Nevada
|
88-0173041
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Large accelerated filer [X]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
Smaller reporting company [ ]
|
GLOSSARY OF TERMS AND ABBREVIATIONS (as used in this document)
|
3
|
|
|
||
PART I – FINANCIAL INFORMATION
|
||
|
|
|
Item 1. Unaudited Consolidated Interim Financial Statements
|
4
|
|
|
|
|
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|
25
|
|
|
|
|
Item 3. Quantitative and Qualitative Disclosures about Market Risk
|
36
|
|
|
|
|
Item 4. Controls and Procedures
|
37
|
|
|
|
|
PART II – OTHER INFORMATION
|
||
|
||
Item 1. Legal Proceedings
|
38
|
|
|
|
|
Item 1A. Risk Factors
|
38
|
|
|
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
38
|
|
|
|
|
Item 3. Defaults Upon Senior Securities
|
38
|
|
|
|
|
Item 4. Mine Safety Disclosures
|
38
|
|
|
|
|
Item 5. Other Information
|
38
|
|
|
|
|
Item 6. Exhibits
|
39
|
Abbreviation/term
|
Definition
|
Fiscal dates -- as presented
|
Fiscal dates--actual
|
December 31, 2014
|
January 3, 2015
|
December 31, 2013
|
December 28, 2013
|
September 30, 2014
|
September 27, 2014
|
|
|
AOCI
|
accumulated other comprehensive income (loss)
|
APIC
|
additional paid-in-capital
|
ASP
|
average sales price per machine unit
|
ASU
|
Accounting Standards Update
|
bps
|
basis points
|
CDS
|
central determination system
|
CEO
|
chief executive officer
|
CFO
|
chief financial officer
|
DAU
|
Daily Active Users
|
DCF
|
discounted cash flow
|
DoubleDown
|
Double Down Interactive LLC
|
EBITDA
|
earnings before interest, taxes, depreciation, and amortization
|
EPS
|
earnings per share
|
Exchange Act
|
Securities Exchange Act of 1934, as amended
|
FASB
|
Financial Accounting Standards Board
|
FV
|
fair value
|
GAAP
|
generally accepted accounting principles
|
GTECH
|
GTECH S.p.A.
|
IGT, we, our, the Company
|
International Game Technology and its consolidated entities
|
IP
|
intellectual property
|
IRS
|
Internal Revenue Service
|
LIBOR
|
London inter-bank offered rate
|
MAU
|
Monthly Active Users
|
MDA
|
management's discussion and analysis of financial condition and results of operations
|
pp
|
percentage points
|
R&D
|
research and development
|
SEC
|
Securities and Exchange Commission
|
SIP
|
2002 Stock Incentive Plan
|
SG&A
|
sales, general and administrative
|
SPA
|
sale and purchase agreement (dated April 26, 2011)
|
TITO
|
Ticket-In-Ticket-Out
|
UK
|
United Kingdom
|
US
|
United States
|
UTBs
|
unrecognized tax benefits
|
VIE
|
variable interest entity
|
VLT
|
video lottery terminal
|
WAP
|
wide area progressive
|
Yield
|
average revenue per unit per day
|
*
|
not meaningful (in tables)
|
Item 1.
|
Unaudited Consolidated Interim Financial Statements
|
|
|
|
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
5
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
|
6
|
|
|
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
7
|
|
|
|
|
SUPPLEMENTAL CASH FLOWS INFORMATION
|
8
|
|
|
|
|
NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
9
|
|
|
|
|
1.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
9
|
|
|
|
2.
|
VARIABLE INTERESTS AND AFFILIATES
|
12
|
|
|
|
3.
|
RECEIVABLES
|
12
|
|
|
|
4.
|
CONCENTRATIONS OF CREDIT RISK
|
13
|
|
|
|
5.
|
INVENTORIES
|
14
|
|
|
|
6.
|
PROPERTY, PLANT AND EQUIPMENT
|
14
|
|
|
|
7.
|
GOODWILL AND OTHER INTANGIBLES
|
14
|
|
|
|
8.
|
FAIR VALUE MEASUREMENTS
|
15
|
|
|
|
9.
|
DERIVATIVE INSTRUMENTS
|
16
|
|
|
|
10.
|
CREDIT FACILITIES AND INDEBTEDNESS
|
17
|
|
|
|
11.
|
CONTINGENCIES
|
18
|
|
|
|
12.
|
INCOME TAXES
|
21
|
|
|
|
13.
|
EMPLOYEE BENEFIT PLANS
|
22
|
|
|
|
14.
|
EARNINGS PER SHARE
|
22
|
|
|
|
15.
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
|
23
|
|
|
|
16.
|
BUSINESS SEGMENTS
|
23
|
|
|
|
17.
|
IMPAIRMENT, RESTRUCTURING, AND MERGER-RELATED COSTS
|
24
|
First Quarters Ended December 31,
|
2014
|
2013
|
||||||
(In millions, except per share amounts)
|
||||||||
REVENUES
|
||||||||
Gaming operations
|
$
|
211.1
|
$
|
223.0
|
||||
Product sales
|
148.0
|
243.6
|
||||||
Interactive
|
91.5
|
74.6
|
||||||
Total
|
450.6
|
541.2
|
||||||
COSTS AND OPERATING EXPENSES
|
||||||||
Cost of gaming operations
|
79.8
|
86.8
|
||||||
Cost of product sales
|
77.0
|
116.7
|
||||||
Cost of interactive
|
35.4
|
27.9
|
||||||
Selling, general and administrative
|
108.5
|
117.8
|
||||||
Research and development
|
57.3
|
60.3
|
||||||
Depreciation and amortization
|
13.7
|
16.7
|
||||||
Contingent acquisition-related costs
|
2.5
|
11.3
|
||||||
Impairment, restructuring, and merger-related
|
12.9
|
-
|
||||||
Total
|
387.1
|
437.5
|
||||||
OPERATING INCOME
|
63.5
|
103.7
|
||||||
OTHER INCOME (EXPENSE)
|
||||||||
Interest income
|
9.3
|
10.1
|
||||||
Interest expense
|
(21.3
|
)
|
(36.4
|
)
|
||||
Other
|
0.2
|
(1.9
|
)
|
|||||
Total
|
(11.8
|
)
|
(28.2
|
)
|
||||
INCOME BEFORE TAX
|
51.7
|
75.5
|
||||||
Income tax provision (benefit)
|
16.7
|
(3.7
|
)
|
|||||
NET INCOME
|
$
|
35.0
|
$
|
79.2
|
||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||
Currency translation adjustment
|
(15.3
|
)
|
(2.3
|
)
|
||||
Unrealized loss, net of tax
|
(0.2
|
)
|
(0.2
|
)
|
||||
COMPREHENSIVE INCOME
|
$
|
19.5
|
$
|
76.7
|
||||
EARNINGS PER SHARE
|
||||||||
Basic
|
$
|
0.14
|
$
|
0.31
|
||||
Diluted
|
0.14
|
0.31
|
||||||
CASH DIVIDENDS DECLARED PER SHARE
|
$
|
0.11
|
$
|
0.11
|
||||
WEIGHTED AVERAGE SHARES OUTSTANDING
|
||||||||
Basic
|
247.6
|
252.6
|
||||||
Diluted
|
249.9
|
255.3
|
December 31, 2014
|
September 30, 2014
|
|||||||
(In millions, except par value)
|
||||||||
ASSETS
|
||||||||
Cash and equivalents
|
$
|
201.6
|
$
|
255.1
|
||||
Restricted cash and investment securities
|
64.2
|
57.2
|
||||||
Restricted cash and investment securities of VIEs
|
1.8
|
2.1
|
||||||
Jackpot annuity investments
|
41.1
|
41.9
|
||||||
Jackpot annuity investments of VIEs
|
10.8
|
11.1
|
||||||
Accounts receivable, net
|
280.5
|
329.3
|
||||||
Current maturities of contracts and notes receivable, net
|
183.4
|
200.9
|
||||||
Inventories
|
72.0
|
71.4
|
||||||
Deferred income taxes
|
97.6
|
98.3
|
||||||
Other assets and deferred costs
|
139.7
|
153.8
|
||||||
Total current assets
|
1,092.7
|
1,221.1
|
||||||
Property, plant and equipment, net
|
405.2
|
412.7
|
||||||
Jackpot annuity investments
|
209.8
|
211.3
|
||||||
Jackpot annuity investments of VIEs
|
25.7
|
25.4
|
||||||
Contracts and notes receivable, net
|
97.1
|
115.5
|
||||||
Goodwill
|
1,453.9
|
1,461.6
|
||||||
Other intangible assets, net
|
70.8
|
80.9
|
||||||
Deferred income taxes
|
137.6
|
142.0
|
||||||
Other assets and deferred costs
|
315.8
|
319.0
|
||||||
TOTAL ASSETS
|
$
|
3,808.6
|
$
|
3,989.5
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
LIABILITIES
|
||||||||
Short-term debt
|
$
|
-
|
$
|
-
|
||||
Accounts payable
|
66.3
|
77.7
|
||||||
Jackpot liabilities, current portion
|
117.5
|
117.5
|
||||||
Accrued employee benefits
|
9.4
|
31.4
|
||||||
Accrued income taxes
|
0.9
|
0.9
|
||||||
Dividends payable
|
-
|
27.2
|
||||||
Other accrued liabilities
|
241.1
|
290.1
|
||||||
Total current liabilities
|
435.2
|
544.8
|
||||||
Long-term debt
|
1,810.2
|
1,878.6
|
||||||
Jackpot liabilities
|
259.5
|
261.6
|
||||||
Other liabilities
|
110.4
|
106.9
|
||||||
TOTAL LIABILITIES
|
2,615.3
|
2,791.9
|
||||||
COMMITMENTS AND CONTINGENCIES
|
-
|
-
|
||||||
SHAREHOLDERS' EQUITY
|
||||||||
Common stock: $0.00015625 par value; 1,280.0 shares authorized;
276.6 and 274.7 issued; 248.7 and 247.3 outstanding
|
-
|
-
|
||||||
Additional paid-in capital
|
1,484.5
|
1,472.7
|
||||||
Treasury stock at cost: 27.9 and 27.4 shares
|
(494.6
|
)
|
(486.5
|
)
|
||||
Retained earnings
|
234.1
|
226.6
|
||||||
Accumulated other comprehensive income
|
(30.7
|
)
|
(15.2
|
)
|
||||
TOTAL EQUITY
|
1,193.3
|
1,197.6
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
3,808.6
|
$
|
3,989.5
|
Three Months Ended December 31,
|
2014
|
2013
|
||||||
(In millions)
|
||||||||
OPERATING
|
||||||||
Net income
|
$
|
35.0
|
$
|
79.2
|
||||
Adjustments:
|
||||||||
Depreciation and amortization
|
38.3
|
51.3
|
||||||
Acquisition-related contingent earn-out costs
|
2.4
|
4.5
|
||||||
Discounts and deferred issuance costs
|
0.8
|
11.6
|
||||||
Share-based compensation
|
8.7
|
9.0
|
||||||
Excess tax benefits from employee stock plans
|
(2.6
|
)
|
(6.4
|
)
|
||||
Other non-cash items
|
4.5
|
8.0
|
||||||
Changes in operating assets and liabilities, excluding acquisitions:
|
||||||||
Receivables
|
73.4
|
(13.2
|
)
|
|||||
Inventories
|
(1.2
|
)
|
15.6
|
|||||
Accounts payable and accrued liabilities
|
(80.1
|
)
|
(51.0
|
)
|
||||
Jackpot liabilities
|
(5.7
|
)
|
(16.6
|
)
|
||||
Income taxes, net of employee stock plans
|
8.4
|
(11.4
|
)
|
|||||
Other assets and deferred costs
|
21.0
|
(4.5
|
)
|
|||||
Net operating cash flows
|
102.9
|
76.1
|
||||||
INVESTING
|
||||||||
Capital expenditures
|
(24.6
|
)
|
(24.6
|
)
|
||||
Proceeds from assets sold
|
6.0
|
3.3
|
||||||
Investment securities, net
|
-
|
(70.6
|
)
|
|||||
Jackpot annuity investments, net
|
6.1
|
9.0
|
||||||
Changes in restricted cash
|
(6.8
|
)
|
(0.8
|
)
|
||||
Loans receivable payments received
|
-
|
6.4
|
||||||
Net investing cash flows
|
(19.3
|
)
|
(77.3
|
)
|
||||
FINANCING
|
||||||||
Debt repayments
|
(75.0
|
)
|
-
|
|||||
Debt issuance costs
|
-
|
(0.5
|
)
|
|||||
Employee stock plan proceeds
|
1.2
|
1.9
|
||||||
Excess tax benefits from employee stock plans
|
2.6
|
6.4
|
||||||
Share repurchases, including net shares
|
(8.1
|
)
|
(211.0
|
)
|
||||
Dividends paid
|
(54.6
|
)
|
(25.9
|
)
|
||||
Net financing cash flows
|
(133.9
|
)
|
(229.1
|
)
|
||||
FOREIGN EXCHANGE RATES EFFECT ON CASH AND EQUIVALENTS
|
(3.2
|
)
|
(2.4
|
)
|
||||
NET CHANGE IN CASH AND EQUIVALENTS
|
(53.5
|
)
|
(232.7
|
)
|
||||
BEGINNING CASH AND EQUIVALENTS
|
255.1
|
713.3
|
||||||
ENDING CASH AND EQUIVALENTS
|
$
|
201.6
|
$
|
480.6
|
Three Months Ended December 31,
|
2014
|
2013
|
||||||
(In millions)
|
||||||||
INVESTMENT SECURITIES
|
||||||||
Purchases
|
$
|
-
|
$
|
(99.5
|
)
|
|||
Proceeds from sale
|
-
|
28.9
|
||||||
Net
|
$
|
-
|
$
|
(70.6
|
)
|
|||
JACKPOT FUNDINGS
|
||||||||
Change in jackpot liabilities
|
$
|
(5.7
|
)
|
$
|
(16.6
|
)
|
||
Jackpot annuity investment purchases
|
(4.0
|
)
|
(2.0
|
)
|
||||
Jackpot annuity investment proceeds
|
10.1
|
11.0
|
||||||
Net change in jackpot annuity investments
|
6.1
|
9.0
|
||||||
Net jackpot funding
|
$
|
0.4
|
$
|
(7.6
|
)
|
|||
CAPITAL EXPENDITURES
|
||||||||
Property, plant and equipment
|
$
|
(7.2
|
)
|
$
|
(7.6
|
)
|
||
Gaming operations equipment
|
(17.3
|
)
|
(16.9
|
)
|
||||
Intellectual property
|
(0.1
|
)
|
(0.1
|
)
|
||||
Total
|
$
|
(24.6
|
)
|
$
|
(24.6
|
)
|
||
PAYMENTS
|
||||||||
Interest
|
$
|
30.2
|
$
|
27.8
|
||||
Income taxes
|
7.3
|
9.6
|
||||||
NONCASH INVESTING AND FINANCING ITEMS
|
||||||||
Accrued capital asset additions
|
$
|
(0.3
|
)
|
$
|
0.3
|
|||
Interest accretion for jackpot annuity investments
|
3.8
|
4.1
|
Fiscal Periods
|
As Presented
|
Actual
|
Current quarters
|
December 31, 2014
|
January 3, 2015
|
Prior year quarter
|
December 31, 2013
|
December 28, 2013
|
Prior year end
|
September 30, 2014
|
September 27, 2014
|
Unless otherwise indicated in this report:
|
||
|
●
|
International Game Technology, IGT, we, our, or the Company refers to International Game Technology and its consolidated entities
|
|
●
|
italicized text with an attached superscript trademark or copyright notation indicates trademarks of IGT or its licensors, and additional IGT trademark information is available on our website at www.IGT.com
|
|
●
|
references to years relate to our fiscal years ending September 30
|
|
●
|
current refers to our fiscal first quarter ended December 31, 2014
|
|
●
|
Note refers to the Notes of our Consolidated Interim Financial Statements in Item 1 of this report
|
|
●
|
references to EPS are on a diluted basis
|
|
●
|
table amounts are presented in millions, except per share amounts and par value
|
|
●
|
discussion and analysis relates to results for the current fiscal periods as compared with the prior year fiscal periods
|
December 31, 2014
|
September 30, 2014
|
|||||||
Allowances for Credit Losses
|
$
|
22.5
|
$
|
24.2
|
Reconciliation of Allowances for Credit Losses
|
||||||||
First Quarter Ended December 31,
|
2014
|
2013
|
||||||
Beginning balance
|
$
|
92.1
|
$
|
78.5
|
||||
Charge-offs and other adjustments
|
(0.7
|
)
|
-
|
|||||
Recoveries
|
-
|
-
|
||||||
Provisions
|
3.9
|
1.5
|
||||||
Ending balance
|
$
|
95.3
|
$
|
80.0
|
||||
Current portion
|
$
|
89.3
|
$
|
73.2
|
||||
Noncurrent portion
|
6.0
|
6.8
|
Recorded Investment
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||||||||||
(principal and interest due, net of deferred interest and fees)
|
Contracts
|
Notes
|
Total
|
Contracts
|
Notes
|
Total
|
||||||||||||||||||
Individually evaluated for impairment
|
$
|
31.3
|
$
|
75.5
|
$
|
106.8
|
$
|
28.3
|
$
|
75.5
|
$
|
103.8
|
||||||||||||
Collectively evaluated for impairment
|
269.0
|
-
|
269.0
|
304.7
|
-
|
304.7
|
||||||||||||||||||
Total
|
$
|
300.3
|
$
|
75.5
|
$
|
375.8
|
$
|
333.0
|
$
|
75.5
|
$
|
408.5
|
Allowances for Credit Losses
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||||||||||
Contracts
|
Notes
|
Total
|
Contracts
|
Notes
|
Total
|
|||||||||||||||||||
Individually evaluated for impairment
|
$
|
18.7
|
$
|
60.6
|
$
|
79.3
|
$
|
14.6
|
$
|
60.5
|
$
|
75.1
|
||||||||||||
Collectively evaluated for impairment
|
16.0
|
-
|
16.0
|
17.0
|
-
|
17.0
|
||||||||||||||||||
Total
|
$
|
34.7
|
$
|
60.6
|
$
|
95.3
|
$
|
31.6
|
$
|
60.5
|
$
|
92.1
|
||||||||||||
Recorded Investment Aging Analysis
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||||||||||
Contracts
|
Notes
|
Total
|
Contracts
|
Notes
|
Total
|
|||||||||||||||||||
Past Due
|
||||||||||||||||||||||||
1-29 days
|
$
|
9.3
|
$
|
1.3
|
$
|
10.6
|
$
|
6.9
|
$
|
1.3
|
$
|
8.2
|
||||||||||||
30-59 days
|
3.8
|
1.2
|
5.0
|
4.2
|
1.3
|
5.5
|
||||||||||||||||||
60-89 days
|
4.4
|
1.2
|
5.6
|
3.6
|
1.2
|
4.8
|
||||||||||||||||||
Over 90 days
|
30.3
|
71.8
|
102.1
|
23.7
|
66.7
|
90.4
|
||||||||||||||||||
Total(1)
|
$
|
47.8
|
$
|
75.5
|
$
|
123.3
|
$
|
38.4
|
$
|
70.5
|
$
|
108.9
|
||||||||||||
Amount not past due (2)
|
252.5
|
-
|
252.5
|
294.6
|
5.0
|
299.6
|
||||||||||||||||||
Grand total
|
$
|
300.3
|
$
|
75.5
|
$
|
375.8
|
$
|
333.0
|
$
|
75.5
|
$
|
408.5
|
||||||||||||
(1)Alabama impaired note included in total past due
|
$
|
75.0
|
$
|
75.0
|
$
|
70.0
|
$
|
70.0
|
||||||||||||||||
(2)Alabama impaired note included in amount not past due
|
-
|
-
|
5.0
|
5.0
|
||||||||||||||||||||
Over 90 days, accruing interest
|
$
|
0.8
|
$
|
-
|
$
|
0.8
|
$
|
0.6
|
$
|
-
|
$
|
0.6
|
||||||||||||
Nonaccrual status
|
24.9
|
75.5
|
100.4
|
21.9
|
75.5
|
97.4
|
Recorded Investment by Credit Quality Indicator
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||||||||||
(Using Credit Profile by Internally Assigned Risk Grade)
|
Contracts
|
Notes
|
Total
|
Contracts
|
Notes
|
Total
|
||||||||||||||||||
Low
|
$
|
117.6
|
$
|
-
|
$
|
117.6
|
$
|
138.9
|
$
|
-
|
$
|
138.9
|
||||||||||||
Medium
|
75.8
|
-
|
75.8
|
82.6
|
-
|
82.6
|
||||||||||||||||||
High (3)
|
106.9
|
75.5
|
182.4
|
111.5
|
75.5
|
187.0
|
||||||||||||||||||
Total
|
$
|
300.3
|
$
|
75.5
|
$
|
375.8
|
$
|
333.0
|
$
|
75.5
|
$
|
408.5
|
||||||||||||
(3) Alabama impaired note included
|
$
|
75.0
|
$
|
75.0
|
$
|
75.0
|
$
|
75.0
|
Impaired Loans
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||||||||||
Contracts
|
Notes
|
Total
|
Contracts
|
Notes
|
Total
|
|||||||||||||||||||
Recorded investment
|
$
|
31.3
|
$
|
75.5
|
$
|
106.8
|
$
|
28.3
|
$
|
75.5
|
$
|
103.8
|
||||||||||||
Unpaid principal face
|
31.6
|
75.5
|
107.1
|
28.7
|
75.5
|
104.2
|
||||||||||||||||||
Related allowance
|
18.7
|
60.6
|
79.3
|
14.6
|
60.5
|
75.1
|
||||||||||||||||||
Average recorded investment
|
29.8
|
75.5
|
105.3
|
17.0
|
75.3
|
92.3
|
Net Receivables By Region At December 31, 2014
|
|
|
||||
Nevada
|
12 %
|
|
|
|
|
|
Louisiana
|
7 %
|
|
Argentina
|
11 %
|
|
|
Illinois
|
5 %
|
|
Europe
|
9 %
|
|
|
California
|
5 %
|
|
Mexico
|
8 %
|
|
|
Other (less than 4% individually)
|
29 %
|
|
Other (less than 4% individually)
|
14 %
|
|
|
North America
|
58 %
|
|
International
|
42 %
|
|
|
December 31, 2014
|
September 30, 2014
|
|||||||
Raw materials
|
$
|
50.9
|
$
|
48.9
|
||||
Work-in-process
|
1.2
|
0.8
|
||||||
Finished goods
|
19.9
|
21.7
|
||||||
Total
|
$
|
72.0
|
$
|
71.4
|
December 31, 2014
|
September 30, 2014
|
|||||||
Land
|
$
|
52.1
|
$
|
52.1
|
||||
Buildings
|
233.4
|
232.4
|
||||||
Leasehold improvements
|
14.8
|
15.2
|
||||||
Machinery, furniture and equipment
|
283.9
|
286.8
|
||||||
Gaming operations equipment
|
667.1
|
713.0
|
||||||
Total cost
|
1,251.3
|
1,299.5
|
||||||
Less accumulated depreciation
|
(846.1
|
)
|
(886.8
|
)
|
||||
Property, plant and equipment, net
|
$
|
405.2
|
$
|
412.7
|
Activity By Segment For the Three Months Ended December 31, 2014
|
North America
|
International
|
Total
|
|||||||||
Beginning balance
|
1,275.9
|
$
|
185.7
|
$
|
1,461.6
|
|||||||
Foreign currency adjustment
|
-
|
(7.7
|
)
|
(7.7
|
)
|
|||||||
Ending balance
|
$
|
1,275.9
|
$
|
178.0
|
$
|
1,453.9
|
December 31, 2014
|
September 30, 2014
|
|||||||||||||||||||||||
Cost
|
Accumulated
Amortization
|
Net
|
Cost
|
Accumulated
Amortization
|
Net
|
|||||||||||||||||||
Patents
|
$
|
355.3
|
$
|
337.8
|
$
|
17.5
|
$
|
355.8
|
$
|
334.5
|
$
|
21.3
|
||||||||||||
Developed technology
|
131.0
|
98.3
|
32.7
|
131.0
|
94.7
|
36.3
|
||||||||||||||||||
Contracts
|
20.1
|
19.5
|
0.6
|
20.1
|
19.3
|
0.8
|
||||||||||||||||||
Reacquired rights
|
13.4
|
5.4
|
8.0
|
13.4
|
5.1
|
8.3
|
||||||||||||||||||
Customer relationships
|
61.2
|
53.8
|
7.4
|
61.2
|
52.0
|
9.2
|
||||||||||||||||||
Trademarks
|
12.5
|
7.9
|
4.6
|
12.5
|
7.5
|
5.0
|
||||||||||||||||||
Total
|
$
|
593.5
|
$
|
522.7
|
$
|
70.8
|
$
|
594.0
|
$
|
513.1
|
$
|
80.9
|
First Quarter Ended December 31,
|
Future Annual Estimates
|
|||||||||||||||||||||||||
2014
|
2013
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||||||||||
$
|
10.2
|
$
|
13.5
|
$
|
37.6
|
$
|
20.9
|
$
|
11.1
|
$
|
6.0
|
$
|
2.1
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
December 31, 2014
|
||||||||||||||||
Money market funds
|
$
|
65.4
|
$
|
65.4
|
$
|
-
|
$
|
-
|
||||||||
Derivative assets
|
68.7
|
-
|
68.7
|
-
|
||||||||||||
Derivative liabilities
|
(64.3
|
)
|
-
|
(64.3
|
)
|
-
|
||||||||||
Acquisition contingent earn-out payable
|
(60.6
|
)
|
-
|
-
|
(60.6
|
)
|
||||||||||
September 30, 2014
|
||||||||||||||||
Money market funds
|
$
|
65.8
|
$
|
65.8
|
$
|
-
|
$
|
-
|
||||||||
Derivative assets
|
65.2
|
-
|
65.2
|
-
|
||||||||||||
Derivative liabilities
|
(58.1
|
)
|
-
|
(58.1
|
)
|
-
|
||||||||||
Acquisition contingent earn-out payable
|
(58.2
|
)
|
-
|
-
|
(58.2
|
)
|
Acquisition Contingent Consideration Payable for the Three Months Ended December 31,
|
2014
|
2013
|
||||||
Beginning balance
|
$
|
(58.2
|
)
|
$
|
(106.4
|
)
|
||
Issuances
|
-
|
-
|
||||||
Accretion (fair value adjustment)
|
(2.4
|
)
|
(4.5
|
)
|
||||
Payments
|
-
|
-
|
||||||
Ending balance
|
$
|
(60.6
|
)
|
$
|
(110.9
|
)
|
Carrying
Value
|
Fair Value
|
Level 1
|
Level 2
|
Level 3
|
Unrealized
Gain (Loss)
|
|||||||||||||||||||
December 31, 2014
|
||||||||||||||||||||||||
Jackpot investments
|
$
|
287.4
|
$
|
322.6
|
$
|
322.6
|
$
|
-
|
$
|
-
|
$
|
35.2
|
||||||||||||
Contracts & notes receivable
|
280.5
|
276.1
|
-
|
-
|
276.1
|
(4.4
|
)
|
|||||||||||||||||
Jackpot liabilities
|
(377.0
|
)
|
(374.5
|
)
|
-
|
-
|
(374.5
|
)
|
2.5
|
|||||||||||||||
Debt
|
(1,745.9
|
)
|
(1,824.7
|
)
|
(1,377.6
|
)
|
-
|
(447.1
|
)
|
(78.8
|
)
|
|||||||||||||
September 30, 2014
|
||||||||||||||||||||||||
Jackpot investments
|
$
|
289.7
|
$
|
323.0
|
$
|
323.0
|
$
|
-
|
$
|
-
|
$
|
33.3
|
||||||||||||
Contracts & notes receivable
|
316.4
|
311.8
|
-
|
-
|
311.8
|
(4.6
|
)
|
|||||||||||||||||
Jackpot liabilities
|
(379.1
|
)
|
(369.6
|
)
|
-
|
-
|
(369.6
|
)
|
9.5
|
|||||||||||||||
Debt
|
(1,820.8
|
)
|
(1,923.7
|
)
|
(1,402.3
|
)
|
-
|
(521.4
|
)
|
(102.9
|
)
|
Balance Sheet Location and Fair Value
|
December 31, 2014
|
September 30, 2014
|
||||||||||||||
Assets
|
Liabilities
|
Assets
|
Liabilities
|
|||||||||||||
Non-designated Hedges: Foreign Currency Contracts
|
||||||||||||||||
Other assets and deferred costs (current)
|
$
|
3.3
|
$
|
-
|
$
|
2.1
|
$
|
-
|
||||||||
Other accrued liabilities
|
-
|
-
|
-
|
0.3
|
||||||||||||
Designated Hedges: Interest Rate Swaps
|
||||||||||||||||
Other assets and deferred costs (noncurrent)
|
64.2
|
-
|
55.4
|
-
|
||||||||||||
Long-term debt
|
-
|
64.3
|
-
|
57.8
|
||||||||||||
Gross Derivatives
|
67.5
|
64.3
|
57.5
|
58.1
|
||||||||||||
Counter-party Netting: Swaps Interest Receivable and Payable
|
||||||||||||||||
Accounts receivable
|
||||||||||||||||
Due from counter-party
|
2.9
|
-
|
15.5
|
-
|
||||||||||||
Due to counter-party
|
(1.7
|
)
|
-
|
(7.8
|
)
|
-
|
||||||||||
Net Derivatives
|
$
|
68.7
|
$
|
64.3
|
$
|
65.2
|
$
|
58.1
|
Periods Ended December 31,
|
2014
|
2013
|
||||||
Non-designated Hedges: Foreign Currency Contracts
|
||||||||
Other income (expense)
|
$
|
1.5
|
$
|
1.2
|
||||
Designated Hedges: Interest Rate Swaps
|
||||||||
Effectiveness - Interest expense
|
7.2
|
6.8
|
||||||
Ineffectiveness - Other income (expense)
|
2.3
|
(1.1
|
)
|
|
December 31, 2014
|
September 30, 2014
|
||||||
Credit facility
|
$
|
450.0
|
$
|
525.0
|
||||
7.5% Bonds (due June 2019)
|
500.0
|
500.0
|
||||||
5.5% Bonds (due June 2020)
|
300.0
|
300.0
|
||||||
5.35% Bonds (due October 2023)
|
500.0
|
500.0
|
||||||
Total principal debt obligations (at face)
|
1,750.0
|
1,825.0
|
||||||
Discounts:
|
||||||||
7.5% Bonds
|
(1.5
|
)
|
(1.5
|
)
|
||||
5.5% Bonds
|
(0.8
|
)
|
(0.8
|
)
|
||||
5.35% Bonds
|
(1.8
|
)
|
(1.9
|
)
|
||||
Swap FV adjustments:
|
||||||||
7.5% Bonds
|
41.3
|
38.5
|
||||||
5.5% Bonds
|
23.0
|
19.3
|
||||||
Total outstanding debt recorded, net
|
$
|
1,810.2
|
$
|
1,878.6
|
Three Months ended December 31,
|
2014
|
2013
|
||||||
Beginning balance
|
$
|
3.3
|
$
|
4.4
|
||||
Reduction for payments made
|
(1.1
|
)
|
(1.4
|
)
|
||||
Accrual for new warranties issued
|
1.7
|
2.6
|
||||||
Adjustments for pre-existing warranties
|
(0.6
|
)
|
(1.5
|
)
|
||||
Ending balance
|
$
|
3.3
|
$
|
4.1
|
Weighted Average
|
||||||||||||||||
OPTIONS
|
Shares
|
Exercise
Price
Per
Share
|
Remaining
Contractual
Term
(in years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at beginning of fiscal year
|
7.4
|
$
|
18.41
|
|||||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
(0.1
|
)
|
14.37
|
|||||||||||||
Forfeited
|
-
|
16.69
|
||||||||||||||
Expired
|
(0.2
|
)
|
26.11
|
|||||||||||||
Outstanding at end of period
|
7.1
|
$
|
18.34
|
3.9
|
$
|
10.9
|
||||||||||
Vested and expected to vest
|
7.1
|
$
|
18.34
|
3.9
|
$
|
10.9
|
||||||||||
Exercisable
|
7.1
|
$
|
18.35
|
3.9
|
$
|
10.8
|
Weighted Average
|
||||||||||||||||
RESTRICTED SHARE UNITS
|
Shares
|
Grant Date
Fair Value
Per Share
|
Remaining
Vesting
Period
(in years)
|
Aggregate
Intrinsic
Value
|
||||||||||||
Outstanding at beginning of fiscal year
|
6.3
|
$
|
15.39
|
|||||||||||||
Granted
|
-
|
16.13
|
||||||||||||||
Vested
|
(1.8
|
)
|
15.28
|
|||||||||||||
Forfeited
|
(0.2
|
)
|
15.57
|
|||||||||||||
Outstanding at end of period
|
4.3
|
$
|
15.43
|
1.6
|
$
|
74.7
|
||||||||||
Expected to vest
|
3.1
|
$
|
15.27
|
1.6
|
$
|
54.3
|
OTHER INFORMATION
|
||||
Shares available for future grant (see Note 1 about GTECH merger limitations)
|
21.2
|
|||
Unrecognized costs for outstanding awards
|
$
|
51.6
|
||
Weighted average future recognition period (in years)
|
1.5
|
First Quarters Ended December 31,
|
2014
|
2013
|
||||||
Net income available to common shares
|
$
|
35.0
|
$
|
79.2
|
||||
Basic weighted average shares outstanding
|
247.6
|
252.6
|
||||||
Dilutive effect of non-participating share-based awards
|
2.3
|
2.7
|
||||||
Diluted weighted average common shares outstanding
|
249.9
|
255.3
|
||||||
Basic EPS
|
$
|
0.14
|
$
|
0.31
|
||||
Diluted EPS
|
$
|
0.14
|
$
|
0.31
|
||||
Weighted average shares excluded from diluted EPS because the effect would be anti-dilutive:
|
||||||||
Share-based awards
|
4.1
|
5.1
|
||||||
3.25 % Convertible Notes (redeemed May 1, 2014)
|
-
|
42.6
|
||||||
Hedges (expired May 1, 2014)
|
-
|
(42.6
|
)
|
|||||
Warrants (expired November 21, 2014)
|
-
|
42.6
|
First Quarters Ended December 31,
|
2014
|
2013
|
||||||
Total shares repurchased (1)
|
0.5
|
8.8
|
||||||
Average price per share
|
$
|
16.84
|
$
|
17.28
|
||||
Aggregate payments
|
$
|
8.1
|
$
|
211.0
|
||||
Remaining authorization (see Note 1 about GTECH merger limitations)
|
$
|
209.7
|
||||||
(1)Including net shares tendered by employees at vesting for tax withholding obligations
|
Unrealized Gain (Loss)
|
||||||||||||||||||||||||
Currency
Translation Adjustment |
Treasury
Locks |
TOTAL
|
Currency
Translation Adjustment |
Treasury
Locks |
TOTAL
|
|||||||||||||||||||
Quarters Ended December 31,
|
2014
|
2013
|
||||||||||||||||||||||
Beginning balance
|
$
|
(22.5
|
)
|
$
|
7.3
|
$
|
(15.2
|
)
|
$
|
0.2
|
$
|
8.0
|
$
|
8.2
|
||||||||||
Activity before reclassifications:
|
||||||||||||||||||||||||
Before tax
|
(15.3
|
)
|
-
|
(15.3
|
)
|
(2.3
|
)
|
-
|
(2.3
|
)
|
||||||||||||||
Income tax effect
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||
Net of tax
|
(15.3
|
)
|
-
|
(15.3
|
)
|
(2.3
|
)
|
-
|
(2.3
|
)
|
||||||||||||||
Reclassifications to earnings: (located within interest expense on the income statement)
|
||||||||||||||||||||||||
Before tax
|
-
|
(0.3
|
)
|
(0.3
|
)
|
-
|
(0.3
|
)
|
(0.3
|
)
|
||||||||||||||
Income tax effect
|
-
|
0.1
|
0.1
|
-
|
0.1
|
0.1
|
||||||||||||||||||
Net of tax
|
-
|
(0.2
|
)
|
(0.2
|
)
|
-
|
(0.2
|
)
|
(0.2
|
)
|
||||||||||||||
Net other comprehensive income
|
(15.3
|
)
|
(0.2
|
)
|
(15.5
|
)
|
(2.3
|
)
|
(0.2
|
)
|
(2.5
|
)
|
||||||||||||
Ending balance
|
$
|
(37.8
|
)
|
$
|
7.1
|
$
|
(30.7
|
)
|
$
|
(2.1
|
)
|
$
|
7.8
|
$
|
5.7
|
First Quarters Ended December 31,
|
2014
|
2013
|
||||||
NORTH AMERICA
|
||||||||
Revenues
|
$
|
363.5
|
$
|
427.4
|
||||
Gaming operations
|
188.0
|
191.6
|
||||||
Product sales
|
94.0
|
170.0
|
||||||
Interactive
|
81.5
|
65.8
|
||||||
Gross profit
|
212.1
|
244.6
|
||||||
Gaming operations
|
115.8
|
113.7
|
||||||
Product sales
|
46.7
|
90.0
|
||||||
Interactive
|
49.6
|
40.9
|
||||||
Operating income
|
84.0
|
105.9
|
||||||
INTERNATIONAL
|
||||||||
Revenues
|
$
|
87.1
|
$
|
113.8
|
||||
Gaming operations
|
23.1
|
31.4
|
||||||
Product sales
|
54.0
|
73.6
|
||||||
Interactive
|
10.0
|
8.8
|
||||||
Gross profit
|
46.3
|
65.2
|
||||||
Gaming operations
|
15.5
|
22.5
|
||||||
Product sales
|
24.3
|
36.9
|
||||||
Interactive
|
6.5
|
5.8
|
||||||
Operating income
|
12.5
|
24.9
|
||||||
CORPORATE (unallocated)
|
||||||||
Operating expenses
|
$
|
(33.0
|
)
|
$
|
(27.1
|
)
|
||
CONSOLIDATED
|
||||||||
Revenues
|
$
|
450.6
|
$
|
541.2
|
||||
Gaming operations
|
211.1
|
223.0
|
||||||
Product sales
|
148.0
|
243.6
|
||||||
Interactive
|
91.5
|
74.6
|
||||||
Gross profit
|
258.4
|
309.8
|
||||||
Gaming operations
|
131.3
|
136.2
|
||||||
Product sales
|
71.0
|
126.9
|
||||||
Interactive
|
56.1
|
46.7
|
||||||
Operating income
|
63.5
|
103.7
|
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Our MDA is organized into the following sections:
|
||
|
●
|
FORWARD LOOKING STATEMENTS
|
|
●
|
OVERVIEW
|
|
●
|
CONSOLIDATED COMPARATIVE ANALYSIS
|
|
●
|
BUSINESS SEGMENT RESULTS - North America
|
●
|
BUSINESS SEGMENT RESULTS - International
|
|
|
●
|
LIQUIDITY AND CAPITAL RESOURCES
|
|
●
|
RECENTLY ISSUED ACCOUNTING STANDARDS
|
|
●
|
CRITICAL ACCOUNTING ESTIMATES
|
Unless otherwise indicated in this report:
|
||
|
●
|
International Game Technology, IGT, we, our, or the Company refers to International Game Technology and its consolidated entities
|
|
●
|
italicized text with an attached superscript trademark or copyright notation indicates trademarks of IGT or its licensors, and additional IGT trademark information is available on our website at www.IGT.com
|
|
●
|
references to years relate to our fiscal years ending September 30
|
|
●
|
current refers to our fiscal first quarter ended December 31, 2014
|
|
●
|
Note refers to the Notes of our Consolidated Interim Financial Statements in Item 1 of this report
|
|
●
|
references to EPS are on a diluted basis
|
|
●
|
table amounts are presented in millions, except units and EPS
|
|
●
|
discussion and analysis relates to results for the current fiscal periods as compared with the prior year fiscal periods
|
Examples of forward looking statements in this report include, but are not limited to, the following categories of expectations about:
|
||
●
|
statements as to the expected timing, completion and effects of the proposed merger transaction with GTECH
|
|
|
●
|
our ability to successfully introduce new products and their impact on replacement demand
|
|
●
|
the timing, features, benefits, and continued or future success of new product introductions and ongoing product, marketing, and strategic initiatives
|
|
●
|
our future financial and operational performance
|
|
●
|
our strategic and operational plans, including our ability to manage and leverage cost reduction initiatives
|
|
●
|
our leadership position in the gaming industry or in online casino-style social gaming
|
|
●
|
the advantages offered to customers by our anticipated products and product features
|
|
●
|
economic conditions and other factors affecting the gaming industry
|
|
●
|
gaming growth, expansion, and new market opportunities
|
|
●
|
future trends in the demand for our products
|
|
●
|
developments with respect to economic, political, regulatory and other conditions affecting our international operations
|
|
●
|
mergers, acquisitions and divestitures, including the anticipated benefits of completed acquisitions and possible acquisitions of, or investments in, businesses, products, and technologies
|
|
●
|
research and development activities, including anticipated benefits from such activities
|
|
●
|
fluctuations in future gross margins, tax rates, and liabilities
|
|
●
|
future product sales or machine placements
|
|
●
|
legislative, legal or regulatory developments and related market opportunities
|
|
●
|
available capital resources to fund future operating requirements, capital expenditures, payment obligations, acquisitions, dividends, and share repurchases
|
|
●
|
losses from off-balance sheet arrangements
|
|
●
|
financial returns to shareholders related to management of our costs
|
|
●
|
the impact of recently adopted accounting pronouncements
|
|
●
|
the outcome and expense of litigation
|
We continue to partner with our customers to build stronger relationships and deliver innovative gaming products and services. Our fiscal 2015 operating objectives below are designed to improve our business with adjustments as new opportunities arise and the industry evolves.
|
●
|
Assembling the most compelling and highest performing game library available—serving both operators and players
|
●
|
Expanding and managing the broadest distribution network globally
|
●
|
Maximizing shareholder value through the efficient operation of our business, the optimal generation of cash flow, and the responsible, dependable return of capital
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
450.6
|
$
|
541.2
|
$
|
(90.6
|
)
|
-17
|
%
|
|||||||
Operating income
|
63.5
|
103.7
|
(40.2
|
)
|
-39
|
%
|
||||||||||
Net Income
|
35.0
|
79.2
|
(44.2
|
)
|
-56
|
%
|
||||||||||
EPS
|
$
|
0.14
|
$
|
0.31
|
$
|
(0.17
|
)
|
-55
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
211.1
|
$
|
223.0
|
$
|
(11.9
|
)
|
-5
|
%
|
|||||||
Gross margin
|
62
|
%
|
61
|
%
|
1
|
pp
|
||||||||||
Installed base units - '000
|
45.4
|
54.3
|
(8.9
|
)
|
-16
|
%
|
||||||||||
MegaJackpots® (premium brand)
|
20.4
|
24.9
|
(4.5
|
)
|
-18
|
%
|
||||||||||
Lease (CDS, Racino, other)
|
25.0
|
29.4
|
(4.4
|
)
|
-15
|
%
|
||||||||||
Yield - $0.00
|
$
|
46.36
|
$
|
44.99
|
$
|
1.37
|
3
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
148.0
|
$
|
243.6
|
$
|
(95.6
|
)
|
-39
|
%
|
|||||||
Machines
|
80.1
|
167.0
|
(86.9
|
)
|
-52
|
%
|
||||||||||
Non-machine (1)
|
67.9
|
76.6
|
(8.7
|
)
|
-11
|
%
|
||||||||||
Gross margin
|
48
|
%
|
52
|
%
|
(4
|
)
|
pp
|
|||||||||
Machine units recognized (2) - '000
|
5.8
|
12.8
|
(7.0
|
)
|
-55
|
%
|
||||||||||
Machine ASP - '000
|
$
|
13.9
|
$
|
13.2
|
$
|
0.7
|
5
|
%
|
||||||||
Machine units shipped (3) - '000
|
5.9
|
13.0
|
(7.1
|
)
|
-55
|
%
|
||||||||||
New/expansion
|
1.2
|
4.4
|
(3.2
|
)
|
-73
|
%
|
||||||||||
Replacement
|
4.7
|
8.6
|
(3.9
|
)
|
-45
|
%
|
||||||||||
(1)systems, licensing and parts/other; (2)correlates with revenues recognized; (3)includes deferred revenue units
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
91.5
|
$
|
74.6
|
$
|
16.9
|
23
|
%
|
||||||||
Social gaming
|
79.4
|
64.8
|
14.6
|
23
|
%
|
|||||||||||
IGTi
|
12.1
|
9.8
|
2.3
|
23
|
%
|
|||||||||||
Gross margin
|
61
|
%
|
63
|
%
|
(2
|
)
|
pp
|
|||||||||
DoubleDown average user metrics (1)
|
||||||||||||||||
DAU - '000
|
1,910
|
1,716
|
194
|
11
|
%
|
|||||||||||
MAU - '000
|
5,212
|
6,198
|
(986
|
)
|
-16
|
%
|
||||||||||
Bookings per DAU - $0.00
|
$
|
0.43
|
$
|
0.42
|
$
|
0.01
|
2
|
%
|
||||||||
(1)as a single application with multiple games, active users equal unique users
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Selling, general and administrative
|
$
|
108.5
|
$
|
117.8
|
$
|
9.3
|
8
|
%
|
||||||||
Research and development
|
57.3
|
60.3
|
3.0
|
5
|
%
|
|||||||||||
Depreciation and amortization
|
13.7
|
16.7
|
3.0
|
18
|
%
|
|||||||||||
Subtotal
|
179.5
|
194.8
|
15.3
|
8
|
%
|
|||||||||||
Percent of revenue
|
40
|
%
|
36
|
%
|
||||||||||||
Contingent acquisition-related costs
|
2.5
|
11.3
|
8.8
|
78
|
%
|
|||||||||||
Impairment, restructuring and merger-related
|
12.9
|
-
|
(12.9
|
)
|
*
|
|||||||||||
Total
|
$
|
194.9
|
$
|
206.1
|
$
|
11.2
|
5
|
%
|
Acquisition-related charges (mostly DoubleDown)
|
2014
|
2013
|
Change
|
|||||||||||||
Earn-out (See Note 8 about valuation factors)
|
$
|
2.4
|
$
|
4.7
|
$
|
2.3
|
49
|
%
|
||||||||
Retention
|
0.1
|
6.6
|
6.5
|
98
|
%
|
|||||||||||
Total contingent costs
|
2.5
|
11.3
|
8.8
|
78
|
%
|
|||||||||||
Amortization of acquired intangibles
|
2.2
|
3.4
|
1.2
|
35
|
%
|
|||||||||||
Total
|
$
|
4.7
|
$
|
14.7
|
$
|
10.0
|
68
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Interest Income
|
$
|
9.3
|
$
|
10.1
|
$
|
(0.8
|
)
|
-8
|
%
|
|||||||
WAP investments (1)
|
3.8
|
4.1
|
(0.3
|
)
|
-7
|
%
|
||||||||||
Receivables and investments
|
5.5
|
6.0
|
(0.5
|
)
|
-8
|
%
|
||||||||||
Interest Expense
|
(21.3
|
)
|
(36.4
|
)
|
15.1
|
41
|
%
|
|||||||||
WAP jackpot liabilities (1)
|
(3.8
|
)
|
(4.1
|
)
|
0.3
|
7
|
%
|
|||||||||
Borrowings
|
(17.5
|
)
|
(22.8
|
)
|
5.3
|
23
|
%
|
|||||||||
Convertible debt equity discount
|
-
|
(9.5
|
)
|
9.5
|
100
|
%
|
||||||||||
Other, including gain (loss)
|
0.2
|
(1.9
|
)
|
2.1
|
*
|
|||||||||||
Total other income (expense), net
|
$
|
(11.8
|
)
|
$
|
(28.2
|
)
|
$
|
16.4
|
58
|
%
|
(1)WAP interest income includes earnings on cash and investments held for future winner payments, as well as jackpot annuity interest that accretes at approximately the same rate as WAP interest expense.
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Income tax provision (benefit)
|
$
|
16.7
|
$
|
(3.7
|
)
|
$
|
(20.4
|
)
|
-551
|
%
|
||||||
Effective tax rate
|
32.3
|
%
|
-4.9
|
%
|
(37.2
|
)
|
pp
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Total Revenues
|
$
|
363.5
|
$
|
427.4
|
$
|
(63.9
|
)
|
-15
|
%
|
|||||||
Gross Margin
|
58
|
%
|
57
|
%
|
1
|
pp
|
||||||||||
Operating Income
|
$
|
84.0
|
$
|
105.9
|
$
|
(21.9
|
)
|
-21
|
%
|
|||||||
Margin
|
23
|
%
|
25
|
%
|
(2
|
)
|
pp
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
188.0
|
$
|
191.6
|
$
|
(3.6
|
)
|
-2
|
%
|
|||||||
Gross margin
|
62
|
%
|
59
|
%
|
3
|
pp
|
||||||||||
Installed base units - '000
|
36.7
|
41.3
|
(4.6
|
)
|
-11
|
%
|
||||||||||
MegaJackpots® (premium brand)
|
18.1
|
21.5
|
(3.4
|
)
|
-16
|
%
|
||||||||||
Lease (CDS, racino, other)
|
18.6
|
19.8
|
(1.2
|
)
|
-6
|
%
|
||||||||||
Yield - $0.00
|
$
|
51.35
|
$
|
50.91
|
$
|
0.44
|
1
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
94.0
|
$
|
170.0
|
$
|
(76.0
|
)
|
-45
|
%
|
|||||||
Machines
|
51.7
|
118.0
|
(66.3
|
)
|
-56
|
%
|
||||||||||
Non-machine
|
42.3
|
52.0
|
(9.7
|
)
|
-19
|
%
|
||||||||||
Gross margin
|
50
|
%
|
53
|
%
|
(3
|
)
|
pp
|
|||||||||
Machine units recognized - '000
|
3.9
|
9.6
|
(5.7
|
)
|
-59
|
%
|
||||||||||
Machine ASP - '000
|
$
|
13.4
|
$
|
12.3
|
$
|
1.1
|
9
|
%
|
||||||||
Machine units shipped - '000
|
4.2
|
9.8
|
(5.6
|
)
|
-57
|
%
|
||||||||||
New/expansion
|
0.7
|
3.7
|
(3.0
|
)
|
-81
|
%
|
||||||||||
Replacement
|
3.5
|
6.1
|
(2.6
|
)
|
-43
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
81.5
|
$
|
65.8
|
$
|
15.7
|
24
|
%
|
||||||||
Social gaming
|
79.4
|
64.8
|
14.6
|
23
|
%
|
|||||||||||
IGTi
|
2.1
|
1.0
|
1.1
|
110
|
%
|
|||||||||||
Gross margin
|
61
|
%
|
62
|
%
|
(1
|
)
|
pp
|
|||||||||
DoubleDown average user metrics
|
||||||||||||||||
DAU - '000
|
1,910
|
1,716
|
194
|
11
|
%
|
|||||||||||
MAU - '000
|
5,212
|
6,198
|
(986
|
)
|
-16
|
%
|
||||||||||
Bookings per DAU - $0.00
|
$
|
0.43
|
$
|
0.42
|
$
|
0.01
|
2
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Total Revenues
|
$
|
87.1
|
$
|
113.8
|
$
|
(26.7
|
)
|
-23
|
%
|
|||||||
Gross Margin
|
53
|
%
|
57
|
%
|
(4
|
)
|
pp
|
|||||||||
Operating Income
|
$
|
12.5
|
$
|
24.9
|
$
|
(12.4
|
)
|
-50
|
%
|
|||||||
Margin
|
14
|
%
|
22
|
%
|
(8
|
)
|
pp
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
23.1
|
$
|
31.4
|
$
|
(8.3
|
)
|
-26
|
%
|
|||||||
Gross margin
|
67
|
%
|
72
|
%
|
(5
|
)
|
pp
|
|||||||||
Installed base units - '000
|
8.7
|
13.0
|
(4.3
|
)
|
-33
|
%
|
||||||||||
MegaJackpots® (premium brand)
|
2.3
|
3.4
|
(1.1
|
)
|
-32
|
%
|
||||||||||
Lease (CDS, racino, other)
|
6.4
|
9.6
|
(3.2
|
)
|
-33
|
%
|
||||||||||
Yield - $0.00
|
$
|
25.93
|
$
|
26.32
|
$
|
(0.39
|
)
|
-1
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues
|
$
|
54.0
|
$
|
73.6
|
$
|
(19.6
|
)
|
-27
|
%
|
|||||||
Machines
|
28.4
|
49.0
|
(20.6
|
)
|
-42
|
%
|
||||||||||
Non-machine
|
25.6
|
24.6
|
1.0
|
4
|
%
|
|||||||||||
Gross margin
|
45
|
%
|
50
|
%
|
(5
|
)
|
pp
|
|||||||||
Machine units recognized - '000
|
1.9
|
3.2
|
(1.3
|
)
|
-41
|
%
|
||||||||||
Machine ASP - '000
|
$
|
15.1
|
$
|
15.3
|
$
|
(0.2
|
)
|
-1
|
%
|
|||||||
Machine units shipped - '000
|
1.7
|
3.2
|
(1.5
|
)
|
-47
|
%
|
||||||||||
New/expansion
|
0.5
|
0.7
|
(0.2
|
)
|
-29
|
%
|
||||||||||
Replacement
|
1.2
|
2.5
|
(1.3
|
)
|
-52
|
%
|
First Quarters Ended December 31,
|
2014
|
2013
|
C h a n g e
|
|||||||||||||
Revenues - IGTi
|
$
|
10.0
|
$
|
8.8
|
$
|
1.2
|
14
|
%
|
||||||||
Gross margin
|
65
|
%
|
66
|
%
|
(1
|
)
|
pp
|
December 31, 2014
|
September 30, 2014
|
Increase (Decrease)
|
||||||||||
Cash and equivalents
|
$
|
201.6
|
$
|
255.1
|
$
|
(53.5
|
)
|
|||||
Accounts receivable, net
|
280.5
|
329.3
|
(48.8
|
)
|
||||||||
Inventories
|
72.0
|
71.4
|
0.6
|
|||||||||
Working Capital
|
657.5
|
676.3
|
(18.8
|
)
|
||||||||
Trailing-twelve month statistics:
|
||||||||||||
Days sales outstanding (excluding contracts and notes)
|
52
|
58
|
(6
|
)
|
||||||||
Inventory turns
|
4.8
|
5.4
|
(0.6
|
)
|
Three Months Ended December 31,
|
2014
|
2013
|
Favorable (Unfavorable)
|
|||||||||
Operations
|
$
|
102.9
|
$
|
76.1
|
$
|
26.8
|
||||||
Investing
|
(19.3
|
)
|
(77.3
|
)
|
58.0
|
|||||||
Financing
|
(133.9
|
)
|
(229.1
|
)
|
95.2
|
|||||||
Effects of exchange rates
|
(3.2
|
)
|
(2.4
|
)
|
(0.8
|
)
|
||||||
Net change in cash and equivalents
|
$
|
(53.5
|
)
|
$
|
(232.7
|
)
|
$
|
179.2
|
Our credit facility carries no limitations on share repurchases or dividend payments (see Note 1 about limitations related to the GTECH merger) provided no default exists and includes the following covenants (all terms as defined in the facility document):
|
|||
|
●
|
a minimum ratio of 3.0 adjusted EBITDA to interest expense (interest coverage ratio)
|
|
|
●
|
a maximum ratio of 3.5 for net funded debt to adjusted EBITDA (net funded debt leverage ratio)
|
|
|
●
|
certain restrictions on our ability to:
|
|
|
|
■
|
pledge the securities of our subsidiaries
|
|
|
■
|
permit our subsidiaries to incur or guaranty additional debt, or enter into swap agreements
|
|
|
■
|
incur liens
|
|
|
■
|
merge with or acquire other companies, liquidate or dissolve
|
|
|
■
|
sell, transfer, lease or dispose of all or substantially all assets
|
|
|
■
|
change the nature of our business
|
|
December 31, 2014
|
September 30, 2014
|
Increase (Decrease)
|
|||||||||
Assets
|
$
|
3,808.6
|
$
|
3,989.5
|
$
|
(180.9
|
)
|
|||||
Liabilities
|
2,615.3
|
2,791.9
|
(176.6
|
)
|
||||||||
Total Equity
|
1,193.3
|
1,197.6
|
(4.3
|
)
|
2015 First Quarter (in millions, except price per share)
|
Total
Number
of
Shares
Purchased
|
Average
Price
Paid
Per
Share
|
Total Number
of Shares Purchased
as Part of a Publicly
Announced Plan
|
Approximate Dollar
Value of Shares
Still Available
for Purchase
Under the Plan
|
||||||||||||
September 28 - November 1, 2014
|
-
|
$
|
-
|
-
|
$
|
209.7
|
||||||||||
November 2 - November 29, 2014
|
0.1
|
16.60
|
0.1
|
209.7
|
||||||||||||
November 30, 2014 - January 3, 2015
|
0.4
|
16.87
|
0.4
|
209.7
|
4.1 | Amendment No. 1, dated as of October 20, 2014, between International Game Technology and Wells Fargo Bank, National Association, as trustee, to the Indenture dated as of June 15, 2009, as supplemented by the First Supplemental Indenture dated as of June 15, 2009 (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on October 22, 2014) |
10.1* | IGT 2002 Stock Incentive Plan – Form: Letter Amendment to Performance Restricted Stock Unit Award Agreement Fiscal 2013 and Performance Restricted Stock Unit Award Agreement Fiscal 2014 |
31.1 | Certification of Chief Executive Officer pursuant to Rule 13a – 14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification of Chief Financial Officer pursuant to Rule 13a – 14(a) of the Exchange Act, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Executive Officer pursuant to Rule 13a – 14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
32.2 | Certification of Chief Financial Officer pursuant to Rule 13a – 14(b) of the Exchange Act and section 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 |
By:
|
/s/ John Vandemore
|
|
John Vandemore
|
||
Chief Financial Officer and Treasurer
|
||
(Principal Financial Officer)
|