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International Game Technology (IGT)

Q1 2011 Earnings Call

January 20, 2011 5:00 pm ET


Matt Moyer - Vice President of Investor Relations

Eric Tom - Chief Operating Officer

Patti Hart - Chief Executive Officer, President, Lead Independent Director and Member of Stock Award Committee

Patrick Cavanaugh - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer


Carlo Santarelli - Wells Fargo Securities, LLC

David Katz - Jefferies & Company, Inc.

Mark Strawn - Morgan Stanley

Cameron McKnight - Buckingham Research Group, Inc.

Chris Woronka - Deutsche Bank AG

Joseph Greff - JP Morgan Chase & Co

Steven Kent - Goldman Sachs Group Inc.

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Steven Wieczynski - Stifel, Nicolaus & Co., Inc.

Robin Farley - UBS Investment Bank



Welcome, and thank you for standing by. [Operator Instructions] I'd now like to turn the conference over to Mr. Matt Moyer, VP of IR. You may begin.

Matt Moyer

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Good afternoon, and welcome to IGT's First Fiscal Quarter 2011 Earnings Conference Call. On the call with me today is Patti Hart, President and CEO; Pat Cavanaugh, CFO; and Eric Tom, COO.

Before beginning, we'd like to remind listeners our discussion reflects management's views based on the business environment as of today, January 20, 2011, and will include forward-looking statements, including forecast of future performance and estimates of amounts not yet determinable, the potential for growth of existing and the opening of new jurisdictions for our products, play levels for our installed base of recurring revenue gains, as well as our future prospects and proposed new products, services, developments or business strategies.

We do not intend and undertake no obligation to update our forward-looking statements to reflect future events or circumstances. Actual results may differ materially. Additional information about factors which could potentially impact our financial results is included in today's press release and our filings with the SEC, including our most recent annual report on Form 10-K.

During this call, we may discuss certain non-GAAP financial measures, including but not limited to; EPS from continuing ops, income from continuing operations, adjusted EBITDA and free cash flow. In our press release, which is posted on the Investor Relations section of our website,, you will find additional disclosures regarding these non-GAAP measures. You will also find supplemental materials regarding our guidance for adjusted EPS from continuing operations and its reconciliation to GAAP posted under the Events tab on the Investor Relations section of our website.

With all that in mind, I'll now turn the call over to Patti.

Patti Hart

Thanks, Matt, and good afternoon, everyone. I would characterize our fiscal first quarter as a reflection of the remarkable improvement we have made in our profitability and in our internal processes. I would also characterize this quarter as quiet, no big surprises, not a lot of negative noise and a clear indication that we are headed in the right direction.

While the top line continues to reflect the sluggish market, we continue to make progress towards our objective of delivering more meaningful revenue growth and healthier game operation deals in the future. In the current global economic environment, it is absolutely the right decision to be customer-minded and incorporate feedback from the market into our business plans. We need to ensure that we are doing the right things in the most efficient manner in every part of our business. We have improved internal processes and positioned ourselves to capture increased earnings and cash flows when customer demand returns.

Additionally, we have worked to put our cost structure and balance sheet into the best shape possible. Our products are much improved, and they are delivering the excitement that players expect. We are poised to capture the exciting opportunities in front of us, and we are confident in our ability to further demonstrate our position as an industry leader.

We clearly exhibited the potential of our product development process at G2E with our incredible lineup of new products. It's very rewarding to see the fruits of our labors. The recent opening of the Troia Casino in Lisbon, Portugal, where we captured 70% of the floor and the Cosmopolitan of Las Vegas, where we deployed 50% of the machines on the floor, showcase our unique ability to serve all aspects of the next-generation casino. In both cases, our server-based systems, combined with our games, allow us to help our partners differentiate themselves with the market-leading slot floor.

We have also seen incredible levels of server-based adoption in the high-limit area of slot floors across the country. The order volume for our server-based Tier 1 installs has never been better. We have always believed that sbX was going to be a best-in-class solution and now, our customers can adopt it much more quickly and inexpensively.

Following G2E, we deployed our American Idol and Wheel of Fortune Triple Spin games on our new Center Stage platforms. Both new games are performing much better than floor averages and above our lofty expectations. We have quickly established this platform as a much-needed fixture on slot floors across the country, and we are readying a spectacular lineup of games to further strengthen this format.

Our Center Stage platform is upgradable, with minimal capital costs and limited downtime, improving returns for both our customers and our shareholders. Our 30-day exclusive with MGM Properties on our American Idol game could not have gone better. You will soon see the American Idol game prevalent around the globe. Our high-performing Sex and the City Game has now reached an installed base count of over 1,800 and continues to outperform our wildest expectations.

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