758)

Inventories


51,406


(76,321)

Upfront Italian license fees


(244,698)


(665,260)

Accounts payable


(3,031)


(22,855)

Other assets and liabilities


(118,923)


(21,736)

Net cash provided by operating activities


685,928


281,332






Cash flows from investing activities





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


823,788


-

Proceeds from sale of assets


167,452


185,798

Capital expenditures


(698,010)


(541,943)

Other


5,435


40,160

Net cash provided by (used in) investing activities


298,665


(315,985)






Cash flows from financing activities





Principal payments on long-term debt


(1,754,259)


(357,513)

Dividends paid


(162,528)


(161,179)

Return of capital - non-controlling interests


(84,391)


(35,407)

Dividends paid - non-controlling interests


(57,908)


(32,717)

Payments in connection with the early extinguishment of debt


(38,832)


-

Debt issuance costs paid


(16,378)


(10,825)

Net (payments of) receipts from financial liabilities


(150)


30,595

Capital increase - non-controlling interests


148,468


256,455

Proceeds from long-term debt


1,762,270


-

Other


(43,264)


(1,548)

Net cash used in financing activities


(246,972)


(312,139)






Net increase (decrease) in cash and cash equivalents


737,621


(346,792)

Effect of exchange rate changes on cash


25,703


13,402

Cash and cash equivalents at the beginning of the period


294,094


627,484

Cash and cash equivalents at the end of the period


1,057,418


294,094











Supplemental Cash Flow Information:





Interest paid


(417,110)


(450,655)

Income taxes paid


(296,386)


(183,278)

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited






December 31,


2017


2016

Assets




Current assets:




Cash and cash equivalents

1,057,418


294,094

Restricted cash and investments

248,012


247,222

Trade and other receivables, net

937,854


947,237

Inventories

319,545


347,494

Other current assets

407,520


424,727

Income taxes receivable

94,168


28,792

   Total current assets

3,064,517


2,289,566





Systems, equipment and other assets related to contracts, net

1,434,194


1,199,674

Property, plant and equipment, net

193,723


357,841

Goodwill

5,723,815


6,810,012

Intangible assets, net

2,273,460


2,874,031

Other non-current assets

2,427,953


1,497,662

Deferred income taxes

41,546


31,376

   Total non-current assets

12,094,691


12,770,596





Total assets

15,159,208


15,060,162





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




Current liabilities:




Accounts payable

1,240,753


1,216,079

Other current liabilities

1,780,875


1,097,045

Current portion of long-term debt

599,114


77

Income taxes payable

55,935


28,590

   Total current liabilities

3,676,677


2,341,791





Long-term debt, less current portion

7,777,445


7,863,085

Deferred income taxes

491,460


761,924

Income taxes payable

55,665


-

Other non-current liabilities

446,113


444,556

   Total non-current liabilities

8,770,683


9,069,565





Total liabilities

12,447,360


11,411,356





Commitments and contingencies








Redeemable non-controlling interests and shareholders' equity

2,711,848


3,648,806





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

15,159,208


15,060,162

 

International Game Technology PLC

Net Debt

($ thousands)










December 31,


2017


2016





6.250% Senior Secured Notes due 2022

1,470,075


1,472,150

6.500% Senior Secured Notes due 2025

1,086,913


1,085,537

4.750% Senior Secured Notes due 2023

1,008,601


884,917

4.125% Senior Secured Notes due 2020

833,655


730,465

5.625% Senior Secured Notes due 2020

595,767


593,954

4.750% Senior Secured Notes due 2020

585,171


509,050

7.500% Senior Secured Notes due 2019

148,231


521,894

5.500% Senior Secured Notes due 2020

125,709


126,294

5.350% Senior Secured Notes due 2023

61,082


61,187

6.625% Senior Secured Notes due 2018

-


521,556

Senior Secured Notes

5,915,204


6,507,004





Term Loan Facilities due 2023

1,785,361


-

Revolving Credit Facilities due 2021

76,880


516,529

Term Loan Facilities due 2019

-


839,552

Long-term debt, less current portion

7,777,445


7,863,085





6.625% Senior Secured Notes due 2018

599,114


-

Other

-


77

Current portion of long-term debt 

599,114


77





Total debt

8,376,559


7,863,162





Cash and cash equivalents

1,057,418


294,094





Net debt

7,319,141


7,569,068

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)













For the three months ended



December 31,



2017


2016






Net income


105,924


249,352

Benefit from income taxes


(83,346)


(5,387)

Non-operating expenses (income)


171,335


(105,979)

Depreciation 


111,997


97,164

Amortization


83,366


114,858

Service revenue amortization


54,456


31,820

Restructuring expense


9,170


6,420

Impairment loss


-


31,162

Transaction (income) expense, net


(58)


1,030

Non-cash purchase accounting (excluding D&A)


(223)


(126)

Stock-based compensation expense


(398)


1,844

Adjusted EBITDA


452,223


422,158
















Cash flows from operating activities


270,343


86,067

Capital expenditures


(145,841)


(185,741)

Free Cash Flow


124,502


(99,674)

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)













For the year ended



December 31,



2017


2016






Net (loss) income


(947,511)


264,207

(Benefit from) provision for income taxes


(29,414)


59,206

Non-operating expenses


925,833


337,023

Impairment loss


715,220


37,744

Amortization


401,355


492,021

Depreciation 


401,085


390,448

Service revenue amortization


209,774


116,980

Restructuring expense


39,876


27,934

Stock-based compensation expense


4,704


26,346

Non-cash purchase accounting (excluding D&A)


(736)


795

Bad debt recovery


(17,858)


-

Transaction (income) expense, net


(26,740)


2,590

Adjusted EBITDA


1,675,588


1,755,294
















Cash flows from operating activities


685,928


281,332

Capital expenditures


(698,010)


(541,943)

Free Cash Flow


(12,082)


(260,611)

 

 International Game Technology PLC 


 Condensed Consolidated Statement of Operations 


 Reconciliation of Non-GAAP Financial Measures 


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


































Adjustments





Q4 2017










Q4 2017




As


Purchase


Foreign


Restructuring


Transaction


As




Reported


Accounting


Exchange


Expense


Income


Adjusted
















 Total revenue 


1,345,670


(182)


-


-


-


1,345,488
















 Cost of services 


686,802


(27,563)


-


-


-


659,239


 Cost of product sales 


176,375


(10,454)


-


-


-


165,921


 Selling, general and administrative 


208,522


(27,183)


-


-


-


181,339


 Research and development 


70,946


(230)


-


-


-


70,716


 Restructuring expense 


9,170


-


-


(9,170)


-


-


 Transaction income, net 


(58)


-


-


-


58


-


 Total operating expenses 


1,151,757


(65,430)


-


(9,170)


58


1,077,215
















 Operating income 


193,913


65,248


-


9,170


(58)


268,273
















 Foreign exchange loss, net 


(59,228)


-


59,228


-


-


-


 Other expense, net 


(146)


1


-


-


(8)


(153)


 Interest expense, net 


(111,961)


513


-


-


-


(111,448)


 Total non-operating expenses 


(171,335)


514


59,228


-


(8)


(111,601)
















 Income before benefit from income taxes 


22,578


65,762


59,228


9,170


(66)


156,672
















 (Benefit from) provision for income taxes (a) (b) (c) 


(83,346)


267,714


(60,593)


2,887


(2)


126,660
















 Net income 


105,924


(201,952)


119,821


6,283


(64)


30,012
















 Less: Net income attributable to non-controlling interests 


26,195


25


-


-


-


26,220
















 Net income attributable to IGT PLC 


79,729


(201,977)


119,821


6,283


(64)


3,792
















 Net income per common share - diluted 


0.39










0.02


 Weighted-average shares - diluted 


204,104










204,104






























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
















(b) As Reported includes a net $103.6 million one-time, non-cash income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the "Tax Act") composed of (i) a $64.4 million non-cash income tax expense for the restatement of deferred tax assets and a $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting, both driven by the decrease in the income tax rate from 35% to 21% and (ii) a $71.2 million non-cash income tax expense in 2017 associated with unremitted foreign earnings. Separate from the Tax Act, As Reported includes a $73.3 million one-time, non-cash tax expense for the write-off of a deferred tax asset related primarily to unrealized foreign exchange losses.
















(c) As Adjusted excludes the $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting and the $73.3 million one-time, non-cash tax expense for the write-of of a deferred tax asset related primarily to unrealized foreign exchange losses.


 

 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 




December 2017






Impairment/


Transaction Income


December 2017




As


Purchase


Foreign


Restructuring


and Refinancing


As




Reported


Accounting


Exchange


Expense


Expense


Adjusted
















 Total revenue 


4,938,959


(722)


-


-


-


4,938,237
















 Cost of services 


2,553,083


(145,221)


-


-


-


2,407,862


 Cost of product sales 


579,431


(87,715)


-


-


-


491,716


 Selling, general and administrative 


816,093


(117,460)


-


-


-


698,633


 Research and development 


313,088


(656)


-


-


-


312,432


 Restructuring expense 


39,876


-


-


(39,876)


-


-


 Impairment loss 


715,220


-


-


(715,220)


-


-


 Transaction income, net 


(26,740)


-


-


-


26,740


-


 Total operating expenses 


4,990,051


(351,052)


-


(755,096)


26,740


3,910,643
















 Operating (loss) income 


(51,092)


350,330


-


755,096


(26,740)


1,027,594
















 Foreign exchange loss, net 


(443,977)


-


443,977


-


-


-


 Other (expense) income, net 


(33,393)


1,568


-


-


35,420


3,595


 Interest expense, net 


(448,463)


2,928


-


-


-


(445,535)


 Total non-operating expenses 


(925,833)


4,496


443,977


-


35,420


(441,940)
















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


(976,925)


354,826


443,977


755,096


8,680


585,654
















 (Benefit from) provision for income taxes (a) (b) (c) 


(29,414)


368,780


26,559


12,019


(88,161)


289,783
















 Net (loss) income 


(947,511)


(13,954)


417,418


743,077


96,841


295,871
















 Less: Net income attributable to non-controlling interests 


121,065


102


-


-


-


121,167
















 Net (loss) income attributable to IGT PLC 


(1,068,576)


(14,056)


417,418


743,077


96,841


174,704
















 Net (loss) income per common share - diluted 


(5.26)










0.86


 Weighted-average shares - diluted (d) 


203,130










203,504






























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
















(b) As Reported includes a net $103.6 million one-time, non-cash income tax benefit related to the Tax Cuts and Jobs Act of 2017 (the "Tax Act") composed of (i) a $64.4 million non-cash income tax expense for the restatement of deferred tax assets and a $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting, both driven by the decrease in the income tax rate from 35% to 21% and (ii) a $71.2 million non-cash income tax expense in 2017 associated with unremitted foreign earnings. Separate from the Tax Act, As Reported includes a $73.3 million one-time, non-cash tax expense for the write-off of a deferred tax asset related primarily to unrealized foreign exchange losses.















(c) As Adjusted excludes the $239.2 million non-cash income tax benefit for the restatement of deferred tax liabilities related to Purchase Accounting and the $73.3 million one-time, non-cash tax expense for the write-offf of a deferred tax asset related primarily to unrealized foreign exchange losses.
















(d) 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





Q4 2016






Impairment/




Q4 2016



As


Purchase


Foreign


Restructuring


Transaction


As



Reported


Accounting


Exchange


Expense


Expense


Adjusted














 Total revenue 


1,321,216


244


-


-


-


1,321,460














 Cost of services 


641,649


(44,186)


-


-


-


597,463

 Cost of sales 


179,240


(29,845)


-


-


-


149,395

 Selling, general and administrative 


236,547


(29,468)


-


-


-


207,079

 Research and development 


87,182


(277)


-


-


-


86,905

 Restructuring expense 


6,420


-


-


(6,420)


-


-

 Impairment loss 


31,162


(30,000)


-


(1,162)


-


-

 Transaction expense, net 


1,030


-


-


-


(1,030)


-

 Total operating expenses 


1,183,230


(133,776)


-


(7,582)


(1,030)


1,040,842














 Operating income 


137,986


134,020


-


7,582


1,030


280,618














 Foreign exchange gain, net 


195,587


-


(195,587)


-


-


-

 Other income, net 


23,359


11,672


-


-


-


35,031

 Interest expense, net 


(112,967)


2,084


-


-


-


(110,883)

 Total non-operating expenses 


105,979


13,756


(195,587)


-


-


(75,852)














 Income before provision for income taxes 


243,965


147,776


(195,587)


7,582


1,030


204,766














 (Benefit from) provision for income taxes (a) 


(5,387)


51,662


(50,323)


13,230


356


9,538














 Net income 


249,352


96,114


(145,264)


(5,648)


674


195,228














 Less: Net income attributable to non-controlling interests 


16,034


26


-


-


-


16,060














 Net income attributable to IGT PLC 


233,318


96,088


(145,264)


(5,648)


674


179,168














 Net income per common share - diluted 


1.15










0.88

 Weighted-average shares - diluted 


203,146










203,146



























(a) Adjustments for income taxes are 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 



December 2016






Impairment/




December 2016



As


Purchase


Foreign


Restructuring


Transaction


As



Reported


Accounting


Exchange


Expense


Expense


Adjusted














 Total revenue 


5,153,896


1,576


-


-


-


5,155,472














 Cost of services 


2,553,479


(181,552)


-


-


-


2,371,927

 Cost of sales 


582,358


(118,936)


-


-


-


463,422

 Selling, general and administrative 


945,824


(134,325)


-


-


-


811,499

 Research and development 


343,531


(1,736)


-


-


-


341,795

 Restructuring expense 


27,934


-


-


(27,934)


-


-

 Impairment loss 


37,744


(30,000)


-


(7,744)


-


-

 Transaction expense, net 


2,590


-


-


-


(2,590)


-

 Total operating expenses 


4,493,460


(466,549)


-


(35,678)


(2,590)


3,988,643














 Operating income 


660,436


468,125


-


35,678


2,590


1,166,829














 Foreign exchange gain, net 


101,040


-


(101,040)


-


-


-

 Other income, net 


18,365


15,553


-


-


-


33,918

 Interest expense, net 


(456,428)


8,231


-


-


-


(448,197)

 Total non-operating expenses 


(337,023)


23,784


(101,040)


-


-


(414,279)














 Income before provision for income taxes 


323,413


491,909


(101,040)


35,678


2,590


752,550














 Provision for income taxes (a) 


59,206


174,000


(26,892)


20,948


658


227,920














 Net income 


264,207


317,909


(74,148)


14,730


1,932


524,630














 Less: Net income attributable to non-controlling interests 


52,870


102


-


-


-


52,972














 Net income attributable to IGT PLC 


211,337


317,807


(74,148)


14,730


1,932


471,658














 Net income per common share - diluted 


1.05










2.33

 Weighted-average shares - diluted 


202,214










202,214



























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

 

International Game Technology PLC Segment Performance

Revenue Detail 

($ millions)

































INTERNATIONAL GAME TECHNOLOGY PLC


Quarter Change


YTD Change





2016

2017


Percentage

Constant FX


Percentage

Constant FX





Q4 

YTD

Q4 

YTD


Q4

Q4


YTD

YTD

Gaming


Total Revenue

730

2,667

664

2,501


-9.0%

-12.5%


-6.2%

-7.2%















Gaming Services

492

1,976

452

1,836


-8.1%

-12.5%


-7.1%

-8.2%



Terminal 

325

1,282

331

1,284


2.0%

-3.3%


0.2%

-1.3%



Social (DDI)

61

279

0

111


-100.0%

-100.0%


-60.1%

-59.9%



Other

107

415

121

440


13.0%

9.3%


6.2%

5.6%















Product Sales

237

691

212

665


-10.7%

-12.5%


-3.7%

-4.6%



Terminal 

156

449

146

444


-6.9%

-9.0%


-1.1%

-2.1%



Other

81

243

66

222


-18.2%

-19.2%


-8.6%

-9.3%















Lottery


Total Revenue

520

2,176

559

2,067


7.6%

3.6%


-5.0%

-5.9%















Lottery Services

500

2,092

511

1,952


2.2%

-1.6%


-6.7%

-7.5%



FM/Concessions

444

1,829

463

1,769


4.3%

-1.6%


-3.3%

-4.8%



LMA

37

174

36

157


-3.1%

-3.1%


-9.7%

-9.7%



Other Services

19

88

12

25


-36.0%

2.6%


-71.1%

-57.8%















Product Sales

20

85

48

115


140.0%

130.8%


35.8%

33.9%



Terminal 

1

11

2

4


266.8%

266.8%


-63.5%

-63.5%



Systems/Other

20

74

47

111


136.7%

127.3%


50.0%

47.8%















Other


Total Revenue

72

311

122

371


70.3%

55.7%


19.4%

15.3%















Service Revenue

70

308

110

349


57.8%

43.8%


13.1%

9.2%


Product Sales

2

3

12

22


465.9%

432.1%


N/M

N/M















Consolidated


Revenue

1,321

5,154

1,346

4,939


1.9%

-2.5%


-4.2%

-5.3%




























Operating Income:













Segment Total

340

1,374

322

1,210


-5.3%

-9.4%


-11.9%

-12.7%



Purchase Accounting

(134)

(468)

(65)

(1,064)


-51.3%

-51.4%


127.4%

126.3%



Corporate Support

(68)

(246)

(63)

(197)


-7.6%

-10.3%


-19.8%

-22.2%



Total

138

660

194

(51)


40.5%

31.9%


-107.7%

-109.3%





















































NORTH AMERICA GAMING & INTERACTIVE


Quarter Change


YTD Change





2016

2017


Percentage

Constant FX


Percentage

Constant FX





Q4 

YTD

Q4 

YTD


Q4

Q4


YTD

YTD

Gaming


Total Revenue

368

1,373

281

1,158


-23.8%

-24.1%


-15.7%

-15.8%