UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                    FORM 10-Q

     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

                For the quarterly period ended: December 28, 2002
                                                -----------------

                                       OR

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

     For the transition period from _____ to_____

                        Commission File Number 001-10684

                          INTERNATIONAL GAME TECHNOLOGY
               (Exact name of registrant as specified in charter)

               Nevada                                     88-0173041
      (State of Incorporation)                 (IRS Employer Identification No.)

                    9295 Prototype Drive, Reno, Nevada 89521
                    (Address of principal executive offices)

                                 (775) 448-7777
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes  X   No
     -       -

Indicate  by check mark  whether the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the  Exchange  Act).  Yes X  No
                                                   -     -

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

                  Class                 Outstanding at January 25, 2003
                  -----                 -------------------------------
              Common Stock
       par value $.000625 per share                  84,949,143




                          International Game Technology

                                Table of Contents


  Part I - Financial Information
                                                                            Page
  Item 1.    Financial Statements:
                Unaudited Condensed Consolidated Statements of Income -
                    Quarters Ended December 28, 2002
                    and December 29, 2001.....................................3

                Unaudited Condensed Consolidated Balance Sheets -
                    December 28, 2002 and September 28, 2002 .................5

                Unaudited Condensed Consolidated Statements of Cash Flows -
                    Quarters Ended December 28, 2002 and December 29, 2001....7

                Unaudited Notes to Condensed Consolidated Financial
                    Statements................................................9

  Item 2.    Management's Discussion and Analysis of Financial Condition
             and Results of Operations.......................................24

  Item 3.    Quantitative and Qualitative Disclosures About Market Risk......33

  Item 4.    Controls and Procedures.........................................34


  Part II - Other Information

  Item 1.    Legal Proceedings...............................................35

  Item 2.    Changes in Securities...........................................35

  Item 3.    Defaults Upon Senior Securities.................................35

  Item 4.    Submission of Matters to a Vote of Security Holders.............35

  Item 5.    Other Information...............................................35

  Item 6.    Exhibits and Reports on Form 8-K................................35

  Signature..................................................................36

  Certification..............................................................37




Part I - Financial Information

Item 1.  Financial Statements

Unaudited Condensed Consolidated Statements of Income



                                                                            Quarters Ended
                                                                    ------------------------------
                                                                    December 28,      December 29,
                                                                       2002              2001
--------------------------------------------------------------------------------------------------
(Amounts in thousands, except per share amounts)
                                                                                 
Revenues
Product sales                                                       $241,250           $199,605
Gaming operations                                                    248,382            101,888
Lottery and pari-mutuel systems                                       42,030                  -
                                                                    --------           --------
Total revenues                                                       531,662            301,493
                                                                    --------           --------

Costs and expenses
Cost of product sales                                                126,175            117,103
Cost of gaming operations                                            116,126             47,988
Cost of lottery and pari-mutuel systems                               29,413                  -
Selling, general and administrative                                   65,898             45,307
Depreciation and amortization                                         14,636              5,240
Research and development                                              21,362             15,413
Provision for bad debts                                                3,069              6,517
                                                                    --------           --------
 Total costs and expenses                                            376,679            237,568
                                                                    --------           --------

Earnings (losses) of unconsolidated affiliates                          (179)            33,865
                                                                    --------           --------

Income from operations                                               154,804             97,790
                                                                    --------           --------

Other income (expense)
Interest income                                                       12,171             10,918
Interest expense                                                     (26,850)           (25,352)
Gain (loss) on the sale of assets                                        (67)                32
Minority interest                                                       (268)                 -
Other                                                                  1,293             (1,182)
                                                                    --------           --------
Other expense, net                                                   (13,721)           (15,584)
                                                                    --------           --------

Income from continuing operations before tax                         141,083             82,206

Provision for income taxes                                            53,188             30,416
                                                                    --------           --------
Income from continuing operations                                     87,895             51,790

Income from discontinued operations, net of tax of $2,234              3,692                  -
                                                                    --------           --------

Net income                                                          $ 91,587           $ 51,790
                                                                    ========           ========



        The accompanying notes are an integral part of these
            condensed consolidated financial statements.




Unaudited Condensed Consolidated Statements of Income



                                                                          Quarters Ended
                                                                   ----------------------------
                                                                   December 28,    December 29,
                                                                      2002            2001
-----------------------------------------------------------------------------------------------
(Amounts in thousands, except per share amounts)
                                                                               
Basic earnings per share
 Continuing operations                                              $  1.01          $  0.71
 Discontinued operations                                               0.04                -
                                                                    -------          -------
 Net income                                                         $  1.05          $  0.71
                                                                    =======          =======

Diluted earnings per share
 Continuing operations                                              $  1.00          $  0.70
 Discontinued operations                                                .04                -
                                                                    -------          -------
 Net income                                                         $  1.04          $  0.70
                                                                    =======          =======

Weighted average common shares outstanding                           86,855           72,864

Weighted average common and potential
 shares outstanding                                                  88,481           74,440




        The accompanying notes are an integral part of these
            condensed consolidated financial statements.





Unaudited Condensed Consolidated Balance Sheets



                                                                    December 28,         September 28,
                                                                        2002                 2002
------------------------------------------------------------------------------------------------------
(Amounts in thousands, except shares and par value)
                                                                                   
Assets
  Current assets
     Cash and cash equivalents                                      $  440,951           $  423,694
     Investment securities, at market value                             13,573               13,493
     Accounts receivable, net of allowances for doubtful
       accounts of $22,110 and $18,578                                 333,589              314,620
     Current maturities of long-term notes and contracts
       receivable, net of allowances                                    73,906               61,357
     Inventories, net of allowances for obsolescence of
       $23,585 and $24,677:
       Raw materials                                                    72,015               66,536
       Work-in-process                                                   1,439                5,412
       Finished goods                                                   77,781               72,212
                                                                    ----------           ----------
       Total inventories                                               151,235              144,160
                                                                    ----------           ----------

     Investments to fund liabilities to jackpot winners                 40,231               39,932
     Deferred income taxes                                              10,233                3,511
     Prepaid expenses and other                                         42,293               47,111
     Assets of discontinued operations held for sale                   148,772              147,144
                                                                    ----------           ----------
       Total current assets                                          1,254,783            1,195,022
                                                                    ----------           ----------
  Long-term notes and contracts receivable, net of
     allowances and current maturities                                 146,904              138,279
                                                                    ----------           ----------
  Property, plant and equipment, at cost
     Land                                                               21,783               21,750
     Buildings                                                          86,076               85,975
     Gaming operations equipment                                       289,536              294,096
     Manufacturing machinery and equipment                             176,692              169,143
     Leasehold improvements                                              9,543                9,364
                                                                    ----------           ----------
       Total                                                           583,630              580,328
     Less accumulated depreciation and amortization                   (289,525)            (284,193)
                                                                    ----------           ----------
       Property, plant and equipment, net                              294,105              296,135
                                                                    ----------           ----------

Investments to fund liabilities to jackpot winners                     331,570              329,802
Deferred income taxes                                                   83,021               82,916
Intangible assets, net                                                 257,535              276,485
Goodwill, net                                                          979,067              967,424
Investments in unconsolidated affiliates                                     -                   66
Other assets                                                            30,994               29,689
                                                                    ----------           ----------
                                                                    $3,377,979           $3,315,818
                                                                    ==========           ==========



              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




Unaudited Condensed Consolidated Balance Sheets



                                                                    December 28,        September 28,
                                                                        2002                2002
-----------------------------------------------------------------------------------------------------
(Amounts in thousands, except shares and par value)
                                                                                  
Liabilities and Stockholders' Equity
   Current liabilities
     Current maturities of long-term notes payable and
        capital lease obligations                                   $     8,197         $     8,519
     Accounts payable                                                    80,643              77,669
     Jackpot liabilities                                                174,297             167,097
     Accrued employee benefit plan liabilities                           24,744              47,156
     Accrued interest                                                     9,845              29,998
     Accrued income taxes                                                41,904              45,762
     Other accrued liabilities                                          138,503             123,672
     Liabilities of discontinued operations                              10,261              11,186
                                                                    -----------         -----------
          Total current liabilities                                     488,394             511,059
                                                                    -----------         -----------
   Long-term notes payable and capital lease obligations,
      net of current maturities                                         971,395             971,375
   Long-term jackpot liabilities                                        383,244             380,567
   Other liabilities                                                     14,404              11,010
                                                                    -----------         -----------
                                                                      1,857,437           1,874,011
                                                                    -----------         -----------

   Minority interest                                                      8,931               8,663
                                                                    -----------         -----------

   Commitments and contingencies                                              -                   -

   Stockholders' equity
     Common stock, $.000625 par value; 320,000,000 shares
        authorized; 174,296,343 and 174,166,938 shares issued               109                 109
     Additional paid-in capital                                       1,457,137           1,451,385
     Deferred compensation                                               (9,807)            (10,748)
     Retained earnings                                                1,619,870           1,528,284
     Treasury stock; 87,614,312 and 87,340,612 shares, at cost       (1,550,153)         (1,530,434)
     Accumulated other comprehensive loss                                (5,545)             (5,452)
                                                                    -----------         -----------
                                                                      1,511,611           1,433,144
                                                                    -----------         -----------
                                                                    $ 3,377,979         $ 3,315,818
                                                                    ===========         ===========


              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




Unaudited Condensed Consolidated Statements of Cash Flows


                                                                           Quarters Ended
                                                                   --------------------------------
                                                                   December 28,        December 29,
                                                                       2002                2001
---------------------------------------------------------------------------------------------------
(Amounts in thousands)
                                                                                  
Cash flows from operating activities
Net income                                                          $ 91,587            $ 51,790
                                                                    --------            --------
Adjustments to reconcile net income to net cash provided by
    operating activities:
    Depreciation and amortization                                     44,091              18,577
    Discounts and deferred offering costs                              1,056                 737
    Stock-based compensation                                             972                  31
    Provision for bad debts                                            3,069               6,517
    Provision for inventory obsolescence                               3,625               3,627
    Gain (loss) on sale of assets                                         67                 (32)
    (Increase) decrease in operating assets:
       Receivables                                                   (52,013)              4,636
       Inventories                                                   (11,492)             16,813
       Prepaid expenses and other                                      5,460               4,297
       Other assets                                                   (2,918)             (2,750)
       Net accrued and deferred income taxes, net of tax
          benefit of employee stock plans                             (4,611)             18,249
    Decrease in accounts payable and accrued liabilities             (25,563)            (41,242)
    Earnings of unconsolidated affiliates less than distributions        179               9,485
                                                                    --------            --------
       Total adjustments                                             (38,078)             38,945
                                                                    --------            --------
    Net cash provided by operating activities                         53,509              90,735
                                                                    --------            --------
Cash flows from investing activities
    Investment in property, plant and equipment                      (11,827)             (3,873)
    Investment in gaming operations equipment                        (21,441)            (16,078)
    Proceeds from sale of property, plant and equipment                  207                 164
    Investment securities:
       Purchases                                                           -              (2,715)
       Proceeds                                                            -                  33
    Investments to fund liabilities to jackpot winners:
       Purchases                                                     (10,412)             (6,156)
       Proceeds                                                        8,345               6,512
    Loans receivable
       Cash advanced                                                     (10)                  -
       Payments received                                               9,741               6,756
                                                                    --------            --------
    Net cash provided by (used in) investing activities              (25,397)            (15,357)
                                                                    --------            --------




              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




Unaudited Condensed Consolidated Statements of Cash Flows


                                                                           Quarters Ended
                                                                  --------------------------------
                                                                  December 28,        December 29,
                                                                      2002                2001
--------------------------------------------------------------------------------------------------
(Amounts in thousands)
                                                                                  
Cash flows from financing activities Long-term debt:
       Proceeds                                                          738                   -
       Principal payments                                             (1,563)             (8,397)
    Jackpot liabilities:
       Collections from systems                                       60,651              22,641
       Payments to winners                                           (52,995)            (13,215)
    Proceeds from shares issued                                        3,727               4,394
    Share repurchases                                                (19,719)            (40,268)
                                                                    --------            --------
    Net cash used in financing activities                             (9,161)            (34,845)
                                                                    --------            --------

Effect of exchange rate changes on cash and
    cash equivalents                                                  (1,694)              2,301
                                                                    --------            --------

Net increase in cash and cash equivalents                             17,257              42,834
Cash and cash equivalents at:
    Beginning of period                                              423,694             364,234
                                                                    --------            --------

    End of period                                                   $440,951            $407,068
                                                                    ========            ========


Supplemental Cash Flow Information

Certain non-cash investing and financing activities described below are not
reflected in the consolidated statements of cash flows. Depreciation and
amortization reflected in the statements of cash flows includes the amounts
presented separately on the statements of income, plus depreciation that is
classified as a component of cost of product sales, cost of gaming operations
and cost of lottery and pari-mutuel systems.



                                                                          Quarters Ended
                                                                  ------------------------------
                                                                  December 28,      December 29,
                                                                      2002             2001
------------------------------------------------------------------------------------------------
(Amounts in thousands)
                                                                               
Tax benefit of employee stock plans                                 $ 1,994          $ 3,296

Payments of interest                                                 40,160           42,132

Payments of income taxes                                             58,747           11,722



              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.




Unaudited Notes to Condensed Consolidated Financial Statements

1.       Organization, Basis of Presentation and Summary of Significant
         Accounting Policies

Organization
International Game Technology is recognized as one of the world leaders in the
development and production of computerized gaming products. We operate in three
lines of business: product sales, proprietary gaming and lottery systems.
Founded in 1980, IGT principally served the casino gaming industry in the United
States (US). In 1986, we began expanding our business internationally. In
addition to our US production, we currently manufacture our products in the
United Kingdom and through third party manufacturers in Japan, Canada, and
Germany. We also maintain sales offices in selected legalized gaming
jurisdictions globally, including Australia, Europe, Japan, Latin America, New
Zealand and South Africa.

Unless the context indicates otherwise, references to "International Game
Technology," "IGT," "we," "our," or "the Company" includes International Game
Technology and our wholly-owned subsidiaries and their subsidiaries. Our
principal executive offices are located at 9295 Prototype Drive, Reno, Nevada
89521; our telephone number is (775) IGT-7777; our Internet address is
www.IGT.com. Through our Internet website, we make available free of charge, as
soon as reasonably practical after such information has been filed or furnished
to the SEC, our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act.

Basis of Presentation
These financial statements and notes have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission and, in the opinion of
management, include all adjustments (all of which are of a normal recurring
nature) necessary for a fair statement of the consolidated results of
operations, financial position, and cash flows for each period presented. The
consolidated results for interim periods are not necessarily indicative of
results for the full year. These financial results should be read in conjunction
with our Annual Report on Form 10-K for the year ended September 28, 2002. We
have reclassified certain prior period amounts to conform to our current
presentation.

Principles of Consolidation
Our consolidated financial statements include the accounts of International Game
Technology and all of its majority owned or controlled subsidiaries. The
minority interest in the Colorado Grande Casino has been presented within
discontinued operations and liabilities of discontinued operations. We account
for investments in 50% or less owned joint ventures using the equity method. For
strategic marketing alliances for which no separate legal entity exists, we
recognize all assets, liabilities, revenues and expenses that we own, owe, earn
and incur based on the activities that we perform on behalf of the alliance. All
appropriate inter-company accounts and transactions have been eliminated.


Critical Accounting Policies

Use of Estimates
Our consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the US. Accordingly, we are required
to make estimates, judgments and assumptions that we believe are reasonable
based on our historical experience, contract terms, observance of known trends
in our company and the industry as a whole, and information available from other
outside sources. Our estimates affect the reported amounts of assets,
liabilities, revenues and expenses, and related disclosure of contingent assets
and liabilities. On a regular basis, we evaluate our estimates, including those
related to customer programs and incentives, product returns, bad debts,
inventory obsolescence, investments, intangible assets, income taxes, warranty
obligations, long-term contracts, contingencies and litigation. Actual results
may differ from initial estimates.



Revenue Recognition
We generally recognize revenue when persuasive evidence of an arrangement
exists, the seller's price to the buyer is fixed or determinable, collectibility
is reasonably assured and delivery has occurred.

Product Sales
We generally recognize revenue from the sale of gaming machines, systems,
equipment and related parts when the products are shipped and title passes to
the customer. Our sales credit terms are normally 90 days or less. We also grant
extended payment terms under contracts of sale secured by the related equipment
sold, generally for terms of one to five years with interest recognized at
prevailing rates.

Proprietary Gaming
Our proprietary gaming segment is comprised of our wholly-owned gaming
operations, which includes activities that we perform on behalf of our strategic
marketing alliances for which no separate legal entities exist, as well as our
unconsolidated joint venture activities reported as earnings of unconsolidated
affiliates. Because our joint venture operations are an integral part of our
business and the nature of the products and management are the same, our
earnings of unconsolidated affiliates are included as a component of income from
operations. IGT and Anchor Gaming (Anchor) were 50% partners in our largest
joint venture, The Spin For Cash Wide Area Progressive Joint Venture (JV).
Subsequent to the acquisition of Anchor on December 30, 2001, the activities of
the JV have been consolidated.

We place games in both casinos and government sponsored gaming markets under a
broad spectrum of recurring revenue pricing arrangements, including wide area
progressive (WAP) systems, stand alone participation and flat fee, equipment
leasing and rental, as well as hybrid pricing or premium products that include a
product sale and a recurring fee. WAP games differ from stand alone and hybrid
games in that they are electronically linked, inter-casino systems that connect
gaming machines to a central computer, allowing the system to build a
progressive jackpot with every wager until a player hits the top award winning
combination. WAP game revenues are recognized based on a percentage of coin in
generated by the game. Revenues from stand alone games are recognized based on a
percentage of the net win that the game generates or on a flat fee basis with
the passage of time. The operation of linked progressive systems varies among
jurisdictions as a result of different gaming regulations. Participating casinos
pay a percentage of the coin in either directly to IGT, an administrator, or a
trust to oversee and fund the progressive jackpot. Funding of the jackpots also
differs by jurisdiction but is generally administered by IGT.

Our linked progressive systems in Iowa are operated under a trust consisting of
one member from each Iowa casino operating multi-linked games related to the
trust. As administrator, IGT provides all of the services associated with the
operation of the trust. Fees paid to IGT consist of funds generated by the trust
in excess of the amount necessary to fund the jackpot liabilities. IGT
recognizes revenue based on the trust profits. In Atlantic City, New Jersey, our
linked progressive slot system operations are administered by several trusts
managed by representatives of the participating casinos. Separate trusts exist
for each system linked by a progressive meter. Fees paid to IGT are a function
of the trusts' adequate cash flow. We recognize revenues from these trusts based
on estimated collectibility.

Lottery and Pari-mutuel Systems
Revenue from the sale of lottery and pari-mutuel gaming systems equipment and
related parts is generally recognized upon delivery to the customer. Revenues
from sales of lottery and video gaming central site systems (including
customized software and equipment) are recognized using the percentage of
completion method for long-term construction type contracts where costs to
complete the contract can reasonably be estimated. Prior to revenue recognition
on central site systems, costs incurred are applied against progress billings
and recorded as a net accrued liability or other current asset as appropriate.
Systems contract services revenue is recognized as the services are performed.
These long-term contracts require installation and operation of lottery and
pari-mutuel wagering networks and the related revenue is generally based on a
percentage of sales volume, which may fluctuate over the lives of the contracts.



Casino Operations
In accordance with industry practice, we recognize casino gaming revenue as the
net win from casino operations, which is the difference between amounts wagered
and payments made to casino players. Slot route revenue is recognized based on
our share of coins wagered or on our share of net winnings. Revenue excludes the
retail value of complimentary food and beverage furnished gratuitously to
customers. Revenue is also reported net of cash rebates accrued to customers as
part of the casino loyalty programs. In June 2002, we committed to a plan to
sell our casino operations and have reclassified all related financial results
to discontinued operations.

Jackpot Liabilities and Expenses
IGT, the administrator or the trust recognizes a liability for jackpots not yet
won and jackpot expense for the cost to fund these jackpots in the future.
Jackpots are generally payable in equal installments over a 20 to 26 year period
or immediately in the case of our instant win progressive jackpots. Winners may
elect to receive the present value of jackpots discounted at applicable interest
rates (lump sum) in lieu of annual installments. Interest rates eligible for use
in the lump sum payment calculation vary by jurisdiction and are impacted by
market forces and other economic conditions. Historically, approximately 80% of
winners have elected the lump sum payment option. Winners that do not elect the
lump sum payment generally receive equal annuity payments over the 20 to 26 year
time horizon. We fund jackpot annuity payments through qualifying US government
or agency securities. To calculate the present value of our outstanding
progressive jackpot liabilities to be paid to future winners, we use current
market prime, treasury, and agency rates weighted based on the 80% historical
lump sum election ratio. We believe this calculation provides the best estimate
of our cost to fund jackpots.

Additionally, we estimate the current portion of our liabilities for jackpots
not yet won based on our historical experience with winners' lump sum elections,
as well as the theoretical projected number of jackpots for the current and
non-current periods. Based on this, we have classified 80% of our jackpot
liabilities as current and 20% as non-current. Changes in future winners'
elections of installment or lump sum payments would impact the allocation of our
jackpot liabilities between current and non-current liabilities.

Fluctuations in applicable interest rates due to changes in market and other
economic conditions directly impact our cost to fund jackpots, and therefore the
gross profit on our gaming operations. If interest rates decline, our cost to
fund jackpots increases, and correspondingly our gross profit declines.

Receivables and Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts on our accounts and notes
receivable that we have deemed to have a high risk of collectibility. We analyze
historical collection trends, customer concentrations, customer
creditworthiness, current economic trends and changes in our customer payment
terms when evaluating the adequacy of our allowance for doubtful accounts.

Inventories and Obsolescence
Inventories are stated at the lower of cost (first-in, first-out method) or
market value. We regularly review inventory quantities on hand and record
provisions for excess and obsolete inventory based primarily on our estimated
forecast of product demand and production requirements.

Long-lived Assets
We assign estimated useful lives to our long-lived assets, including intangible
assets and prepaid or deferred royalties, based on the period of time the asset
is expected to contribute directly or indirectly to future cash flows. We
consider certain factors when assigning useful lives such as legal, regulatory
and contractual provisions, as well as the effects of obsolescence, demand,
competition, and other economic factors. We are required to use judgment and
make estimates to determine the useful lives of long-lived assets. We have
classified prepaid and deferred royalty costs as current and non-current assets
based on the period of expected consumption related to projected revenues. We
depreciate or amortize our long-lived assets with finite lives to reflect the
pattern in which the economic benefits for the assets will be consumed based on
projected usage and revenues. Intangible assets with an increasing revenue
stream are amortized using the straight-line method. Intangible assets with a



declining revenue stream are amortized on an accelerated basis. While we believe
that our estimates of future revenues, cash flows and useful lives are
reasonable, different assumptions could materially effect our assignment of
useful lives. Any changes to the estimated useful lives of our depreciable or
amortizable assets will impact our results of operations.

Our property, plant and equipment is depreciated or amortized using the
straight-line method over the following useful lives: buildings over 30 to 40
years; gaming operations equipment over 2 to 7 years; manufacturing machinery
and equipment over 2 to 15 years; and leasehold improvements over the lease
term. Maintenance and repairs are expensed as incurred, improvements are
capitalized, and gains or losses on disposal are included in income.

We evaluate the carrying value of our long-lived and intangible assets for
impairment at least annually or whenever events or changes in circumstances
indicate that the carrying value of the assets may not be recoverable from
related future undiscounted cash flows. Indicators that could trigger an
impairment review include legal and regulatory factors, market conditions, and
operational performance. Any resulting impairment loss, measured as the
difference between the carrying amount and the fair value of the assets, could
have a material adverse impact on our financial condition and results of
operations.

Recently Issued Accounting Standards
In June 2001, the FASB issued SFAS 143, Accounting for AssetRetirement
Obligations. This statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement applies to all entities and to
all legal obligations associated with the retirement of long-lived assets that
result from the acquisition, construction, development and the normal operation
of a long-lived asset, except for certain obligations of lessees. We adopted
SFAS 143 on September 29, 2002, the beginning of our fiscal year 2003. The
adoption of this statement did not have a material impact on our results of
operations or financial position.

In August 2001, the FASB issued SFAS 144, Accounting for the Impairment and
Disposal of Long-Lived Assets. This statement requires one accounting model be
used for long-lived assets to be disposed of by sale, whether previously held
and used or newly acquired and broadens the presentation of discontinued
operations to include additional disposal transactions. We adopted SFAS 144 on
September 29, 2002, the beginning of our fiscal year 2003. The adoption of this
statement did not have a material impact on our results of operations or
financial position.

In April 2002, the FASB issued SFAS 145, Rescission of FASB Statements 4, 44,
and 64, Amendment of FASB Statement 13, and Technical Corrections. SFAS 145
rescinds SFAS 4, Reporting Gains and Losses from Extinguishment of Debt. Under
SFAS 4, all gains and losses from extinguishment of debt were required to be
aggregated, if material, and classified as an extraordinary item, net of related
income tax effect, on the statement of income. SFAS 145 requires all gains and
losses from extinguishment of debt to be classified as extraordinary only if
they meet the criteria of Accounting Principles Board (APB) Opinion 30. We
adopted SFAS 145 on September 29, 2002, the beginning of our fiscal year 2003.
Accordingly, losses on the extinguishment of debt that were classified as
extraordinary items in prior periods will be reclassified to continuing
operations.

In June 2002, the FASB issued SFAS 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS 146 addresses financial accounting and
reporting for costs associated with exit or disposal activities and nullifies
Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring). SFAS 146 requires that a liability
for a cost associated with an exit or disposal activity be recognized when the
liability is incurred. A fundamental conclusion reached by the FASB in this
statement is that an entity's commitment to a plan, by itself, does not create a
present obligation to others that meets the definition of a liability. SFAS 146
also establishes that fair value is the objective for initial measurement of the
liability. The provisions of this



statement are effective for exit or disposal activities that are initiated after
December 31, 2002, with early application encouraged. We believe that the
adoption of this statement will not have a material impact on our results of
operations or financial position.

In November 2002, the FASB issued FASB Interpretation (FIN) 45, Guarantor's
Accounting and Disclosure Requirements for Guarantees, including indirect
Guarantees of Indebtedness of Others. FIN 45 expands the information disclosures
required by guarantors for obligations under certain types of guarantees. It
also requires initial recognition at fair value of a liability for such
guarantees. We adopted the disclosure requirements of FIN 45 for the quarter
ending December 28, 2002. We will apply the liability recognition requirements
to all guarantees issued or modified after December 31, 2002. We believe the
adoption of these requirements will not have a material impact on our results of
operations or financial position.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation--Transition and Disclosure. This Statement amends FASB Statement
No. 123, Accounting for Stock-Based Compensation, to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The disclosure requirements of this statement are
effective for our interim financial statements for the quarter ending March
2003.

In January 2003, the FASB issued FIN 46, Consolidation of Variable Interest
Entities (VIEs). FIN 46 establishes standards for determining under what
circumstances VIEs should be consolidated with their primary beneficiary,
including those to which the usual condition for consolidation does not apply.
FIN 46 also requires disclosures about unconsolidated VIEs in which the Company
has a significant variable interest. The consolidation requirements of FIN 46
apply immediately to VIEs created after January 31, 2003. The consolidation
requirements apply to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain disclosure requirements apply in all
financial statements issued after January 31, 2003.

We continue to evaluate the impact of this interpretation on our financial
condition and results of operations. Based on our initial analysis, it is
possible that we may consolidate or disclose information about activities of our
unconsolidated affiliate and the progressive systems trusts in Iowa and New
Jersey when the consolidation requirements become effective for our fourth
quarter ending September 2003.

The purpose of our operations with our current unconsolidated affiliate is to
combine their technology, development efforts and licensed property rights with
our manufacturing, distribution, and marketing expertise to develop, market,
sell, and maintain certain gaming products. Our linked progressive systems in
Iowa and New Jersey are administered by trusts that collect contribution fees
from participating casinos and manage the jackpot liabilities and payments to
winners. At December 28, 2002, these unconsolidated entities collectively
recorded total assets of $190.7 million, total liabilities of $237.1 million
including amounts due to IGT, and total revenues for the quarter of $32.6
million. We do not believe that consolidation of these entities will have a
material impact to our net income. We are not able to estimate the maximum
exposure to loss as a result of our involvement with these entities as it
depends on the frequency of jackpots won relative to the timing of collections
from participating casinos. Historically, we have not incurred any net losses as
a result of our involvement in these entities.

2.       Acquisitions and Discontinued Operations

Acquisitions
On December 30, 2001, we completed our acquisition of Anchor in a stock for
stock exchange. Anchor shareholders received one share of IGT common stock for
each share of Anchor common stock owned.



The aggregate purchase price paid for Anchor was $986.9 million, plus the
assumption of Anchor's outstanding debt of $337.0 million, net of discount. The
purchase price included just over 14.9 million outstanding shares of Anchor
common stock, exchanged on a one-for-one basis for IGT shares valued at $59.50
per share, $93.0 million of Anchor stock options assumed by IGT, $3.7 million of
Anchor shares held by IGT prior to the acquisition, and $3.5 million of
transaction costs. For accounting purposes, the $59.50 share price was
determined based on the average closing market prices of IGT's common stock for
the seven trading days ended July 12, 2001, which includes the three trading
days before and after the acquisition announcement on July 9, 2001.

We applied the guidance of SFAS 141 in our final allocation of the Anchor
acquisition purchase price. See Note 5 for the purchase price allocation to
identifiable intangible assets and goodwill. Prior to the Anchor acquisition,
the JV activities were accounted for under the equity method and its revenues
were reflected, net of expenses, as earnings of unconsolidated affiliates in our
statements of income. Subsequent to the acquisition, the JV activities have been
consolidated.

This acquisition afforded us additional opportunities to use our complementary
resources to develop new games more effectively for the benefit of our
customers. In addition, with Anchor we grew our business presence in the public
gaming sector and expanded our business activities into online lottery systems.
We believe our combined resources make us a more effective supplier to the
gaming and lottery industries.

The following table presents our final allocation of the Anchor acquisition
purchase price, including the consolidation of the JV:



                                                                            Discontinued
                                                                         Casino Operations
                                                              Total           Reclass            Net
-------------------------------------------------------------------------------------------------------
(Amounts in thousands)
                                                                                   
Cash acquired                                              $  123,104       $      -        $  123,104
Assets held for sale                                           77,000        143,868           220,868
Accounts and notes receivable                                  88,156         (2,251)           85,905
Inventory                                                      18,974           (510)           18,464
Property and equipment                                        153,926        (53,155)          100,771
Investments to fund liabilities to jackpot winners            102,880              -           102,880
Identifiable intangible assets                                288,839        (68,800)          220,039
Goodwill                                                      853,614        (16,978)          836,636
Investment in JV                                              (64,758)             -           (64,758)
Other current assets                                           27,520           (829)           26,691
Other long-term assets                                          2,446         (1,345)            1,101
                                                           ----------       --------        ----------
   Total assets                                            $1,671,701       $      -        $1,671,701
                                                           ==========       ========        ==========

Accounts payable                                           $   14,370       $   (623)       $   13,747
Liabilities of discontinued operations                              -          7,367             7,367
Notes payable                                                 377,292              -           377,292
Jackpot liabilities                                           168,610              -           168,610
Other liabilities                                             142,052         (6,744)          135,308
                                                           ----------       --------        ----------
   Total liabilities                                          702,324              -           702,324
                                                           ----------       --------        ----------

Deferred compensation                                         (13,973)             -          (13,973)
Common stock and additional paid-in capital                   983,350              -           983,350
                                                           ----------       --------        ----------
   Total equity                                               969,377              -           969,377
                                                           ----------       --------        ----------
   Total liabilities and equity                            $1,671,701       $      -        $1,671,701
                                                           ==========       ========        ==========




The following unaudited pro forma financial information is presented as if the
Anchor acquisition had been effective at the beginning of fiscal 2001:

                                                    Quarter Ended
                                                       December
                                                         2001
         ---------------------------------------------------------
         (Amounts in thousands)
         Total revenues                                $486,190
         Income from continuing operations               62,507
         Income from discontinued operations              2,287
         Net income                                      64,794
         Earnings per share
            Basic                                      $   0.74
            Diluted                                    $   0.71

Discontinued Operations
In June 2002, we determined that the casino operations acquired with Anchor were
not a strategic fit with our core business and committed to a plan to sell the
two Colorado casinos (Colorado Central Station and Colorado Grande Casino) and
the Nevada gaming machine route acquired with Anchor. As a result, we ceased
depreciation and amortization, and our casino operations have been classified as
discontinued operations for all periods presented.

In December 2002, we announced our definitive agreement pursuant to which Herbst
Gaming will purchase substantially all of the assets of the Nevada slot route
operations of our subsidiary, Anchor Coin, for a cash price of $61.0 million.
The sale is subject to Herbst Gaming obtaining regulatory and third party
approvals, including gaming regulatory approvals.

In late December 2002, we also announced our agreement to sell the two Colorado
casinos for a cash price of $84.0 million to Isle of Capri Black Hawk L.L.C., a
joint venture between Isle of Capri Casinos, Inc. and Nevada Gold & Casinos,
Inc. The agreement is subject to the satisfaction of several conditions,
including financing and the approval of the Colorado Gaming Commission.

Operating results of our discontinued casino operations are summarized below:

                                                       Quarter Ended
                                                          December
                                                            2002
         -----------------------------------------------------------
         (Amounts in thousands)
         Net revenue                                      $30,260
                                                          =======

         Income before tax                                $ 5,926
         Provision for income taxes                        (2,234)
                                                          -------
         Income from discontinued operations              $ 3,692
                                                          =======




At December 28, 2002 and September 28, 2002, $2.3 million of deferred
compensation and $27.5 million of deferred tax liabilities related to
discontinued operations. Assets and liabilities of discontinued operations were
comprised of the following as of:



                                                                            December         September
                                                                              2002              2002
         ---------------------------------------------------------------------------------------------
         (Amounts in thousands)
                                                                                        
         Cash                                                              $  8,726           $  7,837
         Accounts receivable, net                                             1,312              1,448
         Other current assets                                                 1,994              1,423
         Property and equipment, net                                         51,161             50,925
         Intangible assets                                                   66,607             66,492
         Goodwill                                                            16,978             16,978
         Other non-current assets                                             1,994              2,041
                                                                           --------           --------
             Total assets of discontinued operations held for sale         $148,772           $147,144
                                                                           ========           ========

         Current liabilities                                               $  8,643           $  9,561
         Minority interest                                                    1,618              1,625
                                                                           --------           --------
             Total liabilities of discontinued operations                  $ 10,261           $ 11,186
                                                                           ========           ========


3.       Notes and Contracts Receivable

The following allowances for doubtful notes and contracts were netted against
current and long-term maturities:

                                                 December       September
                                                   2002            2002
         ----------------------------------------------------------------
         (Amount in thousands)
         Current                                 $17,781          $22,068
         Long-term                                15,905           15,062
                                                 -------          -------
                                                 $33,686          $37,130
                                                 =======          =======


4.       Concentrations of Credit Risk

The financial instruments that potentially subject us to concentrations of
credit risk consist principally of cash and cash equivalents and accounts,
contracts, and notes receivable. We maintain cash balances at several financial
institutions in amounts which, at times, may be in excess of the Federal Deposit
Insurance Corporation insurance limits.

Our revenues and resulting receivables are concentrated in specific legalized
gaming regions. Accounts, contracts, and notes receivable by region as a
percentage of total receivables at December 28, 2002 were as follows:


         Domestic Region
            Native American casinos                              39%
            Nevada                                               24
            Atlantic City (distributor and other)                 9
            Riverboats (greater Mississippi River area)           6
            Other US regions, less than 3% individually          10
                                                                ---
               Total domestic                                    88
                                                                ---

         International Region
            Canada                                                4
            Europe                                                4
            Other international, less than 3% individually        4
                                                                ---
               Total international                               12
                                                                ---

            Total                                               100%
                                                                ===



5.        Intangible Assets and Goodwill

We have finalized the fair values and estimated useful lives of the intangible
assets acquired from Anchor. Our final allocation of the Anchor purchase price
to identifiable intangible assets and goodwill is detailed in the table below.
Anchor's in-process research and development (R&D) of $1.0 million was charged
to R&D expense immediately subsequent to acquisition because no future
alternative uses existed. The goodwill related to the Anchor acquisition is not
deductible for tax purposes. In June 2002, we ceased amortization of the
contract intangibles related to our discontinued casino operations that were
reclassified to assets held for sale, net of accumulated amortization of $2.4
million.



                                                                     Discontinued
                                                       Continuing       Casino
                                                       Operations     Operations        Total
         ---------------------------------------------------------------------------------------
         (Amounts in thousands)
                                                                              
         Finite Lived Intangible Assets
           Patents                                      $166,400        $     -        $166,400
           Contracts                                      32,354         47,500          79,854
           Developed Technology                           10,015              -          10,015
           Trademarks                                      7,222              -           7,222
           In-Process R&D                                  1,000              -           1,000
                                                        --------        -------        --------
                                                         216,991         47,500         264,491
         Indefinite Lived Intangible Assets
           Trademarks                                      3,048         21,300          24,348
                                                        --------        -------        --------

         Total Intangible Assets                        $220,039        $68,800        $288,839
                                                        ========        =======        ========

         Goodwill                                       $836,636        $16,978        $853,614
                                                        ========        =======        ========


In addition to adjustments related to the final Anchor purchase price
allocation, we capitalized $921,000 of patent legal and registration costs with
an average life of 9.5 years during the quarter ended December 28, 2002. The
following table identifies our intangible asset balances by category, excluding
discontinued operations, as of:


                                                      December 2002                          September 2002
                                            ----------------------------------       --------------------------------
                                                      Accumulated    Carrying                Accumulated    Carrying
                                              Cost    Amortization  Amount Net       Cost    Amortization  Amount Net
         ------------------------------------------------------------------------------------------------------------
         (Amounts in thousands)
                                                                                          
         Finite Lived Intangible Assets
           Patents                          $243,190     $24,900    $218,290       $242,269     $19,178     $223,091
           Contracts                          32,360       9,363      22,997         32,660       7,685       24,975
           Developed technology               10,018       2,630       7,388         10,583       1,956        8,627
           Trademarks                          7,262       1,450       5,812          7,787         743        7,044
                                            --------     -------    --------       --------     -------     --------
             Total                           292,830      38,343     254,487        293,299      29,562      263,737

         Indefinite Lived Assets
           Trademarks                          3,048           -       3,048         12,748           -       12,748
                                            --------     -------    --------       --------     -------     --------

         Total Intangible Assets            $295,878     $38,343    $257,535       $306,047     $29,562     $276,485
                                            ========     =======    ========       ========     =======     ========





Aggregate amortization expense totaled $8.8 million for the first quarter of
2003 and $838,000 for the prior year quarter. Estimated amortization expense for
fiscal 2003 and for each of the four succeeding fiscal years is as follows:


         Fiscal Year                             Amount
         ------------------------------------------------
         (Amounts in thousands)

         2003                                     $30,546
         2004                                      30,551
         2005                                      28,977
         2006                                      25,313
         2007                                      23,616


The following distribution of goodwill by segment has been adjusted to reflect
changes in our final Anchor purchase price allocation. No goodwill was allocated
to the Lottery Systems acquired from Anchor.



                                                    Product   Proprietary
                                                     Sales      Gaming       Total
         --------------------------------------------------------------------------
                                                                  
         (Amounts in thousands)
         Balance as of September 28, 2002          $ 94,574    $872,850    $967,424
         Adjustments to goodwill                     11,353        (670)     10,683
         Foreign currency translation adjustment        960           -         960
                                                   --------    --------    --------
         Balance as of December 28, 2002           $106,887    $872,180    $979,067
                                                   ========    ========    ========



6.       Earnings Per Share

The following table shows the reconciliation of basic earnings per share (EPS)
for income from continuing operations to diluted EPS:


                                                                   Quarters Ended
                                                              ------------------------
                                                              December       December
                                                                2002           2001
         -----------------------------------------------------------------------------
                                                                        
         (Amounts in thousands, except per share amounts)
         Income from continuing operations                     $87,895        $51,790
                                                               =======        =======

         Weighted average common shares outstanding             86,855         72,864
         Dilutive effect of stock options outstanding            1,626          1,576
                                                               -------        -------
         Weighted average common and potential
            shares outstanding                                  88,481         74,440
                                                               =======        =======

         Basic earnings per share                              $  1.01        $  0.71
         Diluted earnings per share                            $  1.00        $  0.70

         Number of common shares excluded from
            diluted EPS because option exercise price
            was greater than average market price                  263             47


We purchased a total of 1.8 million shares, or approximately 2%, of our
outstanding common stock during the period from December 29, 2002 to January 29,
2003. There were no other transactions in the same period which would have
materially changed the number of common shares or potential common shares
outstanding.



7.       Income Taxes

Our provision for income taxes is based on estimated effective annual income tax
rates. The provision differs from income taxes currently payable because certain
items of income and expense are recognized in different periods for financial
statement than for tax return purposes.

8.       Comprehensive Income

Items of other comprehensive income include cumulative foreign currency
translation adjustments and net unrealized gains and losses on investment
securities. Our total comprehensive income is presented below:

                                                              Quarters Ended
                                                          ----------------------
                                                          December      December
                                                            2002          2001
         -----------------------------------------------------------------------
         (Amounts in thousands)
         Net income                                        $91,587       $51,790
         Net change in other comprehensive income              (93)        4,926
                                                           -------       -------
         Comprehensive income                              $91,494       $56,716
                                                           =======       =======

9.       Contingencies

Litigation
IGT has been named in and has brought lawsuits in the normal course of business.
We do not expect the outcome of these suits, including the lawsuits described
below, to have a material adverse effect on our financial position or results of
future operations.

Acres
In February 1999, the JV and Anchor filed an action in US District Court,
District of Nevada against Acres Gaming, Inc. (Acres). The complaint alleges,
among other things, infringement of certain secondary event (bonus features)
patents owned by Anchor and licensed to the JV. Acres responded by filing an
answer and counterclaim against the JV and Anchor. Additionally, Acres filed an
action in Oregon against the JV and Anchor alleging wrongful use of Acres'
intellectual property. This action has been stayed pending the outcome of the
Nevada actions. Motions for summary judgment have been filed by the parties.

Aristocrat
In December 2001, IGT filed a complaint for patent infringement for six US
patents, misappropriation of trade secrets and breach of contract against
Aristocrat Leisure Limited (ALL), an Australian corporation, and two
wholly-owned US subsidiaries, Aristocrat Technologies, Inc. (ATI) and Casino
Data Systems (CDS) in the US District Court for the District of Nevada
(Aristocrat Lawsuit I). In January 2002, ALL, ATI, CDS and Aristocrat
Technologies Australia Pty Ltd., a wholly-owned Australian subsidiary of ALL,
filed a complaint for patent infringement of four US patents against IGT and for
a declaratory judgment that the subject matter of Aristocrat Lawsuit I be
decided in their favor in the same court (Aristocrat Lawsuit II). In February
2002, IGT filed an amended complaint in Aristocrat Lawsuit I naming all the
Aristocrat parties from Aristocrat Lawsuit II as defendants, incorporating all
the subject matter previously involved in Aristocrat Lawsuit I and Aristocrat
Lawsuit II, and including additional claims for trademark infringement and
trademark counterfeiting against all the Aristocrat parties. The court granted
IGT's motion to consolidate the Aristocrat Lawsuit I and the Aristocrat Lawsuit
II, so that all the pending issues between IGT and the Aristocrat parties could
be resolved in a single lawsuit. On January 21, 2003, ATI and IGT announced a
confidential out-of-court settlement resolving these patent and trademark
infringement disputes related to intellectual property rights in the fields of
cashless technology, bonusing, and slot machine hardware.



Bally
In November 2002, Bally Gaming, Inc. filed a complaint in U.S. District Court
for the District of Nevada against IGT and Anchor for declaratory relief seeking
a non-monetary judgment that Bally has not infringed certain patents owned by
IGT or Anchor.

Collins
In 1994, a lawsuit was filed in South Carolina against IGT by Collins Music Co.
(Collins), a distributor for IGT in South Carolina. In the action, Collins
alleged that IGT agreed, but subsequently failed, to renew a Distributorship
Agreement with Collins. Collins also alleged that equipment sold to it was not
the latest IGT product available to the marketplace. IGT counterclaimed for the
unpaid invoices for machines delivered to Collins, for violations of the South
Carolina Unfair Trade Practices Act, for breach of the Distributorship Agreement
accompanied by fraudulent acts and denied all the other allegations. In August
2001, a jury found that IGT breached its agreement with Collins and awarded
Collins $15.0 million in compensatory damages.

IGT filed motions for post-trial relief that were denied by the trial court. IGT
timely filed its Notice of Appeal. In May 2002, Collins filed a Motion to
Dismiss the IGT appeal. Oral argument on the motion was held in August 2002 and
in September 2002, it was granted by a three-judge panel of the Court. IGT
timely filed a Petition for Rehearing en banc. Rather than consider the
Petition, the South Carolina Court of Appeals requested that the South Carolina
Supreme Court take the case on certification. Further proceedings on all issues
are now pending before the South Carolina Supreme Court. Through December 2002,
we have accrued the $15.0 million judgment plus accrued interest of $2.5
million.

GTECH
In February 1999, GTECH Holdings Corporation filed a complaint in Florida
against the State of Florida, Department of Lottery (Florida Lottery) and
Automated Wagering International (AWI), Anchor's online lottery subsidiary
recently renamed to IGT OES. The complaint requested that the contract between
AWI and the Florida Lottery be declared void. In July 1999, the First District
Court of Appeals affirmed the Florida Lottery's award of the contract to AWI. In
March 1999, AWI and the Florida Lottery executed an amended contract.

In January 2000, the Florida Circuit Court determined that the amended contract
materially differed from the Request for Proposal and declared the amended
contract null and void. The Florida Lottery appealed on February 2, 2000,
affecting an automatic stay of the Circuit Court's order. AWI appealed on
February 10, 2000. On February 28, 2001, the Florida First District Court of
Appeals affirmed the order of the Circuit Court. Both AWI and the Florida
Lottery petitioned the Court of Appeals for a rehearing or certification of
questions to the Florida Supreme Court. In July 2001, the Court of Appeals
granted these motions. Both AWI and the Florida Lottery petitioned the Florida
Supreme Court to consider the questions certified by the Court of Appeals and
also to stay enforcement of the Order of the Circuit Court. In June 2002, the
Florida Supreme Court issued an order dismissing the appeals of AWI and the
Florida Lottery. Both parties immediately began operating under an Emergency
Agreement executed between AWI and the Florida Lottery effective February 2000.

AWI, the Florida Lottery and GTECH began settlement discussions and in July
2002, the parties entered into a settlement agreement, which provides for
dismissal of the lawsuit. It further provides that AWI and the Florida Lottery
will continue to operate the lottery under the Emergency Agreement through
December 31, 2004, which is the term of the original agreement executed by AWI
and the Florida Lottery in 1999. The Florida Lottery agreed to commence the
procurement process for a new online system not later than the first quarter of
2003 with the new system to be implemented by January 1, 2005.

Kraft
In July 2001, an individual, Mary Kraft, filed a complaint against IGT, Anchor
and the three operators of casinos in Detroit, Michigan. IGT was never served
with the complaint and was voluntarily dismissed from the litigation. In
September 2001, IGT filed a motion to intervene as a party defendant. The
plaintiff claimed the bonus wheel feature of the Wheel of Fortune(R) and I Dream
of Jeannie(TM) slot machines, which are manufactured, designed and programmed by



IGT and/or Anchor, are deceptive and misleading. Specifically, plaintiff alleged
that the bonus wheels on these games do not randomly land on a given dollar
amount but are programmed to provide a predetermined frequency of payouts. The
complaint alleged violations of the Michigan Consumer Protection Act, common law
fraud and unjust enrichment and asked for unspecified compensatory and punitive
damages, disgorgement of profits, injunctive and other equitable relief, and
costs and attorney's fees. The Michigan Gaming Control Board, the administrative
agency responsible for regulating the Detroit casinos, approved the machines and
their programs for use. In April 2002, the Court granted the Summary Disposition
filed by IGT and Anchor and dismissed the Plaintiff's complaint. In May 2002,
Plaintiff filed an appeal.

Poulos
Along with a number of other public gaming corporations, IGT is a defendant in
three class action lawsuits: one filed in the US District Court of Nevada,
entitled Larry Schreier v. Caesars World, Inc., et al, and two filed in the US
District Court of Florida, entitled Poulos v. Caesars World, Inc., et al. and
Ahern v. Caesars World, Inc., et al., which have been consolidated into a single
action. The Court granted the defendants' motion to transfer venue of the
consolidated action to Las Vegas. The actions allege that the defendants have
engaged in fraudulent and misleading conduct by inducing people to play video
poker machines and electronic slot machines, based on false beliefs concerning
how the machines operate and the extent to which there is an opportunity to win
on a given play. The amended complaint alleges that the defendants' acts
constitute violations of the Racketeer Influenced and Corrupt Organizations Act,
and also give rise to claims for common law fraud and unjust enrichment, and
seeks compensatory, special, incidental and punitive damages of several billion
dollars. In December 1997, the Court denied the motions that would have
dismissed the Consolidated Amended Complaint or that would have stayed the
action pending Nevada gaming regulatory action. The defendants filed their
consolidated answer to the Consolidated Amended Complaint in February 1998. In
March 2002, the Court directed that certain merits discovery could proceed. In
June 2002, the Court denied the plaintiffs' motion for class certification. An
appeal of that denial was filed timely with the US Court of Appeals for the
Ninth Circuit. The appellants' (class plaintiffs) opening brief on appeal must
be filed on or before March 31, 2003 and the Respondent's brief is due June 30,
2003.

Environmental Matters
Colorado Central Station Casino (CCSC), one of our discontinued casino
operations, is located in an area that has been designated by the Environmental
Protection Agency (EPA) as a superfund site as a result of contamination from
historic mining activity in the area. The EPA is entitled to proceed against
owners and operators of properties located within the site for remediation and
response costs associated with their properties and with the entire site. CCSC
is located within the drainage basin of North Clear Creek and is therefore
subjected to potentially contaminated surface and ground water from upstream
mining related sources. Soil and ground water samples on the site indicate that
several contaminants exist in concentrations exceeding drinking water standards.
CCSC has applied the guidance in Statement of Position 96-1 "Environmental
Remediation Liabilities" and determined that a liability has not been incurred.

Guarantees

Liquidated Damages Under Online Lottery Contracts
Our lottery contracts typically permit termination of the contract by the
lottery authority at any time for material breach or for other specified reasons
and generally contain demanding implementation and performance schedules.
Failure to perform under such contracts may result in substantial monetary
damages. Some of our US lottery contracts contain provisions for significant
liquidated damages related to various incidents such as implementation delays,
systems downtime, supply shortages, or degraded systems performance. Many of our
lottery contracts also permit the lottery authority to terminate the contract
upon notice "for convenience" or upon a State's cessation, in whole or in part,
of lottery operations and do not specify the compensation, if any, to which we
would be entitled should such termination occur. Some of our international
customers similarly reserve the right to assess monetary damages in the event of
contract termination or breach. Although such liquidated damages provisions are



customary in the lottery industry and the actual liquidated damages imposed are
sometimes subject to negotiation, such provisions in our lottery contracts
present an ongoing potential for additional expense. At December 28, 2002, we
had $2.7 million accrued for liquidated damages.

Performance Bonds
We had performance bonds outstanding, related to our operation of several
lottery systems and a gaming machine route, totaling $77.1 million at December
28, 2002. The amount outstanding at December 28, 2002 included $75.0 million
related to lottery systems acquired with Anchor. We are liable to reimburse the
bond issuer in the event the bond is exercised as a result of our
nonperformance.

Progressive Systems Trusts
Our linked progressive systems in Iowa and New Jersey are administered by trusts
consisting of participating casino members. We have agreed to loan to these
trusts, upon request, and subject to certain limitations, amounts necessary to
meet substantially all obligations of the trusts. Trust obligations are
primarily related to jackpot liabilities. We are not able to estimate the
maximum potential amount of future payments under this guarantee because it
depends on the frequency of jackpots won relative to the timing of collections
from participating casinos. Loans to the trusts have historically been
infrequent and short term in nature. Outstanding loans to the trusts totaled
$352,000 including accrued interest at December 28, 2002.

Self-Insurance
We are self-insured for various levels of workers' compensation, directors' and
officers' liability, electronic errors and omissions liability, employee
medical, dental, prescription drug, and short-term disability coverage. We also
have stop loss coverage to protect against unexpected claims. Insurance claims
and reserves include accruals of estimated settlements for known claims, as well
as accruals of actuarial estimates of incurred but not reported claims.

10.      Derivatives and Hedging Activities

Derivatives and Hedging Activities
With the adoption of Statement of Financial Accounting Standards (SFAS) 133 on
October 1, 2000, we recognize all derivatives as either assets or liabilities on
the balance sheet at the fair value of the instruments. Accounting for changes
in the fair value of derivatives depends on the intended use and resulting
designation. We use derivative financial instruments to minimize our market risk
exposure resulting from fluctuations in foreign exchange rates and interest
rates. The primary business objective of our hedging program, operated pursuant
to documented corporate risk management policies, is to minimize the impact of
transaction, remeasurement, and specified economic exposures to our net income
and earnings per share. The counter parties to these instruments are major
commercial banks and we believe that losses related to credit risk are remote.
We are not party to leveraged derivatives and do not hold or issue financial
instruments for speculative purposes.

We routinely use derivative financial instruments to hedge our net exposure, by
currency, related to our monetary assets and liabilities denominated in
non-functional foreign currency. These hedging instruments are subject to
fluctuations in value that are generally offset by the value of the underlying
exposures being hedged. These forward exchange contracts are not designated as
hedging instruments under SFAS 133 and resulting gains or losses are recognized
in current earnings.

From time to time, we enter into sales commitments denominated in foreign
currencies. Our policy is to hedge significant firm commitments denominated in
foreign currency with forward exchange contracts to protect the US dollar value
of the revenues. These forward exchange contracts have been designated as fair
value hedges under SFAS 133 and related gains or losses are included as a
component of the hedged transaction when recorded. Gains and losses related to
the hedge ineffectiveness are recorded in other income or expense. Time value is
excluded from effectiveness testing.



At December 28, 2002, our net foreign currency exposure totaled $35.2 million
related to our monetary assets and liabilities denominated in non-functional
foreign currency and $58.2 million for a firm sales commitment denominated in
Canadian dollars. These exposures were hedged with $87.5 million in forward
currency contracts. The hedge for the firm commitment was designated as fair
value hedge under SFAS 133 and the amount of the hedge ineffectiveness was not
material for the quarter ended December 28, 2002. At September 28, 2002, we had
net foreign currency exposure of $28.9 million related to our monetary assets
and liabilities denominated in non-functional foreign currency and $54.9 million
for a firm sales commitment denominated in Canadian dollars. These exposures
were hedged with $86.5 million in forward contracts.

11.      Business Segments

We operate principally in the following three lines of business. The casino
operations acquired from Anchor have been reclassified to discontinued
operations. See Note 2.

      *  Product sales encompass the development, manufacturing, marketing,
         distribution and sales of computerized gaming products and systems.

      *  Proprietary gaming operations includes the development, marketing and
         placement of WAP systems, stand alone games, and gaming equipment
         leasing. This segment is comprised of our wholly-owned gaming
         operations, which includes activities that we perform on behalf of our
         strategic marketing alliances, as well as our joint venture activities
         reported as earnings of unconsolidated affiliates. Subsequent to the
         Anchor acquisition, the JV activities have been consolidated.

      *  Lottery systems consist of the development, manufacturing, operation
         and sale of online lottery and pari-mutuel systems.

There have been no material changes during the current period in the basis of
measuring segment profit or the amount of identifiable assets by segment since
our last annual report. See Note 5 for changes to the allocation of goodwill
by segment since our last annual report. The following table presents
information on our lines of business for the current and prior comparable
periods. IGT's segment profit reflects income from continuing operations before
tax, including an appropriate allocation of operating expenses, as well as
interest income, interest expense and other expenses, net.The following table
presents information on our lines of business for the current and prior
comparable periods. IGT's segment profit reflects income from continuing
operations before tax, including an appropriate allocation of operating
expenses, as well as interest income, interest expense and other expenses, net.



                                                       Product   Proprietary
  Lines of Business                                     Sales       Gaming       Lottery   Corporate Consolidated
  ---------------------------------------------------------------------------------------------------------------
                                                                                         
  (Amounts in thousands)
  Quarter ended December 2002
  Total revenues                                       $241,250     $248,382     $42,030    $      -    $531,662
  Earnings (losses) of unconsolidated affiliates              -         (179)          -           -        (179)
  Segment profit (loss)                                  65,493       92,387       3,296     (20,093)    141,083
 ----------------------------------------------------------------------------------------------------------------
  Quarter ended December 2001
  Total revenue                                        $199,605     $101,888     $     -    $      -    $301,493
  Earnings (losses) of unconsolidated affiliates              -       33,865           -           -      33,865
  Segment profit (loss)                                  39,340       62,172           -     (19,306)     82,206



12.      Subsequent Events

On January 29, 2003 and February 5, 2003, we issued in a private offering $969.8
million principal amount at maturity of zero-coupon senior convertible
debentures due January 29, 2033 (the Debentures), including $126.5 million
pursuant to an option exercised by the initial purchaser. IGT received gross
proceeds of $575.0 million from the issuance of the Debentures. The Debentures
have a yield to maturity of 1.75%. IGT may be required to pay contingent cash
interest on the Debentures at then prevailing market rates to be determined
during any six month period commencing on or after January 29, 2006, if the



average closing sale prices of our common stock for specified measurement
periods is less than or equal to 60% of the accreted conversion price of the
Debentures during such specified periods.

The Debentures are convertible into shares of our common stock at an initial
conversion rate of 5.2926 shares per $1,000 principal amount at maturity upon
the occurrence of the following events: (i) the closing price of our common
stock is more than 120% of the accreted conversion price (initially
approximately $134 per share) for a specified period; (ii) the average trading
price of the Debentures is less than 95% of the average closing price of our
common stock on the New York Stock Exchange multiplied by the conversion rate
for a specified period; (iii) our long-term senior debt ratings (or the ratings
on the Debentures, if rated) are reduced to below BB by Standard & Poor's and
below Ba2 by Moody's or ceases to be rated by both rating agencies; (iv) the
Debentures have been called for redemption; and (v) upon the occurrence of
specified corporate events.

We may repurchase the Debentures at any time on or after September 29, 2006, for
a price equal to the accreted value of the Debentures plus accrued and unpaid
cash interest thereon, if any. The holders of the Debentures can require us to
repurchase their Debentures on January 29, 2006, 2008, 2013, 2018, 2023 and 2028
for a repurchase price equal to the accreted value of the Debentures plus
accrued and unpaid cash interest thereon, if any. We must pay the repurchase
price in cash for any repurchases on January 29, 2006, and thereafter may elect
to pay the repurchase in cash or shares of common stock. We may also be required
to repurchase the Debentures upon the occurrence of specified change of control
events at the accreted value of the Debentures plus accrued and unpaid cash
interest thereon, if any. Upon a change of control, we may elect to pay the
repurchase price in cash or common stock valued at 95% of its average closing
sale price for the five day trading period ending on the third trading day prior
to the repurchase date.


Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations

Critical Accounting Policies

Our consolidated financial statements have been prepared in conformity with
accounting principles generally accepted in the United States (US). Accordingly,
we are required to make estimates, judgments and assumptions that we believe are
reasonable based on our historical experience, contract terms, observance of
known trends in our company and the industry as a whole, and information
available from other outside sources. Our estimates affect the reported amounts
of assets, liabilities, revenues and expenses, and related disclosure of
contingent assets and liabilities. On a regular basis, we evaluate our
estimates, including those related to customer programs and incentives, product
returns, bad debts, inventory obsolescence, investments, intangible assets,
income taxes, warranty obligations, long-term contracts, contingencies and
litigation. Actual results may differ from initial estimates. We have identified
the following policies as critical to our business operations and the
understanding of our results of operations: use of estimates, revenue
recognition, jackpot liabilities and expenses, receivables and allowance for
doubtful accounts, inventories and obsolescence, and long-lived assets. For a
discussion on the application of these and other significant accounting
policies, see Note 1 of our Condensed Consolidated Financial Statements.

Anchor Acquisition

On December 30, 2001, we completed our acquisition of Anchor Gaming (Anchor),
which resulted in the addition of two new lines of business, lottery systems and
casino operations. The lottery systems provide equipment and related services to
online lotteries and pari-mutuel organizations. In June 2002, we determined that
the casino operations were not a strategic fit with our core business and
committed to a plan to sell the two Colorado casinos and the Nevada gaming
machine route acquired with Anchor. As a result, our casino operations have been



classified as discontinued operations for all periods presented. The allocation
of the Anchor acquisition purchase price to the fair value of net assets
acquired was finalized in December 2002.

IGT and Anchor had worked together since 1996 as partners in The Spin For Cash
Joint Venture (JV). The most notable change to our financial results following
the acquisition was the consolidation of the JV, which was previously accounted
for under the equity method, whereby revenues were reflected, net of expenses,
in earnings of unconsolidated affiliates on our statements of income.

Results of Operations

Quarter Ended December 28, 2002 Compared to the Quarter Ended December 29, 2001
Income from continuing operations for the current quarter grew to $87.9 million
or $1.00 per diluted share compared to $51.8 million or $0.70 per diluted share
for the same quarter last year. The acquisition of Anchor and the consolidation
of the JV contributed significantly to this improvement. In June 2002, we
committed to sell the casino and slot route operations acquired in connection
with the Anchor acquisition. The current quarter results included income from
discontinued casino operations, net of tax, totaling $3.7 million or $.04 per
diluted share. Net income for the first quarter of fiscal 2003 totaled $91.6
million or $1.04 per diluted share.

Income from Operations
Current quarter operating income grew 58% to $154.8 million from $97.8 million
in the first quarter of fiscal 2002. Contributions from Anchor and the
consolidation of the JV primarily drove this increase. In addition, we
experienced revenue growth in both product sales and proprietary gaming
operations compared to the prior year quarter.

Prior to the Anchor acquisition on December 30, 2001, our revenue from the JV
was presented, net of expenses, in earnings of unconsolidated affiliates. Given
that current quarter revenues included the JV, but our prior year quarter
revenues did not, income from operations as a percentage of revenue was not
comparable to the prior year quarter except on a pro forma basis as if the
Anchor acquisition and the consolidation of the JV had been effective at the
beginning of fiscal 2002. If the Anchor acquisition and the consolidation of the
JV had been effective at the beginning of fiscal 2002, comparable prior year
first quarter revenues would have been $486.2 million and income from operations
would have been $119.9 million. Income from operations as a percentage of
revenue improved to 29% in the current quarter versus 25% in the prior year
quarter, assuming the acquisition was effective at the beginning of fiscal 2002,
primarily related to improved gross profit and reduced bad debt expense.

Revenues and Gross Profit
Total revenues and earnings of unconsolidated affiliates for the first quarter
of fiscal 2003 grew 58% to $531.5 million compared to $335.4 million in the
first quarter of fiscal 2002. Gross profit improved to $259.8 million in the
current quarter compared to $170.3 in prior year quarter. Anchor's operations
and the consolidated results of the JV contributed significantly to this growth.

Product Sales
Revenue from product sales reached $241.3 million on shipments of 29,700 units
worldwide in the first quarter of fiscal 2003. Comparatively, sales in the prior
year quarter totaled $199.6 million on shipments of 32,500 units. Gross profit
margins on product sales improved to 48% in the current quarter from 41% in the
prior year quarter. The increase in gross profit margin resulted primarily from
a larger proportionate mix of domestic sales, comprising 80% of total sales
versus 64% in the prior year quarter. We estimate our overall gross profit
margins will trend closer to the mid 40%'s for the remainder of fiscal 2003, due
to an increased volume of lower margin sales into Japan and Quebec. Domestic
margins benefited from a greater mix of sales to new properties, along with
increased sales of traditional spinning reel games. We believe this trend is a
result of the more full-scale casino floor replacements we have been
experiencing in conjunction with the replacement demand acceleration currently
in process in our markets.



Domestic shipments increased to 19,300 in the current quarter compared to 12,600
in the prior year quarter. The increase in domestic unit sales resulted from new
casino openings, as well as greater replacement demand in Nevada, Atlantic City
and Native American markets. Shipment to new casinos included the Seneca in
Niagara Falls, New York, the newest gaming market, the Borgata in Atlantic City,
and the Tuscany and Cannery casinos in Las Vegas. We sold 11,100 units into the
domestic replacement market during the current quarter or 58% of total domestic
sales compared to 7,200 units or 57% in the same quarter last year.

Our EZ Pay(R) technology continues to stimulate replacement demand for our
gaming machines as existing slot machines are replaced with our EZ Pay(R)
systems and ticket-in/ticket-out (TITO) equipped machines throughout major
casino resorts. We shipped over 3,300 replacement games to the MGM MIRAGE casino
properties during the first quarter of fiscal 2003 pursuant to our previously
announced EZ Pay(R) agreement with this customer. With the recent settlement of
the Aristocrat patent lawsuit (see Note 9 of our Condensed Consolidated
Financial Statements), virtually every major manufacturer of cashless gaming
systems and machines is licensed to use the cashless patents in the intellectual
property package administered by IGT. We believe this will facilitate casinos'
implementation of cashless technology using any combination of systems and
machines, encourage broader adoption of cashless technology and continue to
stimulate replacement demand.

International machine shipments for the quarter declined to 10,400 from 19,900
in the prior year quarter, related primarily to reduced sales in Japan and
Australia, partially offset by stronger sales in Europe. Sales were negatively
impacted in Japan by the restrictive regulatory environment and in Australia by
on-going government anti-gaming "harm minimization" measures, as well as the
economic effects of recent drought conditions. Improvements in average sales
price and margins in Australia, United Kingdom, and Latin America partially
offset decreased international sales volumes.

Proprietary Gaming
Gaming operations revenues and earnings of unconsolidated affiliates for the
first quarter increased 83% to $248.2 million from $135.8 million the prior year
quarter. Gross profit from proprietary gaming operations grew 50% to $132.1
million compared to $87.8 million the prior year. These improvements resulted
from the inclusion of Anchor and the consolidation of the JV, as well as
enhanced yield per game resulting from new game introductions and a favorable
jurisdictional mix. Nevada, the industry's lowest net win market, comprised only
39% of our installed casino base at December 2002 versus 43% at December 2001,
further enhancing our jurisdictional mix.

IGT's installed base of proprietary games, including machines placed in both
casinos and racinos, ended the current quarter at 32,500, an increase of 600
units over the prior year quarter when adjusted to reflect acquired Anchor
machines. The growth in our installed base related primarily to machines awarded
to IGT in the Delaware racino market. Of IGT's 32,500 installed base, machines
in casino markets ended the quarter at 28,500, an increase of 100 over the same
quarter last year when adjusted to reflect acquired Anchor machines. This
increase was aided by the commencement of Native American gaming in New York.
Domestic casino market proprietary game placements declined from the prior year
quarter in Nevada and Atlantic City by 1,600 units, offset by 1,700 additional
placements in other US regional and Native American jurisdictions. New games
introduced during the quarter included such popular themes as I Love Lucy(R),
Lifestyles of the Rich and Famous (TM)(our first Advanced Video Platform(TM)
game), and The Beverly Hillbillies(TM) (our first penny progressive video slot
machine).

Lottery and pari-mutuel systems
Our lottery and pari-mutuel systems, acquired with Anchor, produced revenues of
$42.0 million and a gross profit margin of $12.6 million or 30% for the first
quarter of fiscal 2003. Current quarter revenues were favorably impacted due to
increased play resulting from a large multi-state Powerball jackpot and a large
Lotto jackpot in Florida. In December 2002, we went live with Korea's first
online lottery.



Operating Expenses
Operating expenses for the current quarter increased to $105.0 million from
$72.5 million in the comparable prior year quarter. The inclusion of Anchor's
operations in the current quarter accounted for increases in all expense
categories except bad debt expense. Bad debt expense in the prior year quarter
included additional provisions for international receivables related to the
currency devaluation of the Argentine Peso. Expenses also increased due to legal
costs related to protection of our intellectual property, along with our ongoing
investment in research and development. Operating expenses included $1.6 million
in the current quarter and $1.5 million in the prior year quarter to update our
internal software systems with an enterprise resource planning (ERP) solution.

Other Income and Expense
Other expense, net, decreased $1.9 million from the same quarter last year to
$13.7 million for the current quarter.

Our worldwide tax rate increased to 37.7% for the current quarter compared to
37% for the prior year quarter related primarily to the Anchor acquisition. We
expect our tax rate for fiscal 2003 to fluctuate between 37.5% and 38%.

Discontinued Operations
In June 2002, we determined that the casino operations acquired with Anchor were
not a strategic fit with our core business and committed to a plan to sell the
two Colorado casinos (Colorado Central Station and Colorado Grande Casino) and
the Nevada gaming machine route acquired with Anchor. As a result, we ceased
depreciation and amortization, and our casino operations have been classified as
discontinued operations for all periods presented. Current quarter income from
discontinued operations, net of tax, totaled $3.7 million.

In December 2002, we announced our definitive agreement pursuant to which Herbst
Gaming will purchase substantially all of the assets of the Nevada slot route
operations of our subsidiary, Anchor Coin, for a cash price of $61.0 million.
The sale is subject to Herbst Gaming obtaining regulatory and third party
approvals, including gaming regulatory approvals.

In late December 2002, we also announced our agreement to sell the two Colorado
casinos for a cash price of $84.0 million to Isle of Capri Black Hawk L.L.C., a
joint venture between Isle of Capri Casinos, Inc. and Nevada Gold and Casinos,
Inc. The agreement is subject to the satisfaction of several conditions,
including financing and the approval of the Colorado Gaming Commission.

Business Segments Operating Profit (See Note 11 of our Condensed Consolidated
Financial Statements)
IGT's operating profit by segment reflects income from continuing operations
before tax, including an appropriate allocation of operating expenses, as well
as interest income, interest expense and other expenses, net. Our proprietary
gaming segment includes both our wholly owned gaming operations and our
unconsolidated joint venture activities reported as earnings of unconsolidated
affiliates.

Product sales segment profit for the current quarter increased 66% to $65.5 or
27% of related revenues up from $39.3 million or 20% in the same quarter last
year. This improvement related primarily to volume growth and increased gross
profit margins, partially offset by increased operating expenses.

Segment profit from our proprietary gaming operation improved 49% to $92.4
million in the current quarter from $62.2 million in the prior year quarter.
This improvement resulted primarily from the full consolidation of the JV and
inclusion of Anchor's results subsequent to acquisition, as well as growth in
our installed base and enhanced yield per game. As a percentage of revenue and
earnings of unconsolidated affiliates, proprietary gaming segment profit totaled
37% in the current quarter compared to 46% in the prior year quarter. This
fluctuation was primarily due to our share of the JV activities reflected net of
expenses in earnings of unconsolidated affiliates in the prior year quarter.



Current quarter segment profit from lottery systems, our new segment acquired
with Anchor, totaled $3.3 million or 8% of related revenues. Compared to the
prior sequential quarter ended September 2002, revenues improved related to the
large Powerball and Florida jackpots.

Financial Condition, Liquidity and Capital Resources

Capital Resources
One of IGT's fundamental financial strengths is our ability to generate cash
from operations to reinvest in our business. We anticipate that our operating
activities will continue to provide us with cash flows to assist in our business
expansion and to meet our financial commitments. Our sources of capital also
include, but are not limited to, the issuance of public or private placement
debt, bank borrowings, and the issuance of equity securities.

We believe that our available short-term and long-term capital resources are
sufficient to fund our capital expenditures and operating capital requirements,
scheduled debt payments, interest and income tax obligations, strategic
investments and acquisitions, and share repurchases. Our sources of capital
afford us the financial flexibility to target acquisitions of businesses that
offer opportunities to implement our operating strategies, increase our rates of
return, and improve shareholder value.

Cash Flow From Operating Activities
Cash provided by operations in the first three months of fiscal 2003 totaled
$53.5 million compared to $90.7 million in the first quarter of fiscal 2002. The
most significant fluctuations related to increased sales volumes and payment
timing in receivables, inventories, taxes, accounts payable and accrued
liabilities. Receivables increased due to machines shipped late in the quarter,
as well as additional financing arrangements with the Seneca tribe for their new
casino in New York. Taxes paid in the current quarter were $47.0 million higher
than the prior year quarter, predominantly related to the Anchor acquisition.

Cash Flow From Investing and Financing Activities
Net cash used by investing activities in the first quarter of fiscal 2003
totaled $25.4 million compared to $15.4 million in the prior year quarter. This
fluctuation related primarily to investment in property, plant and equipment
totaling $33.3 million in the current quarter compared to $20.0 million in the
prior year period. Our capital expenditures for the current quarter included
$3.7 million to update our internal software systems with an ERP solution
compared to $621,000 in the prior year quarter.

Net cash flow from financing activities used $9.2 million in the first three
months ended December 28, 2002, compared to $34.8 million in the prior year
quarter. This fluctuation is primarily due to decreased share repurchases and
debt payments in the current quarter.

Net Cash Flow from Proprietary Progressive Jackpot Systems
WAP games differ from stand alone and hybrid games in that they are
electronically linked, inter-casino systems that connect gaming machines to a
central computer, allowing the system to build a progressive jackpot with every
wager until a player hits the top award winning combination. Only WAP systems
have related jackpot liabilities and investments to fund future jackpot
payments.

Our proprietary WAP systems provide cash through collections from
systems to fund jackpot liabilities and from maturities of investments purchased
to fund future annual jackpot payments. Cash is used to make payments to jackpot
winners for jackpot liabilities or to purchase investments to fund future
jackpot payments. The purchase of and proceeds from investments to fund jackpot
liabilities are classified as investing activities. Collections from systems to
fund jackpot liabilities and payments to winners are classified as financing
activities. The increased cash flows related to jackpot investments and
liabilities in the current quarter versus the prior year quarter are due
primarily to the consolidation of the JV with the Anchor acquisition.



Net cash flows from these activities represent timing differences between the
growth in liabilities for jackpots and the actual payments to the winners during
the period. Fluctuations in net cash flows from systems occur based on the
timing of the jackpot cycles and the volume of play across all of our WAP
jackpot systems games. Net cash flows from these activities collectively
provided cash of $5.6 million in the first three months of 2003 and $9.8 million
in the comparable prior year period.

Stock Repurchase Plan
Our Board of Directors authorized IGT's common stock repurchase plan in 1990.
Our remaining share repurchase authorization totaled 2.6 million shares as of
January 29, 2003. During the first three months of fiscal 2003, we repurchased
274,000 shares for an aggregate price of $19.7 million. From December 29, 2002
to January 29, 2003, we repurchased 1.8 million shares for an aggregate price of
$137.3 million.

Credit Facilities and Indebtedness
Our domestic and foreign borrowing facilities totaled $269.8 million at December
28, 2002. Of this amount, $3.7 million was drawn with an average interest rate
of 2.38%, $8.2 million was reserved for letters of credit and the remaining
$257.9 million was available for future borrowings. We are required to comply
with certain covenants contained in these agreements, which, among other things,
limit our ability to incur indebtedness, grant liens, make investments,
acquisitions, dispositions, or to pay dividends or make certain other restricted
payments without the written consent of the lenders and require the maintenance
of certain financial ratios. We were in compliance with all applicable covenants
as of December 28, 2002.

On January 29, 2003 and Feburary 5, 2003, we issued in a private offering $969.8
million principal amount at maturity of zero-coupon senior convertible
debentures due January 29, 2033 (the Debentures), including $126.5 million
pursuant to an option exercised by the initial purchaser. IGT received gross
proceeds of $575.0 million from the issuance of the Debentures. The Debentures
have a yield to maturity of 1.75%. IGT may be required to pay contingent cash
interest on the Debentures at then prevailing market rates to be determined
during any six month period commencing on or after January 29, 2006, if the
average closing sale prices of our common stock for specified measurement
periods is less than or equal to 60% of the accreted conversion price of the
Debentures during such specified periods.

The Debentures are convertible into shares of our common stock at an initial
conversion rate of 5.2926 shares per $1,000 principal amount at maturity upon
the occurrence of the following events: (i) the closing price of our common
stock is more than 120% of the accreted conversion price (initially
approximately $134 per share) for a specified period; (ii) the average trading
price of the Debentures is less than 95% of the average closing price of our
common stock on the New York Stock Exchange multiplied by the conversion rate
for a specified period; (iii) our long-term senior debt ratings (or the ratings
on the Debentures, if rated) are reduced to below BB by Standard & Poors' and
below Ba2 by Moody's or ceases to be rated by both rating agencies; (iv) the
Debentures have been called for redemption; and (v) upon the occurrence of
specified corporate events.

We may repurchase the Debentures at any time on or after September 29, 2006, for
a price equal to the accreted value of the Debentures plus accrued and unpaid
cash interest thereon, if any. The holders of the Debentures can require us to
repurchase their Debentures on January 29, 2006, 2008, 2013, 2018, 2023 and 2028
for a repurchase price equal to the accreted value of the Debentures plus
accrued and unpaid cash interest thereon, if any. We must pay the repurchase
price in cash for any repurchases on January 29, 2006, and thereafter may elect
to pay the repurchase in cash or shares of common stock. We may also be required
to repurchase the Debentures upon the occurrence of specified change of control
events at the accreted value of the Debentures plus accrued and unpaid cash
interest thereon, if any. Upon a change of control, we may elect to pay the
repurchase price in cash or common stock valued at 95% of its average closing
sale price for the five day trading period ending on the third trading day prior
to the repurchase date.



Financial Condition

                                                   December    September
                                                     2002        2002
         ---------------------------------------------------------------
         (Amounts in millions)
         Total assets                               $3,378      $3,316
         Total liabilities and minority interest     1,866       1,883
         Total stockholders' equity                  1,512       1,433


Total assets increased $62.0 million during the first three months of fiscal
2003 primarily due to increases in cash, receivables and inventories related to
increased sales and timing of payments.

Total liabilities and minority interest decreased $17.0 million during the first
three months of fiscal 2003 primarily related to payments for semi-annual
interest on our Senior Notes and employee incentive plans.

Total stockholders' equity increased $79.0 million predominantly related to net
income generated during the current period, partially offset by treasury stock
repurchases. Additional paid-in capital also increased as the result of employee
stock plans.

Off-Balance Sheet Arrangements
In the normal course of business, we are a party to financial instruments with
off-balance sheet risk such as performance bonds and other guarantees, which are
not reflected in our balance sheet. We do not expect any material losses to
result from these off-balance sheet instruments and we are not dependent on
off-balance sheet financing arrangements to fund our operations.

Liquidated Damages Under Online Lottery Contracts
Our lottery contracts typically permit termination of the contract by the
lottery authority at any time for material breach or for other specified reasons
and generally contain demanding implementation and performance schedules.
Failure to perform under such contracts may result in substantial monetary
damages. Some of our US lottery contracts contain provisions for significant
liquidated damages related to various incidents such as implementation delays,
system downtime, supply downtime, supply shortages, or degraded systems
performance. Many of our lottery contracts also permit the lottery authority to
terminate the contract upon notice "for convenience" or upon a State's
cessation, in whole or in part, of lottery operations and do not specify the
compensation, if any, to which we would be entitled should such termination
occur. Some of our international customers similarly reserve the right to assess
monetary damages in the event of contract termination or breach. Although such
liquidated damages provisions are customary in the lottery industry and the
actual liquidated damages imposed are sometimes subject to negotiation, such
provisions in our lottery contracts present an ongoing potential for additional
expense. At December 28, 2002, we had $2.7 million accrued for liquidated
damages.

Performance Bonds
We had performance bonds outstanding, related to our operation of several
lottery systems and a gaming machine route, totaling $77.1 million at December
28, 2002. The amount outstanding at December 28, 2002 included $75.0 million
related to lottery systems acquired with Anchor. We are liable to reimburse the
bond issuer in the event the bond is exercised as a result of our
nonperformance.

Progressive Systems Trusts
Our linked progressive systems in Iowa and New Jersey are administered by trusts
consisting of participating casino members. We have agreed to loan to these
trusts, upon request, and subject to certain limitations, amounts necessary to
meet substantially all obligations of the trusts. Trust obligations are
primarily related to jackpot liabilities. We are not able to estimate the
maximum potential amount of future payments under this guarantee because it
depends on the frequency of jackpots won relative to the timing of collections
from participating casinos. Loans to the trusts have historically been



infrequent and short term in nature. Outstanding loans to the trusts totaled
$352,000 including accrued interest at December 28, 2002.

Recently Issued Accounting Standards

IGT keeps abreast of new generally accepted accounting principles (GAAP) and
disclosure reporting requirements issued by the Financial Accounting Standards
Board (FASB), Securities and Exchange Commission (SEC) and other standard
setting agencies. Recently issued accounting standards affecting our financial
results are described in Note 1 of our Condensed Consolidated Financial
Statements.

Trademarks and Copyright Information

Italicized text indicates trademarks of IGT or its licensors. Included in this
filing are the following trademarks, service marks, and/or federally registered
trademarks of International Game Technology or its wholly-owned subsidiaries: EZ
Pay.

IGT also designs, manufactures, produces, operates, uses, and/or otherwise has
permission to exploit certain gaming machines utilizing materials under license
from third-party licensors. More specifically, the games that have been
mentioned in this filing and their related trademark and copyright ownership
information are as follows: "I LOVE LUCY" and related marks are trademarks of
CBS Broadcasting Inc. Images of Lucille Ball & Desi Arnez are licensed by
Desilu, too, LLC Licensing by Unforgettable Licensing; The Beverly Hillbillies
(TM)/(C) 2003 CBS Worldwide, Inc. All Rights Reserved; Lifestyles of the Rich
and Famous(R)&(C) 2003 Rysher Entertainment, Inc. All Rights Reserved; Wheel of
Fortune is a registered trademark of Califon Productions, Inc.; I Dream of
Jeannie is a trademark of CPT Holdings, Inc.

Forward Looking Statements and Risk Factors

Risk Factors and Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of 1995

Throughout this Quarterly Report on Form 10-Q we make some "forward looking"
statements, which are not historical facts, but are forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements relate to analyses and other information based on forecasts of
future results and estimates of amounts not yet determinable. These statements
also relate to our future prospects and proposed new products, services,
developments or business strategies. These forward looking statements are
identified by their use of terms and phrases such as "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "plan," "predict," "project,"
"will," "continue," and other similar terms and phrases, including references to
assumptions. Although we believe that the expectations reflected in any of our
forward looking statements are reasonable, actual results could differ
materially from those projected or assumed. Our future financial condition and
results of operations, as well as any forward looking statements, are subject to
change and to inherent known and unknown risks and uncertainties. We do not
intend, and undertake no obligation, to update our forward looking statements to
reflect future events or circumstances. We urge you to carefully review the
following discussion of the specific risks and uncertainties that affect our
business. These include, but are not limited to, the following:

Our success in the gaming industry depends in large part on our ability to
--------------------------------------------------------------------------
develop innovative products and systems and would be adversely affected by:
---------------------------------------------------------------------------
o        a decline in the popularity of our gaming products with players;
o        a lack of success in developing new products;
o        an increase in the popularity of competitors' games;
o        a negative change in the trend of consumer acceptance of our newest
         systems innovations including ticket-in/ticket-out voucher technology.



Demand for our products, placement of our proprietary games and operation of our
--------------------------------------------------------------------------------
lottery systems would be adversely affected by:
-----------------------------------------------
o        a reduction in the growth rate of new and existing markets;
o        delays of scheduled openings of newly constructed or planned casinos;
o        reduced levels of gaming play on our gaming systems or weakened
         customer demand for our gaming machines as a result of declines in
         travel activity or customer capital expenditures;
o        a decrease in the desire of established gaming properties to upgrade
         machines, resulting in a decline in the demand for replacement
         machines;
o        a decline in public acceptance of gaming;
o        a reduction in lottery sales in jurisdictions where we hold lottery
         contracts;
o        a loss of or inability to renew lottery contracts; and
o        failure to meet implementation and performance obligations of our
         online lottery systems operations could subject us to significant
         liquidated damage claims.

We operate in a highly regulated industry and our ability to operate in certain
--------------------------------------------------------------------------------
jurisdictions could be adversely affected by:
---------------------------------------------
o        unfavorable public referendums or anti-gaming legislation;
o        unfavorable legislation affecting or directed at manufacturers or
         operators of gaming products and systems;
o        adverse changes in or findings of non-compliance with applicable
         governmental gaming regulations;
o        delays in approvals from regulatory agencies;
o        a limitation, conditioning, suspension or revocation of any of our
         gaming licenses; and
o        unfavorable determinations or challenges of suitability by gaming
         regulatory authorities with respect to our officers, directors or key
         employees.

Our intellectual property rights are subject to risks, including:
-----------------------------------------------------------------
o        potential inability to obtain and maintain patents, trademarks and
         copyrights to protect our newly developed games and technology;
o        competitors' infringement upon our existing trademarks, patents and
         copyrights; and
o        approval of competitors' patent applications that may restrict our
         ability to compete effectively.

Our business is vulnerable to changing economic conditions, including:
----------------------------------------------------------------------
o        unfavorable changes in economic conditions including those that effect
         the relative health of the gaming industry;
o        political or economic instability in international markets;
o        changes in interest rates causing a reduction of investment income or
         in the value of market rate sensitive investments; and
o        fluctuations in foreign exchange rates, tariffs and other trade
         barriers.

Our outstanding Senior Notes, Convertible Debentures and borrowings under credit
--------------------------------------------------------------------------------
facilities subject us to certain additional risks, including:
-------------------------------------------------------------
o        increasing our vulnerability to general adverse economic and industry
         conditions;
o        limiting our ability to obtain additional financing to fund future
         working capital, capital expenditures, acquisitions and other general
         corporate requirements;
o        requiring a substantial portion of our cash flow from operations for
         the payment of interest on our indebtedness and corporate requirements;
o        limiting our flexibility in planning for, or reacting to, changes in
         our business and the industry; and
o        disadvantaging us compared to competitors with less indebtedness.



Our business operations are subject to other risks, including:
--------------------------------------------------------------
o        the loss or retirement of our key executives or other key employees;
o        adverse changes in the creditworthiness of parties with whom we have
         receivables or forward currency exchange contracts;
o        the loss of tenants on sublet properties no longer used in our
         operations;
o        difficulties integrating parts of the acquired Anchor operations;
o        the discovery of facts with respect to legal actions pending against
         IGT not presently known to us or determinations byjudges, juries or
         other finders of fact which do not accord with our evaluation of the
         possible liability or outcome of existing litigation;
o        increased costs due to reliance on third party suppliers and contract
         manufacturers;
o        agreements with Native American casinos which may subject us to
         sovereign immunity risk; and
o        we have been working for some time through several phases of our
         enterprise resource planning (ERP) solution for our computer system
         procedures and controls; any failures, difficulties or significant
         delays in implementing our new information systems could result
         in material adverse consequences to our business, including disruption
         of operations, loss of information and unanticipated increases in
         costs.



Item 3.  Quantitative and Qualitative Factors about Market Risk

Market Risk
We use derivative financial instruments to minimize our market risk exposure
resulting from fluctuations in foreign exchange rates and interest rates. The
primary business objective of our hedging program, operated pursuant to
documented corporate risk management policies, is to minimize the impact of
transaction, remeasurement, and specified economic exposures to our net income
and earnings per share. The counter parties to these instruments are major
commercial banks and we believe that losses related to credit risk are remote.
We are not party to leveraged derivatives and do not hold or issue financial
instruments for speculative purposes.

Foreign Currency Risk
We routinely use forward exchange contracts to hedge our net exposures, by
currency, related to the non-functional currency monetary assets and liabilities
of our operations. In addition, from time to time, we may enter into forward
exchange contracts to establish with certainty the US dollar amount of future
firm commitments denominated in a foreign currency.

At December 28, 2002, our net foreign currency exposure totaled $35.2 million
related to our monetary assets and liabilities denominated in non-functional
foreign currency and $58.2 million for a firm sales commitment denominated in
Canadian dollars. These exposures were hedged with $87.5 million in forward
currency contracts. At September 28, 2002, we had net foreign currency exposure
of $28.9 million related to our monetary assets and liabilities denominated in
non-functional foreign currency and $54.9 million for a firm sales commitment
denominated in Canadian dollars. These exposures were hedged with $86.5 million
in forward contracts.

Given our foreign exchange position, a 10% percent adverse change in foreign
exchange rates upon which these foreign exchange contracts are based would
result in exchange gains and losses. In all material aspects, these exchange
gains and losses would be fully offset by exchange gains and losses on the
underlying net monetary exposures for which the contracts are designated as
hedges. We do not expect material exchange rate gains and losses from unhedged
foreign currency exposures.

As currency exchange rates change, translation of the income statements of our
international businesses into US dollars affects year-over-year comparability of
operating results. We do not generally hedge translation risks because cash
flows from international operations are generally reinvested locally. Changes in
the currency exchange rates that would have the largest impact on translating
our international operating results include the Australian dollar, the British



pound, the Japanese yen and the Euro. We estimate that a 10% change in foreign
exchange rates would impact reported operating results by less than $200,000 for
the quarter ended December 28, 2002 compared to less than $1.0 million in the
comparable prior year period. This sensitivity analysis disregards the
possibility that rates can move in opposite directions and that gains from one
area may or may not be offset by losses from another area.

Interest Rate Risk
Fluctuations in prime, treasury and agency rates due to changes in market and
other economic conditions directly impact our costs to fund jackpots, and
therefore the gross profit in our proprietary gaming operations. If interest
rates decline, our costs increase, and correspondingly our gross profit
declines. We estimated that a 10% decline in interest rates would have reduced
our gross profit by $6.5 million in the first three months of fiscal 2003 and
$4.7 million in the comparable prior year period. We do not currently manage
this exposure with derivative financial instruments.

Our outstanding Senior Notes carry interest at fixed rates. If interest rates
increased by 10%, the fair market value of these notes would have decreased
approximately $22.5 million at December 28, 2002 and $24.2 million at September
28, 2002.


Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable assurance of achieving the
desired control objectives, and management necessarily is required to apply its
judgment in evaluating the cost-benefit relationship of possible controls and
procedures.

Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on the
foregoing, our Chief Executive Officer and the Chief Financial Officer concluded
that IGT's disclosure controls and procedures are effective.

Changes In Internal Controls
As a part of the ongoing implementation of our ERP solution, we have updated our
internal controls as necessary to accommodate any modifications to our business
processes or accounting procedures. There have not been any other significant
changes in our internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation. There were no
significant deficiencies or material weaknesses, and therefore no corrective
actions were taken.



Part II - Other Information

Item 1.  Legal Proceedings

           For a description of our legal proceedings, see Note 9 of Notes to
           Condensed Consolidated Financial Statements, which is incorporated by
           reference in response to this item.

Item 2.  Changes in Securities

           None.

Item 3.  Defaults Upon Senior Securities

           None.

Item 4.  Submission of Matters to a Vote of Security Holders

           None


Item 5.  Other Information

           None

Item 6.  Exhibits and Reports on Form 8-K

           (a)      Exhibits

           10.01    IGT Profit Sharing Plan (As Amended and Restated as of
                    April 1, 2002)

           (b)      Reports on Form 8-K

                    None



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.



Date: February 10, 2003

                                 INTERNATIONAL GAME TECHNOLOGY


                                 By:  /s/ Maureen Mullarkey
                                      -----------------------------------
                                      Maureen Mullarkey
                                      Executive Vice President,
                                      Chief Financial Officer and
                                      Treasurer



CERTIFICATION

I, G. Thomas Baker certify that:
         1.       I have reviewed this quarterly report on Form 10-Q of
                  International Game Technology.

         2.       Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this quarterly report,
                  fairly present in all material respects the financial
                  condition, results of operations and cash flows of the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  a.       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period in which this
                           quarterly report is being prepared;

                  b.       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c.       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures based on our evaluation as of the
                           Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a.       all significant  deficiencies in the design or
                           operation of internal  controls which could adversely
                           affect the  registrant's  ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  b.       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.

         Date:  February 10, 2003

         /s/ G. Thomas Baker
         -----------------------
         G. Thomas Baker
         Chief Executive Officer



CERTIFICATION

I, Maureen T. Mullarkey, certify that:
         1.       I have reviewed this quarterly report on Form 10-Q of
                  International Game Technology.

         2.       Based on my knowledge, this quarterly report does not contain
                  any untrue statement of a material fact or omit to state a
                  material fact necessary to make the statements made, in light
                  of the circumstances under which such statements were made,
                  not misleading with respect to the period covered by this
                  quarterly report;

         3.       Based on my knowledge, the financial statements, and other
                  financial information included in this quarterly report,
                  fairly present in all material respects the financial
                  condition, results of operations and cash flows of the
                  registrant as of, and for, the periods presented in this
                  quarterly report;

         4.       The registrant's other certifying officers and I are
                  responsible for establishing and maintaining disclosure
                  controls and procedures (as defined in Exchange Act Rules
                  13a-14 and 15d-14) for the registrant and we have:

                  a.       designed such disclosure controls and procedures to
                           ensure that material information relating to the
                           registrant, including its consolidated subsidiaries,
                           is made known to us by others within those entities,
                           particularly during the period in which this
                           quarterly report is being prepared;

                  b.       evaluated the effectiveness of the registrant's
                           disclosure controls and procedures as of a date
                           within 90 days prior to the filing date of this
                           quarterly report (the "Evaluation Date"); and

                  c.       presented in this quarterly report our conclusions
                           about the effectiveness of the disclosure controls
                           and procedures based on our evaluation as of the
                           Evaluation Date;

         5.       The registrant's other certifying officers and I have
                  disclosed, based on our most recent evaluation, to the
                  registrant's auditors and the audit committee of registrant's
                  board of directors (or persons performing the equivalent
                  functions):

                  a.       all significant  deficiencies in the design or
                           operation of internal  controls which could adversely
                           affect the  registrant's  ability to record, process,
                           summarize and report financial data and have
                           identified for the registrant's auditors any material
                           weaknesses in internal controls; and

                  b.       any fraud, whether or not material, that involves
                           management or other employees who have a significant
                           role in the registrant's internal controls; and

         6.       The registrant's other certifying officers and I have
                  indicated in this quarterly report whether there were
                  significant changes in internal controls or in other factors
                  that could significantly affect internal controls subsequent
                  to the date of our most recent evaluation, including any
                  corrective actions with regard to significant deficiencies and
                  material weaknesses.


          Date:  February 10, 2003

          /s/ Maureen T. Mullarkey
          -------------------------
          Maureen T. Mullarkey
          Chief Financial Officer