International Game Technology Reports Second Quarter Fiscal Year 2013 Results

LAS VEGAS, April 25, 2013 /PRNewswire/ --

Second Quarter Highlights (compared to last year's second quarter)

  • Total revenues increased 11% to $600 million
  • North America product sales revenue increased 25%
  • GAAP earnings per share from continuing operations increased 38% to $0.29
  • Adjusted earnings per share from continuing operations increased 33% to $0.36
  • GAAP operating income increased 10% to $129 million
  • Adjusted operating income increased 13% to $164 million
  • Sold 8,400 North America replacement units, up 68%
  • Social gaming revenues increased 31% to $54 million sequentially from our 2013 fiscal first quarter, as average revenue per daily active user grew 19% to $0.37 sequentially.

International Game Technology (NYSE: IGT) today reported operating results for the second quarter ended March 31, 2013.

(Logo: http://photos.prnewswire.com/prnh/20130130/LA50769LOGO)

"We are very pleased with our momentum through the second quarter, demonstrating the strength of our comprehensive strategy – leveraging our core business, broadening the distribution of our premier content, and generating shareholder returns," said Patti Hart, CEO of IGT. "As we continue to deliver on this strategy, we expect that this will be our fourth consecutive year of double digit growth in adjusted earnings per share from continuing operations." 

Consolidated Results

($ in millions, except per share amounts)


Quarters Ended



Six Months Ended


March 31,



March 31,


2013


2012


% Change



2013


2012


% Change

GAAP Measures








Revenue

$ 600.0


$ 541.2


11%



$ 1,130.2


$ 986.8


15%

Operating income

$ 129.3


$ 118.0


10%



$    247.7


$ 217.9


14%

Income from continuing operations

$   78.2


$   62.4


25%



$    143.5


$ 112.7


27%

Earnings per share from continuing operations

$   0.29


$   0.21


38%



$      0.54


$   0.38


42%

Net operating cash flows








$    182.5


$ 176.7


3%














Non-GAAP Measures








Adjusted operating income

$ 163.5


$ 144.7


13%



$    301.0


$ 245.8


22%

Adjusted income from continuing operations

$   95.1


$   79.5


20%



$    171.5


$ 130.6


31%

Adjusted earnings per share from continuing operations

$   0.36


$   0.27


33%



$      0.64


$   0.44


45%

Free cash flow (after dividends)








$      91.4


$   17.4


425%


Adjusted operating income, adjusted income from continuing operations, adjusted earnings per share from continuing operations and free cash flow are non-GAAP financial measures. Reconciliations between GAAP and non-GAAP measures are provided at the end of this release.

  • Revenues increased 11% to $600 million in the second quarter, driven by growth in North America machine sales and social gaming.
  • Adjusted earnings per share from continuing operations increased 33% to $0.36 for the second quarter.
  • Non-GAAP adjusted financial measures for the second quarter ended March 31, 2013 exclude acquisition-related charges for DoubleDown, fees related to the proxy contest, Alabama note impairment and certain discrete tax benefits.

Gaming Operations (excluding Interactive)

($ in millions, unless otherwise noted)


Quarters Ended



Six Months Ended


March 31,



March 31,


2013


2012


% Change



2013


2012


% Change














Revenue

$ 254.3


$ 266.1


-4%



$ 496.9


$ 518.1


-4%

Gross profit

$ 156.7


$ 163.1


-4%



$ 309.8


$ 317.1


-2%

Gross margin

62%


61%


2%



62%


61%


2%

Installed base

56,700


56,100


1%



56,700


56,100


1%

Average revenue per unit per day (0.00)

$ 49.26


$ 52.34


-6%



$ 47.99


$ 51.75


-7%

  • Revenues decreased 4% to $254 million in the second quarter primarily due to lower MegaJackpots® revenue.
  • Gross margin increased to 62% from 61% in the second quarter, primarily due to lower jackpot expenses and depreciation.
  • Installed base increase was driven by lease operations growth globally.
  • Average revenue per unit per day in the second quarter was $49.26, down 6% over the prior year quarter, primarily due to lower yields, most significant in MegaJackpots®, and up 5% sequentially due to seasonal gaming trends.

Product Sales

($ in millions, unless otherwise noted)


Quarters Ended



Six Months Ended


March 31,



March 31,


2013


2012


% Change



2013


2012


% Change














Revenue

$ 279.0


$ 240.8


16%



$ 513.7


$ 421.8


22%

Gross profit

$ 144.0


$ 132.0


9%



$ 269.5


$ 223.6


21%

Gross margin

52%


55%


-5%



52%


53%


-2%

Units recognized ('000)

14.3


10.2


40%



25.0


17.5


43%

Average machine sales price ('000)

$   14.1


$   15.8


-11%



$   14.4


$   15.8


-9%

  • Revenues increased 16% to $279 million and units recognized increased 40% to 14,300 in the second quarter, primarily due to increased North America machine sales related to Canadian VLT customers, as well as an increase in North America new openings.
  • Gross margin decreased to 52% from 55% in the second quarter due to targeted promotional activity, unfavorable mix shift and higher non-standard manufacturing costs.
  • Average machine sales price in the second quarter decreased 11% compared to the prior year quarter mainly due to targeted promotional activity and an increased mix of lower-priced VLT sales.

Interactive

($ in millions, unless otherwise noted)



Quarters Ended



Six Months Ended


March 31,



March 31,


2013


2012


% Change



2013


2012


% Change














Revenue

$ 66.7


$ 34.3


94%



$ 119.6


$ 46.9


155%

    Social gaming

$ 54.3


$ 21.3


155%



$   95.6


$ 21.3


349%

    IGTi

$ 12.4


$ 13.0


-5%



$   24.0


$ 25.6


-6%














Gross Margin

61%


54%


13%



60%


53%


13%

    Social gaming

61%


61%


-



61%


61%


-

    IGTi

59%


42%


40%



55%


47%


17%














Double Down Average User Statistics*








    DAU (Daily active users) ('000)

1,690


1,350


25%



1,575


1,350


17%

    MAU (Monthly active users) ('000)

6,276


4,975


26%



5,596


4,975


12%

    Bookings per DAU (0.00)

$ 0.37


$ 0.24


54%



$   0.34


$ 0.24


42%


*as a single application with multiple games, active users equal unique users


  • Social gaming revenues in the second quarter increased 31% sequentially to $54 million, primarily driven by an increase in both average DAU and average bookings per DAU.
  • Average DAU were 1.7 million in the second quarter, an increase of 16% compared to the prior sequential quarter and an increase of 25% compared to the prior year quarter.
  • Average bookings per DAU increased 19% sequentially to $0.37 in the second quarter and 54% over the same quarter last year.

Operating Expenses and Other Income/Expense

($ in millions)





Quarters Ended



Six Months Ended


March 31,



March 31,


2013


2012


% Change



2013


2012


% Change

Operating Expenses












Selling, general & administrative

$ 110.7


$ 109.3


1%



$ 210.9


$ 199.1


6%

Research & development

58.1


55.3


5%



112.5


102.2


10%

Depreciation & amortization

19.7


19.3


2%



38.7


34.7


12%

Contingent acquisition related costs

21.9


11.7


87%



39.3


11.7


236%

Impairment

1.6


-


*



1.6


-


*

Total operating expenses

$ 212.0


$ 195.6


8%



$ 403.0


$ 347.7


16%














Adjusted Operating Expenses









    Total

$ 180.1


$ 171.2


5%



$ 349.3


$ 322.1


8%














Adjusted operating expenses is a non-GAAP financial measure.  Reconciliations between GAAP and non-GAAP measures are provided at the end of this release.

  • Second quarter operating expenses increased over the prior year quarter primarily due to additional expenses from DoubleDown and unfavorable bad debt provisions.
  • Adjusted operating expenses were 30% of revenues for the second quarter compared to 32% of revenues in the prior year quarter.

Balance Sheet and Capital Deployment

($ in millions)







March 31,


September 30,




2013


2012


% Change







Cash and equivalents (including restricted amounts)

$      312.3


$              288.2


8%

Working capital

$      663.9


$              633.0


5%

Contractual debt obligations

$   1,770.0


$           1,790.0


-1%

  • During the second quarter the company returned $94 million to shareholders.  The company repurchased 4.4 million shares of common stock at an average price of $17.03 per share for a total cost of $75 million and also returned $19 million in the form of dividends.

Other

References to per share amounts in this release are based on diluted shares of common stock, unless otherwise specified.  Reconciliations of all GAAP to Non-GAAP financial measures are provided at the end of this release.

Outlook

Based on current expectations and the operating results for the second quarter of fiscal 2013, the company is increasing its fiscal year 2013 guidance for adjusted earnings from continuing operations to $1.26 to $1.32 per share. 

GAAP earnings per share from continuing operations for fiscal year 2013 will include acquisition-related expenses, primarily related to DoubleDown, proxy contest-related fees and certain tax-related benefits the amount of which are not determinable at this time.  The company may also recognize charges for impairment, other acquisition-related expenses, resolution of certain tax items, and/or other items that are not currently determinable, but may be significant. For this reason, the Company is unable to provide estimates for full-year GAAP earnings per share from continuing operations at this time.

Earnings Conference Call

As previously announced on Apr. 4, 2013, IGT will host a conference call to discuss its Second Quarter 2013 earnings results on Thursday, Apr. 25, 2013, at 2:00 p.m. PDT (or 5:00 p.m. EDT). The access numbers are as follows:

Domestic callers dial +1 800-369-1753, passcode IGT
International callers dial +1 312-470-7067, passcode IGT

The conference call will also be broadcast live over the Internet. A link to the webcast is available at the IGT website: http://www.IGT.com/investors.  The call will be archived until Thursday, May 9, 2013 at http://www.IGT.com/investors, for those interested parties that are unable to participate during the live webcast.

A taped replay of the conference call will be available after the conference call. This replay will run through Thursday, May 9, 2013.  The access numbers are as follows:

Domestic callers dial +1 888-566-0041
International callers dial +1 402-998-0492

Q2 FY 2013 Excel file

Q2 FY 2013 PDF of this press release

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties.  These statements include our expected future financial and operational performance (including our guidance for fiscal year 2013) and our strategic and operational plans.  These statements involve a number of risks and uncertainties that could cause actual results to differ materially from the results predicted, and reported results should not be considered an indication of future performance.  Among the factors that could cause actual results and outcomes to differ materially from those contained in such forward-looking statements are the following: general economic conditions and changes in economic conditions affecting the gaming industry; new or changing laws or regulations or new interpretations of existing laws or regulations affecting our business; difficulties or delays in obtaining or maintaining necessary licenses or approvals; slow growth in the number of new gaming jurisdictions or new casinos or the rate of replacement of existing gaming machines; changes in operator or player preferences for our products; our ability to compete in the gaming industry with new or existing competitors; our ability to develop and introduce new products and their acceptance by our customers; risks related to our international operations; our ability to protect our intellectual property; adverse results of litigation, including intellectual property infringement claims; risks related to business combinations, investments in intellectual property and the integration of acquisitions; and future developments or changes affecting online gaming or social casino-style gaming, which is a new and evolving industry.  A further list and description of these and other risks, uncertainties and other matters can be found in our annual report and other reports filed with the Securities and Exchange Commission, including under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for fiscal 2012 filed with the SEC on November 28, 2012 and our Quarterly Report on Form 10-Q for our fiscal quarter ended December 31, 2012 filed with the SEC on February 6, 2013 and available on the SEC website at www.sec.gov and on the investor relations section of our website at www.IGT.com/investors.  Additional information will also be set forth in our Quarterly Report on Form 10-Q for our fiscal quarter ended March 31, 2013, which we expect to file with the SEC in the second quarter of calendar 2013.  All information provided in this release is as of April 25, 2013, and IGT does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances.

IGT Resources:

About IGT

International Game Technology (NYSE: IGT) is a global leader in casino gaming entertainment and continues to transform the industry by translating casino player experiences to social, mobile and interactive environments for markets around the world. IGT's acquisition of DoubleDown Interactive provides engaging social casino style entertainment to more than 6 million players monthly. More information about IGT is available at IGT.com or connect with IGT at @IGTNews or facebook.com/IGT. Anyone can play at the DoubleDown Casino by visiting http://apps.facebook.com/doubledowncasino or doubledowncasino.com

CONSOLIDATED STATEMENTS OF INCOME (Unaudited and Condensed) 








Periods Ended March 31,


Second Quarters


Six Months


2013

2012


2013

2012

(In millions, except per share amounts)

Revenues






Gaming operations

$ 254.3

$ 266.1


$  496.9

$ 518.1

Product sales

279.0

240.8


513.7

421.8

Interactive

66.7

34.3


119.6

46.9

Total revenues

600.0

541.2


1,130.2

986.8

Costs and operating expenses






Cost of gaming operations

97.6

103.0


187.1

201.0

Cost of product sales

135.0

108.8


244.2

198.2

Cost of interactive

26.1

15.8


48.2

22.0

Selling, general and administrative

110.7

109.3


210.9

199.1

Research and development

58.1

55.3


112.5

102.2

Depreciation and amortization

19.7

19.3


38.7

34.7

Contingent acquisition related costs

21.9

11.7


39.3

11.7

Impairment 

1.6

-


1.6

-

Total costs and operating expenses

470.7

423.2


882.5

768.9

Operating income

129.3

118.0


247.7

217.9

Other income (expense)






Interest income

11.1

10.8


22.4

22.9

Interest expense

(30.3)

(30.0)


(62.0)

(60.1)

Other  

(2.5)

(2.0)


(2.7)

(4.8)

Total other income (expense)

(21.7)

(21.2)


(42.3)

(42.0)

Income from continuing operations before tax 

107.6

96.8


205.4

175.9

Income tax provision 

29.4

34.4


61.9

63.2

Income from continuing operations

78.2

62.4


143.5

112.7

Loss from discontinued operations, net of tax

-

(0.5)


-

(1.5)

Net income

$   78.2

$   61.9


$  143.5

$ 111.2

Basic earnings (loss) per share






Continuing operations

$   0.30

$   0.21


$    0.54

$   0.38

Discontinued operations

-

-


-

(0.01)

Net income

$   0.30

$   0.21


$    0.54

$   0.37

Diluted earnings (loss) per share






Continuing operations

$   0.29

$   0.21


$    0.54

$   0.38

Discontinued operations

-

-


-

(0.01)

Net income

$   0.29

$   0.21


$    0.54

$   0.37

Weighted average shares outstanding






Basic

263.6

296.7


264.7

297.0

Diluted 

265.6

298.1


266.7

298.6

 


CONSOLIDATED BALANCE SHEET (Unaudited and Condensed) 






 March 31, 


 September 30, 


2013


2012

(In millions)




Assets




Current assets




Cash and equivalents

$      236.5


$               206.3

Restricted cash and investments

75.8


81.9

Jackpot annuity investments 

58.5


60.2

Receivables, net

578.3


564.8

Inventories

89.4


92.9

Other assets and deferred costs

249.1


257.2

  Total current assets

1,287.6


1,263.3

Property, plant and equipment, net

511.5


555.7

Jackpot annuity investments 

279.6


295.7

Contracts and notes receivable, net

115.2


139.3

Goodwill and other intangibles, net

1,629.1


1,663.1

Other assets and deferred costs

376.7


368.0

Total Assets

$  4,199.7


$            4,285.1

Liabilities and Shareholders' Equity




Current liabilities




Accounts payable

$        86.4


$                  87.5

Jackpot liabilities, current portion

140.2


152.4

Dividends payable

20.8


16.0

Other accrued liabilities  

376.3


374.4

  Total current liabilities

623.7


630.3

Long-term debt

1,829.3


1,846.4

Jackpot liabilities

308.9


328.6

Other liabilities

195.3


282.0

Total Liabilities

2,957.2


3,087.3

Total Equity

1,242.5


1,197.8

Total Liabilities and Shareholders' Equity

$  4,199.7


$            4,285.1


CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited and Condensed) 






Six Months Ended


March 31,


2013


2012

(In millions)




Operating




Net income

$ 143.5


$ 111.2

Depreciation and amortization

117.8


115.2

Other non-cash items

54.8


42.1

Changes in operating assets and liabilities, excluding acquisitions:




Receivables

(21.2)


(28.5)

Inventories

9.4


(14.6)

Accounts payable and accrued liabilities

(61.8)


3.8

Jackpot liabilities

(40.7)


(21.9)

Income taxes, net of employee stock plans

(21.9)


(13.8)

Other assets and deferred costs

2.6


(16.8)

Net operating cash flows

182.5


176.7

Investing




Capital expenditures

(56.4)


(123.6)

Proceeds from assets sold

8.3


19.8

Jackpot annuity investments, net

27.1


23.6

Changes in restricted cash

5.8


3.2

Loans receivable, net

15.1


14.9

Business acquisitions, net of cash acquired

-


(233.0)

Net investing cash flows

(0.1)


(295.1)

Financing




Debt related proceeds (payments), net

(20.0)


-

Employee stock plan proceeds

8.3


14.3

Share repurchases

(75.1)


(50.1)

Noncontrolling interest acquired

-


(2.5)

Dividends paid

(34.7)


(35.7)

Acquisition-related contingent consideration

(27.9)


-

Net financing cash flows

(149.4)


(74.0)

Foreign exchange rates effect on cash 

(2.8)


3.5

Net change in cash and equivalents

30.2


(188.9)

Beginning cash and equivalents

206.3


460.0

Ending cash and equivalents

$ 236.5


$ 271.1


SUPPLEMENTAL DATA (Unaudited) 








Periods Ended March 31,

Revenue Metrics

Second Quarters


Six Months


2013

2012


2013

2012

In millions, unless otherwise noted






Gaming Operations






Revenues

$ 254.3

$ 266.1


$ 496.9

$ 518.1

North America

220.3

233.1


428.8

452.6

International

34.0

33.0


68.1

65.5

Gross margin

62%

61%


62%

61%

North America

60%

59%


61%

59%

International

69%

75%


69%

74%

Installed base ('000)

56.7

56.1


56.7

56.1

North America

42.6

42.7


42.6

42.7

International

14.1

13.4


14.1

13.4

Average revenue per unit per day (0.00)

$49.26

$52.34


$47.99

$51.75

Product Sales






Revenues

$ 279.0

$ 240.8


$ 513.7

$ 421.8

North America

200.6

160.8


359.5

263.9

International

78.4

80.0


154.2

157.9

Machines

$ 202.4

$ 161.1


$ 359.8

$ 276.8

North America

148.7

101.4


250.5

160.5

International

53.7

59.7


109.3

116.3

Non-machine

$   76.6

$   79.7


$ 153.9

$ 145.0

North America

51.9

59.4


109.0

103.4

International

24.7

20.3


44.9

41.6

Gross margin

52%

55%


52%

53%

North America

53%

57%


54%

55%

International

49%

50%


48%

49%

Units recognized ('000)

14.3

10.2


25.0

17.5

North America

11.1

6.8


18.3

10.6

International

3.2

3.4


6.7

6.9

Units shipped ('000) [includes units where revenues deferred]

14.3

10.5


23.7

17.0

North America

11.1

6.7


18.0

10.2

New

2.7

1.7


4.4

2.4

Replacement

8.4

5.0


13.6

7.8

International

3.2

3.8


5.7

6.8

New

1.0

2.0


1.9

3.3

Replacement

2.2

1.8


3.8

3.5

Average machine sales price ('000)

$   14.1

$   15.8


$   14.4

$   15.8

North America

13.4

14.9


13.7

15.1

International

16.6

17.6


16.3

16.9

Interactive






Revenues

$   66.7

$   34.3


$ 119.6

$   46.9

North America

54.8

21.6


96.7

21.7

International

11.9

12.7


22.9

25.2

Social

54.3

21.3


95.6

21.3

North America

54.3

21.3


95.6

21.3

International

-

-


-

-

IGTi

12.4

13.0


24.0

25.6

North America

0.5

0.3


1.1

0.4

International

11.9

12.7


22.9

25.2

Gross margin

61%

54%


60%

53%

North America

61%

58%


61%

58%

International

58%

47%


54%

49%

DoubleDown Casino®Average User Statistics*






Daily active users (DAU) ('000)

1,690

1,350


1,575

1,350

Monthly active users (MAU) ('000)

6,276

4,975


5,596

4,975

Bookings per DAU (0.00)

$0.37

$0.24


$0.34

$0.24


*as a single application with multiple games, active users equal unique users


Reconciliations of GAAP to Non-GAAP Adjusted Financial Measures 

(In millions, except EPS)















Second Quarter Ended March 31, 2013






Continuing Operations


Revenue

Cost of
Revenues

Operating
Expenses

Operating
Income

Net
Earnings (a)

Diluted
EPS








GAAP measures

$    600.0

$     258.7

$    212.0

$    129.3

$         78.2

$0.29

% of revenue



35%

22%



Acquisition related charges:(b)







Contingent retention & earn-out

-

-

(21.9)

21.9

14.6

0.06

Amortization of intangibles

-

(2.3)

(4.5)

6.8

4.5

0.02

Proxy fees

-

-

(3.9)

3.9

2.6

0.01

Alabama Note impairment

-

-

(1.6)

1.6

1.1

-

Certain discrete tax items (benefits)

-

-

-

-

(5.9)

(0.02)

Total non-GAAP adjustments

-

(2.3)

(31.9)

34.2

16.9

0.07








Adjusted measures

$    600.0

$     256.4

$    180.1

$    163.5

$         95.1

$0.36

% of revenue



30%

27%

















Six Months Ended March 31, 2013






Continuing Operations


Revenue

Cost of
Revenues

Operating
Expenses

Operating
Income

Net
Earnings (a)

Diluted
EPS








GAAP measures

$ 1,130.2

$     479.5

$    403.0

$    247.7

$       143.5

$0.54

% of revenue



36%

22%



Acquisition related charges:(b)







Contingent retention & earn-out

-

-

(39.3)

39.3

26.2

0.10

Amortization of intangibles

-

(4.6)

(8.9)

13.5

9.0

0.03

Proxy fees

-

-

(3.9)

3.9

2.6

0.01

Alabama Note impairment

-

-

(1.6)

1.6

1.1

-

Royalty settlement

(5.0)

-

-

(5.0)

(5.0)

(0.02)

Certain discrete tax items (benefits)

-

-

-

-

(5.9)

(0.02)

Total non-GAAP adjustments

(5.0)

(4.6)

(53.7)

53.3

28.0

0.10








Adjusted measures

$ 1,125.2

$     474.9

$    349.3

$    301.0

$       171.5

$0.64

% of revenue



31%

27%










(a)Adjustments tax effected at 34%, except no tax effect on royalty settlement

(b) Primarily related to DoubleDown 

Second Quarter Ended March 31, 2012





Continuing Operations


Cost of
Revenues

Operating
Expenses

Operating
Income

Net
Earnings (a)

Diluted
EPS







GAAP measures

$     227.6

$    195.6

$    118.0

$         62.4

$0.21

% of revenue


36%

22%



Acquisition related charges:(b)






Contingent retention & earn-out

-

(11.7)

11.7

7.5

0.03

Amortization of intangibles

(2.3)

(3.9)

6.2

4.0

0.01

Professional fees

-

(4.5)

4.5

2.8

0.01

Distributor settlement

-

(3.1)

3.1

2.0

0.01

Severance

-

(1.2)

1.2

0.8

-

Total non-GAAP adjustments

(2.3)

(24.4)

26.7

17.1

0.06







Adjusted measures

$     225.3

$    171.2

$    144.7

$         79.5

$0.27

% of revenue


32%

27%















Six Months Ended March 31, 2012





Continuing Operations


Cost of
Revenues

Operating
Expenses

Operating
Income

Net
Earnings (a)

Diluted
EPS







GAAP measures

$     421.2

$    347.7

$    217.9

$       112.7

$0.38

% of revenue


35%

22%



Acquisition related charges:(b)






Contingent retention & earn-out

-

(11.7)

11.7

7.5

0.03

Amortization of intangibles

(2.3)

(3.9)

6.2

4.0

0.01

Professional fees

-

(5.7)

5.7

3.6

0.01

Distributor settlement

-

(3.1)

3.1

2.0

0.01

Severance

-

(1.2)

1.2

0.8

-

Total non-GAAP adjustments

(2.3)

(25.6)

27.9

17.9

0.06







Adjusted measures

$     418.9

$    322.1

$    245.8

$       130.6

$0.44

% of revenue


33%

25%









(a)Adjustments tax effected at 36%

(b) Primarily related to DoubleDown 


Adjusted Diluted EPS from Continuing Operations


 For the Years Ended September 30, 


2012


2011


2010


2009

GAAP Diluted EPS from Continuing Operations

$0.86


$0.97


$0.73


$0.50

Acquisition related charges (primarily DoubleDown)

0.20


-


-


-

Impairment and restructuring

(0.04)


0.03


0.15


0.24

Severance

0.01


-


-


-

Distributor settlement

0.01


-


-


-

IP Usage settlements

-


0.01


-


-

Investment (gain) loss

-


(0.01)


0.07


0.05

Debt refinancing charges

-


-


0.01


0.01

Certain discrete tax items (benefits)

-


(0.07)


(0.12)


(0.06)

Total non-GAAP adjustments

0.18


(0.04)


0.11


0.24

Adjusted Diluted EPS from Continuing Operations

$       1.04


$       0.93


$    0.84


$       0.74

















Adjusted EBITDA For The Periods Ended March 31,


Second Quarters


Six Months


2013


2012


2013


2012









GAAP Income from continuing operations

$       78.2


$       62.4


$  143.5


$     112.7

Other (income) expense, net

21.7


21.2


42.3


42.0

Income tax provision

29.4


34.4


61.9


63.2

Depreciation and amortization

60.1


60.6


117.8


115.2

Other charges:








Share-based compensation 

9.9


8.5


18.6


16.7

Contingent acquisition related costs

21.9


11.7


39.3


11.7

Impairment 

1.6


-


1.6


-

Adjusted EBITDA 

$     222.8


$     198.8


$  425.0


$     361.5

























Free Cash Flow For The Six Months Ended March 31,






2013


2012









GAAP net operating cash flows





$  182.5


$     176.7

Investment in property, plant and equipment





(8.1)


(34.5)

Investment in gaming operations equipment





(48.1)


(87.1)

Investment in intellectual property





(0.2)


(2.0)

Free Cash Flow (before dividends)





126.1


53.1

Dividends paid





(34.7)


(35.7)

Free Cash Flow (after dividends)





$    91.4


$       17.4

We believe that certain non-GAAP financial measures, when presented in conjunction with comparable GAAP (Generally Accepted Accounting Principles) measures, are useful because that information is an appropriate measure for evaluating our operating performance. Non-GAAP information is used to evaluate business performance and management's effectiveness. These measures should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Non-GAAP financial measures may not be calculated in the same manner by all companies and therefore may not be comparable.

SOURCE International Game Technology



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