International Game Technology today announced operating results for the third quarter ended June 30, 2008. Net income for the quarter was US$108.3 million or US$0.35 per diluted share versus US$136.4 million or US$0.41 per diluted share in the same quarter last year. For the nine-month period ended June 30, 2008, net income was US$290.5 million or US$0.92 per diluted share compared to US$385.6 million or US$1.14 per diluted share in the same period last year. The company states that comparability for the year-to-date periods is affected by a number of significant items.

"Although the market environment continues to be impacted by unfavorable economic conditions, IGT delivered strong revenues and gross profits during the third quarter," said Chairman and CEO TJ Matthews. "We furthered our server-based gaming initiatives with the release of several new models on our Advanced Video Platform (AVP(R)) and the completion of the strategic acquisition of Million-2-1 in the third quarter, as well as closing the acquisition of substantially all of the assets of Cyberview Technology, Inc. in July. In addition, we have repurchased 14.6 million shares of IGT stock since April 18, 2008."

Third quarter revenues and gross profit from gaming operations were US$333.6 million and US$202.1 million, respectively, compared to US$341.9 million and US$210.6 million for the same quarter last year. For the nine months ended June 30, 2008, revenues and gross profit from gaming operations totalled US$1.0 billion and US$585.4 million, respectively, compared to US$1.0 billion and US$608.3 million in the same prior year period.

For the current quarter and year-to-date, gross margins on gaming operations were 61% and 58%, respectively, compared to 62% and 60% in the prior year. Gross profit and margins in the current year-to-date period were impacted by significant interest rate reductions that increased jackpot-related expense and technical obsolescence charges for fixed assets related to our transition to new game cabinets and platforms. In the prior year-to-date period, gross profit and margins were favourably impacted by a gain from the Gulf Coast hurricane property damage portion of the insurance proceeds that totalled US$5.0 million before tax.

As of June 30, 2008, gaming operations installed base totalled 59,200, an increase of 1,000 units from the prior year quarter and 500 units from the immediately preceding quarter. Sequential and year-over-year growth was primarily the result of expansion in international lease operations markets. Worldwide product sales revenues generated third quarter gross profit of US$185.6 million compared to US$186.0 million in the prior year. Non-machine revenues (comprised of gaming systems, parts, conversions and other fees) totalled US$115.3 million or 34% of total product sales versus US$91.6 million or 25% in the comparable prior year quarter.

Although domestic shipments continued to be affected by the lower levels of North America replacement demand, shipments to new or expanded casinos improved 2,200 units compared to the prior year quarter. Internationally, fewer shipments, primarily into Japan and the UK, were partially offset by strong shipments into Latin America. Gross margin improvements for both the quarter and year-to-date periods are primarily due to fewer machine shipments into the lower margin Japan and UK markets combined with a stronger mix of non-machine sales. (E-07.17.08)

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