LONDON, May 13, 2015 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE: IGT) today reported results for GTECH S.p.A.'s ("GTECH") first quarter of 2015 and for International Game Technology's ("Legacy IGT") second quarter of 2015, ended March 31, 2015. The combination of GTECH and Legacy IGT was completed on April 7, 2015. As such, results presented in this news release are for periods predating the combination and during which each company was under separate management. The respective reporting formats of the legacy companies have been maintained in this release for ease of comparison. The results in this news release relating to GTECH are presented in Euros under International Financial Reporting Standards ("IFRS") and results relating to Legacy IGT are presented in U.S. Dollars under U.S. generally accepted accounting principles ("GAAP"). IGT will begin reporting as a combined entity with its second quarter of 2015 results under GAAP.
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Commenting on the first quarter performance, Marco Sala, CEO of IGT, noted: "We had a solid first quarter for GTECH operations, continuing to run the underlying business efficiently and profitably, at the same time as we were completing a transformative merger. We were ready to launch the integration from day one, focusing on revitalizing our R&D capabilities. Exciting content delivered across the whole range of platforms is the key to consolidating our leadership of the global gaming industry."
"We achieved near-record GTECH EBITDA during the first quarter on top of challenging, multi-year comparisons. We also improved our net financial position excluding one-off items linked to the transaction. We have confirmed our $280 million target for cost and revenue synergies and are on track to deliver them on schedule," said Alberto Fornaro, CFO of IGT.
GTECH S.p.A. First Quarter 2015 Results Comparison
Consolidated Income
Statement (EUR/M) Q1 2015 Q1 2014 % chg
------------------- ------- ------- -----
Revenues 807.7 781.3 +3.4
-------- ----- ----- ----
EBITDA 295.6 296.0 --
------ ----- ----- ---
Operating Income 149.3 180.8 -17.5
---------------- ----- ----- -----
Net Income (Loss)
Attributable to Owners (26.9) 75.0 nm
----------------------- ----- ---- ---
Diluted Earnings (Loss) Per
Share (0.16) 0.43 nm
--------------------------- ----- ---- ---
EBITDA is principally comprised of operating income plus depreciation, amortization, and impairment. EBITDA is considered an alternative performance measure that is not a defined measure under IFRS and may not take into account the recognition, measurement and presentation requirements associated with IFRS. We believe that EBITDA assists in explaining trends in our operating performance, provides useful information about our ability to incur and service indebtedness and is a commonly used measure of performance by securities analysts and investors in the gaming industry. EBITDA should not be considered as an alternative to operating income as an indicator of our performance or to cash flows as a measure of our liquidity. As we define it, EBITDA may not be comparable to other similarly titled measures used by other companies.
Consolidated Revenues grew 3% to EUR808 million from EUR781 million in the first quarter of 2014. This increase was principally driven by higher service revenues, which rose 4% to EUR755 million from EUR729 million in the prior year, reflecting net favorable foreign currency effects and lottery growth in Italy and the Americas. Product sales of EUR52 million were in line with the prior year as lower lottery product sales in the Americas and International machine gaming revenues were offset by favorable currency translation.
EBITDA of EUR296 million was in line with the first quarter of last year and near all-time peak levels, reflecting growth in the Americas and stability in the International segment, in addition to net favorable foreign currency effects, which offset the impact of a higher sports betting payout in Italy.
Operating Income was EUR149 million compared to EUR181 million in the first quarter of 2014. Operating Income was EUR170 million excluding one-off items, primarily transaction and restructuring costs associated with the acquisition of Legacy IGT.
Interest Expense was EUR81 million compared to EUR41 million last year, the increase being principally due to financing associated with the acquisition of Legacy IGT.
Net Loss Attributable to the Owners was EUR27 million compared to net income of EUR75 million in the first quarter of 2014. The Net Loss Attributable to the Owners primarily reflects higher Interest Expense and other charges associated with the acquisition of Legacy IGT. Diluted Loss-Per-Share was EUR0.16 compared to Diluted Earnings-Per-Share of EUR0.43 in the comparable prior year period, again reflecting acquisition-related items.
Cash from Operations was EUR158 million compared to EUR163 million in the prior year. Capital Expenditures in the first quarter were EUR65 million.
At March 31, 2015, Consolidated Shareholders' Equity totaled EUR2.59 billion. GTECH had a Net Financial Position (NFP) of EUR3.16 billion versus EUR2.59 billion as of December 31, 2014. Excluding one-off items primarily related to the acquisition of Legacy IGT, NFP was EUR2.56 billion at the end of the first quarter of 2015.
First Quarter Results by Segment
Americas
Revenues in the Americas segment grew 23% to EUR300 million in the quarter. In constant currency and excluding pass-through reimbursements, Revenues were up 4%. Service revenues increased 26%, supported by favorable foreign currency effects; strong instant ticket sales and multistate jackpot activity; and substantial growth for machine gaming operations. Product sales of EUR34 million in the quarter were modestly above the prior year period, as a significant increase in machine gaming revenues and favorable foreign currency effects were partially offset by lower lottery product sales.
Operating Income from the Americas segment of EUR46 million was 51% greater than the prior year period, reflecting favorable foreign currency effects, strong lottery same-store revenue growth, and higher machine gaming profits from both product sales and the contribution from a larger installed base of gaming machines.
International
Revenues in the International segment were EUR77 million, EUR1 million greater than the prior year, driven by favorable foreign currency effects and increased lottery revenues that were partially offset by lower machine gaming product sales.
International lottery same-store revenues were up approximately 11% compared to the same period in 2014, reflecting continued strength in instant ticket sales in the United Kingdom and robust jackpot growth in Eastern Europe.
Operating Income in the International segment was EUR13 million versus EUR15 million in the first quarter of last year, as higher lottery profits were more than offset by lower product sales and a broad mix of items.
Italy
Revenues in Italy were EUR430 million compared to EUR461 million in the first quarter of 2014, principally due to higher sports betting payout. While sports betting wagers were up 2% in the first quarter, sports betting revenues were EUR39 million compared to EUR62 million last year due to a 10 percentage point increase in payout.
Total Lotto wagers for the quarter were up 16% to EUR1.82 billion compared to EUR1.57 billion last year, driven by strong performance in 10eLotto and late-numbers. Instant-ticket wagers declined 7% to EUR2.30 billion versus EUR2.48 billion last year, partially due to the cadence of new product introductions.
Machine gaming revenues were EUR135 million versus EUR145 million last year, reflecting the impact of the new Italian Stability Law.
Operating Income of EUR140 million compared to EUR158 million last year primarily reflects the impact of the higher sports betting payout.
Other News
Pursuant to the Agreement and Plan of Merger, as amended, providing for the combination of GTECH and Legacy IGT, Philip G. Satre was appointed as Chairman of the Board of Directors and each of Patti S. Hart and Lorenzo Pellicioli was appointed as Vice Chairman of the Board of Directors.
Conference call and webcast
Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call to present the first quarter 2015 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News and Presentations" on IGT's Investor Relations website at www.merger.igt.com/investors. A replay of the webcast will be available on the website following the live event.
To listen by telephone, the dial in number is +44 (0) 20 3450 9571 for participants in the United Kingdom and +1 646 254-3387 for listeners outside the United Kingdom. The conference ID/confirmation code is 2660253. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1 347 366-9565 using the conference ID/confirmation code 2660253.
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 generated approximately $6 billion in revenues in 2014 and has more than 13,000 employees. For more information, please visit www.merger.igt.com.
Cautionary Statement Regarding Forward-Looking Statements
This communication may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning IGT and other matters. These statements may discuss goals, intentions, projections and expectations as to future plans, strategies, strengths, trends, events, results of operations or financial condition, revenue, income, earnings (or loss) per share, capital expenditures, dividends, capital structure or other financial items, or otherwise, based on current beliefs of the management of IGT as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should,", "shall", "continue", "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements are subject to various risks and uncertainties, many of which are outside IGT's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) risks that the businesses of Legacy IGT and GTECH S.p.A. will not be integrated successfully, following the recent completion of their business combination, or that the combined companies will not realize estimated cost savings, value of certain tax assets, synergies, growth or other anticipated benefits or that such benefits may take longer to realize than expected; risks relating to unanticipated costs of integration of the two companies; reductions in customer spending; a slowdown in customer payments and changes in customer demand for products and services; unanticipated changes relating to competitive factors in the industries in which the company operates; ability to hire and retain key personnel; the potential impact of the consummation of the business combination on relationships with third parties, including customers, employees and competitors; ability to attract new customers and retain existing customers in the manner anticipated; reliance on and integration of information technology systems; changes in legislation or governmental regulations affecting the company; international, national or local economic, social or political conditions that could adversely affect the company or its customers; conditions in the credit markets; risks associated with assumptions the company makes in connection with its critical accounting estimates; the resolution of pending legal proceedings and investigations; and the company's international operations, which are subject to the risks of currency fluctuations and foreign exchange controls. The foregoing list of factors is not exhaustive. You should carefully consider the foregoing factors and the other risks and uncertainties that affect the company's business, including those described in IGT's registration statement on Form F-4 and other documents filed from time to time with the Securities and Exchange Commission (the "SEC"). Forward-looking statements speak only as of the date on which such statements are made, Except as required under applicable law, the company does not assume any obligation to update these forward-looking statements. Nothing in this announcement is intended, or is to be construed, as a profit forecast or to be interpreted to mean that earnings per IGT share for the current or any future financial years will necessarily match or exceed the historical published earnings per IGT share, as applicable. All forward-looking statements contained in this communication are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to IGT, or persons acting on its behalf, are expressly qualified in its entirety by the cautionary statements contained throughout this communication.
Contact:
Robert K. Vincent, Corporate Communications, +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, Italian Media Relations, +39 06 51899030
GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED INCOME STATEMENTS
For the three months
ended
March 31,
---------
2015 2014
---- ----
(EUR thousands) Unaudited
---------
Service revenue 755,435 729,475
Product sales 52,254 51,778
------ ------
Total revenue 807,689 781,253
Raw materials, services and other
costs 387,915 374,405
Personnel 170,416 134,868
Depreciation 66,324 61,970
Amortization 53,623 49,022
Capitalization of internal
construction costs -labor and
overhead (29,941) (19,855)
Unusual expense, net 10,080 -
------ ---
658,417 600,410
Operating income 149,272 180,843
Interest income 556 794
Equity income (loss), net (203) 66
Other income 490 453
Other expense (121,530) (2,234)
Foreign exchange gain (loss), net 8,542 (1,162)
Interest expense (81,256) (40,597)
------- -------
(193,401) (42,680)
-------- -------
Income (loss) before income tax
expense (44,129) 138,163
Income tax expense (benefit) (20,560) 56,648
------- ------
Net income (loss) (23,569) 81,515
======= ======
Attributable to:
Owners of the parent (26,930) 75,029
Non-controlling interests 3,361 6,486
----- -----
(23,569) 81,515
======= ======
Earnings (loss) per share/ADRs
Basic -net income (loss)
attributable to owners of the
parent EUR (0.16) EUR 0.43
Diluted -net income (loss)
attributable to owners of the
parent EUR (0.16) EUR 0.43
GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
March 31, December 31,
2015 2014
---- ----
(EUR thousands) Unaudited Audited
--------- -------
ASSETS
Non-current assets
Systems, equipment and other
assets related to contracts, net 980,232 910,095
Property, plant and equipment,
net 83,468 77,394
Goodwill 3,731,622 3,402,201
Intangible assets, net 1,165,976 1,151,472
Investments in associates and
joint ventures 24,670 24,474
Other non-current assets 82,206 75,495
Non-current financial assets 23,470 21,557
Deferred income taxes 9,275 22,026
----- ------
Total non-current assets 6,100,919 5,684,714
--------- ---------
Current assets
Inventories 178,298 152,042
Trade and other receivables, net 776,647 757,444
Other current assets 292,814 255,288
Current financial assets 40,496 10,386
Income taxes receivable 5,247 5,459
Cash and cash equivalents 254,620 261,184
------- -------
Total current assets 1,548,122 1,441,803
--------- ---------
TOTAL ASSETS 7,649,041 7,126,517
========= =========
EQUITY AND LIABILITIES
Equity attributable to owners of
the parent
Issued capital 175,122 174,976
Share premium 1,653,307 1,651,498
Treasury shares (418,596) (40,211)
Retained earnings 158,936 171,065
Other reserves 774,530 378,947
------- -------
2,343,299 2,336,275
Non-controlling interests 242,811 281,814
------- -------
Total equity 2,586,110 2,618,089
--------- ---------
Non-current liabilities
Long-term debt, less current
portion 2,847,954 1,725,738
Deferred income taxes 143,841 177,296
Long-term provisions 10,377 13,038
Other non-current liabilities 58,990 57,728
Non-current financial liabilities 62,280 60,518
------ ------
Total non-current liabilities 3,123,442 2,034,318
--------- ---------
Current liabilities
Accounts payable 922,427 1,022,194
Short-term borrowings 2 8,895
Other current liabilities 435,226 356,414
Current financial liabilities 501,828 275,019
Current portion of long-term debt 41,486 786,878
Short-term provisions 1,120 991
Income taxes payable 37,400 23,719
------ ------
Total current liabilities 1,939,489 2,474,110
--------- ---------
TOTAL EQUITY AND LIABILITIES 7,649,041 7,126,517
========= =========
GTECH S.P.A. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
For the three months
ended
March 31,
---------
2015 2014
---- ----
(EUR thousands) Unaudited
---------
Cash flows from operating
activities
Income (loss) before income tax
expense (44,129) 138,163
Adjustments for:
Interest expense 81,256 40,597
Tender premium paid in connection
with the early extinguishment of
debt 66,834 -
Depreciation 66,324 61,970
Intangibles amortization 53,649 49,044
Write-off of bridge facility costs 45,279 -
Provisions 919 955
Share-based payment expense 305 1,618
Interest income (556) (794)
Non-cash foreign exchange (gain)
loss, net (10,686) 781
Other non-cash items 8,407 2,251
Cash foreign exchange loss, net 2,144 381
Income tax paid (12,160) (17,946)
------- -------
Cash flows before changes in
operating assets and liabilities 257,586 277,020
Changes in operating assets and
liabilities:
Inventories (15,043) 5,826
Trade and other receivables (29,936) 49,798
Accounts payable (73,300) (117,410)
Other assets and liabilities 18,396 (51,739)
------ -------
Net cash flows from operating
activities 157,703 163,495
------- -------
Cash flows from investing
activities
Purchases of systems, equipment
and other assets related to
contracts (58,787) (40,529)
Purchases of intangible assets (4,437) (3,755)
Purchases of property, plant and
equipment (1,518) (980)
Interest received 1,240 416
Escrow deposit - (21,858)
Other 873 (3,989)
--- ------
Net cash flows used in investing
activities (62,629) (70,695)
------- -------
Cash flows from financing
activities
Principal payments on long-term
debt (704,505) -
Dividends paid (114,746) -
Interest paid (109,190) (108,486)
Tender premium paid in connection
with the early extinguishment of
debt (64,905) -
Debt issuance costs paid (64,863) -
Payments on bridge facility (45,737) -
Net payments on financial
liabilities (21,452) -
Escrow payment related to dividend
on rescission shares (14,850) -
Repayments of short-term
borrowings (9,562) (836)
Dividends paid - non-controlling
interest (566) (32,059)
Proceeds from issuance of long-
term debt 1,034,470 -
Return of capital - non-
controlling interest - (42,145)
Acquisition of non-controlling
interest - (72,328)
Other (431) 4,328
---- -----
Net cash flows used in financing
activities (116,337) (251,526)
-------- --------
Net decrease in cash and cash
equivalents (21,263) (158,726)
Effect of exchange rate changes on
cash 14,699 (4,092)
------ ------
Cash and cash equivalents at the
beginning of the period 261,184 419,118
------- -------
Cash and cash equivalents at the
end of the period 254,620 256,300
======= =======
GTECH S.P.A. AND SUBSIDIARIES
KEY FINANCIAL INDICATOR COMPARISONS
For the three months ended
--------------------------
March 31, Change
--------- ------
(EUR thousands,
except per share
data) 2015 2014 EUR %
---- ---- --- ---
Revenue 807,689 781,253 26,436 3.4
EBITDA 295,598 296,037 (439) (0.1)
Operating income 149,272 180,843 (31,571) (17.5)
Net income (loss)
attributable to
owners of the
parent (26,930) 75,029 (101,959) (135.9)
Diluted earnings
(loss) per share (0.16) 0.43 (0.59) (137.2)
March 31, December 31, Change
2015 2014 EUR %
---- ---- --- ---
Net financial
position 3,158,433 2,585,478 572,955 22.2
Reconciliations of IFRS to Non-IFRS Financial Measures
Operating income 149,272 180,843 (31,571) (17.5)
Depreciation 66,324 61,970 4,354 7.0
Amortization 53,623 49,022 4,601 9.4
Restructuring
costs 13,349 3,033 10,316 >200.0
Unusual expense,
net 10,080 - 10,080 -
Other 2,950 1,169 1,781 152.4
EBITDA 295,598 296,037 (439) (0.1)
======= ======= ==== ====
Operating income 149,272 180,843 (31,571) (17.5)
IGT Acquisition related items:
Transaction costs 10,080 - 10,080 -
Transaction
related
restructuring
costs 10,621 - 10,621 -
Operating income
as adjusted 169,973 180,843 (10,870) (6.0)
======= ======= ======= ====
GTECH S.P.A. AND SUBSIDIARIES
OPERATING SEGMENT RESULTS
For the three months ended
--------------------------
March 31, 2015 March 31, 2014 Change
-------------- -------------- ------
(EUR thousands) Italy Americas International Total Italy Americas International Total Italy Americas International Total
----- -------- ------------- ----- ----- -------- ------------- ----- ----- -------- ------------- -----
Service revenue
Lottery 208,855 192,766 42,821 444,442 200,267 151,521 41,092 392,880 8,588 41,245 1,729 51,562
Lottery Management Services - 33,546 - 33,546 - 31,663 - 31,663 - 1,883 - 1,883
Total Lottery 208,855 226,312 42,821 477,988 200,267 183,184 41,092 424,543 8,588 43,128 1,729 53,445
Machine Gaming 134,219 25,959 5,991 166,169 144,587 17,903 5,691 168,181 (10,368) 8,056 300 (2,012)
Sports Betting 38,745 1,112 1,798 41,655 62,267 547 1,475 64,289 (23,522) 565 323 (22,634)
Commercial Services 29,126 8,947 4,686 42,759 34,167 8,649 4,627 47,443 (5,041) 298 59 (4,684)
Interactive Gaming 18,810 3,205 4,688 26,703 19,211 935 4,743 24,889 (401) 2,270 (55) 1,814
Total service revenue 429,755 265,535 59,984 755,274 460,499 211,218 57,628 729,345 (30,744) 54,317 2,356 25,929
Product sales
Lottery - 10,971 7,406 18,377 - 17,525 3,185 20,710 - (6,554) 4,221 (2,333)
Machine Gaming 636 23,516 8,806 32,958 622 15,628 13,868 30,118 14 7,888 (5,062) 2,840
Sports Betting - - 790 790 - - 910 910 - - (120) (120)
Interactive Gaming - - 129 129 - - 40 40 - - 89 89
Total product sales 636 34,487 17,131 52,254 622 33,153 18,003 51,778 14 1,334 (872) 476
Total segment revenue 430,391 300,022 77,115 807,528 461,121 244,371 75,631 781,123 (30,730) 55,651 1,484 26,405
Purchase accounting 161 130 31
Total revenue 807,689 781,253 26,436
======= ======= ======
Segment operating income 139,626 45,991 12,542 198,159 157,768 30,492 15,330 203,590 (18,142) 15,499 (2,788) (5,431)
Corporate support (1) (34,270) (9,996) (24,274)
Purchase accounting (14,617) (12,751) (1,866)
Operating income 149,272 180,843 (31,571)
======= ======= =======
Segment operating margin 32.4% 15.3% 16.3% 24.5% 34.2% 12.5% 20.3% 26.1%
Operating income margin 18.5% 23.1%
(1) Corporate support expenses are
principally comprised of general
and administrative expenses and
other expenses that are managed at
the corporate level, including
Restructuring, Corporate
Headquarters and Board of
Directors expenses.
GTECH S.P.A. AND SUBSIDIARIES
AMERICAS SEGMENT
The following tables set forth
changes in revenue on a constant
currency basis:
Service Revenue Change
----------------------
For the three months ended March
31, 2015
compared to March 31, 2014
--------------------------
Constant Foreign
(EUR
thousands) Currency Currency Change
-------- -------- ------
Lottery 5,933 35,312 41,245
Machine
Gaming 3,524 4,532 8,056
Interactive
Gaming 2,198 72 2,270
Sports
Betting 475 90 565
Commercial
Services (196) 494 298
Lottery
Management
Services (4,827) 6,710 1,883
7,107 47,210 54,317
===== ====== ======
Service Revenue Change
----------------------
For the three months ended
--------------------------
March 31, Change
--------- ------
(EUR
thousands) 2015 2014 EUR %
---- ---- --- ---
Lottery
Same-
Store
Revenues 140,200 133,637 6,563 4.9
Wins 3,241 - 3,241 -
Gaming &
Other 48,048 45,918 2,130 4.6
Lottery
Management
Services 26,836 31,663 (4,827) (15.2)
Foreign
Exchange
Impact 47,210 - 47,210 -
Total
Service
Revenue 265,535 211,218 54,317 25.7
======= ======= ====== ====
Product Sales Change
--------------------
For the three months ended March
31, 2015
compared to March 31, 2014
--------------------------
Constant Foreign
(EUR thousands) Currency Currency Change
-------- -------- ------
Lottery (8,452) 1,898 (6,554)
Machine Gaming 6,014 1,874 7,888
(2,438) 3,772 1,334
====== ===== =====
GTECH S.P.A. AND SUBSIDIARIES
INTERNATIONAL SEGMENT
The following tables set forth changes in
revenue on a constant currency basis:
Service Revenue Change
----------------------
For the three months ended March
31, 2015
compared to March 31, 2014
--------------------------
Constant Foreign
(EUR thousands) Currency Currency Change
-------- -------- ------
Lottery (1,279) 3,008 1,729
Interactive Games (253) 198 (55)
Commercial
Services (6) 65 59
Sports Betting 163 160 323
Machine Gaming 452 (152) 300
(923) 3,279 2,356
==== ===== =====
Service Revenue Change
----------------------
For the three months ended
--------------------------
March 31, Change
--------- ------
(EUR
thousands) 2015 2014 EUR %
---- ---- --- ---
Lottery Same
Store
Revenue 24,891 22,343 2,548 11.4
Gaming &
Other 31,814 35,285 (3,471) (9.8)
Foreign
Exchange
Impact 3,279 - 3,279 -
Total
Service
Revenue 59,984 57,628 2,356 4.1
====== ====== ===== ===
Product Sales Change
--------------------
For the three months ended March
31, 2015
compared to March 31, 2014
--------------------------
Constant Foreign
(EUR thousands) Currency Currency Change
-------- -------- ------
Machine Gaming (5,191) 129 (5,062)
Sports Betting (220) 100 (120)
Interactive Games 89 - 89
Lottery 3,242 979 4,221
(2,080) 1,208 (872)
====== ===== ====
GTECH S.P.A. AND SUBSIDIARIES
ITALY SEGMENT
For the three months ended
--------------------------
March 31, Change
--------- ------
(EUR thousands) 2015 2014 EUR %
---- ---- --- ---
Service revenue
Lotto 118,929 103,461 15,468 15.0
Instant tickets 89,926 96,806 (6,880) (7.1)
Lottery 208,855 200,267 8,588 4.3
======= ======= ===== ===
Lotto (EUR
millions)
Core wagers 1,712.2 1,509.3 202.9 13.4
Wagers for late
numbers 104.6 59.5 45.1 75.8
----
1,816.8 1,568.8 248.0 15.8
======= ======= ===== ====
Instant Tickets
Total sales (in
millions) EUR 2,302.1 EUR 2,475.9 (EUR 173.8) (7.0)
Total tickets
sold (in
millions) 455.7 500.9 (45.2) (9.0)
Average price
point EUR 5.05 EUR 4.94 EUR 0.11 2.2
Machine Gaming
(EUR millions)
VLT wagers 1,372.5 1,497.1 (124.6) (8.3)
AWP wagers 1,130.6 1,140.5 (9.9) (0.9)
Total wagers 2,503.1 2,637.6 (134.5) (5.1)
======= ======= ====== ====
(Installed at the
end of March)
VLT's installed 10,938 10,675 263 2.5
AWP machines
installed 63,840 69,385 (5,545) (8.0)
Total machines
installed 74,778 80,060 (5,282) (6.6)
====== ====== ====== ====
Sports Betting
(EUR millions)
Fixed odds sports
betting and
other wagers 256.5 251.4 5.1 2.0
Interactive
Gaming (EUR
millions)
Interactive
gaming wagers 473.7 478.6 (4.9) (1.0)
GTECH S.P.A. AND SUBSIDIARIES
NET FINANCIAL POSITION
March 31, December 31,
(EUR thousands) 2015 2014 Change
---- ---- ------
Cash at bank 251,064 256,757 (5,693)
Cash on hand 3,556 4,427 (871)
----- ----- ----
Cash and cash
equivalents 254,620 261,184 (6,564)
Current financial
receivables 40,496 10,386 30,110
Cash exit rights 378,384 - 378,384
Dividends payable 42,519 129,594 (87,075)
Capital Securities - 747,585 (747,585)
Other 122,412 193,613 (71,201)
------- ------- -------
Current financial
debt 543,315 1,070,792 (527,477)
Net current
financial debt 248,199 799,222 (551,023)
Revolving Credit
Facilities 1,046,555 721,938 324,617
Term Loan 795,332 - 795,332
2010 Notes (due
2018) 485,916 484,837 1,079
2012 Notes (due
2020) 473,373 472,229 1,144
Capital Securities 45,320 45,280 40
Other 63,738 61,972 1,766
------ ------ -----
Non current
financial debt 2,910,234 1,786,256 1,123,978
Net financial
position 3,158,433 2,585,478 572,955
========= ========= =======
GTECH S.P.A. AND SUBSIDIARIES
DEBT
March 31, December 31,
(EUR thousands) 2015 2014
---- ----
Long-term debt, less current portion
Revolving Credit
Facilities 1,046,555 721,938
Term Loan 795,332 -
2010 Notes (due 2018) 485,916 484,837
2012 Notes (due 2020) 473,373 472,229
Capital Securities 45,320 45,280
Other 1,458 1,454
----- -----
2,847,954 1,725,738
========= =========
Short-term borrowings
Short-term borrowings 2 8,895
2 8,895
=== =====
Current portion of long-term debt
Senior Notes 31,776 -
2010 Notes (due 2018) 5,337 24,549
2012 Notes (due 2020) 1,692 14,408
Revolving Credit
Facilities 414 189
Capital Securities - 747,585
Other 2,267 147
----- ---
41,486 786,878
====== =======
Total debt 2,889,442 2,521,511
========= =========
GTECH S.P.A. AND SUBSIDIARIES
INTEREST EXPENSE
For the three months
ended
March 31,
---------
(EUR thousands) 2015 2014
---- ----
Senior Notes (32,305) -
Bridge facility (16,690) -
2010 Notes (due 2018) (8,793) (6,932)
Revolving Credit Facilities (8,732) -
2012 Notes (due 2020) (5,980) (4,633)
Capital Securities (4,840) (16,133)
Term Loan (2,428) -
2009 Notes (due 2016) - (9,235)
Facilities - (2,421)
Other (1,488) (1,243)
(81,256) (40,597)
======= =======
OPERATING SEGMENT INFORMATION
Third-party revenue Operating income
------------------- ----------------
For the three months ended March 31,
------------------------------------
(EUR thousands) 2015 2014 2015 2014
---- ---- ---- ----
Operating Segments
Italy 430,391 461,121 139,626 157,768
Americas 300,022 244,371 45,991 30,492
International 77,115 75,631 12,542 15,330
807,528 781,123 198,159 203,590
Corporate support - - (34,270) (9,996)
Purchase accounting 161 130 (14,617) (12,751)
807,689 781,253 149,272 180,843
======= ======= ======= =======
Depreciation Amortization
------------ ------------
For the three months ended March 31,
------------------------------------
(EUR thousands) 2015 2014 2015 2014
---- ---- ---- ----
Operating Segments
Italy 18,772 20,211 37,257 35,962
Americas 37,893 32,474 1,789 1,456
International 5,200 4,270 212 -
61,865 56,955 39,258 37,418
Corporate support 3,595 3,641 451 97
Purchase accounting 864 1,374 13,914 11,507
66,324 61,970 53,623 49,022
====== ====== ====== ======
Legacy IGT Second Quarter Fiscal Year 2015 Results
Second quarter results for Legacy IGT (compared to last year's second quarter)
-- Total revenue decreased 22% to $399 million
-- Adjusted earnings per share decreased to $0.09 from $0.20
-- GAAP earnings per share decreased to ($0.05) from $0.10
-- Social gaming revenue increased 17% to $81 million and average bookings
per daily active user grew 9% to $0.47
-- Returned $27 million to shareholders in the form of dividends
Consolidated Results
--------------------
Second Quarter Six Months
-------------- ----------
Periods Ended March 31, 2015 2014 % 2015 2014 %
Change Change
--- ------ ------
(In millions, except per share
amounts)
GAAP Measures
Revenue $399.4 $512.8 -22% $850.0 $1,054.0 -19%
Operating income (7.2) 72.1 -110% 56.3 175.7 -68%
Net income (loss) (13.1) 25.7 -151% 21.9 105.0 -79%
Earnings (loss) per share $(0.05) $0.10 -150% $0.09 $0.42 -79%
Net operating cash flows $185.6 $(65.2) 385%
Non-GAAP Measures (1)
Adjusted operating income $47.5 $107.5 -56% $133.0 $231.2 -42%
Adjusted net income 23.4 49.4 -53% 71.0 112.4 -37%
Adjusted earnings per share $0.09 $0.20 -55% $0.28 $0.45 -38%
Free cash flow (before
dividends) $135.0 $(111.4) 221%
(1) Adjusted operating income, adjusted net
income, adjusted earnings per share and free
cash flow are non-GAAP financial measures.
Reconciliations between GAAP and non-GAAP
measures are provided at the end of this
release.
-- Revenue decreased 22% to $399 million in the quarter primarily due to
declines in product sales and gaming operations, partially offset by an
increase in interactive revenue.
-- Non-GAAP adjusted financial measures for the quarter excluded $24
million in bad debt provision and $19 million in merger-related costs.
-- Operating cash flow for the first six months increased by $251 million,
primarily due to the prior year investment of $185 million to extend
land-based licensing rights for Wheel of Fortune(®) and Jeopardy!(®)
through 2024, as well as expand rights to include social gaming and
online real-money wagering in the U.S.
Gaming Operations
-----------------
Second Quarter Six Months
-------------- ----------
Periods Ended
March 31, 2015 2014 % 2015 2014 %
Change Change
---
(In millions, unless
otherwise noted)
Revenue $190.7 $230.4 -17% $401.8 $453.4 -11%
Gross profit 116.0 140.4 -17% 247.3 276.6 -11%
Gross margin 61% 61% - pp 62% 61% 1 pp
Installed base ('000) 43.6 53.4 -18% 43.6 53.4 -18%
Yield (average
revenue per unit per
day -$0.00) $47.06 $47.00 - % $46.62 $46.11 1%
-- Revenue decreased 17% to $191 million in the quarter primarily due to
installed base declines.
-- Gross margin for the quarter was consistent with prior-year results.
-- Installed base decreased 18% driven largely by declines in International
lease units converted to sales in the prior year, as well as declines in
North America MegaJackpots(®) most significantly in the standalone
category.
-- Average revenue per unit per day in the quarter was $47.06, slightly
above the prior-year quarter.
Product Sales
-------------
Second Quarter Six Months
-------------- ----------
Periods Ended
March 31, 2015 2014 % 2015 2014 %
Change Change
---
(In millions, unless
otherwise noted)
Revenue $114.6 $202.6 -43% $262.5 $446.2 -41%
Gross profit 44.2 104.0 -58% 115.2 230.9 -50%
Gross margin 39% 51% (12) pp 44% 52% (8) pp
Machine units
recognized ('000) 5.1 7.9 -35% 10.9 20.7 -47%
Machine average sales
price ('000) $12.0 $14.7 -18% $13.0 $13.7 -5%
-- Revenue decreased 43% to $115 million in the quarter, primarily due to
lower new unit sales, as well as lower non-machine sales
-- North America replacement sales increased 400 units to 3,800 units in
the quarter compared to 3,400 units in the prior-year quarter primarily
due to lease units converted to sales.
-- Gross margin decreased to 39% from 51% primarily due to lower
manufacturing productivity and inventory charges associated with reduced
volume.
-- Average machine sales price decreased 18% to $12,000 in the quarter
primarily due to product mix, mostly due to lower-priced lease units
converted to sales.
Interactive
-----------
Second Quarter Six Months
-------------- ----------
Periods Ended March 31, 2015 2014 % 2015 2014 %
Change Change
--- ------ ------
(In millions, unless
otherwise noted)
Revenue $94.1 $79.8 18% $185.7 $154.4 20%
Social gaming 80.6 68.8 17% 160.0 133.6 20%
IGTi 13.5 11.0 23% 25.7 20.8 24%
Gross Margin 63% 61% 2 pp 62% 62% - pp
DoubleDown average user
statistics (1)
DAU (Daily active users)
('000) 1,929 1,775 9% 1,919 1,745 10%
MAU (Monthly active users)
('000) 4,734 6,218 -24% 4,973 6,208 -20%
Bookings per DAU ($0.00) $0.47 $0.43 9% $0.45 $0.42 6%
(1) as a single application with
multiple games, active users
equal unique users
-- Social gaming revenue increased 17% to $81 million compared to the prior
year quarter, driven by increases in both average DAU and bookings per
DAU. Mobile revenue comprised 41% of total bookings in the quarter and
increased 52% compared to the prior year quarter.
-- Average DAU were 1.9 million, an increase of 9% over the prior year
quarter due to improved content and enhanced player retention and
engagement strategies.
-- Average MAU were 4.7 million, a decrease of 24% compared to the prior
year quarter, primarily due to increased marketing efforts to procure
higher-quality players.
-- Average bookings per DAU in the first quarter were $0.47, an increase of
9% over the same quarter last year.
Operating Expenses
------------------
Second Quarter Six Months
-------------- ----------
Periods Ended March 31, 2015 2014 % 2015 2014 %
Change Change
--- ------ ------
(In millions)
Selling, general &
administrative $101.4 $116.7 -13% $206.4 $229.2 -10%
Bad debt provision 27.1 7.4 266% 30.5 12.9 136%
Research & development 59.5 58.5 2% 116.9 118.8 -2%
Depreciation &
amortization 13.2 16.6 -20% 26.9 33.2 -19%
Contingent acquisition-
related costs 0.4 3.7 -89% 2.9 15.0 -81%
Impairment,
restructuring, and
merger-related costs 25.0 17.8 * 37.9 17.8 *
---- ---- --- ---- ---- ---
Total operating expenses $226.6 $220.7 3% $421.5 $426.9 -1%
====== ====== === ====== ====== ===
Adjusted Operating
Expenses (1) $174.7 $188.0 -7% $351.1 $377.4 -7%
(1) Adjusted operating expenses is a non-
GAAP financial measure. Reconciliations
between GAAP and non-GAAP measures are
provided at the end of this release.
-- GAAP operating expenses increased 3% to $227 million, primarily due to
an increase of $20 million in bad debt provision and an increase of $7
million in impairment, restructuring, and merger-related costs.
-- Adjusted operating expenses decreased 7% to $175 million, in part due to
cost savings initiatives resulting from the March 2014 business
realignment.
Balance Sheet and Capital Deployment
------------------------------------
(In
millions) March 31, 2015 September 30, 2014 % Change
-------------- ------------------ --------
Cash
and
equivalents
(including
restricted
amounts) $296.7 $314.4 -6%
Working
capital 669.4 676.3 -1%
Contractual
debt
obligations 1,750.0 1,825.0 -4%
-- Contractual debt obligations totaled $1.75 billion as of March 31, 2015.
-- Outstanding borrowings under the company's revolving credit facility
were $450 million as of March 31, 2015.
-- The company returned $27 million to its shareholders in the form of
dividends during the quarter.
Other
References to per share amounts in this release are based on diluted shares of common stock, unless otherwise specified.
CONSOLIDATED STATEMENTS OF INCOME (Unaudited and Condensed)
Second Quarter Six Months
-------------- ----------
Periods Ended March 31, 2015 2014 2015 2014
----------------------- ---- ---- ---- ----
(In millions, except per share amounts)
REVENUES
Gaming operations $190.7 $230.4 $401.8 $453.4
Product sales 114.6 202.6 262.5 446.2
Interactive 94.1 79.8 185.7 154.4
---- ---- ----- -----
Total 399.4 512.8 850.0 1,054.0
COSTS AND OPERATING
EXPENSES
Cost of gaming
operations 74.7 90.0 154.5 176.8
Cost of product sales 70.4 98.6 147.3 215.3
Cost of interactive 34.9 31.4 70.4 59.3
Selling, general and
administrative 101.4 116.7 206.4 229.2
Bad debt provision 27.1 7.4 30.5 12.9
Research and
development 59.5 58.5 116.9 118.8
Depreciation and
amortization 13.2 16.6 26.9 33.2
Contingent acquisition-
related costs 0.4 3.7 2.9 15.0
Impairment,
restructuring, and
merger-related costs 25.0 17.8 37.9 17.8
---- ---- ---- ----
Total 406.6 440.7 793.7 878.3
OPERATING INCOME (LOSS) (7.2) 72.1 56.3 175.7
---- ---- ---- -----
OTHER INCOME (EXPENSE)
Interest income 7.6 10.7 16.9 20.9
Interest expense (20.1) (36.9) (41.3) (73.3)
Other 2.5 (3.4) 2.6 (5.3)
--- ---- --- ----
Total (10.0) (29.6) (21.8) (57.7)
INCOME (LOSS) BEFORE
TAX (17.2) 42.5 34.5 118.0
Income tax provision
(benefit) (4.1) 16.8 12.6 13.0
---- ---- ---- ----
NET INCOME (LOSS) $(13.1) $25.7 $21.9 $105.0
====== ===== ===== ======
EARNINGS (LOSS) PER
SHARE
Basic $(0.05) $0.10 $0.09 $0.42
Diluted $(0.05) $0.10 $0.09 $0.42
WEIGHTED AVERAGE SHARES
OUTSTANDING
Basic 248.8 247.7 248.2 250.2
Diluted 250.2 248.6 250.1 251.9
CONSOLIDATED BALANCE SHEET (Unaudited and Condensed)
March 31, September 30,
2015 2014
---- ----
(In millions)
ASSETS
Cash and
equivalents $240.0 $255.1
Restricted cash
and investment
securities 56.7 59.3
Jackpot annuity
investments 50.6 53.0
Receivables, net 388.8 530.2
Inventories 86.2 71.4
Other assets and
deferred costs 260.3 252.1
----- -----
Total current
assets 1,082.6 1,221.1
Property, plant
and equipment,
net 391.8 412.7
Jackpot annuity
investments 226.3 236.7
Contracts and
notes
receivable, net 70.7 115.5
Goodwill and
other intangible
assets, net 1,505.9 1,542.5
Other assets and
deferred costs 461.5 461.0
----- -----
TOTAL ASSETS $3,738.8 $3,989.5
======== ========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Accounts payable $75.8 $77.7
Jackpot
liabilities,
current portion 104.7 117.5
Dividends payable - 27.2
Other accrued
liabilities 232.7 322.4
----- -----
Total current
liabilities 413.2 544.8
Long-term debt 1,818.8 1,878.6
Jackpot
liabilities 251.4 261.6
Other liabilities 109.0 106.9
----- -----
TOTAL LIABILITIES 2,592.4 2,791.9
TOTAL EQUITY 1,146.4 1,197.6
------- -------
TOTAL LIABILITIES
AND
SHAREHOLDERS'
EQUITY $3,738.8 $3,989.5
======== ========
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited and Condensed)
Six Months Ended March 31, 2015 2014
-------------------------- ---- ----
(In millions)
OPERATING
Net income $21.9 $105.0
Adjustments:
Depreciation and amortization 76.9 99.4
Acquisition-related
contingent earn-out costs 2.4 6.6
Bad debt provision 30.5 12.9
Other non-cash items 31.8 51.9
Changes in operating assets
and liabilities, excluding
acquisitions:
Receivables 134.3 15.5
Inventories (25.6) 13.4
Accounts payable and accrued
liabilities (57.8) (50.2)
Jackpot liabilities (29.9) (32.9)
Income taxes, net of employee
stock plans 0.4 (50.4)
Other assets and deferred
costs 0.7 (236.4)
--- ------
Net operating cash flows 185.6 (65.2)
----- -----
INVESTING
Capital expenditures (50.6) (46.2)
Proceeds from assets sold 18.8 7.8
Investment securities, net - 13.9
Jackpot annuity investments,
net 20.1 25.0
Changes in restricted cash 2.4 5.6
Loans receivable, net - 14.9
--- ----
Net investing cash flows (9.3) 21.0
---- ----
FINANCING
Debt-related proceeds
(payments), net (75.0) (0.6)
Employee stock plan proceeds 10.5 12.0
Share repurchases, including
net shares (8.3) (211.3)
Dividends paid (81.9) (53.4)
Acquisition-related
contingent consideration (27.9) (56.1)
----- -----
Net financing cash flows (182.6) (309.4)
------ ------
FOREIGN EXCHANGE RATES EFFECT
ON CASH AND EQUIVALENTS (8.8) (3.9)
---- ----
NET CHANGE IN CASH AND
EQUIVALENTS (15.1) (357.5)
BEGINNING CASH AND
EQUIVALENTS 255.1 713.3
----- -----
ENDING CASH AND EQUIVALENTS $240.0 $355.8
====== ======
SUPPLEMENTAL DATA (Unaudited)
REVENUE METRICS Second Quarter Six Months
-------------- ----------
Periods Ended March 31, 2015 2014 2015 2014
----------------------- ---- ---- ---- ----
(In millions, unless otherwise noted)
GAMING OPERATIONS
Revenues $190.7 $230.4 $401.8 $453.4
North America 169.7 200.1 357.7 391.7
International 21.0 30.3 44.1 61.7
Gross margin 61% 61% 62% 61%
North America 60% 58% 61% 59%
International 69% 78% 68% 75%
Installed base (units '000) 43.6 53.4 43.6 53.4
North America 34.8 40.4 34.8 40.4
International 8.8 13.0 8.8 13.0
Yield (average revenue per
unit per day -$0.00) $47.06 $47.00 $46.62 $46.11
PRODUCT SALES
Revenues $114.6 $202.6 $262.5 $446.2
North America 77.5 143.8 171.6 313.8
International 37.1 58.8 90.9 132.4
Machines $61.3 $116.0 $141.3 $282.9
North America 42.6 79.1 94.3 197.2
International 18.7 36.9 47.0 85.7
Non-machine $53.3 $86.6 $121.2 $163.3
North America 34.9 64.7 77.3 116.6
International 18.4 21.9 43.9 46.7
Gross margin 39% 51% 44% 52%
North America 43% 56% 47% 54%
International 30% 40% 39% 46%
Machine units recognized
('000) 5.1 7.9 10.9 20.7
North America 4.0 5.7 7.9 15.3
International 1.1 2.2 3.0 5.4
Machine units shipped
('000) [includes units
where revenues deferred] 5.1 7.6 11.0 20.6
North America 4.0 5.5 8.2 15.3
New 0.2 2.1 0.9 5.8
Replacement 3.8 3.4 7.3 9.5
International 1.1 2.1 2.8 5.3
New 0.3 0.6 0.8 1.2
Replacement 0.8 1.5 2.0 4.1
Machine ASP ('000) $12.0 $14.7 $13.0 $13.7
North America 10.6 13.9 12.0 12.9
International 17.1 16.6 15.8 15.9
INTERACTIVE
Revenues $94.1 $79.8 $185.7 $154.4
North America 82.9 70.3 164.4 136.1
International 11.2 9.5 21.3 18.3
Social Gaming 80.6 68.8 160.0 133.6
North America 80.6 68.8 160.0 133.6
IGTi 13.5 11.0 25.7 20.8
North America 2.3 1.5 4.4 2.5
International 11.2 9.5 21.3 18.3
Gross margin 63% 61% 62% 62%
North America 62% 62% 62% 62%
International 67% 51% 66% 58%
DoubleDown average user statistics [as a single application with multiple games, active users equal unique users]
DAU (daily active users)
('000) 1,929 1,775 1,919 1,745
MAU (monthly active users)
('000) 4,734 6,218 4,973 6,208
Bookings per DAU ($0.00) $0.47 $0.43 $0.45 $0.42
Reconciliations of GAAP to Non-GAAP Adjusted Financial Measures
(in millions, except EPS)
Second Quarter Ended March
31, 2015 Cost of Cost of Cost of Operating Operating Net Diluted
Gaming Product Interactive Expenses Income Earnings EPS
Operations Sales (loss) (loss) (a)
--- ---------- ----- ----- ---------
GAAP measures $74.7 $70.4 $34.9 $226.6 $(7.2) $(13.1) $(0.05)
% of revenue 57% -2%
Acquisition-related
charges: (b)
Contingent retention & earn-
out - - - (0.4) 0.4 0.2 -
Amortization of intangibles - (0.1) (2.4) (2.2) 4.7 3.2 0.01
Bad debt provision - - - (24.3) 24.3 16.2 0.06
Alabama note impairment - - - (6.1) 6.1 4.1 0.02
Merger-related costs - - - (18.9) 18.9 12.6 0.05
Severance (0.3) - - - 0.3 0.2 -
---- --- --- --- --- --- ---
Total non-GAAP adjustments (0.3) (0.1) (2.4) (51.9) 54.7 36.5 0.14
Adjusted measures $74.4 $70.3 $32.5 $174.7 $47.5 $23.4 $0.09
% of revenue 44% 12%
(a) Adjustments tax effected at
33%; (b) Primarily DoubleDown
Second Quarter Ended March
31, 2014 Cost of Cost of Cost of Operating Operating Net Diluted
Gaming Product Interactive Expenses Income Earnings EPS
Operations Sales (a)
--- ---------- ----- ---
GAAP measures $90.0 $98.6 $31.4 $220.7 $72.1 $25.7 $0.10
% of revenue 43% 14%
Acquisition-related
charges: (b)
Contingent retention & earn-
out - - - (3.7) 3.7 2.5 0.01
Amortization of intangibles - - (2.7) (3.4) 6.1 4.1 0.02
Business realignment - - - (16.5) 16.5 11.0 0.05
Alabama note impairment - - - (1.3) 1.3 0.9 -
Legal settlement/accrual - - - (7.8) 7.8 5.2 0.02
--- --- --- ---- --- --- ----
Total non-GAAP adjustments - - (2.7) (32.7) 35.4 23.7 0.10
Adjusted measures $90.0 $98.6 $28.7 $188.0 $107.5 $49.4 $0.20
% of revenue 37% 21%
(a) Adjustments tax effected at
33%; (b) Primarily DoubleDown
Six Months Ended
March 31, 2015 Cost of Cost of Cost of Operating Operating Net Diluted
Gaming Product Interactive Expenses Income Earnings EPS
Operations Sales (a)
--- ---------- ----- ---
GAAP measures $154.5 $147.3 $70.4 $421.5 $56.3 $21.9 $0.09
% of revenue 50% 7%
Acquisition-related
charges: (b)
Contingent retention
& earn-out - - - (2.9) 2.9 1.9 0.01
Amortization of
intangibles - (0.2) (4.9) (4.4) 9.5 6.3 0.02
Bad debt provision - - - (24.3) 24.3 16.2 0.06
Alabama note
impairment - - - (5.1) 5.1 3.4 0.01
Merger-related costs - - - (32.8) 32.8 21.8 0.09
Severance (1.2) - - (0.9) 2.1 1.4 0.01
Certain discrete tax
items (benefits) - - - - - (1.9) (0.01)
--- --- --- --- --- ---- -----
Total non-GAAP
adjustments (1.2) (0.2) (4.9) (70.4) 76.7 49.1 0.19
Adjusted measures $153.3 $147.1 $65.5 $351.1 $133.0 $71.0 $0.28
% of revenue 41% 16%
(a) Adjustments tax effected at
33%; (b) Primarily DoubleDown
Six Months Ended March 31,
2014 Cost of Cost of Cost of Operating Operating Net Diluted
Gaming Product Interactive Expenses Income Earnings EPS
Operations Sales (a)
--- ---------- ----- ---
GAAP measures $176.8 $215.3 $59.3 $426.9 $175.7 $105.0 $0.42
% of revenue 41% 17%
Acquisition-related
charges: (b)
Contingent retention & earn-
out - - - (15.0) 15.0 10.0 0.04
Amortization of intangibles - - (5.4) (6.8) 12.2 8.1 0.03
Business realignment - - - (16.5) 16.5 11.0 0.05
Alabama note impairment - - - (1.3) 1.3 0.9 -
Legal settlement/accrual - - - (7.8) 7.8 5.2 0.02
Severance (0.6) - - (2.1) 2.7 1.8 0.01
Certain discrete tax items
(benefits) - - - - - (29.6) (0.12)
--- --- --- --- --- ----- -----
Total non-GAAP adjustments (0.6) - (5.4) (49.5) 55.5 7.4 0.03
Adjusted measures $176.2 $215.3 $53.9 $377.4 $231.2 $112.4 $0.45
% of revenue 36% 22%
(a) Adjustments tax effected at
33%; (b) Primarily DoubleDown
Second Quarter Six Months
-------------- ----------
Adjusted EBITDA
For The Second
Quarters Ended
March 31, 2015 2014 2015 2014
--------------- ---- ---- ---- ----
GAAP Net income
(loss) $(13.1) $25.7 $21.9 $105.0
Other (income)
expense, net 10.0 29.6 21.8 57.7
Income tax
provision
(benefit) (4.1) 16.8 12.6 13.0
Depreciation and
amortization 38.6 48.1 76.9 99.4
Other charges:
Share-based
compensation 6.0 7.6 14.7 16.5
Contingent
acquisition-
related costs 0.4 3.7 2.9 15.0
Impairment,
restructuring,
and merger-
related costs 25.0 17.8 37.9 17.8
---- ---- ---- ----
Adjusted EBITDA $62.8 $149.3 $188.7 $324.4
===== ====== ====== ======
Free Cash Flow For The Six Months
Ended March 31, 2015 2014
--------------------------------- ---- ----
GAAP net operating cash flows $185.6 $(65.2)
Investment in property, plant and
equipment (15.2) (11.8)
Investment in gaming operations
equipment (35.3) (31.6)
Investment in intellectual property (0.1) (2.8)
---- ----
Free Cash Flow (before dividends) 135.0 (111.4)
Dividends paid (81.9) (53.4)
----- -----
Free Cash Flow (after dividends) $53.1 $(164.8)
===== =======
Non-GAAP Financial Information
Legacy IGT believed that certain
non-GAAP financial measures, when
presented in conjunction with
comparable GAAP measures, were
useful because that information was
an appropriate measure for
evaluating its operating
performance. Non-GAAP information
was 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.
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SOURCE International Game Technology PLC
