Business Context and Reporting Period
This Form 6-K filing by International Game Technology PLC (IGT) covers the month of August 2015. The registrant is a foreign private issuer based in London, United Kingdom. The filing primarily serves to announce a quarterly dividend, reference second-quarter 2015 financial results, and provide an update on an ongoing Italian tax investigation.
Key Financial Metrics
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. These metrics are referenced as being contained in the attached press releases and presentations (Exhibits 99.2, 99.3, and 99.4) regarding the second quarter and six months ended June 30, 2015.
Dividend Declaration:
- Amount: $0.20 per ordinary share.
- Record Date: August 26, 2015.
- Payment Date: September 10, 2015.
Material Changes and Contingencies
Italian Tax Matter Update:
The Company provided a significant update regarding a tax investigation involving its predecessor, GTECH S.p.A. In December 2013, GTECH paid €34.7 million to settle certain tax matters, including €28 million related to the 2006 acquisition financing. The Rome Public Prosecutor initiated an investigation in May 2015 into three senior executives.
A Tax Audit began on June 22, 2015, focusing on the 2006 merger and subsequent refinancing. On July 7, 2015, the Italian Tax Police issued a report alleging a breach of transfer pricing rules (Article 110, par. 7, of the Income Tax Act). The allegation claims the Company failed to recharge interest expenses and costs related to the 2006 acquisition to its U.S. subsidiary, GTECH.
- Scope: The report covers tax years 2006 to 2010.
- Future Scope: Years 2011 to 2014 are expected to be addressed in a future audit report.
- Current Status: The report has been sent to the Public Prosecutor and the Italian tax agency for independent evaluation. The Company may submit a defensive brief.
- Company Position: IGT believes the tax returns were appropriate and compliant, asserting no additional taxes are due.
Guidance, Outlook, and Risks
The filing includes a comprehensive cautionary statement regarding forward-looking statements. Management notes that actual results may differ materially from predictions due to various risks, including:
- Integration challenges between IGT and GTECH and the realization of cost savings or synergies.
- Ability to pay future dividends or maintain current dividend levels.
- Reductions in customer spending and changes in demand.
- Competitive factors and the ability to retain key personnel.
- Changes in legislation, regulations, and international economic conditions.
- Currency fluctuations and foreign exchange controls.
- Pending legal, regulatory, and tax proceedings, specifically the Italian tax matter.
The filing explicitly states it is not a profit forecast and does not guarantee that future earnings per share will match or exceed historical levels.
Investor Verification Checklist
- Review Exhibits 99.2, 99.3, and 99.4 for specific Q2 2015 revenue, profit, and cash flow figures not included in this summary.
- Monitor the outcome of the Italian Tax Police report evaluation by the Italian tax agency and the Public Prosecutor.
- Assess the potential financial impact of the alleged transfer pricing breach for tax years 2006–2010 and the anticipated audit for 2011–2014.
- Verify the Company's ability to maintain the $0.20 quarterly dividend given the risks associated with integration and regulatory proceedings.