WEST GREENWICH – Lottery and gaming giant GTECH Holdings Corp. said Thursday that it had “record” revenues of $1.26 billion in fiscal 2005, up 19.6 percent over fiscal 2004, with net income of $196.4 million, or $1.50 per diluted share, up 7.2 percent over the previous year.
The company also reported $337.9 million in revenues for the fourth quarter of fiscal 2005, up 20.9 percent over the fourth quarter of fiscal 2004. Net fourth-quarter income was $43.8 million, or $0.34 per diluted share, down 8.3 percent from the same quarter in 2004.
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The financial report comes as GTECH is facing a civil suit by Brazil’s Public Ministry that led a court to freeze the company’s Brazilian assets and order part of its Brazilian revenues to be withheld. In a news release, the company addressed the situation but focused on stressed GTECH’s overall strength.
“GTECH’s fourth quarter and full-year results provide further validation that our business is operationally sound, financially strong, and strategically on track,” said GTECH president and CEO W. Bruce Turner in a news release. “We enjoyed significant growth in total revenues in both the quarter and the year, driven by the continued strength in same store sales and strong product sales. We also met our overall financial goals and objectives, despite the unexpected revenue holdback in Brazil.”
“We are pleased with the strong operating performance of the business in fiscal 2005, despite several challenges,” said GTECH senior vice president and CFO Jaymin B. Patel. “The outlook for fiscal 2006 is promising, and we remain excited about the future. Our significant successes in the marketplace over the past 12 months position us well for continued growth, and provide confidence in our ability to achieve our long-term goals of profitability and value creation for our shareholders.”
The company said during fiscal 2005, it generated $375.2 million of cash from operations. This cash, along with cash generated by the sale of available-for-sale investment securities, was principally used to fund the Spielo Manufacturing Inc., Leeward Islands Lottery Holding Company Inc. (LILHCo), and BillBird S.A. acquisitions of $200.7 million and to fund $245.6 million of systems, equipment, and other assets relating to contracts, the company said.
In addition, GTECH issued $300 million of senior notes during fiscal 2005; repaid the remaining $90.0 million of its 7.87-percent senior notes; repurchased $120.7 million, or 5.3 million shares of its common stock, and paid cash dividends of $39.8 million. As of Feb. 26, GTECH said, it had $94.4 million of cash and cash equivalents and $196.8 million of short-term investment securities on hand.
Regarding the Brazil situation, GTECH said it has recently received written confirmation of an appellate court decision that reverses a “substantial portion” of a lower court’s order freezing GTECH’s Brazilian assets and imposing a 30-percent withholding of GTECH’s fees from Caixa Economica Federal (Caixa) as indemnification for potential future liabilities should the Public Ministry’s suit prevail.
GTECH stressed that it has “aggressively defended” against the suit, which it said is “based on outdated and faulty information.” GTECH’s contract with Caixa expires May 14. Caixa has announced that it plans to develop its own central system application and take over operations now run by GTECH.
The company said Caixa has “publicly expressed its intent to enter into a new contract with GTECH or extend its current contract” to assist in the migration process. Negotiations have recently begun, GTECH said.
A detailed financial statement is available at www.gtech.com.
