WEST GREENWICH – GTECH Corp. and parent Lottomatica SpA joined in announcing that on Friday, Nov. 10, Lottomatica’s board of directors, chaired by Lorenzo Pellicioli, approved the consolidated accounts of Lottomatica Group for the nine months ended Sept. 30.
The report includes nine months of Lottomatica’s Italian operations and one month of GTECH operations, the companies noted.
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“It has been a little over two months since Lottomatica completed its acquisition of GTECH,” said Bruce Turner, CEO of Lottomatica Group. “As you might imagine, integrating two industry leaders is a formidable but achievable challenge. The people of Lottomatica and GTECH have responded admirably to the challenge.
“While much work has gone on behind the scenes to integrate our systems and operations, I am pleased to report that this process has proceeded swiftly and efficiently. More importantly, it has been seamless to our customers. We are already benefiting from the complementary expertise within the two organizations, and we remain confident about our long-term outlook,” Turner said.
Lottomatica revenues for the nine months ended Sept. 30 totaled 566 million euros, including about 74 million euros from the quarter’s one post-acquisition month of GTECH operations. Overall, revenues grew 26.3 percent, year over year.
Earnings before interest, tax and amortization (EBITDA) were 268.8 million euros for those nine months, up 13.9 percent from the first nine months of fiscal year 2005. Adjusted for transaction costs, earnings were 287 million euros, about 28 million euros of which were related to one month of GTECH operations.
Net income for the nine months ended Sept. 30 was 38.8 million euros. But excluding transaction-related items of about 91 million euros, it would have been about 130 million euros, Lottomatica said.
The company said its Italian operations enjoyed substantial revenue growth in the first nine months of fiscal 2006 as lottery wagers grew about 20 percent, to 7.7 billion euros, more than offsetting Lotto wagers, which dipped 8.8 percent, to 5.0 billion euros. In the third quarter, Lottomatica Italian operations had earnings before interest, tax and amortization of 255.9 percent million, up 8.5 percent year over year. Adjusted for transaction costs, it 259 million euros. The EBITDA margin of 52 percent is comparable with the third quarter year-to-date 2005 results.
Revenues for one month of GTECH activities totalled 73.6 million euros, the companies said, including about 62.9 million euros from the Lottery segment, 5 million euros from Gaming Solutions, and 5.6 million euros for Commercial Services. Earnings before interest, tax and amortization from GTECH operations were about 13 million euros – or about 28 million euros, when transaction costs are excluded.
Lottomatica Group closed the period with a net debt position of 2.5 billion euros, and cash and equivalents of about 402.5 million euros. In April, it paid out 119.4 million euros in dividends.
“We continued to deliver healthy financial results for the nine months of this fiscal year,” said Marco Sala, managing director of Lottomatica’s Italian operations. “In particular, with reference to the Italian operations, total Lottery wagers grew 20 percent on a year-to-date basis, and we experienced continued positive performance in the Commercial Services segment.”
The companies noted that GTECH, over the course of the third quarter, successfully completed three major lottery system conversions in the United States:
* In July, it converted the Washington Lottery’s central system to GTECH’s Enterprise Series platform and installed a new communications network. It also replaced the Lottery’s existing terminals with 3,400 Altura terminals.
* In August, the Arizona Lottery went live with a new Enterprise Series central system, 2,600 Altura terminals, and a VSAT communications network.
* In September, the Rhode Island Lottery, GTECH’s third U.S. system conversion in less than three months, received the latest version of Enterprise Series.
Among other third-quarter developments at GTECH, the companies listed:
* GTECH’s launch of new online lottery games Rhody Poker and Kansas Hold ‘em, in Rhode Island and Kansas, respectively. Both monitor games, offered every four minutes, are based on GTECH’s Club Poker.
* On the Gaming Solutions front, in July, GTECH launched Ca$hola – along with its video lottery terminal subsidiary Spielo and the Multi-State Lottery Association. – launched Ca$hola in July.
* In addition, the company received a video central system contract from Manitoba Lotteries Corp. in Canada.
Among more recent developments, the companies mentioned the Oregon Lottery’s announcement this week that it intends to award a new online lottery contract to GTECH, and the extensions of existing contracts with GTECH by in Kentucky and Trinidad & Tobago.
Also mentioned was GTECH’s planned entry into the instant-ticket printing business, by acquiring Creative Games International, as part of GTECH’s strategy of becoming a provider of a full range of instant-ticket products and services. The acquisition is pending, and is expected to be completed late this month.
Lottomatica is based in Rome, Italy; its stock trades on the Milan Stock Exchange under the symbol LTO. Additional information is available at www.gtech.com.
