Despite challenging economic headwinds, International Game Technology executives said Tuesday the company is positioning itself for a strong rebound once the global recession recedes and consumer confidence lures customers back to casino gambling.
"Last year was a very challenging year by a number of metrics," Pat Cavanaugh, IGT chief financial officer, told shareholders at IGT's annual meeting at its Reno headquarters.
Operating income, net income and operating cash flow all declined by double-digit percentages in 2008 because of the economy, interest rate declines and a tight credit market, Cavanaugh said.
To help weather the storm, the world's largest maker of slot machines and other gambling devices also announced on Tuesday it was slashing its regular quarterly dividend nearly 60 percent, to 6 cents from 14.5 cents. Officials said the reduced dividend will save about $100 million in cash annually.
"Cash is king in this environment," Cavanaugh said. "Credit markets are closed to a lot of borrowers."
IGT shares closed Tuesday at $8.48, up 45 cents or 5.6 percent. The stock has traded in a 52-week range of $7.03 to $47.48.
The gambling industry has been hard hit by the global recession as gamblers hold on to discretionary dollars for essentials.
Since November, IGT has laid off about 700 employees, a little more than 10 percent of its global work force that totals roughly 5,000.
For the 2008 fiscal year that ended Oct. 30, IGT income fell to $1.10 per share on revenue of $342.5 million, down from $1.51 on $508.2 in revenue in 2007.
"We had a disappointing year as a collective group," IGT Chairman and Chief Executive TJ Matthews told shareholders.
But Matthews said he prefers to look ahead.
"We will be a much more efficient organization," he said.
Matthews said technology will fuel a new generation of casino games and management operations.
The company has been investing in server-based gambling that integrates player machines and management tools.
To that end, he said the $8.6 billion CityCenter project on the Las Vegas Strip will be the first to use technology floor-wide when it opens later this year.
"It will fundamentally change how casino floors do business," Matthews said.
To capitalize, Matthews said IGT is integrating its approach to research and development to be more adaptable to casino needs and competitor products.
"The underlying change is us really working to push our development into third-party environments," he said. He said the applications "are more than just new games."
The goal, he said, is to provide services "to help casinos themselves improve their operations" and "make sure our intellectual property is adopted by others."
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