Driven largely by foreign business, International Game Technology Chairman TJ Matthews presented an upbeat forecast for the world's largest maker of gambling machines at the company's annual meeting.
And despite the impact of hurricanes and a lackluster domestic
market that hurt earnings for fiscal 2005 and the first quarter of
2006 that ended Dec. 31, only four shareholders had questions at
Tuesday's meeting - all of them minor inquiries.
"We are the very best manufacturers in our industry,"
Matthews, the company's chairman and CEO told some 150 shareholders
- about one-third of them IGT employees - at the meeting marking
the company's 25th year in business.
Hurricanes in the Gulf Coast gambling region cost the company
$14.9 million and is expected to result in a loss of 50,000 machine
days each quarter of fiscal 2006. Matthews said the casinos
eventually would be rebuilt and would represent a new market. Matthews said IGT released 172 new game themes such as Fort Knox
and Party Time! in North America last fiscal year, a 38 percent
increase over the previous year, and spent $138 million on research
and development, or 6 percent of its total revenue. The company is
projecting expenses of $172 million this year.
"We will spend more money than our next three competitors
combined," he said. IGT owns 70 percent of the international
While IGT pioneered the use of so-called cashless machines,
which pay out in bar-coded tickets and accept either the tickets or
bills, demand for replacement machines has eased since most casinos
have converted to the newer technology.
"We have our work cut out for us to figure out what's going to
make our games resell," he said.
Chief Financial Officer Maureen Mullarkey said the popularity of
low denomination games - specifically penny slots - and machines
with mystery bonuses had proved popular in recent years.
While domestic sales have leveled off, Matthews said
international business has improved, driven largely by Japan, Latin
America and Australia. The company has established offices in
Mexico, Macau and Russia.
"Five years or so ago, we about broke even in this business,"
Last year's operating income topped $115 million and Matthews
forecast international annual operating income would double within
the next four years.
"IGT is interested in all sorts of gaming expansion. We look
forward to the next 25 years," he said.
IGT shares, which have ranged between $24.20 and $37.18 the past
year, gained 23 cents to close at $35.44 Tuesday on the New York