SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 10, 1996
GTECH HOLDINGS CORPORATION
(Exact name of registrant as specified in its
charter)
Delaware 1-11250 05-0450121
(State or other Jurisdiction (Commission File No.) (IRS Employer Identifica-
of Incorporation) tion No.)
55 Technology Way, West Greenwich, Rhode Island 02817
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 392-1000
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Item 5. Other Events
This Form 8-K is being filed for the purpose of setting forth the text
of a press release dated June 10, 1996 issued by the Company relating to its
first quarter of fiscal 1997 results.
The text of said press release is as follows:
For Immediate Release Contact: Robert Rendine
June 10, 1996 401-392-7452
GTECH ANNOUNCES FIRST QUARTER RESULTS
WEST GREENWICH, RI -- (June 10, 1996) -- GTECH (NYSE "GTK") today announced
earnings for its first quarter of fiscal 1997, ended May 25, 1996.
Revenues for the first quarter of fiscal 1997 totaled $211.2 million, an
increase of 17.7 percent over the $179.4 million for the same period last year.
Net income for the quarter was $18.2 million, or $.42 per share, compared with
$18.3 million, or $.42 per share for the same period last year.
Service and product revenue
Service revenues continued their strong growth, totaling $195.0
million, up 17.9 percent compared with $165.3 million for the same period
last year.
Service revenue increases were driven by the consolidation of $13.7 million in
revenue from Racimec, GTECH's subsidiary in Brazil, a $10.7 million increase
from existing customers and $5 million from Transactive. Transactive provides
services to governments in the electronic distribution of benefits, licenses,
permits, and constituents information.
Product sales totaled $16.2 million, up 14.8 percent from $14.1 million for the
same period last year, due primarily to the sale of one new central system, the
sale of a new instant ticket validation system, and higher terminal sales.
Service and product gross margins
Gross margins on service revenues for the first quarter of fiscal 1997 decreased
to 32.4 percent from 37.8 percent for the same period last year. The lower
margins resulted from the start-up losses at Racimec, coupled with higher
expenses relating to European operations.
The start-up losses at Racimec relate to new on-line lottery systems implemented
in fiscal year 1996, and higher infrastructure costs to support expanded
operations in Brazil. The higher costs in Europe were associated with programs
to enhance customer satisfaction and better position the Company to support
anticipated new business opportunities.
The unusually high jackpot activity of the first quarter of fiscal 1996 did not
repeat in the first quarter of fiscal 1997. This decline in the service margin,
however, was substantially offset by new lottery games, such as keno, in New
York and Georgia.
Gross margins on product sales increased to 43.4 percent, from 26.9 percent for
the same period last year, due to a change in product mix.
The comparison of service margins for this quarter is difficult due to the
consolidation of Racimec and its attendant start-up operating losses. Historic
margins, except as noted for the first quarter of 1996, represent a true picture
of the strength of the business.
Expenses
Selling, general and administrative (SG&A) expenses were virtually flat
at $30.0 million, compared to $29.9 million for the fourth quarter of fiscal
1996, but up from $25.6 million for the same quarter last year.
As a percent of revenue, SG&A expenses were down to 14.2 percent for the first
fiscal quarter, compared to 15.5 percent for the previous quarter, and 14.3
percent for the same period last year. The increase in spending primarily
supported expanded operations, including two of the Company's newly formed
ventures, Dreamport and WorldServ.
Dreamport, GTECH's gaming and entertainment subsidiary, provides video lottery,
electronic bingo, and commercial keno systems, and operates and supplies Native
American casinos.
WorldServ designs, implements and manages communications networks and
value-added information technology services for education and commercial
customers.
Investment and debt repayment
GTECH continued to invest in new contracts and the expansion of systems
in existing jurisdictions and also repaid debt with cash flow from operations.
Cash flow from operations was $52.8 million, with $40.8 million invested in
systems and equipment and other assets relating to new contracts. The major
portion was for previously announced new lottery contracts in Washington State
and Missouri, and the expansion of lottery systems in existing jurisdictions,
domestically and internationally. Of the remainder, $8.5 million repaid a
portion of the Company's $379 million in debt. At the end of the quarter, the
Company had approximately $136 million of revolving credit available.
GTECH Corporation specializes in the automation of lottery, gaming and
government services systems. In the lottery industry, GTECH is the world's
leading supplier of products and services, with contracts to supply and/or
operate lottery systems for 28 U.S. customers and 49 customers outside of the
United States.
Consolidated statements of operation follow:
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CONSOLIDATED INCOME STATEMENTS
GTECH HOLDINGS CORPORATION AND SUBSIDIARIES
(Unaudited)
Three Months Ended
May 25, May 27,
1996 1995
--------------- -----------------
(Dollars in thousands,except per share amounts)
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Revenues:
Services $ 194,986 165,327
Sales of products 16,187 14,102
------------------ -----------------
211,173 179,429
Costs and expenses:
Costs of services 131,715 102,777
Costs of sales 9,154 10,304
------------------ -----------------
140,869 113,081
------------------ -----------------
Gross profit 70,304 66,348
Selling, general and administrative 29,952 25,595
Research and development 6,630 7,531
------------------ -----------------
Operating income 33,722 33,222
Other income (expenses):
Interest income 550 2,061
Equity in earnings of unconsolidated
affiliates 3,217 2,272
Other income 46 164
Interest expense -6,151 -6,150
------------------ -----------------
Income before income taxes 31,384 31,569
Income taxes -13,181 -13,259
------------------ -----------------
Net income $ 18,203 18,310
================== =================
Earnings per common share: $ .42 .42
================== =================
Weighted average common shares outstanding 43,086,000 43,321,000
================= =================
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CONSOLIDATED BALANCE SHEETS
GTECH HOLDINGS CORPORATION AND SUBSIDIARIES
(Unaudited)
May 25, February 24,
ASSETS 1996 1996
-------------- ---------------
(In thousands, except share amounts)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,343 $ 8,519
Trade accounts receivable 77,355 73,755
Inventories 47,055 43,669
Deferred income taxes 25,661 25,661
Other current assets 11,696 12,601
-------------- ---------------
TOTAL CURRENT ASSETS 170,110 164,205
SYSTEMS, EQUIPMENT AND OTHER ASSETS RELATING TO
CONTRACTS 930,771 887,194
Less: Accumulated Depreciation -457,211 -417,948
------------ -------------
473,560 469,246
PROPERTY, PLANT & EQUIPMENT 70,175 67,707
Less: Accumulated Depreciation -36,579 -34,299
--------------- ------------
33,596 33,408
GOODWILL, net 113,847 114,843
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED
AFFILIATES 53,206 49,068
OTHER ASSETS 27,755 28,610
-------------- ---------------
$ 872,074 $ 859,380
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 468 $ 951
Accounts payable 40,143 46,343
Accrued expenses 53,071 54,465
Advance payments from customers 11,146 12,110
Employee compensation 17,267 24,929
Income taxes payable 19,764 ---
Current portion of long-term debt 4,021 3,993
-------------- ---------------
TOTAL CURRENT LIABILITIES 145,880 142,791
LONG-TERM DEBT, less current portion 375,014 382,930
OTHER LIABILITIES 29,579 30,264
DEFERRED INCOME TAXES 6,670 6,670
SHAREHOLDERS' EQUITY
Preferred Stock, par value $.01 per share--
20,000,000 shares authorized, none issued --- ---
Common Stock, par value $.01 per share--150,000,000
shares authorized, 43,771,893 and 43,739,520 shares
issued at May 25, 1996 and February 24, 1996,
respectively; 43,054,212 and 43,021,839 shares
outstanding at May 25, 1996 and February 24, 1996,
respectively 438 437
Additional paid-in capital 168,370 167,758
Equity carryover basis adjustment -7,008 -7,008
Translation adjustment -1,073 -463
Retained earnings 169,141 150,938
-------------- ---------------
329,868 311,662
Less cost of 717,681 shares in treasury -14,937 -14,937
------------ -------------
314,931 296,725
============ =============
872,074 $ 859,380
============== ===============
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SIGNATURES
Pursuant to the requirements of the Securities Exchanges Act, the
Registrant has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned, hereunto duly authorized, on June 10, 1996.
GTECH HOLDINGS CORPORATION
By: /s/ William Y. O'Connor
____________________________________
William Y. O'Connor
President & Chief Operating Officer
