INTERNATIONAL GAME TECHNOLOGY

Financial Analysis of International Game Technology

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This paper is completely an independent work. All information taken from external sources is properly referenced.

Table of Contents

Executive Summary3

Introduction4

Financial Analysis5

Short-Term Liquidity Analysis6

Capital Structure and Solvency6

Return on Invested Capital7

Asset Turnover Analysis7

Profitability and Equity Analysis8

Conclusion9

References10

Executive Summary

International Game Technology (IGT or "the company") is engaged in the designing, manufacturing, and marketing of computerized gaming equipment, systems, and services. IGT sells gaming equipment under brand names Megabucks, Wheel of Fortune, and Star Wars. IGT derives revenue from two segments namely gaming operations and product sales. The company recorded revenues of $1,987.2 million during the financial year ended September 2010 (FY2010), a decrease of 5% as compared to FY2009. The decline in revenue was due to fewer new casino openings, competitive pressure, and lower casino capital spending.

Financial Analysis of International Game Technology

Introduction

International Game Technology (IGT) is one of the leading companies in gaming equipment designing and manufacturing industry. International Game Technology is listed in New York stock exchange and achieved listing in Standard & Poor's 500 index in the year 2001. IGT has global operations in North America, Europe, Latin America Africa, Middle East, and Asia Pacific regions. IGT design and markets computerized gaming equipment, systems, and offers related services. The IGT has divided its business operations in two geographic divisions: North America division, and international division. The company has operating centers in Argentina, Mexico, Australia/New Zealand, Netherlands, China, Singapore, Japan, South Africa, Macau, and UK. IGT distributes its gaming equipment under the brand names IGT DynamiX, Wheel of Fortune, Jokers Wild, Megabucks, and Star Wars (IGT, 2010a). Major competitors of International Game Technology include Bally Technologies, WMS Industries, PokerTek, Multimedia Games Inc., and Aristocrat Leisure Limited (Data Monitor, 2011).

The overall PC market continued to recover from the recession in the second half of 2010, even though major challenges still remained. The IT gaming industry grew rapidly globally, providing a platform for the development and provision of software services throughout the world. Software companies in Canada and North America remained in demand as software development activity picked up in all consumer segments. IT services spending is forecast to total around US$20.1 billion in 2011, up from US$19 billion in 2010, and the market is likely to exceed US$24 billion by 2015 (Data Monitor, 2011). One demand driver will be organizations looking for help to utilize efficiencies from cloud computer gaming.

In 2010, the company spent more than $200.1 million on product development, compared with domestic rivals WMS and Bally Technologies, which spent $105.9 million and $80.3 million, respectively (IGT, 2010b). IGT has myriad patents, insulating the company from competition. Currently the company owns or licenses more than 5,000 patents and holds more than 3,100 trademarks (Data Monitor, 2011).

Financial Analysis

IGT has its distributed its core operations in two segments. The company recorded revenues of $1,987.2 million that showed a decline by 5% in financial year 2010 as compare to 2009 financial performance (IGT, 2010b). Major portion is revenue is generated from sales in the US ...