Brightstar Lottery PLC (BRSL) Q4 2012 Earnings Report, Transcript and Summary

Welcome to International Game Technology's Fourth Quarter and Fiscal Year 2012 Results Conference Call. [Operator Instructions] This call is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the call over to Matt Moyer, Vice President of Investor Relations. Sir, you may begin.

Thanks, Kim. Good afternoon, and welcome to IGT's Fourth Quarter Fiscal Year 2012 Earnings Conference Call. On the call today are Patti Hart, CEO; and John Vandemore, CFO. Before we begin, I'd like to remind listeners our discussion will contain forward-looking statements concerning matters, such as our expected financial and operational performance, including our guidance for fiscal 2013; our expectations for the economy in general and the gaming industry in particular; the expected impact of the Double Down acquisition; and our strategic, operational and product plans. Actual results may differ materially from the results predicted, and reported results should not be considered as indicative of future performance. Potential risks and uncertainties that could cause our business and financial results to differ materially from our forward-looking statements are included in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. All information discussed on this call is as of today, November 8, 2012, and IGT does not intend, and undertakes no obligation, to update this information to reflect future events or circumstances. In addition, on today's call, we will discuss certain non-GAAP financial measures, including adjusted earnings per share, adjusted operating expenses and adjusted earnings per share guidance. Reconciliations of these non-GAAP measures to the GAAP measures we consider most comparable can be found in today's earnings release, which is posted on the Investor Relations section of our website, igt.com, and included as an Exhibit 99 to the Form 8-K we furnished today to the SEC. All references to 2013 or 2013 year refer to our fiscal year 2013. With all that in mind, I'll turn the call over to Patti.

Thank you, Matt, and good afternoon, everyone. Today, we reported a very successful fourth quarter and concluded an equally strong year with momentum. Our exceptional financial results demonstrate the outcomes that we expect from the execution of our strategy and the day-to-day management of our business: first, the financial results reinforce the strength of IGT's leadership position in our core business. We create great games that our customers and players love; second, they validate our strategy for growing IGT in the future by leveraging our industry-leading content across a wide array of gaming platforms like online, mobile and social; third, our performance reflects the financial strength of our company, strength that allows us to make disciplined investments in our business while consistently returning substantial capital to shareholders. Overall, the financial productivity of our business is accelerating in a very positive direction. I'd like to highlight just a few of the many significant achievements from our fourth quarter. We grew total revenues 17% to $631 million. This is our highest quarterly revenue performance in 4 years. We expanded adjusted earnings per share 58% to $0.38. We increased North American machine sales revenues 52% to $153 million, our highest quarterly mark in 8 years. And we grew our gaming operations installed base 6%. Our performance for the year included a number of noteworthy accomplishments as well. We grew total revenues 10% to over $2.1 billion. We expanded adjusted earnings per share 12% to $1.04. This is our third consecutive year of double-digit earnings growth. We increased prices, ship share and gross margin simultaneously in our North American product sales business, a dynamic that's remarkable for any consumer-oriented company. We returned over $545 million in cash to shareholders in the form of dividends and share repurchases. And we began to leverage Double Down into a meaningful addition to our core business. All in all, we delivered a strong year that came in at the high end of our guided range. Our core for sale business is healthier than it has been in many years. Our gaming operations profits are steady while generating tremendous cash flows. And our interactive business is gaining traction at an accelerating rate. We believe we have the pieces in place to generate significant value for shareholders now and into the future. None of this would be possible without the dedication of the IGT workforce. To them, I would like to say thank you for the progress made, for the change affected and for the results delivered. 2012 marks the third straight year we have met or exceeded our initial earnings guidance. Our company is firmly positioned for the future, and we expect 2013 to be even stronger as we plan to continue our streak with a fourth consecutive year of double-digit adjusted EPS growth. With that, I'll ask John to cover some of the financial details. John?

Thank you, Patti. Before reviewing our financial results, I would like to highlight some of the additional disclosures we are making this quarter. We believe that these enhanced disclosures will facilitate a deeper understanding of both our core and interactive businesses. We're now providing separately results for our interactive business in 2 parts: social gaming, which represents Double Down; and IGTi, which represents our online, real money wagering business. As a result of these additional disclosures, our gaming operations results will now exclude all of our interactive businesses. Revenue and gaming operations was flat year-over-year as an increase in our installed base offset yield declines. Additionally, our gaming operations gross margin increased in the fourth quarter by 400 basis points to 61%. On a same-store sales basis, gaming operations gross margin was up about 100 basis points. This was mainly driven by an increased percentage of stand-alone and fixed-fee games that carry higher gross margins than typical WAP games. It also reflects the success of our strategy to manage the turnover of capital in our MegaJackpot installed base. On an annual basis, our profit per unit in MegaJackpot was flat despite -- sorry, was flat despite the lower yield as our convertible platform installed base continues to benefit our profitability. In fact, our profit per unit in gaming operations has been up or flat every year since we instituted the strategy. In 2013, we expect gaming operations revenue and installed base to be about flat with 2012, while gross margin and profit per unit are expected to show modest improvements. Our product sales business performed extremely well in 2012, especially in the domestic markets. Total revenues, units recognized and gross profit all grew. Our consolidated average sales price for the year was up 1%, continuing a trend we've seen for 11 of the past 12 years. We believe that this reflects the benefits customers see in the performance of our games and in our industry-leading technology. Consolidated product sales gross margins were down slightly for the year as an increase in North American gross margin was offset by a weaker gross margin in our International businesses, driven by higher component costs, lower part sales and the benefit of a large, onetime, high-margin sale in 2011. For 2013, on a same-store sales basis, we expect our pricing to follow historical trends. On the strength of our VLT business in Canada, Ohio and Illinois, where we expect to enjoy leading ship shares, we anticipate our product sales revenue and gross profit to deliver double-digit increases while gross margin may be slightly softer due to mix. On the social gaming side of our interactive business, DoubleDown continues to show impressive growth. On a sequential basis, revenues, gross profits, users and bookings per user all grew. In addition, we have seen remarkable growth in the number of mobile users and a corresponding growth in revenue from those users. We remain very excited about DoubleDown's potential and still expect the transaction to be GAAP accretive by 2014. In our IGTi business, we restructured and consolidated some of our European operations. This resulted in approximately $15 million in mainly noncash reorganization charges in the quarter. However, we were also able to take advantage of certain tax strategies as part of this reorganization. This lowered our tax expense in the quarter by about $40 million. Moving forward, we expect some additional costs and, in the short term, lower revenues and gross margin in our IGTi business as this restructuring plan is executed. On the positive side, these actions are anticipated to reduce annual operating expenses in our IGTi business. Fourth quarter adjusted operating expenses increased 10% to $183 million, or 29% of revenues, primarily due to additional investment in our interactive business, which we expect to leverage as revenues grow. For the year, adjusted operating expenses were about flat as a percentage of revenue, and we expect this trend to remain consistent into 2013. I would also like to explain some of the unusual asset impairment charges that we incurred in the quarter. Collectively, these noncash charges totaled $27 million and reflect a significant reduction to the carrying value of the previously acquired Walker Digital patent portfolio and Alabama notes receivable. These charges are detailed further in today's press release. As of September 30, 2012, cash and short-term investments, inclusive of restricted amounts, totaled $288 million. Contractual debt obligations decreased by $140 million from June 30 to $1.8 billion, reflecting cash payments made to repay borrowings under our current credit facility that partially funded our previously announced $400 million accelerated share buyback. To date, we have received approximately 28 million shares under the ASB and currently expect to receive additional shares. To illustrate, if the transaction closed yesterday, the volume weighted average share price underlying the transaction, including discounts, would be $13.12. That would translate into total repurchases of slightly over 30 million shares. We expect this transaction to close in the fiscal first quarter. This year, we generated approximately $447 million in operating cash flow. This is down from the prior year as the timing of income tax payments and an increase in trade receivables related to our Canadian VLT customers were temporary uses of cash. That said, we're extremely pleased with the rate at which our revenue is being converted into operating cash flow, roughly 21%. Over the past 5 years, on average, we have converted 26% of revenues into cash flow from operations. Excluding financial companies and banks, this places IGT in the top 15% of the S&P 500, significantly better than anyone else in our industry. We have been, and will remain, diligent stewards of this operating cash flow, prioritizing organic growth and investment alongside returning cash to shareholders. In total, in 2012, we have returned over $0.5 billion in cash to shareholders in the form of dividends and share repurchases. And we have $600 million remaining in our current repurchase authorization. At this time, we expect the weighted average share count for 2013 to approximate 267 million shares. Looking forward to 2013, we are initiating our adjusted earnings per share guidance at $1.20 to $1.30 per share, representing 15% to 25% growth over fiscal 2012. We feel this guidance reflects the positive momentum in our business as well as the current economic conditions globally and the improving sentiment of our customers toward our products and services. We expect to continue to grow the top line and grow operating income and adjusted earnings per share even faster. Please also keep in mind that historically, we earn about 40% to 45% of our full year earnings in the first half of the fiscal year and that the fiscal first quarter is usually less than half of that. As Patti said, we had a remarkable fourth quarter and a great year. We believe that we have the right strategy in place and can quickly adjust to market demands and deliver consistent, strong financial results. Back to you, Patti.

Thanks, John. To sum it up, we had a very strong fourth quarter and a great finish to a very solid year, our third consecutive year of double-digit growth in adjusted EPS. Looking ahead, we anticipate, as John indicated, that 2013 will add a fourth year to our streak. One of the benefits of our strategy is the ability to deliver dependable earnings growth. No year ever plays out exactly as we plan it, but we hold true to our word, we adjust and we deliver on our promises, as we've demonstrated again this year. We have a deep management team that has proven to be nimble and capable of making these sound adjustments when needed. In 2013, we will remain focused on our core business and on driving even better returns. We expect to stabilize our MegaJackpot revenues, improve our return on invested capital and increase our product sales gross margin, especially in our International business. At DoubleDown, the world's largest social casino, we expect to launch a more complete mobile product. We expect to add localized content for the international market and to leverage even more of our proven IGT brands and game content. In our IGTi group, we expect to see continued growth in our mobile, real money wagering business, consistent with our past trends. At the end of the day, we are a gaming company: hardware, software, content and services. We create leverage by reaching every player everywhere through a variety of business models. Our results speak for themselves. We are executing on a strategy that can and will create value for our shareholders. And we, as a management team, are committed to delivering. With that, we thank you for your time, and we'd like to take your questions

[Operator Instructions] And our first question comes from Carlo Santarelli with Deutsche Bank.

Just with respect to your guidance, obviously, to the midpoint for fiscal '13, you're looking for ballpark 20% earnings growth. Would it be possible for you to maybe try and put into buckets where you see kind of the outsized growth in your 3 business segments, obviously with interactive probably leading that? But if you would maybe break out how you think about each of the segments directionally for next year, that would be really helpful.

Yes, Carlo. I think, as we mentioned in the script, that the gaming operations business we expect to be about flat. We expect margins to improve there, and that's really how we're managing that business, for profits and returns. In the product sales area, we think this will be a fantastic year on the back of the VLT demand in Canada, Ohio and Illinois. And then, obviously, the interactive business is showing fantastic growth, and we would expect that to continue to contribute at a level on par with where it contributed this year. But keep in mind, that's against some pretty fantastic growth expectations in the product sales side of things.

And just to clarify, when you said game ops revenues flat, obviously that's game ops x the interactive piece as if it was reported that way for the entire year, correct?

Yes.

Okay. And then if I just could ask one follow-up. Could you guys kind of talk about the SG&A that's been related to the interactive business here and when you think that could start to be dialed back?

Well, so the vast majority of the growth in SG&A this year has been related to our interactive businesses. That's the IGTi business and then, obviously, the acquisition of Double Down. In fact, the base SG&A has grown less than double digits -- double-digit dollars, that is. So we would expect to continue to invest in the interactive business but at a rate that's less than the revenue growth expectations going forward. And then in the base business, we'd expect again low, low single-digit SG&A growth.

Okay. So if I think about that just empirically, maybe $30 million in incremental SG&A. And is there a period of time when you think you could really scale that down? Or is that about the level you'll need going forward?

Well, I think that's about right on the growth next year, recognizing that we have one more quarter of Double Down next year than we had in the prior first quarter. But I would tell you that the investment in SG&A is going to correlate with what we expect the revenue-generating capacity of that business to be. We don't want to underfeed its capital if it needs it for operating expense. So we want to make sure it's measured and it corresponds with the growth expectations we see in the top line and then ultimately also in the operating income line. And we expect to continue to get leverage out of the investments we've already made and those we would make in the future.

[Operator Instructions] Our next question comes from Robin Farley with UBS.

Great. Two questions. One is North American replacement sales at over 8,000 units. I think your guidance had implied about 4,000 units. So just want to understand whether you got -- doubled the market share you had expected or did you just ship earlier some units that maybe you had previously thought would fall in the December quarter.

Yes, I think the North American -- I mean, we are looking at expecting our North American replacement share to be -- come in at around 48% for the quarter. A very strong quarter for us. There wasn't anything that we pulled in. Our guidance 90 days ago was to stay with our guidance range, which is what -- exactly where we came in. So there wasn't an expectation. There was no moving here of shipments from one quarter to the other. We shipped what we had forecasted that we would ship that hit the guidance range that we confirmed last quarter.

Okay. Great. And then for your guidance for fiscal '13 of $1.20 to $1.30, I think that probably includes -- just based on some of the adjustments you made to EPS for the fourth quarter just reported, you kind of add back to earnings the amortization of intangibles from Double Down, although, analytically, that's kind of how you would reflect how -- that you paid for that acquisition. I assume that you're adding that into your $1.20 to $1.30 next year. So I wonder if you could just break out how much of that $1.20 to $1.30 is you adding back the amortization of intangibles, just so we can get a sort of more clean comparison.

Robin, we have to think about it on an adjusted basis because a portion of those adjustments we made on Double Down are based on the marking of that expected payout on the earn-out to market. So it's very difficult for us to expect future performance that we can't foresee today, although I would note in this quarter we once again increased our expected payout as DoubleDown continues to perform above expectations. So the numbers we give, the $1.20 to $1.30, are adjusted for that.

But by how much? In other words, I know it's difficult to know exactly, but you are making an assumption in there, and I guess I'm just trying to understand what that is.

Yes, so the amounts that I would continue to expect to be on trend recently are the retention payments that we highlight and then the -- and amortization of the intangibles because those are the fairly consistent rate. But the amount that we can give a projection on is the earn-out, the marking-to-market on the earn-out. So I will look at what we've recorded the last couple of quarters on the amortization of the intangibles and the earn-out and trend that forward. But again, there will be additional charges if DoubleDown [indiscernible].

Of course, and your performance -- that’s if you perform well. So that would -- that's -- that will be great to see that because that's a sign the business is doing well. And that's just -- I understand why you adjust for that, because that's really the acquisition cost. It's the amortization of intangibles. So it just -- if I could put numbers on what I think you're saying, it sounds like about $0.08 of the $1.20 to $1.30 is adding -- is -- that you're adding back from amortization of intangibles for next year. I just want to -- does that sound about right?

So let me give you the SG&A hit. It's just under $40 million for both of those together, I think.

So are you confirming the $0.08? I'm sorry, I'm not 100% sure.

So we have given you the SG&A number that would hit for the adjustment we make. We don't make adjustments on an EPS basis, obviously, because the share count will influence that, but on an SG&A cost perspective, that's about the number. I would continue to look at the guidance adjusted for that. It's $1.20 to $1.30, adjusting for unusual items positive or negative.

Right. But your -- this is obviously write-downs and your impairment and restructuring charges, obviously, you're excluding from the $1.20 to $1.30. I just want to get a sense of how much you're adding into the $1.20 to $1.30 from the amortization of intangibles, which is an ongoing cost right now. So that's what I was trying to nail down. So okay.

Our next question comes from Shaun Kelley with back of America.

I just wanted to see if we could get a little bit more color. It looks like, obviously, the source of strength this quarter came from product sales and interactive. So I wanted to ask about each. So first, on product sales for 2013. Just could you guys give us a little bit of your sense of how that's going to look kind of across the year in terms of shipments? Because one of the challenges that we're trying to contend with is obviously, Canada seems to have a much higher ASP and much higher gross margin than Illinois does, and I'm kind of wondering if that is true in your case. And then also, kind of how you think about that, what that mix this quarter versus how that mix is going to be in 2013.

Yes. So I think with regards to Canada, I mean, Canada, a hard-fought win for IGT, and we expect 40% market share in Canada. We have fought very hard for that. I have the personal scars and miles on my body to show for Canada. So we are -- and it generates a lot of cash for us to invest in our business and return to shareholders. So we are delighted with the outcome of all the work we've done in Canada. So John, you want to...

Yes, I would just add. It's not to be terribly precise because in a given year, events can change. We've been waiting for Illinois to occur as an event in the market for about 5 years now, it seems. And although it’s begun, we don't really have a fantastic insight any more than anyone else as to what will exactly result in Illinois over the year. So our outcome -- the outcome we mentioned reflects kind of a weighted average probability of all those events coming through. So it's tough to pin it on one or the other, but we do expect there to be double-digit increases in the year.

Yes, I think the margin, the gross margin on Canada, is a bit stronger than Illinois but not markedly so.

That's helpful, Patti. And then I guess my second question, to switch gears beyond interactive, it looks like very solid sequential growth, but the numbers that I think people would follow in the interactive business is the daily active user, monthly active user figures didn't move up a ton sequentially. So it looks like it's all kind of in the bookings and the monetization. So could you talk a little bit about what's driving that and then what your kind of expectation is going forward in terms of how you think that can continue to build?

Yes. So first of all, I think the fact that we are deriving more revenue from our daily and monthly active users is a huge win for us to be doing it without the customer acquisition costs that tend to be associated with wildly growing people that walk through your mall and don't buy anything. So we have been very focused on driving retention in the customers that do come into DoubleDown and our monetization of those customers. The products that we have moved from the IGT game library into the DoubleDown Casino have had a significantly positive impact on that monetization. They're proven products. We were able to move them into the market in about half the time and with about half the costs of the other people we compete with in the social casino space. So the daily active users and monthly active users, though they are public information and they're publicly available, it's only one sign, one of the things that we look at and that we manage in the marketplace. And increasing that without increasing the bookings is not efficient. So we're very focused on retention and monetization of those that come in as opposed to just opening our doors to as many people that want to come in the front door as possible.

That's helpful. And then I guess one last one just on the share buyback. John, you mentioned that -- I think you were at something like -- and forgive me if I got the numbers wrong here, I was moving quickly. Kind of 28 million shares at this point, but it sounds like depending upon exactly how the agreement plays out, you could have 30 million. And if I caught your weighted average share count expectation for next year was 267 million. Is that correct?

Yes, those are all correct, Shaun.

Okay, great. So then I guess the question is to the extent that there's more free cash flow available here, how would you guys think about the opportunity to buy back even more shares kind of throughout the course of next year?

Yes, just to speak to our capital allocation broadly, as we always say, we're focused on growing the business and putting the capital and the operating expense investment in a place that will grow that core business and nurture the investments we've already made. After that, we will continue to look at dividends and free -- and share repurchase under our existing $600 million authorization as opportunities.

Okay, next question comes from Steve Wieczynski with Stifel, Nicolaus. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: So John, I guess first question will be for you. On the interactive side, you said you expect margins to go down a little bit over the next couple of quarters. But when you look out longer term, say, 1 year or 2 years from now, where do you guys think you can actually get those margins?

Yes, so just to clarify, Steve, the margin pressures I mentioned were particular to the IGTi business. And those will be impacted by the restructuring, as well as that business growing in the regulated real money wagering markets. We actually expect that the social gaming side will continue to enhance margins. We think they can ultimately be on par with some of our higher-margin core games businesses. But, quite frankly, there's a lot we need to learn about this business, and they may be able to go higher. I would also point out just keep in mind that for every dollar we recognize immediately, 30% goes to Facebook. So the margin is a little muted because of that. But ultimately, we think the margins can be among one of the better contributors to the gross profit level as compared to our core game business. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Thanks. And then, Patti, I guess you didn't say too much, or maybe I missed it, about maybe just some general, commentary from G2E. And what you kind of you heard from your customers regarding some of your newer products.

Yes, so we felt -- actually, we felt very good coming out of G2E for a number of reasons. One is we had very good feedback from customers about the new products and the platforms. I would say still cautiously optimistic on spending on the customer front. But as you can see this quarter and for the year, we continue to pick up share, ship share even in a very restricted capital market. So we felt very good. I would say the other piece of feedback we had from the marketplace -- it was very positive, is that every product that was on our booth is available for purchase. Every product. So nothing is out into '14, nothing is out into September of '13. Everything is available. Significant change we made at IGT a couple of years ago that has been very positively received by our customers who don't feel like they went away waiting for us to actually get the products to market, but the products are ready to go to market today. So very, very good feedback. We felt very good coming out of the show about -- and I think reflected in the guidance we've given you for next year.

Our next question comes from Felicia Hendrix with Barclays.

John, on Ohio and your outlook for Ohio next year, this might be part of the weighted average events that you were talking about before in your guidance. But I was wondering if you could tell us more about how you were thinking about the Ohio VLTs for next year and where you would be shipping those.

So again, so we have to look at it on kind of an aggregated and weighted-average basis. And again, it’s very tough to predict any given market, any given legislative change that might occur in those markets. So we're really looking at Canada, Ohio and Illinois as similar opportunities for IGT to command outside ship share, which we've done this year -- this quarter at 48%. So when you think about what we're looking at for next year, I would definitely consider the timing of some of those may slip, and that may impact the range. The domestic economy might impact the range. Obviously, the fiscal cliff that’s looming could be an impact on that. And then, obviously, there are international markets that continue to struggle, and those all could impact the range. So I would consider it in light of the range we've offered.

Okay, helpful. And then can you just tell us what drove the nonmachine product sales in the quarter? I believe it was the highest it's been in about 3 years.

Yes, so we had some pickup on our intellectual property side. And then, just quite frankly, that's been an area of our business that has been lagging over the earlier part of the year. And quite frankly, the sales team did a very good job of trying to play catch-up. Many of those were still down the system side. So it was a decided effort in the quarter to go after that business. Again, it didn't make up for the challenges we experienced earlier in the year, but it was a concerted effort that bore fruit.

And do -- should we expect that kind of -- this kind of performance to recur? Or how should we think about that going forward?

I would think about it on an annual basis. If you think about our annual number, again what you'll find is that IP revenue is always back-end loaded because a lot of that comes through settlement, some of which we've completed and you all have read about recently. So I think if you think about it on an annual basis, Felicia, that's probably about the right way to think about the number.

Okay. And if I may, just one housekeeping. Can you just please tell us how many Canadian VLTs you shipped in the quarter, please?

Yes. Again, I would say we can talk to you offline about details, but, I mean, we don't think about our business by separating out the Canadian VLT. We think about Canada like we think about Ohio and Illinois and an opening in New Orleans, right? It's new business for us. So we're happy to talk to you offline about specifics. It was a good Canadian quarter for us. Without Canada, we would have grown anyway. So it was good and it'll be a good -- we're flying that Canadian flag here at IGT. So it's going to be a good year for us. And hard work, it’s resulting in a good year when it comes to Canada.

[Operator Instructions] Our next question comes from Joe Greff with JPMorgan. Joseph Greff - JP Morgan Chase & Co, Research Division: Two quick questions here. If you can help us out with what you think your gaming operations CapEx will be in 2013. And then another question on the gaming op side for 2013. You had mentioned you expected flat yields year-over-year. Is that fairly even throughout the course of the year? Or is it first down -- first half of the year down and then back half of the year up, yielding a flat year-over-year result?

Yes, I would think about capital in the gaming operations business as flat to down slightly. As we mentioned, our strategy is to manage carefully the turnover of the -- that base and ensure that we're managing the entire game ops business for profits and returns. And in regard to yield, yield is only a part of the story with gaming operations. And that's why we focus on managing the capital and taking what the market will give us in terms of growing the installed base, which we did this quarter. I would expect that there will be continued pressure on yields, but we're taking active steps in the quarter and have been for the last quarter and looking at where we can garner benefits via placement and performance. Our new games are poised to hit the road, and we believe they will drive improved performance. You saw a lot of them at G2E, and the customer feedback on them was very good. We're also looking at marketing and kind of merchandising strategies to improve placement opportunities. That being said, there may be continued yield declines. If any, I would expect them to be a little bit more intense in the first quarter than later in the year just owing to the comparable to last year. Again, we're attempting to address the yield via our strategy and then managing the business, more importantly, for return and profits, which we've done this year by keeping the gross margin flat against a declining yield environment.

Our last question comes from Clifford Kurz from CLSA. Clifford Kurz - Credit Agricole Securities (USA) Inc., Research Division: Just really quickly, is it possible for you to break out in terms of the profits of the interactive gaming business? I know you talked about DoubleDown contributing about $0.01 per share each quarter. I don't know if you can give a little more detail this quarter.

Well, in the additional disclosures that we're providing that we've been talking about in the previous quarter, you will find gross margin by category. So you'll find social gaming and IGTi gross margins broken out separately. Clifford Kurz - Credit Agricole Securities (USA) Inc., Research Division: Okay. But could you give us maybe the bottom line impact as there are a lot of costs associated in the SG&A and such?

No, we don't break out our product categories like that down to the operating income line.

Good. Well, great. Well, thank you all very much for joining us today. We look forward to seeing all of you in New York on Thursday, December 6th for our Investor Day. We'd love to have you all there. We will continue our discussion about our strategy and about all the prospects in front of us for 2013. Thanks very much for your continued interest in IGT.

Thank you. This concludes today's conference. You may disconnect at this time.