IGT Reports Q3 Results

RENO, Nevada – (PRESS RELEASE) -- International Game Technology (NYSE: IGT) today reported operating results for the third quarter ended June 30, 2006.

Third quarter financial highlights:

* Total revenues of $612.4 million, up 6%, and related gross profit up 8% from the prior year

* Product sales revenues of $297.6 million, up 8%

* Record gaming operations revenues of $314.8 million, up 3%, and related gross profit up 12%

* International operating income up 10%

* Fully diluted earnings per share of $0.33, up 3%

"IGT delivered another quarter of solid results, with record revenues in our gaming operations business and improved product sales revenues despite flat machine shipments," said IGT Chairman and CEO TJ Matthews. "The ability to post meaningful financial improvements in a market with limited new or expansion opportunities is a testament to the diversity and depth of IGT's business and product offerings."

For the third quarter of fiscal 2006, net income totaled $114.1 million or $0.33 per diluted share compared to $114.7 million or $0.32 per diluted share in the prior year. For the nine months ended June 30, 2006, net income totaled $358.8 million or $1.02 per diluted share compared to $331.1 million or $0.91 per diluted share in the same prior year period.

Gaming Operations

Third quarter revenues and gross profit from gaming operations improved to $314.8 million and $183.6 million, respectively, compared to $305.1 million and $164.5 million in the prior year. For the nine-month period ended June 30, 2006, revenues and gross profit from gaming operations totaled $917.7 million and $533.0 million, respectively, compared to $890.9 million and $459.7 million in the prior year-to-date period.

Third quarter gross margins on gaming operations grew to 58% compared to 54% in the prior year. Year-to-date gross margins were 58% versus 52% in the prior year. Margin improvement was primarily driven by the continued success of our low-denomination and multi-level progressive games, decreased jackpot expense, an increasing mix of central determination games, and positive shifts in interest rates. Prior year-to-date margins were also negatively impacted by asset obsolescence charges.

The installed base of recurring revenue machines ended the quarter at a record 46,200 units, an increase of 7,700 units from the prior year and an increase of 1,800 units from the immediately preceding quarter. Lease operations growth year-over-year was primarily the result of placements in Mexico. Incremental growth in domestic lease operations was also realized in New York and Rhode Island. Year-over-year growth in the casino operations market was driven by additional placements in domestic central determination and Class II markets including California, Alabama and Florida, as well as the emerging Oklahoma Instant Bingo market. International casino market placements increased with the introduction of wide-area progressive units in South Africa during the current year.