IGT 4Q profits improve

Nov 15, 2005 4:15 AM

International Game Technology Inc. (IGT), the Reno, Nev., company that leads the world in the manufacture and distribution of gaming machines, recaptured some of the respect of investors that had been lost in recent months with a positive earnings report for the fourth fiscal quarter of 2005 that ended on Sept. 30.

Income from continuing operations during the period totaled $105.4 million or $0.30 per share compared to $54.3 million of $0.15 in the prior year.

For the full year 2005, the company had income from continuing operations of $436.5 million or $1.20 per diluted share compared to $429.8 million or $1.17 per share.

And the improvements came despite a substantial decline in domestic product sales. However, this was more than offset by a nearly doubling of sales in international markets. The fourth quarter also was negatively impacted by the closure of Gulf Coast area casinos caused by the hurricanes.

"Although the company faced difficult domestic marketplace conditions, TJ Matthews, chairman and CEO explained, "IGT delivered meaningful accomplishments this year" including generating record cash flow and returning $520.6 million to shareholders in the form of share repurchases and dividends.

On a positive note, Matthews said the company had increased its installed base of recurring revenue machines by 1,600 units to a total of 38,800 units. The growth, he explained, came from placements in casino operations in Alabama, California, Florida and Washington.

Magna Entertainment

Benefiting from asset sales and cost reductions, Magna Entertainment Corp. (MECA) reported a smaller net loss for the third quarter of fiscal 2005 than was reported in the comparable quarter a year earlier.

The net loss totaled $34.5 million or $0.32 per share compared to last year’s loss of $50.3 million or $0.47 per share.

The company hopes to improve its balance sheet with additional asset sales over the next few quarters. These include the sale of 157 acres of excess real estate located in Palm Beach County, Fla., to Toll Bros., Inc., homebuilders for $51 million. Also, the company has an agreement with Millennium Gaming’s Bill Paulos and Bill Wortman and their partners, Los Angeles-based Oaktree Capital, to sell The Meadows harness track in Pennsylvania, provided the track is granted a slots license. The sale will be for $225 million.

During the last quarter, revenues dropped 17% to $59.4 million from $71.6 million in 2004 while non-wagering revenue fell about 6% to $16.8 million.

Some analysts such as Alan Woinski, publisher of The Gaming Industry Weekly Report, have noted that as the owner of about 12 racetracks in North America, Magna Entertainment controls real estate whose value has never been realized in the company’s share price.

WMS Industries

WMS Industries Inc. (WMS), a leading manufacturer of slot machines, reported an improved first quarter of fiscal 2006 that ended on Sept. 30 but saw its stock price hammered because of fiscal year guidance that fell below analysts estimates.

For the quarter, the company reported net income of $6.1 million of $0.18 per share compared to $2.4 million or $0.08 a year ago. Expense related to Gulf Coast hurricane damage was estimated at about $0.05 per diluted share.

Total revenues increased 39% or $29.3 million to $104.4 million. A year earlier, the revenues totaled $75 million. New units sold in the quarter included 4,741 new Bluebird gaming devices; 464 premium-priced dual screen units and 50 new legacy units.

Guidance for fiscal 2006 included the impact of the hurricanes, the company said, placing full year revenue at a level between $460 million and $480 million.

Scientific Games

Including "unusual charges," Scientific Games Corporation (SGMS) reported earnings per share of $0.21 for the third quarter compared to $0.24 per share in the comparable period. However, without the charges, the company said, earnings per share would have been $0.27 based on net income of $24.9 million.

For the nine months ending on Sept. 30, revenues increased 7% to $578.8 million while net income was up $6 to $65 million.

The company said it was awarded seven contracts for online or instant ticket services from the country’s four newest lottery states, South Carolina, Tennessee, North Dakota and Oklahoma.

The company also noted it had received two service contracts in Germany and a new online contract in Maryland.