IGT reports $40.5 million loss

Gary Thompson

Thursday, Nov. 11, 1999 | 10:56 a.m.

Troubles abroad and slumping slot machine sales in the United States led to a $40.5 million fourth-quarter loss for Reno-based gaming-equipment maker International Game Technology.

The company announced today the loss for the quarter ended Oct. 2 included a one-time charge of $98.1 million related primarily to restructuring of its Australian game-making operations.

But IGT also noted that product sales had declined during the quarter to $132.8 million from $159.2 million in the fiscal 1998 fourth period. Its participation-game revenue rose marginally, to $95.4 million from $94.9 million.

Other game makers have reported sharp gains in both machine sales and revenue from participation games, indicating IGT, the gaming industry's dominant equipment maker, is losing market share to its competitors in both areas.

WMS Industries Inc., for example, said recently its first-quarter product sales had doubled and participation-game revenue increased nearly eightfold from year-ago numbers.

Despite the bad news, IGT's stock was up 6.25 cents a share, to $19.8125, in late-morning trading.

The company said the write-off of intangible assets related to its acquisition of Olympic Amusements in Australia and expenses associated with the planned restructuring of that operation accounted for $92.9 million of the one-time charges that impact the fourth quarter.

IGT said the restructuring calls for it to narrow Olympic's product lines and use the parent company's Reno manufacturing plant to reduce product costs.

IGT also wrote off $5.2 million due to changes in Brazilian laws that may affect its ability to recover machines and collect debts there. Brazil has rescinded a law allowing gaming machines in bingo halls.

IGT's overall revenue fell to $228.2 million in the fiscal 1999 fourth quarter from $254 million in fiscal 1998. A year ago, the company posted fourth-quarter net income of $41.7 million, or 37 cents a share.

For all fiscal 1999, IGT's net fell to $62.1 million, or 62 cents a share, from $152.4 million, or $1.33 a share. The 1999 results include a $3.3 million charge for early redemption of debt.

Fiscal 1999 revenue rose to $929.7 million from $824.1 million, IGT said. Full-year product sales rose 21 percent to $576.6 million, due largely to growth in sales abroad, particularly in Japan and Europe. International shipments rose to 65 percent of total machines from 51 percent in fiscal 1998, IGT said.

The company also said it had repurchased 21.8 million shares of its stock during fiscal 1999 for $361.4 million, including 3.4 million shares bought during the fourth quarter for $60.9 million. IGT had 89.8 million shares outstanding on Oct. 2.

Since then, IGT said, it has purchased an additional 800,000 shares for $14.4 million. Company directors voted in October to expanding the existing share repurchase authorization another 25 million shares. As of Nov. 9, the authorization stood at 25.7 million shares.