SCIENTIFIC GAMES HOLDINGS CORP
8-K, 2000-05-26
COMMERCIAL PRINTING
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                       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): MAY 18, 2000

                         SCIENTIFIC GAMES HOLDINGS CORP.
             (Exact name of Registrant as Specified in its Charter)





          DELAWARE                       000-22298               58-1943521
(State or other jurisdiction of    (Commission File Number)   (I.R.S. Employer
incorporation or organization)                               Identification No.)


                          1500 BLUEGRASS LAKES PARKWAY
                            ALPHARETTA, GEORGIA 30004
                                 (770) 664-3700

(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)





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ITEM 5.        OTHER EVENTS


        On May 18, 2000, Scientific Games Holdings Corp., a corporation
organized under the laws of the State of Delaware ("SG"), Autotote Corporation,
a company organized under the laws of the State of Delaware ("Autotote") and ATX
Enterprises, Inc., a corporation organized under the laws of the State of
Delaware and wholly owned subsidiary of Autotote ("Merger Sub"), entered into an
agreement and plan of merger whereby SG will merge (the "Merger") with and into
Merger Sub, with SG as the surviving corporation in the Merger (the "Merger
Agreement"). The description of the Merger Agreement set forth herein is
qualified in its entirety by reference to the full text of such agreement.

        At the effective time of the Merger, each share of common stock, par
value $0.001 per share, of SG ("SG Common Stock") outstanding immediately prior
to the effective time of the Merger will be converted into the right to receive
$26 in cash. The Merger will be treated as a taxable purchase and sale of SG
common stock for U.S. income tax purposes. Consummation of the Merger is subject
to a number of conditions, including (1) the adoption of the Merger Agreement by
the stockholders of SG entitled to vote thereon, (2) the approval by certain
governmental entities and agencies and the expiration of all required regulatory
waiting periods applicable to the Merger, and (3) certain other customary
conditions.

        On May 19, 2000, SG and Autotote issued a joint press release concerning
the proposed Merger. A copy of the press release is attached as Exhibit 99.1
hereto and is hereby incorporated herein by reference.

        This Current Report on Form 8-K and the exhibits hereto contain
forward-looking statements with respect to the financial condition, results of
operations and businesses of each of SGI and Autotote, including statements
relating to the cost savings and opportunities for growth that are expected to
result from the Merger. These forward-looking statements involve certain risks
and uncertainties. Factors that may cause actual result to differ materially
from those contemplated by such forward-looking statements including, among
others, the following possibilities: (1) expected cost savings from the Merger
cannot be fully realized or realized within the expected time-frame; (2)
competitive pressures in the industries in which SG and Autotote compete
intensify; (3) costs or difficulties related to the integration of the
businesses of SGI and Autotote are greater than expected; (4) changes in general
economic or capital market conditions, or in the lottery and gaming businesses
in particular, adversely affect the operations of SG and Autotote; or (5)
legislative or regulatory requirements or changes adversely affect the
businesses of SG and Autotote. Such forward-looking statements speak only as of
the date on which such statements were made and neither SG nor Autotote
undertake any obligation to update any forward-looking statement to reflect
events or circumstances after the date on which any such statement is made to
reflect the occurrence of unanticipated events.

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ITEM 7.        FINANCIAL STATEMENTS AND EXHIBITS

(a)            Financial statements of businesses acquired.

                       -      Not Applicable

(b)            Pro Forma financial information.

                       -      Not Applicable

(c)            Exhibits.

               99.1    Press release, dated May 19, 2000, issued jointly by
                       Scientific Games Holdings Corp. and Autotote Corporation


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                                   SIGNATURES

        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 hereunto duly authorized.


                                             SCIENTIFIC GAMES HOLDINGS CORP.



Date:   May 25, 2000                         By:    /s/ C. Gray Bethea, Jr.
                                                --------------------------------
                                                C. Gray Bethea, Jr.
                                                Vice President, Secretary and
                                                General Counsel

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                                INDEX TO EXHIBITS


                                                                            PAGE
                                                                            ----

EXHIBIT 99.1   Press release, dated May 19, 2000, issued jointly by
               Scientific Games Holdings Corp. and Autotote Corporation       5


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<PAGE>   1
                                                                    EXHIBIT 99.1


AUTOTOTE                                                 [GRAPHIC]
                                                      SCIENTIFIC GAMES
                                                        INTERNATIONAL




<TABLE>
          <S>                      <C>                                  <C>
          Contacts:                David Pye, Vice President            Cliff O. Bickell, Vice President & CFO
                                   Autotote Corporation                 Scientific Games International
                                   212-754-2233                         770-664-3723
                                   www.autotote.com                     www.scigames.com

          Investor Relations:      Lisa D. Lettieri, Vice President
                                   Lippert/Heilshorn Assocs., Inc.
                                   (212) 838-3777 or [email protected]
                                   www.lhai.com

          Media Relations:         Pamela Rigler, Account Supervisor
                                   Lippert/Heilshorn Assocs., Inc.
                                   (212) 838-3777 or [email protected]
</TABLE>


             AUTOTOTE TO ACQUIRE SCIENTIFIC GAMES FOR $26 PER SHARE

                   OLIVETTI TO INVEST $100 MILLION IN AUTOTOTE


NEW YORK, NY, ALPHARETTA, GA, MAY 19, 2000 - AUTOTOTE CORPORATION [AMEX:TTE]
AND SCIENTIFIC GAMES HOLDINGS CORP. [NYSE:SG] announced today that they have
signed a definitive merger agreement. Autotote will pay $26 per share in cash,
or a total of approximately $310 million, to the shareholders of Scientific
Games. Scientific Games is a world leading supplier of lottery products,
integrated lottery systems and support services, and pre-paid telephone cards
with approximately 160 customers in 60 countries. The merger is subject to
approval by Scientific Games' shareholders and certain government entities and
agencies. Certain affiliates of Donaldson Lufkin Jenrette and Lehman Brothers
have issued a commitment letter to provide debt financing for the acquisition
and related costs.

In a separate transaction, Olivetti has issued a commitment letter for $100
million of


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preferred stock, convertible into Autotote shares, which, upon conversion, would
result in an approximately 30% participation in the combined entity. Other
investors have issued similar commitment letters for an additional $10 million
of convertible preferred stock. Ramius Securities, LLC acted as placement agent
for the preferred stock issue.

The acquisition merges the largest company in the pari-mutuel wagering business
with the only full service instant ticket and lottery systems company in the
world. The combined companies have reported revenue of $450 million and adjusted
EBITDA (earnings before interest, taxes, depreciation, amortization and one time
charges) of about $95 million for the last twelve months ending 1/31/00 (TTE)
and 3/31/00 (SG). Autotote intends to combine its rapidly growing lottery
on-line systems and terminal sales businesses with Scientific Games, already the
second largest provider of lottery services worldwide. Both companies serve huge
markets -- $116 billion in handle for the worldwide pari-mutuel industry and
$129 billion worldwide for the lottery industry -- and will enjoy substantial
leverage from their complementary products and sales channels and from the
consolidation of corporate functions.

Both companies have a long-standing reputation for product innovation and
quality services, and offer complementary products and technologies. Autotote is
the leading developer and provider of products and services to the global
pari-mutuel industry. In North America alone, 65% of the estimated $20 billion
of pari-mutuel wagering is processed by Autotote. Autotote is also a licensed
pari-mutuel off-track betting operator in the US and Europe. As previously
announced, Autotote has several domestic and international Internet-based
wagering ventures underway. Scientific Games is the world leader in the
manufacture and marketing of instant lottery tickets with an approximate 68%
market share in the US. Scientific Games also provides extensive marketing and
distribution services to lotteries, and has 4132 installed on-line or instant
ticket validation systems worldwide. In addition, Scientific Games is a leading
international supplier of prepaid phone cards.

Commenting on the acquisition, Lorne Weil, Chairman and CEO of Autotote, said,
"The Scientific Games merger combined with the Olivetti investment gives us an
entirely new strategic posture. With the former, we establish leading positions
in two of the largest segments of the gaming industry while more than doubling
revenue and cash flow. The association with the Olivetti/Telecom Italia Group,
which owns 45% of Lottomatica S.p.A., the leading operator in the lottery
business in Italy, will provide us with an important strategic partner worldwide
and will add significant strength to our balance sheet."

Lorne Weil added, "Scientific Games is widely regarded as the premier company in
the worldwide instant lottery business. This acquisition creates a new company
with very strong leverage to grow the lottery and pari-mutuel businesses
throughout the world. Autotote has won a high proportion of recent on-line
lottery contracts in the US using our highly successful Extrema(TM)
terminals, most of which were previously sold to international


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customers. By combining the depth of experience of both companies, we can
continue to innovate and expand our products and services into new territories,
leveraging the extensive lottery customer relationships established by
Scientific Games and adding our advanced technology to the mix. We also believe
our recently announced interactive wagering services will be an attractive
offering to lotteries worldwide. It is our objective to become the leading
full-line provider of global lottery services, as we are in the pari-mutuel
business."

William Malloy, Chairman, President and CEO of Scientific Games, said, "In a
world where 'bigger is better' is no longer just a saying, the merger with
Autotote gives the newly combined company the breadth and scale to develop and
deliver the products that will drive the future success of the lottery industry.
Furthermore, as the pari-mutuel industry has always applied superior technology
to meet its needs, this combination will accelerate the pace of that
technology's adaptation and introduction to the lottery industry. Our customers
have reason to be excited about the new choices that this merger will bring to
them." Mr. Malloy will remain as a consultant reporting to Mr. Weil for a period
of at least two years and will be nominated for election to Autotote's board of
directors.

Autotote and Scientific Games will be hosting a conference call for investors
and the media today at 11:00 A.M. ET. To access the call within the U.S. dial
888-243-1119 and for international callers dial 212-993-0201.

AUTOTOTE CORPORATION provides computerized wagering equipment, computer
software, management and satellite broadcast services for on-track, off-track
and inter- track wagering, lotteries and legalized sports betting facilities.
Autotote's systems are in use in the United States, Europe, Canada, Mexico,
Latin America, New Zealand and the Far East.

SCIENTIFIC GAMES INTERNATIONAL is a world leader in providing a full range of
lottery products, integrated systems and support services to lotteries in more
than 60 nations and 26 US states plus the District of Columbia, as well as
various commercial businesses around the globe. Currently there are 38 US
lotteries, including the District of Columbia. The company has production or
operating facilities in Georgia, California and the United Kingdom, France,
Germany, and Austria.

OLIVETTI Group, among many businesses is, through Telecom Italia, one of the
world's largest providers of telecommunications services with significant
presences. In Europe and South America. Olivetti and Telecom Italia, in addition
to their ownership in Lottomatica, provides wagering products and services to
sports betting outlets and pari-mutuel facilities in Italy.

This press release includes statements that constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. This information involves risks and uncertainties
that could cause actual results to


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differ materially from the forward-looking statements. For certain information
regarding these risks and uncertainties, reference is made to Autotote's Annual
Report on Form 10-K for the year ended October 31, 1999 and Scientific Games
Annual Report and Form 10-K for the year ended December 31, 1999.

                                      ####



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