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In preparation for IGT's FQ4 2011 earnings release Tuesday afternoon, we’ve put together the recent pertinent forward looking company commentary.

IGT WINS BONUSING PATENT CASE AGAINST BALLY (10/11/11)

  • U.S. Court of Appeals for the Federal Circuit affirmed a district court's judgment against Bally for infringement of two of IGT's patents.
    • IGT's patents (U.S. Patent Nos. RE37,885 and RE38,812) claim certain methods of paying bonuses at gaming machines.  Two of Bally's products, Power Rewards and ACSC Power Winners, were found to infringe.

IGT REACHES AGREEMENT WITH ARISTOCRAT TO SETTLE PATENT LITIGATION (10/3/11)

  •  IGT and Aristocrat have cross-licensed each other to their patents and they will have the right to offer all the products which were the subject matter of the litigations subject to certain royalty obligations. This settlement ends all present patent litigation between IGT and Aristocrat and their subsidiaries.

YOUTUBE FROM FQ3 CONFERENCE CALL

  • "We believe the improvements we are driving across the organization have the potential to generate steady,
    attractive returns."
  • "We will continue to remain focused on efficiently deploying capital to drive positive returns for our shareholders."
  • "Strong performance of our domestic wide area progressive games positively contributed to the increase in yield. Consistent with last quarter, our coin in machine per day was up 13% in our wide area progressive units. Average revenue per day decreased sequentially due to a higher mix of lower yielding international units."
  • "The games that support Center Stage are performing extremely well. We expect to leverage this platform by introducing new content and themes to extend the life of the hardware."
  • "Our international organization continues to break records. Driven by strong replacement demand for our premium products in Europe and Australia, we achieved an average selling price of $16,600 in international product sales, our highest ever. While our ASPs are setting new benchmarks, our product gross margin is also healthy at 57%, a 400 basis point improvement over last year."
  • "Early returns on our six new Asian-themed games are encouraging and a testament to the demand for localized content. We will continue to deliver games in greater volume that are specifically designed for our international markets"
  • "Our interactive business grew revenue over 20% and increased gross profit nearly 30%."
  • "We also demonstrated several new applications for our sbX system. We expect to be delivering a steady flow of new bonus, community, and game-play applications in the coming quarters."
  • “We are raising our 2011 earnings guidance to $0.89 to $0.93 per share on an adjusted basis.”
  • “Our strategy in our purchase of Entraction and the work we’re doing to integrate Entraction into IGT is a 100% ex-U.S. strategy...So what you’ll see us doing is expanding from casino into poker, bingo, and sports betting on a B2B basis in legalized markets likely outside the U.S., in the short term, moving to the U.S. when and if those markets open."
  • [Product sales margins] "I think if you look at the 59% gross margins that we enjoyed this quarter... it’s a combination of mix... And the mix can be the variable component between whether or not you can get to 60% or not"
  • [Size of the online business as a percentage of total] "I’d like to think it never gets to 10%... because it’s shaking our core business revenue as it grows. So that’s going to be one of the challenges, as the market gets healthier in the core business, then it has to chase that up. But I don’t think it’s unrealistic to think in 2013-2014 we could see this playing a significant enough role that you all start getting all visibility into it" 
  • "We’re very focused on outside the U.S. on our Casino Link product"
  • [New opportunities market share] “We set our sights on kind of a north of 50% number on a new opening.”
  • “A stabilization in the wide area progressive component – that’s where we had suffered previously a fair amount of degradation over the last three years.  And then slightly you’re starting to see a shift in favor of wide area progressive in lieu of standalone.”
  • "Internationally, average selling price was up 16% year over year, primarily due to favorable shifts in product mix and foreign exchange rates...A number of things contributed to the lift. It was regional mix, it was product line mix, and it was foreign exchange. So foreign exchange was less than half of the impact on lift, and the other two were the balance.”
  • [seasonality of slot play] “We’ll watch it as we go into FQ1, because that’s generally the quarter where you see slot play decline somewhat sequentially.”
  • “You should expect to see units continue to grow in the international marketplace. They tend to be lower yielding, so you’ll see yields on a per-unit basis a bit lower. And I think that’s kind of the trend that we have seen in the international marketplace. But the profit per unit, which is what we probably focus more on here in the company, continue to see that expand as well.”
  • “I would say South America, Latin America, Caribbean, and Asia, which is generally where we’re focused.  More so than Australia and Europe. You see the game ops side of our business expanding in those two regions.”