IGT posts record net for year

Tuesday, Nov. 3, 1998 | 11:25 a.m.

International Game Technology said higher prices and the sale of new slot machines to Bellagio helped boost fourth-quarter and fiscal 1998 profits to record levels.

The Reno company today said net income for the fourth quarter, ended Sept. 30, rose to $41.7 million, or 37 cents per share, from $41.4 million, or 36 cents a share, in the fiscal 1997 final quarter. Revenue rose to $254 million from $226.4 million, the company said.

For the full year, net income rose to $152.4 million, or $1.33 a share, from $137.2 million, or $1.13 a share, in fiscal 1997. Revenue climbed to $824.1 million from $744 million, IGT said.

Full-year machine sales slipped to 77,000 from 79,300 in fiscal 1997 because of fewer new casino openings and expansions, IGT said. But demand for newer, more expensive platforms such as IGT's Vision, Game King and S-Plus Limited machines helped boost revenue.

IGT said such new products accounted for 43 percent of the total units sold in 1998, up from 10 percent a year earlier.

The fourth-quarter 1998 shipment of 2,100 machines to Mirage Resorts Inc.'s Bellagio helped raise total sales for the period to 27,700 machines from last year's 25,100.

IGT's latest results also benefited from the acquisition of British game maker Barcrest, which shipped 13,000 units and helped boost international sales to 39 percent of total product revenue.

IGT said the gross profit margin on product sales slipped to 41 percent for fiscal 1998 from 44 percent in 1997, reflecting a higher percentage of new platform units and increased international sales, both of which carry lower margins than domestic gaming machines.

Full-year gaming operations revenue increased 23 percent to $347.1 million in 1998 from $282.8 million, aided by the popular Wheel of Fortune systems and strong play on Nevada Megabucks. The total installed base of machines operating on the company's MegaJackpot systems increased to 13,900 from 11,700 during the fiscal year.

The gross profit margin on gaming operations rose to 54 percent in 1998 from 49 percent due to profits from joint ventures. But declining interest rates for the year and, most significantly, the fourth quarter, resulted in higher costs for the interest-sensitive assets IGT buys to fund jackpot payments. IGT said it expects declining interest rates will continue to increase costs of operations into fiscal 1999.

IGT also said it repurchased 5.5 million shares of its outstanding common stock during fiscal 1998 for $122.2 million. Since Sept. 30, it has bought another 920,000 shares for $16.1 million. Its directors have approved the buy-back of up to 22.4 million additional shares. The company has about 115 million shares outstanding.