AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 30, 2002
REGISTRATION NO. 333-83492
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GTECH HOLDINGS CORPORATION
GTECH CORPORATION
GTECH RHODE ISLAND CORPORATION
GTECH LATIN AMERICA CORPORATION
(exact name of registrant as specified in its charter)
DELAWARE 05-0451021
DELAWARE 05-0389840
RHODE ISLAND 06-1493040
DELAWARE 05-0449895
(States or other jurisdictions of incorporation or (I.R.S. employer
organization) identification numbers)
GTECH HOLDINGS CORPORATION
GTECH CORPORATION
GTECH RHODE ISLAND CORPORATION
GTECH LATIN AMERICA CORPORATION
55 TECHNOLOGY WAY
WEST GREENWICH, RHODE ISLAND 02817
(401) 392-1000
(Address, including zip code, and telephone number,
including
area code, of registrants' principal executive offices)
MARC A. CRISAFULLI, ESQ.
SENIOR VICE PRESIDENT
AND
GENERAL COUNSEL
GTECH HOLDINGS CORPORATION
55 TECHNOLOGY WAY
WEST GREENWICH, RHODE ISLAND 02817
(401) 392-1000
(Name, address, including zip code, and telephone
number,
including area code, of agent for service)
WITH COPIES TO:
LAURA N. WILKINSON, ESQ.
EDWARDS & ANGELL, LLP
2800 FINANCIAL PLAZA
PROVIDENCE, RHODE ISLAND 02903
(401) 274-9200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering: [ ] __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [
] ----------
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
PROSPECTUS [GTECH Logo]
$175,000,000
GTECH Holdings Corporation
1-3/4% Convertible Debentures due December 15, 2021
fully and unconditionally guaranteed by
GTECH Corporation and Certain of its Subsidiaries
-------
The debentures are unsecured unsubordinated obligations of GTECH
Holdings Corporation that are fully and unconditionally guaranteed on an
unsecured and unsubordinated basis by GTECH Corporation and certain of its
subsidiaries. Selling securityholders will use this prospectus to resell their
debentures and the common stock of GTECH Holdings Corporation issuable upon
conversion of their debentures and/or upon repurchase by GTECH of their
debentures. We will not receive any of the proceeds from the sale of the
debentures or of GTECH Holdings Corporation's common stock by any of the selling
securityholders.
The debentures will accrue interest at an initial rate of 1.75% per
year, which may be reset as described below under certain circumstances. We will
pay interest on the debentures on June 15 and December 15 of each year. The
first interest payment will be made on June 15, 2002.
Commencing with the six-month period beginning December 15, 2006, we
will reset the interest rate payable to the holders of debentures during
specified six-month periods if the average market price of a debenture for the
five trading-day reference period described in this prospectus equals 120% or
more of the initial issue price of the debentures on the day immediately
preceding the relevant six-month period. If this occurs, the interest rate
payable per debenture in respect of that six-month period will be reset to a
rate per year equal to the interest rate payable 120 days prior to such reset
date on 5-year U.S. Treasury Notes minus 2.54%. However, in no event will the
interest rate be reset below 1.75% or above 2.50% per year. For a discussion of
the special regulations governing contingent payment debt instruments, see
"Certain United States Federal Income Tax Consequences--United States
Holders--Accrual of Interest on the Debentures" beginning on page 34.
On or after December 15, 2006, we may redeem for cash all or part of
the debentures that have not been previously converted at a redemption price
equal to 100% of the principal amount of the debentures plus accrued interest up
to, but not including, the date of redemption. Holders may require us to
repurchase all or part of their debentures on December 15, 2004, December 15,
2006, December 15, 2011 and December 15, 2016 at a price equal to 100% of the
principal amount of the debentures plus accrued interest up to, but not
including, the date of repurchase. We may choose to pay the purchase price in
cash, shares of our common stock, or a combination of both. In addition, upon a
change in control of our company occurring on or prior to December 15, 2021,
each holder may require us to repurchase all or a portion of such holder's
debentures for cash.
Giving effect to an adjustment to the initial conversion rate
resulting from our 2-for-1 stock split paid to shareholders of record on May 16,
2002, the debentures will be convertible at the option of the holder into our
common stock at a conversion rate of 36.3636 shares of common stock per $1,000
principal amount of debentures, which is equivalent to a conversion price of
approximately $27.50 per share, subject to certain further adjustments, in the
following circumstances:
o if the sale price of our common stock is more than 120% of the
conversion price for at least 20 trading days in a 30
trading-day period prior to the date of surrender for
conversion;
o during any period in which the credit ratings assigned to the
debentures by Moody's or Standard & Poor's are reduced to
below specified levels, or in which the credit rating assigned
to the debentures is suspended or withdrawn by either rating
agency;
o if the debentures have been called for redemption; or
o upon the occurrence of specified corporate transactions.
Our common stock is listed on the New York Stock Exchange under the
symbol "GTK". On May 29, 2002, the last reported sale price on the New York
Stock Exchange for our common stock was $29.21.
Investing in the debentures involves risks. See "Risk Factors"
beginning on page 6.
The debentures and the GTECH common stock may be offered by the selling
securityholders in negotiated transactions or otherwise, at market prices
prevailing at the time of sale or at negotiated prices. In addition, the GTECH
common stock may be offered from time to time through ordinary brokerage
transactions on the New York Stock Exchange. See "Plan of Distribution". The
selling securityholders may be deemed to be "underwriters" as defined in the
Securities Act of 1933, or the Securities Act. Any profits realized by the
selling securityholders may be deemed to be underwriting commissions. If the
selling securityholders use any broker-dealers, any commissions paid to
broker-dealers and, if broker-dealers purchase any debentures or GTECH common
stock as principals, any profits received by such broker-dealers on the resale
of the debentures of GTECH common stock, may be deemed to be underwriting
discounts or commissions under the Securities Act.
Neither the Securities and Exchange Commission, any state securities
commission nor any other regulatory body has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is June 3, 2002
-----------
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS..................................... i
NOTICE TO INVESTORS....................................... ii
WHERE YOU CAN FIND MORE INFORMATION....................... ii
FORWARD-LOOKING STATEMENTS................................ iii
SUMMARY................................................... 1
RISK FACTORS.............................................. 6
USE OF PROCEEDS........................................... 10
SELECTED CONSOLIDATED FINANCIAL DATA...................... 11
PRO FORMA FINANCIAL INFORMATION........................... 12
RATIO OF EARNINGS TO FIXED CHARGES........................ 12
DESCRIPTION OF DEBENTURES................................. 13
DESCRIPTION OF CAPITAL STOCK.............................. 31
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES..... 33
SELLING SECURITYHOLDERS................................... 38
PLAN OF DISTRIBUTION...................................... 41
VALIDITY OF SECURITIES.................................... 43
INDEPENDENT AUDITORS...................................... 43
-----------
You should rely only on the information contained in this document or
in documents to which we have referred you. We have not authorized anyone to
provide you with different information. This document may only be used where it
is legal to sell these securities. The information in this document may only be
accurate on the date of this document.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
SEC using a "shelf" registration process. Under this shelf process, the selling
securityholders may sell any of the debentures described in this prospectus in
one or more offerings. This prospectus also covers sales of our common stock
that holders of debentures may receive upon conversion of the debentures into
common stock.
This prospectus provides you with a general description of (i) the
debentures that the selling securityholders may offer from time to time, (ii)
the shares of common stock that we will issue upon the surrender of the
debentures for conversion and (iii) the guarantees by certain of our domestic
subsidiaries. Each time additional selling securityholders, if any, want to sell
debentures or common stock received upon conversion of their debentures, we will
provide a prospectus supplement that will contain specific information about the
terms of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read this prospectus and
any applicable prospectus supplement together with the additional information
described under the heading "Where You Can Find More Information" beginning on
page ii.
NOTICE TO INVESTORS
The debentures are available in book-entry form only. The debentures
were issued in the form of global certificates, which are deposited with, or on
behalf of, The Depository Trust Company, or DTC, and registered in its name or
in the name of Cede & Co., its nominee. Beneficial interests in the global
certificates are shown on, and transfers of the global certificates will be
effected only through, records maintained by DTC and its participants.
Debentures in certificated form will be issued in exchange for the global
certificates only as set forth in the indenture governing the debentures. See
"Description of Debentures--Book Entry System" beginning on page 31.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC under the Securities Exchange Act of 1934, or the
Exchange Act. You may read and copy this information at the SEC's public
reference room at Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024,
Washington, DC 20549.
You may obtain information on the operation of the public reference
rooms by calling the SEC at 1-800-SEC-0330. You may also obtain copies of this
information at prescribed rates by mail from the Public Reference Section of the
SEC, 450 Fifth Street, N.W., Room 1024, Washington, DC 20549.
The SEC also maintains a web site that contains reports, proxy
statements and other information about issuers, like us, who file electronically
with the SEC. The address of that site is www.sec.gov.
You can also inspect reports, proxy statements and other information
about our company at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
We incorporate by reference information into this prospectus, which
means that we disclose important information to you by referring you to another
document filed separately with the SEC. The information incorporated by
reference is deemed to be part of this prospectus, except for any information
superseded by information contained directly in this prospectus. This prospectus
incorporates by reference the documents set forth below that we have previously
filed with the SEC. These documents contain important information about us and
our financial condition.
GTECH SEC FILINGS (File No. 001-11250) PERIOD
- --------------------------------------
Annual Report on Form 10-K................. Fiscal year ended February 23, 2002
The description of our common stock
as set forth in our amended registration
statement on Form 8-A12B/A................. Filed on June 25, 1998
All documents that we file with the SEC from the date of this
prospectus until all the securities offered by this prospectus have been sold
shall also be deemed to be incorporated herein by reference.
You may request a copy of these filings at no cost, by writing or
calling us at the following address or telephone number.
GTECH Holdings Corporation
55 Technology Way
West Greenwich, Rhode Island 02817
(401) 392-1000
Attn: Investor Relations
Exhibits to the filings will not be sent, however, unless those
exhibits have specifically been incorporated by reference in this document.
We have not included or incorporated by reference separate financial
statements of any of the guarantors in this prospectus, nor do any of the
guarantors file reports with the SEC. The guarantors are not required to include
separate financial statements in this prospectus because:
o all of the voting rights of the guarantors are owned, directly
or indirectly, by GTECH Holdings Corporation, which files
periodic and other reports with the SEC pursuant to the
Exchange Act;
o the guarantors have jointly and severally, fully and
unconditionally guaranteed the payment of the debentures; and
o GTECH Holdings Corporation has included and will include a
footnote in its financial statements presenting condensed
consolidating financial information regarding the guarantors
in accordance with applicable accounting regulations of the
SEC.
FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this
prospectus are forward-looking statements within the meaning of the United
States Private Securities Litigation Reform Act of 1995. We identify
forward-looking statements by words such as "may," "will," "should," "could,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "continue" or
similar terms that refer to the future. Such statements include, without
limitation, statements relating to:
o the future prospects for and stability of the lottery
industry and other businesses in which we are engaged or
expect to be engaged;
o our future operating and financial performance;
o our ability to retain existing contracts and to obtain and
retain new contracts; and
o the results and effects of legal proceedings and
investigations.
These forward-looking statements reflect management's assessment based
on information currently available, but are not guarantees and are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in the forward-looking statements. These risks and
uncertainties include, among other things, the matters described in this
prospectus under "Risk Factors--Risk Factors Relating to Our Business" beginning
on page 6.
SUMMARY
The following summary may not contain all the information that may be
important to you. You should read the entire prospectus, as well as the
information incorporated by reference, before making an investment decision.
When used in this prospectus, the terms "GTECH," "we," "our" and "us" refer to
GTECH Holdings Corporation and its consolidated subsidiaries, including the
guarantors, unless otherwise specified or indicated by the context.
GTECH
GTECH is the world's leading operator of highly-secure online lottery
transaction processing systems. We currently operate online lottery systems for,
or supply equipment to, 24 of the 39 online lottery authorities in the United
States and currently operate, provide services to or have entered into contracts
to operate or provide services in the future to, online lottery systems for 58
out of 105 international online lottery authorities.
Our core business consists of providing integrated online lottery
solutions, services and products to governmental lottery authorities and
governmental licensees worldwide. We offer our customers a full range of lottery
technology services, including the design, assembly, installation, operation,
maintenance and marketing of online lottery systems and instant ticket support
systems. Our lottery systems consist of numerous lottery terminals located in
retail outlets, central computer systems, systems software and game software,
and communications equipment which connects the terminals and the central
computer systems.
In recent years, we have taken steps to broaden our offerings of
high-volume transaction processing services outside of our core business of
providing online lottery transaction processing services. Services we currently
offer include the processing of utility bill payments and other financial
transactions.
The Guarantors
GTECH Corporation, a Delaware corporation, is the sole wholly-owned
direct subsidiary of GTECH Holdings Corporation and our principal operating
subsidiary. GTECH Corporation was founded in 1980. GTECH Holdings Corporation
acquired GTECH Corporation in a leveraged buy-out in February 1990, in which
members of then-senior management of GTECH participated. GTECH Corporation
remains the sole direct subsidiary of GTECH Holdings Corporation.
GTECH Rhode Island Corporation is a Rhode Island corporation and a
wholly-owned subsidiary of GTECH Corporation that purchases GTECH Corporation's
accounts receivable, holds intellectual property and licenses such intellectual
property to GTECH Corporation and lends money to and manages the investments of
GTECH Corporation and its subsidiaries.
GTECH Latin America Corporation is a Delaware corporation and a
wholly-owned subsidiary of GTECH Corporation that operates several lotteries in
the Caribbean.
-----------
Our and the guarantors' principal executive offices are located at 55
Technology Way, West Greenwich, Rhode Island 02817, telephone number (401)
392-1000.
The Offering
Issuer.................. GTECH Holdings Corporation.
Debentures Offered...... $175,000,000 aggregate principal amount of our 1-
3/4% Convertible Debentures due December 15, 2021.
Interest................ We will pay interest on the debentures
semiannually on June 15 and December 15,
commencing June 15, 2002. The debentures will
accrue interest at an initial rate of 1.75% per
year, which may be reset as described below under
"--Contingent Interest" under certain
circumstances.
Guarantees.............. The debentures are fully and unconditionally
guaranteed on a joint and several basis by GTECH
Corporation, our sole direct subsidiary, and by
GTECH Rhode Island Corporation and GTECH Latin
America Corporation, each of which is a
wholly-owned subsidiary of GTECH Corporation. We
refer to these three subsidiaries collectively as
the guarantors. If, for any reason, we do not make
payment of the principal of, interest on or any
other amounts required under the debentures or the
indenture when due, whether at maturity, upon
redemption or by acceleration or otherwise, the
guarantors will cause the payment to be made to or
to the order of the trustee.
Maturity of Debentures.... December 15, 2021.
Conversion Rights......... Holders may surrender all or a portion of their
debentures for conversion into shares of our
common stock at any time prior to the close of
business on the business day immediately preceding
the maturity date under any of the following
circumstances:
o if the sale price of our common stock for a
period of at least 20 trading days in the
period of 30 consecutive trading days ending
on the trading day before the date of
surrender for conversion is more than 120% of
the conversion price in effect on that
preceding trading day;
o during any period in which the credit rating
assigned to the debentures by Moody's
Investors Service, Inc. or Standard & Poor's
Rating Services is below Ba1 or BB,
respectively, or in which the credit rating
assigned to the debentures is suspended or
withdrawn by either rating agency;
o if the debentures have been called for
redemption; or
o upon the occurrence of specified corporate
transactions described under "Description of
Debentures-- Conversion Rights" beginning on
page 15.
The initial conversion rate upon issuance of the
debentures was equal to 18.1818 shares of common
stock per $1,000 principal amount of debentures.
This represented an initial conversion price of
approximately $55.00 per share of common stock. On
May 6, 2002, GTECH Holdings Corporation announced
a 2-for-1 stock split in the form of a stock
dividend, to be paid to shareholders of record as
of May 16, 2002, which we refer to as our "2-for-1
stock split." As a result, the conversion price of
the debentures was adjusted to $27.50 per share of
common stock (or 36.3636 shares of common stock
per $1,000 principal amount). The conversion rate
and price will be further adjusted upon the
occurrence of certain events specified in the
indenture. Holders may only convert debentures
with a principal amount of $1,000 or an integral
multiple of $1,000. See "Description of
Debentures--Conversion Rights" beginning on page
15.
Ranking of the Debentures
and the Guarantees......... The debentures are unsecured and unsubordinated
obligations of GTECH Holdings Corporation and rank
equal in right of payment with all of its existing
and future unsecured and unsubordinated
indebtedness. The guarantees are unsecured and
unsubordinated obligations of the respective
guarantors, and rank equal in right of payment
with all of such guarantors' respective existing
and future unsecured and unsubordinated
indebtedness, except to the extent prescribed by
law.
Contingent Interest........ We will reset the interest rate payable to the
holders of debentures during any six-month period
from December 15 to June 14 and from June 15 to
December 14, commencing with the six-month period
beginning December 15, 2006, if the average market
price of a debenture for the five trading days
ending on the second trading day immediately
preceding the beginning of the relevant six-month
period equals 120% or more of the initial issue
price of the debentures on the day immediately
preceding the relevant six-month period. The
interest rate payable per debenture in respect of
any such six-month period will be reset to a rate
per year equal to the interest rate payable 120
days prior to such reset date on 5-year U.S.
Treasury Notes minus 2.54%. However, in no event
will the interest rate be reset below 1.75% or
above 2.50% per year.
United States Federal Income
Tax Considerations........ The indenture requires each holder, for United
States federal income tax purposes, to treat the
debentures as "contingent payment debt
instruments" and to be bound by our application of
the Treasury regulations that govern contingent
contingent payment debt instruments, including our
determination that the yield at which interest
will be deemed to accrue for federal income tax
purposes will be 7.13%, compounded semiannually,
which is the annual yield we would pay, as of the
initial issue date, on a fixed-rate, non-
convertible debt security with no contingent
payments, but with terms and conditions otherwise
comparable to those of the debentures.
Accordingly, each holder will be required to
accrue interest on a constant yield to maturity
basis using this yield, and thus will recognize
taxable income in excess of cash received while
the debentures are outstanding. In addition, a
holder will recognize ordinary income upon a
conversion of a debenture into our common stock
equal to the excess, if any, between the value of
the common stock received on the conversion and
the holder's adjusted tax basis. However, the
proper United States federal income tax treatment
to a holder of a debenture is uncertain in various
respects. If the agreed upon treatment were
successfully challenged by the Internal Revenue
Service, it might be determined that, among other
differences, a holder should have accrued interest
income at a lower yield, should not have
recognized income or gain upon the conversion, and
should not have recognized ordinary income upon a
taxable disposition of its debentures. See
"Certain United States Federal Income Tax
Considerations" beginning on page 33.
INVESTORS SHOULD CONSULT THEIR TAX ADVISORS
REGARDING THE TAX TREATMENT OF THE DEBENTURES AND
WHETHER A PURCHASE OF THE DEBENTURES IS ADVISABLE
IN LIGHT OF THE AGREED UPON TAX TREATMENT AND THE
INVESTOR'S PARTICULAR TAX SITUATION.
Sinking Fund............... None.
Redemption of Debenturesat
the Option of GTECH
Holdings Corporation....... We may redeem all or a portion of the debentures
for cash at any time on or after December 15,
2006, at a redemption price equal to 100% of the
principal amount of the debentures, together with
accrued interest up to, but not including, the
date of redemption. See "Description of
Debentures--Redemption of Debentures at the Option
of GTECH" beginning on page 21.
Purchase of the Debentures
at the Option
of the Holder.............. Holders may require us to purchase all or a
portion of their debentures on December 15, 2004,
December 15, 2006, December 15, 2011 and December
15, 2016 for a price equal to 100% of the
principal amount of the debentures being redeemed,
together with accrued interest up to, but not
including, the date of redemption. We may choose
to pay the purchase price in cash, shares of our
common stock or a combination of both. See
"Description of Debentures--Purchase of Debentures
at the Option of the Holder" beginning on page 21.
Change in Control.......... Upon a change in control of our company occurring
on or before December 15, 2021, each holder may
require us to repurchase all or a portion of such
holder's debentures for cash at a price equal to
100% of the principal amount of the debentures
being redeemed, together with accrued interest up
to, but not including, the date of redemption. See
"Description of Debentures--Change in Control
Permits Purchase of Debentures by GTECH at the
Option of the Holder" beginning on page 24.
Use of Proceeds............ We will receive no proceeds from this offering.
The selling securityholders will receive the
proceeds from this offering.
DTC Eligibility............ The debentures have been issued in book-entry form
and are represented by permanent global
certificates deposited with a custodian for and
registered in the name of a nominee of DTC in New
York, New York. Beneficial interests in any such
securities will be shown on, and transfers will be
effected only through, records maintained by DTC
and its direct and indirect participants and any
such interest may not be exchanged for
certificated securities, except in limited
circumstances. See "Description of
Debentures--Book-Entry System" beginning on page
31.
Registration Rights........ We and the guarantors agreed, for the benefit of
holders, to file a shelf registration statement
with the SEC covering resales of the debentures
and the shares of our common stock issuable upon
conversion of the debentures. We have filed the
registration statement, and this prospectus is a
part of that registration statement. We also
agreed to cause the shelf registration statement
to become effective within 180 days after the
latest date of original issuance and to keep the
shelf registration statement effective for a
period of two years or, if earlier, until (i) the
sale pursuant to the shelf registration statement
of all the debentures and the shares of our common
stock issuable upon conversion of the debentures
or (ii) the expiration of the holding period
applicable to such securities held by
non-affiliates of our company under Rule 144(k) of
the Securities Act, or any successor provision.
See "Description of Debentures--Registration
Rights" beginning on page 29.
Trading.................... The debentures issued in the initial private
placement are eligible for trading in the PORTAL
system. Debentures sold using this prospectus,
however, will no longer be eligible for trading in
the PORTAL system.
New York Stock Exchange
Symbol for our Common
Stock..................... Our common stock is traded on the New York Stock
Exchange under the symbol "GTK."
RISK FACTORS
Investing in the debentures involves risk. You should carefully
consider the risks described below before making an investment decision. The
risks and uncertainties described below and elsewhere in this prospectus are not
the only ones facing us. Additional risks and uncertainties not presently known
to us or that we currently deem immaterial may also impair our business
operations. If any of the following risks actually occurs, our business,
financial condition or results of operations could be materially adversely
affected. In that case, the trading price of the debentures and our common stock
could decline substantially.
Risk Factors Relating to Our Business
Government regulations and other actions affecting the online lottery industry
could have a negative effect on our business.
In the United States and in many international jurisdictions where we
currently operate or seek to do business, online lotteries are not permitted
unless expressly authorized by law. We may not be able to implement our growth
strategy and our business could be materially adversely affected if
jurisdictions that do not currently authorize lotteries do not approve online
lotteries or if those jurisdictions that currently authorize lotteries do not
continue to permit such activities.
Once authorized, the ongoing operations of lotteries and lottery
operators are typically subject to extensive and evolving regulation. Lottery
authorities generally conduct an intensive investigation of the winning vendor
and its employees prior to and after the award of a lottery contract. Lottery
authorities with which we do business may require the removal of any of our
employees deemed to be unsuitable and are generally empowered to disqualify us
from receiving a lottery contract or operating a lottery system as a result of
any such investigation. Some jurisdictions also require extensive personal and
financial disclosure and background checks from persons and entities
beneficially owning a specified percentage (typically 5% or more) of our
securities. The failure of these beneficial owners to submit to such background
checks and provide required disclosure could jeopardize the award of a lottery
contract to GTECH or provide grounds for termination of an existing lottery
contract. Additional restrictions are often imposed by international
jurisdictions in which we market our lottery systems on foreign corporations,
such as us, seeking to do business there.
Further, there have been and may continue to be investigations of
various types, including grand jury investigations, conducted by governmental
authorities into possible improprieties and wrong-doing in connection with
efforts to obtain and/or the awarding of lottery contracts and related matters.
In light of the fact that such investigations frequently are conducted in
secret, we may not necessarily know of the existence of an investigation which
might involve us. Because our reputation for integrity is an important factor in
our business dealings with lottery and other governmental agencies, a
governmental allegation or a finding of improper conduct on our part or
attributable to us in any manner could have a material adverse effect on our
business, including our ability to retain existing contracts or to obtain new or
renewal contracts. In addition, continuing adverse publicity resulting from
these investigations and related matters could have a material adverse effect on
our reputation and business. See Note F to our consolidated financial statements
included in our annual report on Form 10-K incorporated by reference in this
prospectus for further information concerning these matters and other
contingencies.
Finally, sales generated by online lottery games are dependent upon
decisions made by lottery authorities with respect to the operation of these
games over which we have no control, such as matters relating to the marketing
and prize payout features of online lottery games. Because we are typically
compensated in whole or in part based on a jurisdiction's gross online lottery
sales, lower than anticipated sales due to these factors could have a material
adverse effect on our revenues.
Our lottery operations are dependent upon our continued ability to retain and
extend our existing contracts and win new contracts.
We derive a significant portion of our revenues and cash flow from our
portfolio of long-term facilities management contracts and operating contracts.
Upon the expiration of a contract, lottery authorities may award new contracts
through a competitive procurement process. In addition, our lottery contracts
typically permit a lottery authority to terminate the contract at any time for
failure to perform and other specified reasons, and many of our contracts permit
the lottery authority to terminate the contract at will with limited notice and
do not specify the compensation, if any, to which we would be entitled were such
termination to occur.
During fiscal year 2003, we expect that several of our significant
lottery contracts will be the subject of competitive procurement procedures to
select contractors to supply lottery goods and services upon the expiration of
our current contracts. Among these is the National Lottery of Brazil, our
largest contract, which accounted for approximately 10.7% of our consolidated
revenues in fiscal 2002 (which ended in February 2002). Caixa Economica Federal,
the operator of Brazil's national lottery, has indicated that upon the
expiration of our current contract, it may choose to handle internally some
non-lottery operations currently performed by us under our contract and, with
regard to the remaining lottery operations, may seek to proceed with a
competitive procurement process calculated to result in multiple vendors to
administer the national lottery, which is presently administered solely by us.
Other large contracts that will be subject to competitive procurement over the
next 12 months include our California and Georgia lottery contracts.
In addition, some of our lottery contracts permit the lottery
authority to acquire title to our system-related equipment and software during
the term of the contract or upon the expiration or earlier termination of the
contract, in some cases without paying us any compensation related to the
transfer of that equipment and software to the lottery authority.
The termination of or failure to renew or extend one or more lottery
contracts, the renewal or extension of one or more lottery contracts on
materially altered terms or the loss of our assets without compensation could,
depending upon the circumstances, have a material adverse effect on our
business, financial condition, results and prospects.
Slow growth or declines in sales of online lottery goods and services could
adversely affect our future revenues and profitability.
In recent years, as the United States lottery industry has matured, we
have experienced a downward trend in sales generated by certain of our United
States lottery customers. Our future success will depend, in part, on the
success of the lottery industry, as a whole, in attracting and retaining players
in the face of increased competition for the consumers' entertainment dollar, as
well as our own success in developing innovative products and systems to achieve
this goal. Our future success also will depend, in part, on our ability to
develop innovative products and services to permit us to successfully market
transaction processing goods and services outside of the lottery industry. Our
failure to achieve these goals could have a material adverse effect on our
business, financial condition, results and prospects.
We have significant foreign currency exposure.
Our consolidated financial results are significantly affected by
foreign currency exchange rate fluctuations. Foreign currency exchange rate
exposures arise from current transactions and anticipated transactions
denominated in currencies other than United States dollars and from the
translation of foreign currency balance sheet accounts into United States dollar
balance sheet accounts. We are exposed to currency exchange rate fluctuations
because a significant portion of our revenues is denominated in currencies other
than the United States dollar. These exchange rate fluctuations have in the past
adversely affected our operating results and may continue to adversely affect
our results of operations and the value of our assets outside the United States.
We are subject to the economic, political and social instability risks of doing
business in foreign jurisdictions.
We are a global business and derive a substantial portion of our
revenue from our operations outside the United States. In particular, in fiscal
2002, we derived approximately 51% of our revenues from our international
operations and approximately 11.5% of our revenues from our Brazilian operations
alone. In addition, a substantial portion of our assets are held outside of the
United States. We are also exposed to more general risks of international
operations, including:
o increased governmental regulation of the online lottery
industry in the markets where we operate;
o exchange controls or other currency restrictions; and
o significant political instability.
The occurrence of any of these events in the markets where we operate could
jeopardize or limit our ability to transact business in those markets in the
manner we expect and could have a material adverse effect on our business,
financial condition, results and prospects.
We have a concentrated customer base and the loss of any of these customers
could harm our results.
Revenue from our top ten customers accounted for approximately 57.6% of
our total revenue for the fiscal year ended February 23, 2002. If we were to
lose any of these larger customers, or if these larger customers experience slow
lottery ticket sales and consequently reduced lottery revenue, our business,
financial condition, results and prospects could suffer.
Our quarterly operating results may fluctuate significantly.
We have experienced and may continue to experience significant
fluctuations in our operating results from quarter to quarter due to such
factors as the amount and timing of product sales, the occurrence of large
jackpots in lotteries (which increase the amount wagered and our revenue) and
expenses incurred in connection with lottery start-ups. Fluctuations in our
operating results from quarter to quarter may cause our operating results to be
below the expectations of securities analysts and investors. If this occurs, the
trading price of our common stock and, consequently, the value of the debentures
could fluctuate significantly.
We operate in a highly competitive environment.
The online lottery industry is becoming increasingly competitive in the
United States and internationally, which could adversely affect our ability to
win renewals of contracts from our existing customers or to win contract awards
from other lottery authorities. In addition, awards of contracts to us are, from
time to time, challenged by our competitors. Increased competition also may have
a material adverse effect on the profitability of contracts which we do obtain.
We are subject to substantial penalties for failure to perform under our lottery
contracts.
Our lottery contracts typically permit termination of the contract at
any time for failure of GTECH to perform and for other specified reasons and
generally contain demanding implementation and performance schedules. Failure to
perform under these contracts may result in substantial monetary liquidated
damages, as well as contract termination. These provisions in our lottery
contracts present an ongoing potential for substantial expense.
Lottery contracts also generally require us to post a performance bond,
which in some cases may be substantial, to secure our performance under such
contracts. We paid or incurred liquidated damages with respect to our contracts
equaling 0.14%, 0.47%, 0.56%, 0.35%, and 0.21% of our annual revenues in fiscal
2002, 2001, 2000, 1999 and 1998, respectively. If we incur substantial
liquidated damages in the future, it could significantly reduce the amount of
funds that we have available for other uses in our business and may delay or
prevent us from pursuing and achieving our growth strategy, which could have a
material adverse effect on our business, financial condition, results and
prospects.
We may not be able to respond to technological changes or to satisfy future
technology demands of our customers.
Most of our software and hardware products are based on proprietary
technologies. If we fail to develop our product and service offerings to take
advantage of technological developments, we may fall behind our competitors and
our business, financial condition, results and prospects could suffer. In
addition, if our customers require technology solutions based on open systems
and we cannot successfully transition our proprietary technologies to support
open system solutions, we may lose those customers' contracts and our business,
financial condition, results and prospects may suffer.
Expansion of the gaming industry faces opposition.
Gaming opponents continue to persist in efforts to curtail the
expansion of legalized gaming. We can give you no assurance that this opposition
will not succeed in preventing the legalization of online gaming in
jurisdictions where these activities are presently prohibited or prohibiting or
limiting the expansion of online gaming where it is currently permitted, in
either case to the detriment of our business, financial condition, results and
prospects.
We rely on our senior executives and key employees.
Our business prospects and future success depend, in part, upon our
ability to attract and to retain qualified managerial, marketing and technical
employees. Competition for such employees is sometimes intense, and we may not
succeed in hiring and retaining the executives and other employees that we need.
Our loss of or inability to hire key employees could have a material adverse
effect on our business, financial condition, results and prospects.
We may be subject to adverse determinations in pending legal proceedings.
At present we are party to a securities class action lawsuit filed
against us and some of our current and former officers and directors and to
other legal proceedings which are described more fully in the SEC filings
incorporated by reference in this prospectus. We may not prevail in any of those
legal proceedings. If we are not successful in defending these legal
proceedings, we could incur substantial monetary judgments or penalties or
damage to our reputation, and whether or not we are successful, the proceedings
may occupy the time and attention of our senior management.
Risk Factors Relating to the Debentures
You should consider the United States federal income tax consequences of owning
the debentures.
We and each holder have agreed in the indenture to treat the debentures
as "contingent payment debt instruments" and to be bound by our application of
the Treasury regulations that govern contingent payment debt instruments.
Pursuant to this agreement, a holder will be required to accrue interest on a
constant yield to maturity basis using the annual yield we would pay, as of the
initial issue date, on a fixed-rate, non-convertible debt security with no
contingent payments, but with terms and conditions otherwise comparable to those
of the debentures (which yield has been determined to be equal to 7.13%,
compounded semiannually). Accordingly, a holder will recognize taxable income in
excess of the amount of cash received while the debentures are outstanding. In
addition, upon a sale, exchange, conversion or redemption of the debentures at a
gain, a holder will recognize ordinary income. See "Certain United States
Federal Income Tax Consequences" beginning on page 33.
An active trading market for the debentures may not develop.
There is currently no public market for the debentures. We do not plan
to list the debentures on any securities exchange or to include them in any
automated quotation system. We cannot assure you that an active trading market
for the debentures will develop or as to the liquidity or sustainability of any
such market, the ability of holders to sell their debentures or the price at
which holders of the debentures will be able to sell their debentures. Future
trading prices of the debentures will depend on many factors, including, among
other things, prevailing interest rates, our operating results, the price of our
common stock and the market for similar securities.
We may not be able to raise the funds necessary to finance a change in control
purchase or a purchase at the option of the holder.
On December 15, 2004, December 15, 2006, December 15, 2011 and December
15, 2016 and upon the occurrence of specific kinds of change in control events
occurring on or before December 15, 2021, holders of debentures may require us
to purchase their debentures. However, it is possible that we would not have
sufficient funds at that time to make the required purchase of debentures. In
that event, holders would not be able to sell their debentures to us for cash.
In addition, certain important corporate events, such as leveraged
recapitalizations that would increase the level of our indebtedness, would not
constitute a change in control under the indenture. See "Description of
Debentures--Purchase of Debentures at the Option of the Holder" beginning on
page 21 and "--Change in Control Permits Purchase of Debentures by GTECH at the
Option of the Holder" beginning on page 24.
USE OF PROCEEDS
The selling securityholders will receive all of the proceeds from the
sale of the securities offered by this prospectus. Neither GTECH Holdings
Corporation nor any of its subsidiaries will receive any of the proceeds from
the sale of the securities offered by this prospectus.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data below is identical in all respects
to the Selected Consolidated Financial Data we filed as part of our Annual
Report on Form 10-K for the fiscal year ended February 23, 2002, with the
exception of per share data which have been restated to give effect to our
2-for-1 stock split.
Fiscal Year Ended
---------------------------------------------------------------------
February 23, February 24, February 26, February 27, February 28,
2002 2001 2000 1999 1998 (a)
---------------------------------------------------------------------
Operating Data: (Dollars in thousands, except per share amounts)
Revenues:
Services $ 831,787 $ 856,475 $ 860,419 $ 887,395 $ 868,522
Sales of products 177,914 80,068 150,379 85,528 122,045
=========== =========== =========== =========== ===========
Total 1,009,701 936,543 1,010,798 972,923 990,567
Gross Profit:
Services 245,479 292,380 305,110 297,630 266,940
Sales of products 41,462 5,224 48,426 25,703 48,230
=========== =========== =========== =========== ===========
Total 286,941 297,604 353,536 323,333 315,170
Special charges (credit) (b) - 42,270 (1,104) 15,000 99,382
Operating income 134,350 81,905 180,000 141,720 44,104
Interest expense, net of interest income 17,426 21,569 25,523 23,326 24,578
Income before extraordinary charge 75,786 43,148 93,585 89,063 27,214
Extraordinary charge, net of income tax
benefit (c) 7,760 - - - -
Net income 68,026 43,148 93,585 89,063 27,214
Per Share Data: (d)
Basic:
Income before extraordinary charge $ 1.28 $ 0.62 $ 1.29 $ 1.09 $ 0.32
Extraordinary charge (0.13) - - - -
=========== =========== =========== =========== ===========
Net income $ 1.15 $ 0.62 $ 1.29 $ 1.09 $ 0.32
=========== =========== ============ =========== ===========
Diluted:
Income before extraordinary charge $ 1.26 $ 0.62 $ 1.29 $ 1.08 $ 0.32
Extraordinary charge (0.13) - - - -
=========== =========== =========== =========== ===========
Net income $ 1.13 $ 0.62 $ 1.29 $ 1.08 $ 0.32
=========== =========== =========== =========== ===========
Balance Sheet Data (at end of period):
Working capital (deficit) $ (11,448) $ 65,273 $ 28,253 $ 3,755 $ 27,371
Total assets 853,829 938,160 891,023 874,215 1,023,812
Long-term debt, less current portion 329,715 316,961 349,400 319,078 453,587
Shareholders' equity 202,955 314,362 296,576 283,906 345,210
Cash Flow Data:
Net cash provided by operating activities $ 345,230 $ 251,970 $ 230,782 $ 286,282 $ 294,135
Net cash used for investing activities (164,726) (162,566) (164,343) (77,231) (323,880)
=========== =========== =========== =========== ===========
Free cash flow $ 180,504 $ 89,404 $ 66,439 $ 209,051 $ (29,745)
=========== =========== =========== =========== ===========
Depreciation and amortization $ 168,543 $ 174,395 $ 185,376 $ 199,321 $ 204,768
Other Data:
Earnings before depreciation, amortization,
interest, taxes and other special and
noncash charges and credits (e) $ 324,282 $ 312,206 $ 361,764 $ 377,046 $ 347,700
Number of lottery terminals sold 36,240 5,570 13,293 4,921 11,963
Number of lottery customers at year-end 82 83 82 81 78
- ---------------------------------------------
(a) 53-week year.
(b) The impact of the special charges (credit) on earnings per share on a
diluted basis was $0.37, ($0.01), $0.11 and $0.72, in fiscal 2001, 2000,
1999 and 1998, respectively (adjusted for our 2-for-1 stock split). See
Note P to the consolidated financial statements.
(c) Represents an after-tax extraordinary charge on early retirement of debt
and refinancing of our World Headquarters facilities. See Note R to the
consolidated financial statements.
(d) Adjusted for our 2-for-1 stock split.
(e) We believe that earnings before depreciation, amortization, interest, taxes
and other special and noncash charges and credits (the latter two items
comprising infrequent and unusual charges which we believe are not
representative of our ongoing operations such as special charges and
adjustments to the carrying values of certain investments), or EBITDA,
assists in explaining trends in our operating performance, provides useful
information about our ability to incur and service indebtedness and is a
commonly used measure of performance by securities analysts and investors
in the gaming industry. EBITDA should not be considered as an alternative
to operating income as an indicator of our performance or to cash flows as
a measure of our liquidity. As we define it, EBITDA may not be comparable
to other similarly titled measures used by other companies. The components
of EBITDA for fiscal years prior to 2002 have been restated to conform to
the fiscal 2002 presentation.
PRO FORMA FINANCIAL INFORMATION
We used a portion of the proceeds of our initial issuance of the
debentures on December 18, 2001 to repurchase $165 million in existing
indebtedness. Had the debentures been issued, and had the application of a
portion of the net proceeds from that issuance been used to repurchase $165
million of existing indebtedness, on the first day of the fiscal year ended
February 23, 2002, interest expense, income before extraordinary charge and
diluted earnings per share before extraordinary charge would have been $13.8
million, $81.4 million, and $1.35, respectively, for such fiscal year. These pro
forma amounts exclude the effects of any applicable premiums, fees or expenses
payable in connection with the repurchase of the existing indebtedness. Diluted
earnings per share before extraordinary charge has been restated to give effect
to our 2-for-1 stock split. These pro forma amounts do not purport to represent
what our consolidated results of operations would have been if these
transactions had occurred as of the beginning of the period indicated or what
our results will be for future periods.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of earnings to fixed charges
of GTECH Holdings Corporation for the fiscal years ended February 23, 2002,
February 24, 2001, February 26, 2000, February 27, 1999, and February 28, 1998:
Fiscal Years Ended
February 23, 2002 February 24, 2001 February 26, 2000 February 27,1999 February 28, 1998
- ----------------- ----------------- ----------------- ------------- -----------------
5.02x 3.12x 5.49x 5.06x 1.79x
For these ratios, we calculated earnings by adding the following:
o earnings before income taxes and extraordinary charge;
o amortization of capitalized interest; and
o fixed charges excluding capitalized interest.
For this purpose, we calculated fixed charges by adding the following:
o interest expense, including amortization of debt issuance cost
and interest relating to capital leases;
o an estimate of interest included in rental expense; and
o capitalized interest.
Taking into account the application of the proceeds of the original
issuance of the debentures on December 18, 2001 to repurchase certain of our
outstanding debt, the ratio of earnings to fixed charges would have been 6.72x
for the fiscal year ended February 23, 2002 if the offering had been consummated
at the beginning of that period. This pro forma amount excludes the effects of
any applicable premiums, fees or expenses payable in connection with the
repurchase of existing indebtedness with those proceeds. The pro forma amount
does not purport to represent what our consolidated results of operations
actually would have been if these transactions had occurred as of the date
indicated or what our results will be for future periods.
DESCRIPTION OF DEBENTURES
We issued the debentures under an indenture dated as of December 18,
2001, among GTECH Holdings Corporation, as issuer, the guarantors and The Bank
of New York, as trustee. The following summarizes the material provisions of the
debentures, the indenture and the registration rights agreement relating to the
debentures. The following summary does not purport to be complete and is subject
to, and qualified by reference to, all of the provisions of the indenture and
the registration rights agreement. We urge you to read the indenture and the
registration rights agreement because they, and not this description, define
your rights as a holder of the debentures. A copy of the form of indenture, the
form of certificate evidencing the debentures and the registration rights
agreement has been filed with the Securities and Exchange Commission and is
available to you upon your request.
As used in this description, the words "GTECH," "we," "us" or "our"
refer to GTECH Holdings Corporation and do not include any of its current or
future subsidiaries.
General
The debentures are limited to $175,000,000 aggregate principal amount.
The debentures were issued on December 18, 2001. The debentures will mature on
December 15, 2021. The debentures will be payable at the office of the paying
agent, which initially will be an office or agency of the trustee, or an office
or agency maintained by us for such purpose, in the Borough of Manhattan, The
City of New York. The debentures are issued in denominations of $1,000 and
integral multiples thereof. The debentures are convertible into our common stock
as described below under "--Conversion Rights" beginning on page 15.
Interest on the debentures accrues at the initial rate of 1.75% per
year and may be reset in certain circumstances as described below under
"--Contingent Interest" beginning on page 14. We will pay interest semiannually
in arrears on June 15 and December 15, commencing on June 15, 2002, to holders
of record on the immediately preceding June 1 and December 1. Interest on the
debentures accrues from the most recent date to which interest has been paid or
provided for or, if no interest has been paid or provided for, from the date of
original issuance. We will calculate interest on the basis of a 360-day year
composed of twelve 30-day months.
Interest will cease to accrue on a debenture upon its maturity,
conversion, purchase by us at the option of a holder or redemption. We may not
reissue a debenture that has matured or been converted, purchased by us at the
option of a holder, redeemed or otherwise cancelled, except for registration of
transfer, exchange or replacement of such debenture.
Holders may present debentures for conversion at the office of the
conversion agent and may present debentures for registration of transfer at the
office of the trustee.
The indenture requires each holder, for United States federal income
tax purposes, among other things, to treat the debentures as "contingent payment
debt instruments" and to be bound by our application of the Treasury regulations
that govern contingent payment debt instruments, including our determination
that the yield at which interest will be deemed to accrue for federal income tax
purposes will be 7.13%, compounded semiannually, which is the annual yield we
would pay, as of the initial issue date, on a fixed-rate, non-convertible debt
security with no contingent payments, but with terms and conditions otherwise
comparable to those of the debentures. Accordingly, each holder will be required
to accrue interest on a constant yield to maturity basis using this yield, and
thus will recognize taxable income in excess of cash received while the
debentures are outstanding. In addition, a holder will recognize ordinary income
upon a conversion of a debenture into our common stock equal to the excess, if
any, between the value of the common stock received on the conversion and the
holder's adjusted tax basis. However, the proper United States federal income
tax treatment of a holder of a debenture is uncertain in various respects. If
the agreed upon treatment were successfully challenged by the Internal Revenue
Service, it might be determined that, among other differences, a holder should
have accrued interest income at a lower yield, should not have recognized income
or gain upon the conversion, and should not have recognized ordinary income upon
a taxable disposition of its debentures.
INVESTORS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THE TAX TREATMENT
OF THE DEBENTURES AND WHETHER A PURCHASE OF THE DEBENTURES IS ADVISABLE IN LIGHT
OF THE AGREED UPON TAX TREATMENT AND EACH INVESTOR'S PARTICULAR TAX SITUATION.
Contingent Interest
We will reset the interest rate payable to the holders of debentures
during any six-month period from December 15 to June 14 and from June 15 to
December 14, commencing with the six-month period beginning December 15, 2006,
if the average of the debenture price (as defined below) for the five trading
days ending on the second trading day immediately preceding the relevant
six-month period equals 120% or more of the initial issue price of that
debenture. We will pay contingent interest in cash at the same times and in the
same manner as we will pay interest described above under "--General."
The interest rate payable per debenture in respect of any such
six-month period will be reset to a rate per year equal to the interest rate
payable 120 days prior to that reset date on 5-year U.S. Treasury Notes minus
2.54%. However, in no event will the interest rate be reset below 1.75% or above
2.50% per year.
For U.S. federal income tax purposes, interest will continue to accrue
at the comparable yield, which we will report as 7.13% under the contingent debt
payment regulations, subject to adjustment for actual payments of interest and
contingent interest. See "Certain United States Federal Income Tax
Consequences--United States Holders--Accrual of Interest on the Debentures"
beginning on page 34.
The "debenture price" on any date of determination means the average of
the secondary market bid quotations per debenture obtained by the bid
solicitation agent for $10 million principal amount of debentures at
approximately 4:00 p.m., New York City time, on that determination date from
three unaffiliated securities dealers we select. However, if:
o at least three such bids are not obtained by the bid
solicitation agent, or
o in our reasonable judgment, the bid quotations are not
indicative of the secondary market value of the
debentures,
then the debenture price will equal the average of the secondary market
quotations per debenture obtained by the bid solicitation agent at such time
from at least two unaffiliated securities dealers selected by us.
The bid solicitation agent will initially be the trustee. We may change
the bid solicitation agent, but the bid solicitation agent will not be our
affiliate. The bid solicitation agent will solicit bids from securities dealers
that we believe to be willing to bid for the debentures.
Upon determination that holders will be entitled to receive contingent
interest which may become payable during a relevant six-month period, on or
prior to the start of such six-month period, we will issue a press release and
publish this information on our website or through such other similar public
medium, if any, as we may use at that time.
Ranking of the Debentures and the Guarantees
The debentures are unsecured and unsubordinated obligations of GTECH
Holdings Corporation and rank equal in right of payment with all of its existing
and future unsecured and unsubordinated indebtedness. The guarantees are
unsecured and unsubordinated obligations of GTECH Corporation, GTECH Rhode
Island Corporation and GTECH Latin America Corporation, respectively, and rank
equal in right of payment with all of such guarantors' respective existing and
future unsecured and unsubordinated indebtedness, except to the extent
prescribed by law.
Guarantees
The debentures are fully and unconditionally guaranteed by the
guarantors. If, for any reason, we do not make payment of the principal of,
interest or any other amounts required under the debentures or the indenture
when due, whether at maturity, upon redemption or by acceleration or otherwise,
the guarantors will cause the payment to be made to or to the order of the
trustee. The holder of a debenture will be entitled to payment under the
guarantees without taking any action whatsoever against GTECH Holdings
Corporation. See "Summary--The Guarantors" beginning on page 1.
If our revolving credit facility is guaranteed in the future by
additional subsidiary guarantors, GTECH Holdings Corporation has agreed in the
indenture to cause those subsidiaries to also guarantee the debentures.
Conversion Rights
General
You may convert any outstanding debentures (or portions of outstanding
debentures) into our common stock, at the conversion price of approximately
$27.50 per share (equal to a conversion rate of 36.3636 shares per $1,000
principal amount of debentures) under the circumstances summarized below. This
conversion price results from an adjustment to the initial conversion price of
$55.00 per share as a result of our 2-for-1 stock split. The conversion price is
subject to further adjustment as described below. We will not issue fractional
shares of common stock upon conversion of debentures. Instead, we will make a
cash payment in lieu of any fractional shares based upon the sale price of our
common stock on the trading day immediately preceding the conversion date. You
may convert debentures only in denominations of $1,000 and whole multiples of
$1,000.
Holders may surrender debentures for conversion into our common stock
prior to the stated maturity only under the following circumstances:
o if the sale price of our common stock for at least 20 trading
days in the 30 consecutive trading-day period ending on the
trading day before the date of surrender for conversion is
more than 120% of the conversion price in effect on that
preceding trading day;
o during any period in which:
o the credit rating assigned to the debentures
by Moody's or Standard & Poor's is lower than
Ba1 or BB, respectively; or
o the credit rating assigned to the debentures
is suspended or withdrawn by either rating
agency;
o if we have called the debentures for redemption; or
o upon the occurrence of the corporate transactions summarized
below.
If you have exercised your right to require us to repurchase your
debentures as described under "--Purchase of Debentures at the Option of the
Holder" beginning on page 21, you may convert your debentures into our common
stock only if you withdraw your notice of exercise and convert your debentures
prior to the close of business on the business day immediately preceding the
applicable repurchase date.
Conversion upon Satisfaction of Market Price Conditions
A holder may surrender debentures for conversion into shares of our
common stock on any business day if the sale price of our common stock for at
least 20 trading days in a period of 30 consecutive trading days ending on and
including the trading day before the day of surrender for conversion exceeds
120% of the conversion price in effect on that preceding trading day.
The "sale price" of our common stock on any date means:
o the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of our common stock
(regular way) on the New York Stock Exchange on that date;
o if our common stock is not listed on the New York Stock
Exchange on that date, the closing sale price as reported
in the composite transactions for the principal U.S.
securities exchange on which our common stock is listed; or
o if our common stock is not so listed on a U.S. national or
regional securities exchange, the closing sale price as
reported by the Nasdaq National Market or otherwise as
provided in the indenture.
A "business day" is any weekday that is not a day on which banking
institutions in The City of New York are authorized or obligated to close. A
"trading day" is any day on which the securities exchange or quotation system
which is used to determine the sale price of the applicable security is open for
trading or quotation.
Conversion upon Credit Rating Event
A holder may convert any of its debentures during any period in which:
o the credit ratings assigned to the debentures by Moody's
or Standard & Poor's is lower than Ba1 or BB, respectively; or
o the credit rating assigned to the debentures is suspended or
withdrawn by either rating agency.
Conversion upon Notice of Redemption
A holder may surrender for conversion any debentures we call for
redemption at any time prior to the close of business on the day that is two
business days prior to the redemption date, even if the debentures are not
otherwise convertible at that time. If a holder already has delivered a purchase
notice, as described below under "-- Purchase of Debentures at the Option of the
Holder " beginning on page 21, or a change of control purchase notice, as
described below under "-- Change in Control Permits Purchase of Debentures by
GTECH at the Option of the Holder" beginning on page 24, with respect to a
debenture, however, the holder may not surrender that debenture for conversion
until the holder has withdrawn the notice in accordance with the indenture.
Conversion upon Specified Corporate Transactions
If:
o we elect to distribute to all holders of our common stock
certain rights entitling them to purchase, for a period
expiring within 60 days after the record date for the
distribution, common stock at less than the sale price of the
common stock on the trading day preceding the announcement of
such distribution;
o we elect to distribute to all holders of our common stock cash
or other assets, debt securities or certain rights to purchase
our securities, which distribution has a per share value
exceeding 10% of the sale price of the common stock on the
trading day preceding the declaration date for the
distribution; or
o a change of control as described under "--Change in Control
Permits Purchase of Debentures by GTECH at the Option of the
Holder" beginning on page 24 occurs, but holders of debentures
do not have the right to require us to repurchase their
debentures as a result of such change of control because
either (1) the sale price of our common stock for a specified
period prior to such change in control exceeds a specified
level or (2) because the consideration received in such change
in control consists of capital stock that is freely tradeable
and the debentures become convertible into that capital stock
(each as more fully described under "--Change in Control
Permits Purchase of Debentures by GTECH at the Option of the
Holder" beginning on page 24),
then we must notify the holders of debentures at least 20 days prior to the
ex-dividend date for the distribution or within 30 days after the occurrence of
the change in control, as the case may be. Once we have given that notice,
holders may convert their debentures at any time until either (a) the earlier of
close of business on the business day prior to the ex-dividend date and our
announcement that the distribution will not take place, in the case of a
distribution, or (b) within 30 days after the change in control notice, in the
case of a change in control. In the case of a distribution, no adjustment to the
ability of a holder of debentures to convert will be made if the holder
participates or will participate in the distribution without conversion.
In addition, if we are party to a consolidation, merger, binding share
exchange or transfer or lease of all or substantially all of our assets pursuant
to which our common stock will be converted into, or into the right to receive,
cash, securities or other property, a holder may convert debentures at any time
from and after the date which is 15 days prior to the anticipated effective date
of the transaction until 15 days after the effective date of the transaction. If
we are a party to a consolidation, merger, binding share exchange or transfer or
lease of all or substantially all of our assets pursuant to which our common
stock is converted into, or into the right to receive, cash, securities or other
property, then at the effective time of the transaction, this right to convert a
debenture into our common stock will be changed into a right to convert it into,
or into the right to receive, as applicable, the kind and amount of cash,
securities or other property which the holder would have received if the holder
had converted such debenture immediately prior to the transaction. If the
transaction also constitutes a "change in control," as defined below, the holder
can require us to repurchase all or a portion of its debentures as described
under "--Change in Control Permits Purchase of Debentures by GTECH at the Option
of the Holder" beginning on page 24.
Conversion Procedures
Except as provided below, if you convert debentures into our common
stock on any day other than an interest payment date, you will not receive any
interest that has accrued but not been paid on the debentures. By delivering to
the holder the number of shares issuable upon conversion, determined by dividing
the principal amount of the debentures being converted by the conversion price,
together with any cash payment in lieu of fractional shares, we will satisfy our
obligation to pay the principal and accrued but unpaid interest on the
debentures through the conversion date. As a result, accrued but unpaid interest
will be deemed to be paid in full rather than canceled, extinguished or
forfeited. If you convert after a record date for an interest payment but prior
to the corresponding interest payment date, you will receive interest accrued
and paid on such debentures on the interest payment date, notwithstanding the
conversion of such debentures prior to such interest payment date, because you
will have been the holder of record of such debentures on the corresponding
record date. However, at the time of surrender of such debentures for
conversion, you must pay us an amount equal to the interest payable on the
debentures being converted on the interest payment date. The preceding sentence
does not apply, however, to a holder that converts, after a record date for an
interest payment date but prior to the corresponding interest payment date,
debentures that we call for redemption prior to such conversion on a redemption
date that is on or prior to such interest payment date.
You will not be required to pay any taxes or duties relating to the
issuance or delivery of our common stock if you exercise your conversion rights,
but you will be required to pay any tax or duty which may be payable relating to
any transfer involved in the issuance or delivery of the common stock in a name
other than your own. Certificates representing shares of common stock will be
issued or delivered only after all applicable taxes and duties, if any, payable
by you have been paid.
To convert interests in a global debenture, you must deliver to DTC the
appropriate instruction form for conversion pursuant to DTC's conversion
program. To convert a definitive debenture, a holder must:
o complete the conversion notice on the back of the debenture
(or a facsimile thereof);
o deliver the completed conversion notice and the debenture
to be converted to the specified office of the
conversion agent;
o pay all funds required, if any, relating to interest on the
debentures to be converted to which you are not entitled, as
described in the second preceding paragraph; and
o pay all taxes or duties, if any, as described in the preceding
paragraph.
The conversion date will be the date on which all of the foregoing requirements
have been satisfied. The debentures will be deemed to have been converted
immediately prior to the close of business on the conversion date. A certificate
for the number of shares of common stock into which the debentures are converted
(and cash in lieu of any fractional shares) will be delivered as soon as
practicable on or after the conversion date.
Conversion Price Adjustments
We will adjust the conversion price for certain events, including:
o issuances of our common stock as a dividend or distribution on
our common stock;
o certain subdivisions and combinations of our common stock;
o issuances to all holders of our common stock of certain rights
or warrants to purchase our common stock (or securities
convertible into our common stock) at less than (or having a
conversion price per share less than) the then-current sale
price of our common stock;
o distributions to all holders of our common stock of shares of
our capital stock (other than our common stock), evidences of
our indebtedness or assets, including securities, but
excluding:
o the rights and warrants referred to in the third
bullet point above,
o any dividends and distributions in connection
with a reclassification, change, consolidation, merger,
combination, sale or conveyance resulting in a change in the
conversion consideration pursuant to the third
paragraph of this subsection "--Conversion Price Adjustments,"
or
o any dividends or distributions paid exclusively in
cash;
o certain distributions consisting exclusively of cash to all
holders of our common stock to the extent that such
distributions, combined together with:
o all other such all-cash distributions made within
the preceding 12 months for which no adjustment has been made,
plus
o any cash and the fair market value of any
other consideration paid in any other tender offer by us or
any of our subsidiaries for our common stock expiring
within the preceding 12 months for which no adjustment has
been made,
exceed 10% of our market capitalization on the record date for
such distribution (market capitalization meaning the product
of the then current market price (as defined in the indenture)
of our common stock times the number of shares of our common
stock then outstanding); and
o purchases of our common stock pursuant to a tender offer made
by us or any of our subsidiaries to the extent that the same
involves an aggregate consideration that, together with:
o any cash and the fair market value of any other
consideration paid in any other tender offer by us or any of
our subsidiaries for our common stock expiring within the 12
months preceding such tender offer for which no adjustment has
been made, plus
o the aggregate amount of any all-cash distributions
referred to in the preceding bullet point to all holders of
our common stock within 12 months preceding the expiration
of tender offer for which no adjustments have been made,
exceed 10% of our market capitalization on the expiration of
such tender offer.
We will not make an adjustment in the conversion price unless such
adjustment would require a change of at least 1% in the conversion price then in
effect at such time. We will carry forward and take into account in any
subsequent adjustment any adjustment that would otherwise be required to be
made. Except as stated above, we will not adjust the conversion price for the
issuance of our common stock or any securities convertible into or exchangeable
for our common stock or carrying the right to purchase any of the foregoing.
If we:
o reclassify or change our common stock (other than changes
resulting from a subdivision or combination); or
o consolidate or combine with or merge into any person or sell
or convey to another person all or substantially all of our
property and assets,
and the holders of our common stock receive cash, securities or other property
with respect to or in exchange for their common stock, the holders of the
debentures may convert the debentures into the consideration they would have
received if they had converted their debentures immediately prior to such
reclassification, change, consolidation, combination, merger, sale or conveyance
(subject to the other conditions to conversion described herein). We may not
become a party to any such transaction unless its terms are consistent with the
foregoing.
In the event that we distribute shares of capital stock of a subsidiary
of ours, the conversion rate will be adjusted, if at all, based on the market
value of the subsidiary stock so distributed relative to the market value of our
common stock, in each case over a measurement period following the distribution.
In the event we elect to make a distribution described in the third or
fourth bullet points of the first paragraph of this subsection " --Conversion
Price Adjustments," which, in the case of the fourth bullet, has a per share
value equal to more than 10% of the sale price of our shares of common stock on
the day preceding the declaration date for the distribution, then, if the
distribution would also trigger a conversion right under "--Conversion upon
Specified Corporate Transactions" beginning on page 17, or if the debentures are
otherwise convertible, we will be required to give notice to the holders of
debentures at least 20 days prior to the ex-dividend date for the distribution
and, upon the giving of notice, the debentures may be surrendered for conversion
at any time until the close of business on the business day prior to the
ex-dividend date or until we announce that the distribution will not take place.
No adjustment to the conversion price or the ability of a holder of a debenture
to convert will be made if the holder will otherwise participate in the
distribution without conversion or in certain other cases.
If a taxable distribution to holders of our common stock or other
transaction occurs which results in any adjustment of the conversion price, you
may, in certain circumstances, be deemed to have received a distribution subject
to U.S. income tax as a dividend. In certain other circumstances, the absence of
an adjustment may result in a taxable dividend to the holders of our common
stock. See "Certain United States Federal Income Tax Considerations" beginning
on page 33.
We may from time to time, to the extent permitted by law, reduce the
conversion price of the debentures by any amount for any period of at least 20
days. In that case, we will give at least 15 days' notice of such decrease. We
may make such reductions in the conversion price, in addition to those set forth
above, as our board of directors deems advisable to avoid or diminish any income
tax to holders of our common stock resulting from any dividend or distribution
of stock, or rights to acquire stock, or from any event treated as such for
income tax purposes.
Redemption of Debentures at the Option of GTECH
No sinking fund is provided for the debentures. Prior to December 15,
2006, we cannot redeem the debentures at our option. Beginning on December 15,
2006, we may redeem the debentures, in whole at any time, or in part from time
to time, for cash, at a redemption price equal to 100% of the principal amount
of the debentures plus accrued interest up to, but not including, the date of
redemption and additional interest, if any, as described under "--Registration
Rights" beginning on page 29. We will give not less than 15 days' nor more than
60 days' notice of redemption by mail to holders of debentures.
If the redemption date is on or after an interest record date but on or
prior to the related interest payment date, interest will be paid to the record
holder on the relevant record date.
If we redeem less than all of the outstanding debentures, the trustee
shall select the debentures to be redeemed on a pro rata basis in principal
amounts of $1,000 or integral multiples of $1,000. If a portion of a holder's
debentures is selected for partial redemption and the holder converts a portion
of the debentures, the converted portion shall be deemed to be the portion
selected for redemption.
Purchase of Debentures at the Option of the Holder
On December 15, 2004, December 15, 2006, December 15, 2011 and December
15, 2016, each holder may require us to purchase any outstanding debenture for
which that holder has properly delivered and not withdrawn a written purchase
notice, subject to certain additional conditions.
We will purchase each outstanding debenture for which that holder has
properly delivered and not withdrawn a written purchase notice at a purchase
price equal to 100% of the principal amount of such debenture, together with
accrued and unpaid interest up to but not including the redemption date and
additional interest, if any. If the purchase date is on or after an interest
record date but on or prior to the related interest payment date, interest will
be paid to the record holder on the relevant record date.
We may choose to pay the purchase price in cash, shares of our common
stock or a combination of both. For a discussion of the tax treatment of a
holder receiving cash, shares of common stock or any combination of cash and
shares of common stock, see "Certain United States Federal Income Tax
Consequences--United States Holders--Sale, Exchange, Conversion or Redemption"
beginning on page 36.
Required Notices and Procedure
On a date not less than 20 business days prior to each purchase date,
we will be required to give notice to all holders at their addresses shown in
the register of the registrar, and to beneficial owners as required by
applicable law, stating, among other things:
o the procedures that holders must follow to require us to
purchase their debentures;
o whether we will pay the purchase price of debentures in cash,
shares of our common stock or a combination of cash and shares
of our common stock, specifying the percentages of each; and
o if we elect to pay in shares of common stock, in whole or in
part, the method of calculating the market price of our common
stock.
The purchase notice given by each holder electing to require us to
purchase debentures must be given so as to be received by the paying agent no
later than the close of business on the fifth business day prior to the purchase
date and must state:
o the certificate numbers of the holder's debentures to be
delivered for purchase;
o the aggregate principal amount of debentures to be purchased;
o that the debentures are to be purchased by us pursuant to the
applicable provisions of the debentures; and
o if we elect, pursuant to the notice we are required to give,
to pay any or all of the purchase price in shares of our
common stock, but instead must pay the purchase price entirely
in cash because one or more of the conditions to payment of
any or all of the purchase price in shares of our common stock
(described below in "--Purchase of Debentures at the Option of
the Holder--Election to Pay Purchase Price in Shares of Our
Common Stock" beginning on page 23) is not satisfied prior to
the close of business on the purchase date, whether such
holder elects:
(1) to withdraw the purchase notice as to some or all of
the debentures to which it relates, stating the
aggregate principal amount and certificate numbers of
the debentures as to which such withdrawal shall
relate; or
(2) to receive cash in that event in respect of the
entire purchase price for all debentures or portions
of debentures subject to that purchase notice.
If the holder fails to indicate in the purchase notice and in any
written notice of withdrawal a choice with respect to the election described in
the final bullet point above, the holder will be deemed to have elected to
receive cash in respect of the entire purchase price for all debentures subject
to the purchase notice in these circumstances.
A holder may withdraw any purchase notice by delivering a written
notice of withdrawal to the paying agent prior to the close of business on the
business day prior to the purchase date. The notice of withdrawal shall state:
o the certificate numbers of the debentures being withdrawn;
o the aggregate principal amount of the debentures being
withdrawn; and
o the aggregate principal amount, if any, of the debentures that
remain subject to the purchase notice.
In connection with any purchase offer, we will:
o comply in all material respects with the provisions of Rule
13e-4, Rule 14e-1 and any other tender offer rules under the
Exchange Act which may then apply; and
o file Schedule TO or any other required schedule under the
Exchange Act.
Our obligation to pay the purchase price for a debenture as to which a
purchase notice has been delivered and not validly withdrawn is conditioned upon
the holder delivering the debenture, together with necessary endorsements, to
the paying agent at any time after delivery of the purchase notice. We will
cause the purchase price for the debenture to be paid promptly following the
later of the purchase date or the time of delivery of the debenture.
If the paying agent holds money or securities sufficient to pay the
purchase price of the debenture on the business day following the purchase date
in accordance with the terms of the indenture, then, immediately after the
purchase date, the debenture will cease to be outstanding and interest on such
debenture will cease to accrue, whether or not the debenture is delivered to the
paying agent. After the debenture ceases to be outstanding, all other rights of
the holder shall terminate, other than the right to receive the purchase price
upon delivery of the debenture.
We may not purchase any debentures at the option of holders if an event
of default with respect to the debentures, other than a default in the payment
of the purchase price with respect to those debentures, has occurred and is
continuing.
Election to Pay Purchase Price in Shares of Our Common Stock
If we elect to pay the purchase price in shares of our common stock,
the number of shares of common stock to be delivered will equal the quotient of:
o the portion of the purchase price to be paid in shares of our
common stock, divided by
o 95% of the market price of the common stock.
If we elect to deliver shares of our common stock in payment of any or
all of the purchase price, a holder of a debenture otherwise entitled to a
fractional share will receive cash equal to the then-current value of the
fractional share.
The "market price" of our common stock means the average of the sale
prices of the common stock for the five trading day period ending on the third
business day prior to the applicable purchase date. If the third business day
prior to the applicable purchase date is not a trading day, the five trading day
period will end on the last trading day prior to such third business day. The
market price will be appropriately adjusted to take into account the occurrence,
during the period commencing on the first of such trading days during such five
trading day period and ending on such purchase date, of certain events that
would result in an adjustment of the conversion rate with respect to our common
stock.
Because the market price of our common stock is determined prior to the
applicable purchase date, holders of the debentures bear the market risk with
respect to the value of the common stock to be received from the date such
market price is determined to the purchase date. We may pay the purchase price
or any portion of the purchase price in shares of our common stock only if the
information necessary to calculate the market price is published in a daily
newspaper of national circulation.
Our right to purchase debentures, in whole or in part, with shares of
our common stock is also subject to satisfaction of various additional
conditions, including:
o the registration of the common stock under the Securities Act
and the Exchange Act, if required; and
o any necessary qualification or registration under applicable
state securities law or the availability of an exemption from
such qualification and registration.
If these conditions are not satisfied with respect to a holder prior to
the close of business on the purchase date, we will pay the purchase price for
the holder's debentures entirely in cash. Once we have given the required notice
to the holders of debentures describing the consideration we will pay for the
debentures, we may not change the form, components or percentages of components
of that consideration, except as described in the first sentence of this
paragraph.
Change in Control Permits Purchase of Debentures by GTECH at the Option of the
Holder
In the event of a "change in control," as defined below in this
section, occurring on or prior to December 15, 2021, each holder will have the
right, subject to the terms and conditions of the indenture, to require us to
purchase for cash all or any portion of the holder's debentures, in integral
multiples of $1,000 principal amount. The purchase price for such debenture will
equal the aggregate principal amount of such debenture plus the accrued interest
to but excluding the date of purchase and additional interest, if any. We will
be required to purchase the debentures as of the date that is 45 business days
after we give holders notice of the change in control. We refer to this date in
this prospectus as the "change in control purchase date."
Within 30 days after a change in control occurs, we must mail a notice
regarding the change in control to the trustee, to all holders of debentures at
their addresses shown in the register of the registrar and to beneficial owners
as required by applicable law. The notice must state, among other things:
o the events causing a change in control;
o the date of the change in control;
o the last date on which a holder may exercise the purchase
right;
o the change in control purchase price;
o the change in control purchase date;
o the name and address of the paying agent and the conversion
agent;
o the conversion price and any adjustments to the conversion
price;
o that debentures with respect to which a change in control
purchase notice has been given by the holder may be converted
only if the change in control purchase notice has been
withdrawn in accordance with the terms of the indenture; and
o the procedures that holders must follow to exercise these
rights.
To exercise this right, the holder must deliver a written notice to the
paying agent so that it is received by the paying agent no later than the close
of business on the fifth business day prior to the change in control purchase
date. This change in control purchase notice must state:
o the certificate numbers of the debentures to be delivered by
the holder;
o the portion of the aggregate principal amount of debentures to
be purchased; and
o that we are to purchase such debentures pursuant to the
applicable provisions of the debentures.
A holder may withdraw any change in control purchase notice by
delivering a written notice of withdrawal to the paying agent so that it is
received by the paying agent prior to the close of business on the business day
prior to the change in control purchase date. The notice of withdrawal must
state:
o the certificate numbers of the debentures being withdrawn;
o the aggregate principal amount being withdrawn; and
o the aggregate principal amount, if any, of the debentures that
remain subject to a change in control purchase notice.
Our obligation to pay the change in control purchase price for a
debenture for which a holder has delivered, and not validly withdrawn, a change
in control purchase notice is conditioned upon delivery of the debenture,
together with necessary endorsements, to the paying agent at any time after the
delivery of such change in control purchase notice. We will cause the change in
control purchase price for such debenture to be paid promptly following the
later of the change in control purchase date or the time of delivery of such
debenture.
If the paying agent holds money sufficient to pay the change in control
purchase price of the debentures on the business day following the change in
control purchase date in accordance with the terms of the indenture, then,
immediately after the change in control purchase date, the debentures submitted
for repurchase and not validly withdrawn will cease to be outstanding and
interest on such debentures will cease to accrue, whether or not the debentures
are delivered to the paying agent. After a debenture has ceased to be
outstanding, all other rights of the holder shall terminate, other than the
right to receive the change in control purchase price upon delivery of the
debenture.
Under the indenture, a "change in control" is deemed to have occurred
at such time as:
o any person, including our affiliates and associates, other
than us, our subsidiaries or their employee benefit plans,
files a Schedule 13D or Schedule TO, or any successor
schedule, form or report under the Exchange Act, disclosing
that such person has become the beneficial owner of 50% or
more of the voting power of our common stock or other capital
stock into which our common stock is reclassified or changed,
with certain exceptions; or
o any share exchange, consolidation or merger is consummated
pursuant to which our common stock would be converted into
cash, securities or other property, in each case other than
any share exchange, consolidation or merger of our company in
which the holders of our common stock immediately prior to the
share exchange, consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in
the aggregate of all classes of capital stock of the
continuing or surviving corporation immediately after the
share exchange, consolidation or merger.
However, a change in control will be deemed not to have occurred if:
o the sale price of our common stock for any five trading days
within:
o the period of ten consecutive trading days ending
immediately after the later of the change in control
and the public announcement of the change in control,
in the case of a change in control under the first
bullet point above, or
o the period of ten consecutive trading days ending
immediately before the change in control, in the case
of a change in control under the second bullet point
above,
equals or exceeds 105% of the conversion price of the
debentures in effect on each such trading day; or
o at least 90% of the consideration in the transaction or
transactions constituting a change in control consists of
shares of common stock traded or to be traded immediately
following such change in control on a national securities
exchange or the Nasdaq National Market and, as a result of the
transaction or transactions, the debentures become convertible
solely into such common stock (and any rights attached
thereto).
The indenture does not permit our board of directors to waive our
obligation to purchase debentures at the option of holders in the event of a
change in control.
In connection with any purchase offer in the event of a change in
control, we will:
o comply in all material respects with the provisions of Rule
13e-4, Rule 14e-1 and any other tender offer rules under the
Exchange Act which may then be applicable; and
o file Schedule TO or any other required schedule under the
Exchange Act.
The change in control purchase feature of the debentures may in certain
circumstances make more difficult or discourage a takeover of our company. The
change in control purchase feature, however, is not the result of our knowledge
of any specific effort:
o to accumulate common stock;
o to obtain control of our company by means of a merger, tender
offer, solicitation or otherwise; or
o by management to adopt a series of anti-takeover provisions.
Instead, the change in control purchase feature is a standard term
contained in other debenture offerings that have been marketed by the initial
purchasers of the debentures. The terms of the change in control purchase
feature resulted from our negotiations with the initial purchasers.
We could, in the future, enter into certain transactions, including
certain recapitalizations, that would not constitute a change in control with
respect to the change in control purchase feature of the debentures but that
would increase the amount of our or our subsidiaries' outstanding indebtedness.
We may not purchase debentures at the option of holders upon a change
in control if an event of default with respect to the debentures, other than a
default in the payment of the change in control purchase price with respect to
the debentures, has occurred and is continuing.
Merger and Sale of Assets
The indenture provides that neither we nor any of the guarantors may
consolidate with or merge with or into any other person or convey, transfer or
lease our properties and assets substantially as an entirety to another person,
unless among other items:
o we or the guarantor, as applicable, is the surviving person,
or the resulting surviving or transferee person, if other than
us or the guarantor, as the case may be, is organized and
existing under the laws of the United States, any state
thereof or the District of Columbia;
o the successor person assumes all of our obligations under the
debentures and the indenture or the guarantor's obligations
under the guarantees, as the case may be; and
o we, the guarantor or any such successor person will not be in
default under the indenture immediately after the transaction.
When such a person assumes our or a guarantor's obligations in such
circumstances, subject to certain exceptions, we or the guarantor, as the case
may be, shall be discharged from all obligations under the debentures and the
indenture. Although the indenture permits these transactions, some of the
transactions described above which occur on or prior to December 15, 2021 could
constitute a change in control of our company and permit each holder to require
us to purchase the debentures of that holder as described above.
Events of Default
The following are events of default under the debentures and the
indenture:
o default in payment of accrued interest (including additional
interest, if any), the principal amount, redemption price,
purchase price or change in control purchase price with
respect to any debenture when such amount becomes due and
payable (and, in the case of a default in payment of accrued
interest, continuation of such default for a period of 30
days);
o our or a guarantor's failure to comply with any of our or its
other agreements in the debentures or the indenture upon our
receipt of notice of such default by the trustee or by holders
of not less than 25% in aggregate principal amount of the
debentures then outstanding and the failure to cure (or obtain
a waiver of) such default within 90 days after receipt of such
notice;
o our or a guarantor's default in the payment at final maturity,
after the expiration of any applicable grace period, of
principal of, or premium, if any, on indebtedness for money
borrowed, other than non-recourse indebtedness, in the
principal amount then outstanding of $25 million or more, or
acceleration of any indebtedness in such principal amount so
that it becomes due and payable prior to the date on which it
would otherwise have become due and payable and such
acceleration is not rescinded within ten business days after
notice to us or that guarantor;
o the guarantees cease to be, or we or any of the guarantors
assert in writing that the guarantees are not, in full force
and effect and enforceable in accordance with the terms of the
indenture; and
o certain events of bankruptcy, insolvency or reorganization
affecting us or a guarantor.
If an event of default shall have happened and be continuing, either
the trustee or the holders of not less than 25% in aggregate principal amount of
the debentures then outstanding may declare the principal amount plus the
interest on the debentures accrued through the date of such declaration to be
immediately due and payable. In the case of certain events of bankruptcy or
insolvency of our company or a guarantor, the principal amount plus the interest
on the debentures accrued through the occurrence of such event shall
automatically become and be immediately due and payable.
Modification
We, together with the trustee and the guarantors, may enter into
supplemental indentures that add, change or eliminate provisions of the
indenture or modify the rights of the holders of the debentures with the consent
of the holders of at least a majority in aggregate principal amount of the
debentures then outstanding. However, without the consent of each holder, no
supplemental indenture may:
o change the record or payment dates for interest payments,
reduce the rate of interest on any debenture or extend the
time of payment;
o change the stated maturity of any debenture;
o reduce the principal amount, redemption price, purchase price
or change in control purchase price with respect to any
debenture;
o make any debenture payable in money or securities other than
that stated in the debenture;
o make any change that adversely affects the right of a holder
to convert any debenture;
o make any change that adversely affects the right to require us
to purchase a debenture;
o impair the right to institute suit for the enforcement of any
payment with respect to, or conversion of, the debentures;
o modify the guarantees in a manner adverse to holders of the
debentures; or
o change the provisions in the indenture that relate to
modifying or amending the indenture.
Without the consent of any holder of debentures, we, together with the
trustee and the guarantors, may enter into supplemental indentures for any of
the following purposes:
o to evidence our or a guarantor's successor and the assumption
by that successor of our or the guarantor's obligations under
the indenture and the debentures or the guarantees, as the
case may be;
o to add to our or a guarantor's covenants for the benefit of
the holders of the debentures or to surrender any right or
power conferred upon us or a guarantor;
o to secure our obligations in respect of the debentures;
o to make any changes or modifications to the indenture
necessary in connection with the registration of the
debentures and the guarantees under the Securities Act and the
qualification of the indenture under the Trust Indenture Act
as contemplated by the indenture;
o to cure any ambiguity, omission, defect or inconsistency in
the indenture; and
o to add additional guarantors.
No supplemental indenture entered into pursuant to the second, third,
fourth, fifth or sixth bullet points of the preceding paragraph may be entered
into without the consent of the holders of a majority in aggregate principal
amount of the debentures, if such supplemental indenture may materially and
adversely affect the interests of the holders of the debentures.
The holders of a majority in aggregate principal amount of the
outstanding debentures may, on behalf of the holders of all debentures:
o waive our and the guarantors' compliance with restrictive
provisions of the indenture, as detailed in the indenture; and
o waive any past default under the indenture and its
consequences, except a default in the payment of the principal
amount, accrued and unpaid interest, redemption price,
purchase price or change in control purchase price or
obligation to deliver common stock upon conversion with
respect to any debenture or in respect of any provision which
under the indenture cannot be modified or amended without the
consent of the holder of each outstanding debenture affected.
Registration Rights
We and the initial purchasers of the debentures entered into a
registration rights agreement dated December 18, 2001. The following summary of
the registration rights provided in the registration rights agreement is not
complete. You should refer to the registration rights agreement, filed as an
exhibit to the registration statement of which this prospectus is a part, for a
full description of the registration rights that apply to the debentures.
We and the guarantors agreed to file a shelf registration statement
under the Securities Act not later than 90 days after the latest date of
original issuance of the debentures to register resales of the debentures
(including the related guarantees) and the shares of common stock into which the
debentures are convertible. The debentures (including the related guarantees)
and the common stock issuable upon conversion of the debentures are referred to
collectively as registrable securities. We agreed to use all commercially
reasonable efforts to have this shelf registration statement declared effective
as promptly as practicable but not later than 180 days after the latest date of
original issuance of the debentures. The registration statement of which this
prospectus is a part constitutes that registration statement. We also agreed to
keep this registration statement effective until the earliest of:
(1) December 18, 2003;
(2) the date when all registrable securities shall have been
registered under the Securities Act and disposed of; and
(3) the date on which all registrable securities held by
non-affiliates are eligible to be sold to the public pursuant
to Rule 144(k) under the Securities Act.
We will be permitted to suspend the use of the prospectus which is a
part of the registration statement for a period not to exceed an aggregate of 45
days in any 90-day period or an aggregate of 90 days in any twelve-month period
under certain circumstances relating to pending corporate developments, public
filings with the SEC and similar events.
A holder of registrable securities that sells registrable securities
pursuant to the shelf registration statement generally will be required to
provide information about itself and the specifics of the sale, be named as a
selling securityholder in the related prospectus, deliver a prospectus to
purchasers, be subject to relevant civil liability provisions under the
Securities Act in connection with such sales and be bound by the provisions of
the registration rights agreements which are applicable to such holder.
If:
(1) we fail, with respect to a holder that supplies the
questionnaire described below, to supplement the shelf
registration statement in a timely manner as provided in the
registration rights agreement in order to name additional
selling securityholders; or
(2) after the shelf registration statement has been declared
effective, the shelf registration statement ceases to be
effective or usable (subject to certain exceptions) in
connection with resales of debentures and the common stock
issuable upon the conversion of the debentures in accordance
with and during the periods specified in the registration
rights agreement and (A) we do not cure the shelf registration
statement within five business days by a post-effective
amendment or a report filed pursuant to the Exchange Act or
(B) if applicable, we do not terminate the suspension period
described above by the 45th day or 90th day, as the case may
be,
(we refer to each event described above in clauses (1) and (2) as a registration
default), additional interest will accrue on the debentures and the underlying
shares of common stock that are registrable securities in addition to the rate
set forth in the title of the debentures, from and including the date on which
any such registration default occurs to, but excluding, the date on which the
registration default has been cured, at the rate of 0.5% per year for the
debentures (or an equivalent amount for any common stock issued upon conversion
of the debentures that are registrable securities). In the case of a
registration default described in clause (1), our obligation to pay additional
interest extends only to the affected debentures. We will have no other
liabilities for monetary damages with respect to our registration obligations.
With respect to each holder, our obligations to pay additional interest remain
in effect only so long as the debentures (including the related guarantees) and
the common stock issuable upon the conversion of the debentures held by the
holder are "registrable securities" within the meaning of the registration
rights agreement.
We have agreed to pay all registration expenses of the shelf
registration, to provide each holder that is selling registrable securities
pursuant to the shelf registration statement copies of the related prospectus
and to take other actions as are required to permit, subject to the foregoing,
unrestricted resales of the registrable securities. Selling securityholders
remain responsible for all selling expenses (e.g., commissions and discounts).
Governing Law
The indenture, the debentures, the guarantees and the registration
rights agreement are governed by, and will be construed in accordance with, the
law of the State of New York.
Information Concerning the Trustee
The Bank of New York is the trustee, registrar, paying agent and
conversion agent.
Book-Entry System
The debentures were originally issued in the form of global securities
held in book-entry form. DTC or its nominee is the sole registered holder of the
debentures for all purposes under the indenture. Owners of beneficial interests
in the debentures represented by the global securities will hold their interests
pursuant to the procedures and practices of DTC. As a result, beneficial
interests in any such securities will be shown on, and transfers will be
effected only through, records maintained by DTC and its direct and indirect
participants. Any such interest may not be exchanged for certificated
securities, except in limited circumstances. Owners of beneficial interests must
exercise any rights in respect of their interests, including any right to
convert or require repurchase of their interests in the debentures, in
accordance with the procedures and practices of DTC. Beneficial owners will not
be holders and will not be entitled to any rights under the global securities or
the indenture. We and the trustee, and any of their respective agents, may treat
DTC as the sole holder and registered owner of the global securities.
Exchange of Global Securities
The debentures, represented by a global security, will be exchangeable
for certificated securities with the same terms only if:
o DTC is unwilling or unable to continue as depositary or if DTC
ceases to be a clearing agency registered under the Exchange
Act and we do not appoint a successor depositary within 90
days;
o we decide to discontinue use of the system of book-entry
transfer through DTC or any successor depositary; or
o a default under the indenture occurs and is continuing.
DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency" for
registered participants, and it facilitates the settlement of transactions among
its participants in those securities through electronic computerized book-entry
changes in participants' accounts, eliminating the need for physical movement of
securities certificates. DTC's participants include securities brokers and
dealers, which may include the initial purchasers of the debentures, banks,
trust companies, clearing corporation and other organizations, some of whom
and/or their representatives own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 150,000,000 shares of common
stock, par value $.01 per share, and 20,000,000 shares of preferred stock, par
value $.01 per share. As of May 24, 2002, we had 57,270,958 shares of common
stock outstanding and no shares of preferred stock outstanding. The following is
a summary description of the material terms of our capital stock and is
qualified in its entirety by reference to our certificate of incorporation and
by-laws, as amended, filed as exhibits to our most recent Annual Report on Form
10-K filed with the SEC and incorporated by reference in this prospectus.
See "Where You Can Find More Information."
The holders of our common stock are entitled to one vote per share for
each share held of record on all matters submitted to a vote of stockholders.
Subject to preferential rights with respect to any series of preferred stock
that may be issued, holders of our common stock are entitled to receive ratably
such dividends as may be declared by the board of directors on common stock out
of funds legally available therefor, and in the event of a liquidation,
dissolution or winding-up of our affairs, are entitled to share equally and
ratably in all of our remaining assets and funds. The holders of common stock
have no preemptive rights, cumulative voting rights, or rights to convert shares
of common stock into any other securities and are not subject to future calls or
assessments by us.
Our certificate of incorporation and by-laws provide for a classified
board of directors consisting of three classes as nearly equal in size as the
then authorized number of directors constituting the board of directors permits.
At each annual meeting of stockholders, one class of directors is elected for a
three-year term, and the directors in the other two classes continue in office.
Each class holds office until the date of the third annual meeting for the
election of directors following the annual meeting at which such class was
elected. As a result, approximately one-third of the board of directors is
elected each year. Moreover, under the Delaware General Corporation Law (and our
certificate of incorporation and by-laws), in the case of a corporation having a
classified board, stockholders may remove a director only for cause. This
provision, when coupled with the provisions of the certificate of incorporation
and by-laws authorizing the board of directors to fill vacant directorships, may
preclude a stockholder from removing incumbent directors without cause and
simultaneously gaining control of the board of directors by filling the
vacancies created by such removal with that stockholder's own nominees.
Our certificate of incorporation provides that, to the fullest extent
permitted by Delaware law, none of our directors shall be personally liable to
us or our stockholders for monetary damages for the breach of fiduciary duties
as directors. The effect of this provision is to eliminate our rights and the
rights of our stockholders (through stockholder derivative suits on our behalf)
to recover monetary damages against a director for breach of fiduciary duty as a
director (including breaches resulting from grossly negligent conduct). This
provision does not, however, exonerate the directors from liability under
federal securities laws or for (i) breaches of a director's duty of loyalty to
us or our stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or knowing violation of law, (iii) certain
willful or negligent acts in connection with the payment of dividends or the
repurchase or redemption of securities, or (iv) any transaction from which the
director derived an improper personal benefit. Our by-laws provide for
indemnification of our officers and directors to the fullest extent permitted by
applicable law, and officers and directors also may be indemnified pursuant to
agreements with us.
The board of directors has the authority to issue preferred stock in
one or more classes or series and to fix the voting powers, preferences and
relative participating, optional or other special rights of such preferred stock
without any further vote or action by our stockholders. The ability of the board
of directors to issue preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could adversely affect
the voting power of the holders of our common stock and could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, control of us. We have no present plans to issue any
of the preferred stock.
Section 203 of the Delaware General Corporation Law prohibits a
publicly-held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the time
such stockholder became an interested stockholder, unless (i) prior to such time
either the business combination or the transaction which resulted in the
stockholder becoming an interested stockholder is approved by the board of
directors of the corporation, (ii) upon consummation of the transaction which
resulted in the stockholder becoming an interested stockholder, the interested
stockholder owns at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding for purposes of determining the
number of shares outstanding (A) those shares owned by persons who are both
directors and officers and (B) certain employee stock plans, or (iii) at or
after such time the business combination is approved by the board of directors
and authorized at an annual or special meeting of stockholders, and not by
written consent, by the affirmative vote of at least 66 2/3% of the outstanding
voting stock which is not owned by the interested stockholder. A "business
combination" includes certain mergers, consolidations, asset sales, transfers
and other transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" generally is a person who, together with affiliates and
associates, owns (or within three years, did own) 15% or more of the
corporation's voting stock.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General
This is a summary of certain United States federal income tax
consequences of the purchase, ownership and disposition of the debentures. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change, possibly with retroactive effect, or
to differing interpretations. We have not obtained nor do we intend to obtain a
ruling from the Internal Revenue Service with respect to the United States
federal income tax consequences of acquiring, owning or disposing of the
debentures. This summary deals only with debentures held as capital assets and
does not purport to deal with persons in special tax situations, such as
financial institutions, insurance companies, regulated investment companies,
dealers in securities or currencies, tax-exempt entities, persons holding
debentures in a tax-deferred or tax-advantaged account, or persons holding
debentures as a hedge against currency risks, as a position in a "straddle" or
as part of a "hedging" or "conversion" transaction or "constructive sale" or
other integrated transaction for tax purposes, persons who own 10% or more of
our voting power directly or indirectly, or United States Holders, as defined
below, whose functional currency is not the United States dollar. Moreover, this
summary does not deal with the tax consequences to any person that indirectly
owns debentures through another entity.
We do not address all of the tax consequences that may be relevant to
an investor in debentures. In particular, we do not address any federal, state,
local or foreign tax consequences of owning or disposing of the common stock
into which the debentures are convertible.
Moreover, this discussion does not address any state, local or foreign
tax consequences of the purchase, ownership or disposition of debentures or any
federal tax consequences other than federal income tax consequences.
Accordingly, holders should consult their own tax advisors regarding
the tax consequences of purchasing, owning or disposing of the debentures and
the common stock in light of their own circumstances.
A United States Holder is a beneficial owner of the debentures who or
which is:
o A citizen or individual resident of the United States, as
defined in section 7701(b) of the Internal Revenue Code of
1986, as amended (the "Code");
o A corporation or partnership, including any entity treated as
a corporation or partnership for United States federal income
tax purposes, created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
o An estate if its income is subject to United States federal
income taxation regardless of its source; or
o A trust if, and only if, a United States court can exercise
primary supervision over its administration and one or more
United States persons have the authority to control all of its
substantial decisions. Notwithstanding the preceding sentence,
certain trusts in existence on August 20, 1996 and treated as
United States persons before that date, may also be treated as
United States Holders.
A Non-United States Holder is a holder of debentures other than a
United States Holder. We urge prospective investors that are Non-United States
Holders to consult their own tax advisors regarding the United States federal
income tax consequences of an investment in the debentures, including the
application of United States federal withholding taxes.
No statutory, administrative or judicial authority directly addresses
the treatment of the debentures or instruments similar to the debentures for
United States federal income tax purposes. No assurance can be given that the
Internal Revenue Service will not take contrary positions to that described
herein, or that such positions would be upheld by a court of law.
We urge prospective investors to consult their own tax advisors with
respect to the tax consequences to them of the purchase, ownership and
disposition of the debentures and the common stock in light of their own
particular circumstances, including the tax consequences under state, local,
foreign and other tax laws and the possible effects of changes in United States
federal or other tax laws.
Classification of the Debentures
We have received an opinion from our counsel, Edwards & Angell, LLP,
that the debentures will be treated as indebtedness for United States federal
income tax purposes and that the debentures should be subject to the regulations
promulgated under the Code governing contingent payment debt instruments (the
"CPDI regulations").
United States Holders
Accrual of Interest on the Debentures
Pursuant to the terms of the indenture, we and each holder of the
debentures agree, for United States federal income tax purposes, to treat the
debentures as debt instruments that are subject to the CPDI regulations.
Pursuant to these regulations, United States Holders of the debentures will be
required to accrue interest income on the debentures at the "comparable yield,"
as described below, regardless of whether the United States Holder uses the cash
or accrual method of tax accounting. Accordingly, United States Holders will be
required to include in their taxable income for each year that the debentures
are outstanding an amount of accrued interest that is in excess of the cash
payments made on the debentures.
The CPDI regulations provide that a United States Holder must accrue an
amount of ordinary interest income, as original issue discount for United States
federal income tax purposes, for each accrual period before and including the
maturity date of the debentures that equals:
o the product of the adjusted issue price (as defined below) of
the debentures as of the beginning of the accrual period; and
the comparable yield to maturity (as defined below) of the
debentures, adjusted for the length of the accrual period;
o divided by the number of days in the accrual period; and
o multiplied by the number of days during the accrual period
that the United States Holder held the debentures.
A debenture's issue price is the first price at which a substantial
amount of the debentures is sold to investors, excluding sales to bond houses,
brokers or similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers. The adjusted issue price of a
debenture is its issue price increased by any interest income previously
accrued, determined without regards to any adjustments to interest accruals
described below, with respect to the debentures.
Based in part on the advice of Edwards & Angell, LLP, we intend to
treat the term "comparable yield" as the annual yield we would pay, as of the
initial issue date, on a fixed-rate, non-convertible debt security with no
contingent payments, but with terms and conditions otherwise comparable to those
of the debentures. We intend to take the position that the comparable yield for
the debentures is 7.13%, compounded semi-annually.
The CPDI regulations require that we provide to United States Holders,
solely for United States federal income tax purposes, a schedule of the
projected amounts of payments on the debentures. This schedule must produce the
comparable yield. The projected payment schedule includes an estimate for a
payment at maturity taking into account the conversion feature. If the
comparable yield were successfully challenged by the Internal Revenue Service,
the redetermined yield could be materially greater or less than the comparable
yield provided by us. Moreover, the projected payment schedule could differ
materially from the projected payment schedule provided to holders of the
debentures by us.
The comparable yield is set forth in the indenture. United States
Holders may obtain the projected payment schedule by submitting a written
request for that information to GTECH Holdings Corporation, 55 Technology Way,
West Greenwich, Rhode Island 02817, Attention: Treasurer.
The comparable yield and the schedule of projected payments are not
determined for any purpose other than for the determination of a United States
Holder's interest accruals and adjustments thereof in respect of the debentures
for United States federal income tax purposes and do not constitute a projection
or representation regarding the actual amounts payable on the debentures.
Amounts treated as interest under the CPDI regulations are treated as
original issue discount for all purposes of the Code.
Adjustments to Interest Accruals on the Debentures
If, during any taxable year, a United States Holder receives actual
payments with respect to the debentures for that taxable year that in the
aggregate exceed the total amount of projected payments for that taxable year,
the United States Holder will incur a "net positive adjustment" under the CPDI
regulations equal to the amount of that excess. The United States Holder will
treat a "net positive adjustment" as additional interest income for the taxable
year. For this purpose, the payments in a taxable year include the fair market
value of property received with respect to the debentures in that year.
If, during any taxable year, a United States Holder receives actual
payments with respect to the debentures for that taxable year that in the
aggregate were less than the amount of projected payments for that taxable year,
the United States Holder will incur a "net negative adjustment" under the CPDI
regulations equal to the amount of that deficit. This adjustment will:
o reduce the United States Holder's interest income on the
debentures for that taxable year, and
o to the extent of any excess after the application of that
reduction, give rise to an ordinary loss to the extent of the
United States Holder's interest income on the debentures
during prior taxable years, reduced to the extent that
interest was offset by prior net negative adjustments.
If a United States Holder purchases debentures at a discount or premium
to the adjusted issue price, the discount will be treated as a positive
adjustment and the premium will be treated as a negative adjustment. The United
States Holder must reasonably allocate the adjustment over the remaining term of
the debentures by reference to the accruals of original issue discount at the
comparable yield or to the projected payments. It may be reasonable to allocate
the adjustment over the remaining term of the debentures pro rata with the
accruals of original issue discount at the comparable yield. Holders should
consult their tax advisors regarding these allocations.
Sale, Exchange, Conversion or Redemption
Generally, the sale or exchange of a debenture, or the redemption of a
debenture for cash, will result in taxable gain or loss to a United States
Holder. As described above, our calculation of the comparable yield and the
schedule of projected payments for the debentures includes the receipt of stock
upon conversion as a contingent payment with respect to the debentures.
Accordingly, we intend to treat the receipt of our common stock by a United
States Holder upon the conversion of a debenture, or upon our repurchase of a
debenture at the option of a holder where we elect to pay in shares of our
common stock, as a contingent payment under the CPDI regulations. Under this
treatment, a conversion or a repurchase that includes payment in our common
stock will also result in taxable gain or loss to a United States Holder.
The amount of gain or loss on a taxable sale, exchange, conversion or
redemption will be equal to the difference between:
o the amount of cash plus the fair market value of any property
received by the United States Holder, including the fair
market value of any of our common stock received, and
o the United States Holder's adjusted tax basis in the
debentures.
A United States Holder's adjusted tax basis in a debenture at any time
will generally be equal to the United States Holder's original purchase price
for the debenture, increased by any interest income previously accrued by the
United States Holder (determined without regard to any adjustments to interest
accruals described above, other than adjustments to reflect discount or premium
to the adjusted issue price, if any), and decreased by the amount of any
projected payments, as defined above, scheduled to have been made through that
date. Gain recognized upon a sale, exchange, conversion or redemption of a
debenture will generally be treated as ordinary interest income; any loss will
be ordinary loss to the extent of interest previously included in income, and
thereafter, capital loss (which will be long-term if the debenture is held for
more than one year). The deductibility of net capital losses by individuals and
corporations is subject to limitations.
A United States Holder's tax basis in our common stock received upon a
conversion of a debenture or upon a United States Holder's exercise of a put
right that we elect to pay in common stock will equal the then current fair
market value of that common stock. The United States Holder's holding period for
the common stock received may commence on the day immediately following the date
of conversion or repurchase of a debenture. However, the matter is not entirely
certain and holders may be entitled to include their holding period for the
debenture as part of their holding period for the common stock received upon
conversion or repurchase with respect to some or all of the shares. Holders
should consult their own tax advisors regarding the proper application of the
holding period rules to their situation.
Constructive Dividends
If at any time we make a distribution of property to our shareholders
that would be taxable to the shareholders as a dividend for United States
federal income tax purposes and, in accordance with the provisions of the
debentures providing for conversion price adjustments, the conversion rate of
the debentures is increased, that increase may be deemed to be the payment of a
taxable dividend to the holders of the debentures.
For example, an increase in the conversion rate in the event of
distribution of evidences of our indebtedness or our assets or an increase in
the event of an extraordinary cash dividend will generally result in deemed
dividend treatment to holders of the debentures, but generally an increase in
the event of share dividends or the distribution of rights to subscribe for
common stock will not.
Treatment of Non-United States Holders
All payments on the debentures made to a Non-United States Holder,
including a payment in common stock pursuant to a conversion or repurchase of a
debenture, and any gain realized on a sale or exchange of the debentures, will
be exempt from United States federal income and withholding tax, provided that:
o that Non-United States Holder does not own, actually or
constructively, 10 percent or more of the total combined
voting power of all classes of our stock entitled to vote, is
not a controlled foreign corporation related, directly or
indirectly, to us through stock ownership, and is not a bank
receiving interest described in section 881(c)(3)(A) of the
Code and with respect to the gain, is not an individual who is
present in the United States for 183 days or more in the year
of the sale, exchange or disposition of the debentures;
o the certification requirement set forth in section 871(h) or
section 881(c) of the Code has been fulfilled with respect to
the beneficial owner, as discussed below;
o those payments and gain are not effectively connected with the
conduct by that Non-United States Holder of a trade or
business in the United States, and where a tax treaty applies,
are not attributable to a United States permanent
establishment; and
o our common stock continues to be actively traded within the
meaning of section 871(h)(4)(C)(v)(1) of the Code (which, for
these purposes and subject to certain exceptions, includes
trading on the New York Stock Exchange).
If a Non-United States Holder were deemed to have received a
constructive dividend (see "--United States Holders--Constructive Dividends"
above), the Non-United States Holder will generally be subject to United States
withholding tax at a 30% rate, subject to a reduction by an applicable treaty,
on the taxable amount of such dividend.
The statement requirement referred to in the preceding paragraph will
be fulfilled if the beneficial owner of a debenture certifies on Form W-8BEN,
under penalties of perjury, that it is not a United States person and provides
its name, address and any other information the form may require.
If a Non-United States Holder of the debentures is engaged in a trade
or business in the United States, and if interest or gain on the debentures is
effectively connected with the conduct of that trade or business (and where a
tax treaty applies, is attributable to a United States permanent establishment),
the Non-United States Holder, although exempt from the withholding tax discussed
in the preceding paragraphs, will generally be subject to regular United States
federal income tax on interest and on any gain realized on the sale or exchange
of the debentures in the same manner as if it were a United States Holder. In
lieu of the certificate described in the preceding paragraph, a Non-United
States Holder described in the previous sentence will be required to provide to
the withholding agent a properly executed Form W-8ECI (or successor form) in
order to claim an exemption from withholding tax. In addition, if that
Non-United States Holder is a foreign corporation, that Non-United States Holder
may be subject to a branch profits tax equal to 30% (or that lower rate provided
by an applicable treaty) of its effectively connected earnings and profits for
the taxable year, subject to certain adjustments.
Backup Withholding Tax and Information Reporting
Payments of principal, premium, if any, and interest (including
original issue discount and a payment in common stock pursuant to a conversion
or repurchase of the debentures) on, and the proceeds of disposition or
retirement of, the debentures may be subject to information reporting and United
States federal backup withholding tax if the United States Holder of debentures
fails to supply an accurate taxpayer identification number or otherwise fails to
comply with applicable United States information reporting or certification
requirements. Any amounts so withheld will be allowed as a credit against that
United States Holder's United States federal income tax liability, provided that
the required information is provided to the Internal Revenue Service.
A Non-United States Holder may also be subject to United States federal
backup withholding tax on these payments unless the Non-United States Holder
establishes that it is not a United States person. The certification procedures
required to claim the exemption from withholding tax on certain payments on the
debentures described above will satisfy the certification requirements necessary
to avoid the backup withholding tax as well. The amount of any backup
withholding from a payment to the Non-United States Holder will be allowed as a
credit against the Non-United States Holder's United States federal income tax
liability and may entitle the Non-United States Holder to a refund, provided
that the required information is furnished to the Internal Revenue Service.
SELLING SECURITYHOLDERS
The debentures were originally issued by GTECH Holdings Corporation,
guaranteed by GTECH Corporation and the other guarantors, and sold by Credit
Suisse First Boston Corporation, Banc of America Securities LLC and Merrill
Lynch, Pierce Fenner & Smith Incorporated, as representatives of the initial
purchasers in a transaction exempt from the registration requirements of the
Securities Act to persons reasonably believed by the initial purchasers to be
"qualified institutional buyers" as defined by Rule 144A under the Securities
Act. The selling securityholders may from time to time offer and sell pursuant
to this prospectus any or all of the debentures listed below and the GTECH
common stock delivered to the holders upon conversion or purchase by us of
such debentures. When we refer to the "selling securityholders" in this
prospectus, we refer to those persons listed in the table below, as well as the
pledgees, donees, assignees, transferees, successors and others who later hold
any of the selling securityholders' interests.
The table below sets forth the name of each selling securityholder,
the principal amount at maturity of debentures that each selling securityholder
may offer pursuant to this prospectus and the number of shares of our common
stock into which such debentures are convertible. Unless set forth below, none
of the selling securityholders has, or within the past three years has had, any
material relationship with us or with any of our affiliates.
We have prepared the table below based on information given to us by
the selling securityholders on or prior to May 29, 2002. However, any or all of
the debentures or common stock listed below may be offered for sale pursuant to
this prospectus by the selling securityholders from time to time. Accordingly,
no estimate can be given as to the amounts of debentures or common stock that
will be held by the selling securityholders upon consummation of any such sales.
In addition, the selling securityholders listed in the table below may have
acquired, sold or transferred, in transactions exempt from the registration
requirements of the Securities Act, some or all of their debentures since the
date as of which the information in this table is presented.
Information about the selling securityholders may change over time. Any
changed information will be set forth in prospectus supplements. From time to
time, additional information concerning ownership of the debentures and common
stock may rest with certain holders thereof not named in the table below and of
whom we are unaware.
Aggregate Number of
Principal Shares of Percentage of
Amount of Percentage of GTECH Common Shares of GTECH
Debentures That Debentures Stock That May Common Stock
Name May Be Sold Outstanding Be Sold (1) Outstanding (2)
Akela Capital Master Fund, Ltd. .................................. $ 1,000,000 * 36,363 *
Aloha Airlines Non-Pilots Pension Trust .......................... $ 40,000 * 1,454 *
Aloha Pilots Retirement Trust .................................... $ 25,000 * 909 *
American Fidelity Assurance Company............................... $ 375,000 * 13,636 *
Bank Austria Cayman Islands, LTD ................................. $ 2,000,000 1.14% 72,727 *
Bay County PERS .................................................. $ 150,000 * 5,454 *
Bear, Stearns & Co. Inc. ......................................... $ 500,000 * 18,181 *
C&H Sugar Company, Inc. .......................................... $ 55,000 * 2,000 *
CALAMOS(R)Convertible Fund - CALAMOS(R)Investment Trust .......... $ 5,000,000 2.86% 181,818 *
CALAMOS(R)Convertible Growth and Income Fund -
CALAMOS(R)Investment Trust ....................................... $ 5,800,000 3.31% 210,909 *
CALAMOS(R)Market Neutral Fund - CALAMOS(R)Investment
Trust ............................................................ $ 7,100,000 4.06% 258,181 *
CareFirst of Maryland, Inc. ...................................... $ 290,000 * 10,545 *
CareFirst BlueChoice, Inc. ....................................... $ 75,000 * 2,727 *
City of Birmingham Retirement & Relief System..................... $ 1,100,000 * 40,000 *
Chrysler Corporation Master Retirement Trust ..................... $ 6,735,000 3.85% 244,909 *
Consulting Group Capital Markets Funds ........................... $ 400,000 * 14,545 *
Convertible Securities Fund ...................................... $ 155,000 * 5,636 *
Delaware PERS .................................................... $ 1,650,000 * 60,000 *
Delta Airlines Master Trust (c/o Oaktree Capital
Management, LLC) ................................................. $ 1,865,000 1.07% 67,818 *
Delta Pilots D&S Trust (c/o Oaktree Capital
Management, LLC) ................................................. $ 905,000 * 32,909 *
Drury University ................................................. $ 15,000 * 545 *
Equity & Convertible Fund ........................................ $ 870,000 * 31,636 *
Family Service Life Insurance Company ............................ $ 300,000 * 10,909 *
FreeState Health Plan, Inc. ...................................... $ 70,000 * 2,545 *
Gaia Offshore Master Fund Ltd. ................................... $ 5,400,000 3.09% 196,363 *
Genesee County Employees' Retirement System....................... $ 625,000 * 22,727 *
Grace Brothers, Ltd. ............................................. $ 1,000,000 * 36,363 *
Grace Brothers Management LLC .................................... $ 3,000,000 1.71% 109,090 *
Group Hospitalization and Medical Services, Inc. ................. $ 320,000 * 11,636 *
Guardian Life Insurance Co. ...................................... $ 14,200,000 8.11% 516,363 *
Guardian Pension Trust ........................................... $ 900,000 * 32,727 *
Hawaiian Airlines Employees Pension Plan - IAM ................... $ 15,000 * 545 *
Hawaiian Airlines Pension Plan for Salaried Employees ............ $ 5,000 * 181 *
Hawaiian Airlines Pilots Retirement Plan ......................... $ 35,000 * 1,272 *
HealthNow New York, Inc. ......................................... $ 215,000 * 7,818 *
HFR Master Fund, LTD ............................................. $ 50,000 * 1,818 *
Highbridge International LLC ..................................... $ 4,000,000 2.29% 145,454 *
HSBC Trustee Zola Managed Trust .................................. $ 1,300,000 * 47,272 *
ICI American Holdings Trust ...................................... $ 600,000 * 21,818 *
Innovest Finanzdienstleistungs AG ................................ $ 590,000 * 21,454 *
Louisiana CCRF ................................................... $ 325,000 * 11,818 *
Lyxor Master Fund ................................................ $ 1,700,000 * 61,818 *
Lyxor Master Fund ................................................ $ 600,000 * 21,818 *
Microsoft Corporation ............................................ $ 2,370,000 1.35% 86,181 *
Morgan Stanley & Co. ............................................. $ 5,000,000 2.86% 181,818 *
Motion Picture Industry Health Plan - Active Member
Fund ............................................................. $ 420,000 * 15,272 *
Motion Picture Industry Health Plan - Retiree Member
Fund ............................................................. $ 265,000 * 9,636 *
Nations Convertible Securities Fund .............................. $ 7,175,000 4.10% 260,909 *
Nicholas Applegate Investment Grade Convertible .................. $ 10,000 * 363 *
Nomura Securities International Inc. (3) ......................... $ 5,000,000 2.86% 181,818 *
NORCAL Mutual Insurance Company................................... $ 425,000 * 15,454 *
Oakwood Assurance Company......................................... $ 80,000 * 2,909 *
Oakwood Healthcare Inc. .......................................... $ 275,000 * 10,000 *
Oakwood Healthcare Inc. Endowment ................................ $ 12,000 * 436 *
Oakwood Healthcare Inc. Funded Depreciation ...................... $ 145,000 * 5,272 *
Oakwood Healthcare Inc. - OHP .................................... $ 21,000 * 763 *
OCM Convertible Trust ............................................ $ 3,910,000 2.23% 142,181 *
Park Avenue Life Insurance Company ............................... $ 100,000 * 3,636 *
Partner Reinsurance Company Ltd. ................................. $ 1,085,000 * 39,454 *
Peoples Benefit Life Insurance Company TEAMSTERS ................. $ 1,000,000 * 36,363 *
Prudential Insurance Company of America .......................... $ 75,000 * 2,727 *
Qwest Occupational Health Trust .................................. $ 230,000 * 8,363 *
Ramius Capital Group ............................................. $ 500,000 * 18,181 *
RCG Halifax Master Fund, LTD ..................................... $ 500,000 * 18,181 *
RCG Latitude Master Fund, LTD .................................... $ 2,500,000 1.43% 90,909 *
RCG Multi Strategy LP. ........................................... $ 2,000,000 1.14% 72,727 *
San Diego County Employee Retirement Association ................. $ 2,000,000 1.14% 72,727 *
SG Cowen Securities Corp. ........................................ $ 20,000,000 11.43% 727,272 1.25%
Southern Farm Bureau Life Insurance Company....................... $ 900,000 * 32,727 *
State Employees' Retirement Fund of the State of
Delaware ......................................................... $ 2,675,000 1.53% 97,272 *
State of Connecticut Combined Investment Funds ................... $ 5,590,000 3.19% 203,272 *
State of Florida, Office of the Treasurer ........................ $ 1,500,000 * 54,545 *
State of Oregon/SAIF Corporation ................................. $ 1,350,000 * 49,090 *
Syngenta AG ...................................................... $ 285,000 * 10,363 *
The Cockrell Foundation........................................... $ 120,000 * 4,363 *
White River Securities LLC ....................................... $ 500,000 * 18,181 *
Zazove Convertible Arbitrage Fund, L.P. .......................... $ 350,000 * 12,727 *
Zazove Hedged Convertible Fund L.P. .............................. $ 3,400,000 1.94% 123,636 *
Zazove Income Fund L.P. .......................................... $ 2,100,000 1.20% 76,363 *
Zeneca Holdings Trust ............................................ $ 415,000 * 15,090 *
Zurich Institutional Benchmarks Master Fund Ltd. ................. $ 2,500,000 1.43% 90,909 *
All other holders of debentures or future pledgees,
donees, assignees, transferees or successors of any
such holders (4)(5) .............................................. $ 26,862,000 15.35% 976,800 1.68%
Total ............................................................ $175,000,000 100.00% 6,363,635 10.00%
* Less than one percent (1%).
- ----------
(1) Assumes conversion of all of the holder's debentures at a conversion
price of $27.50 per share of common stock. This conversion price is subject to
adjustment, however, as described under "Description of Debentures--Conversion
Rights--Conversion Price Adjustments" beginning on page 19. As a result, the
number of shares of common stock issuable upon conversion of the debentures may
increase or decrease in the future. Does not include shares of GTECH common
stock that we may issue upon purchase of debentures by us at the option of the
holder.
(2) Calculated according to Rule 13d-3(d)(i) of the Exchange Act, using
57,270,958 shares of common stock outstanding as of May 24, 2002. In calculating
this amount for each holder, we treated as outstanding the number of shares of
GTECH common stock issuable upon conversion of all of that holder's debentures,
but we did not assume conversion of any other holder's debentures. Does not
include shares of GTECH common stock that we may issue upon purchase of
debentures by us at the option of the holder.
(3) Nomura Securities International Inc. beneficially owns 33,886 shares of
GTECH common stock in addition to the debentures listed.
(4) Information about other selling securityholders will be set forth in
prospectus supplements, if required.
(5) Except as set forth above, assumes that any other holders of
debentures, or any future pledgees, donees, assignees, transferees or successors
of or from any such other holders of debentures, do not beneficially own any
shares of GTECH common stock other than the shares of common stock issuable upon
conversion of the debentures at the conversion rate.
PLAN OF DISTRIBUTION
We are registering the debentures and the common stock covered by this
prospectus to permit holders to conduct public secondary trading of these
securities from time to time after the date of this prospectus. We have agreed,
among other things, to bear all expenses, other than underwriting discounts and
selling commissions, in connection with the registration and sale of the
debentures and the common stock covered by this prospectus.
We will not receive any of the proceeds from the offering of debentures
or our common stock by the selling securityholders. We have been advised by the
selling securityholders that the selling securityholders may sell all or a
portion of the debentures and our common stock beneficially owned by them and
offered hereby from time to time:
o directly; or
o through underwriters, broker-dealers or agents, who may
receive compensation in the form of discounts, commissions or
concessions from the selling securityholders or from the
purchasers of the debentures and our common stock for whom
they may act as agent.
The debentures and our common stock may be sold from time to time in one or more
transactions at:
o fixed prices, which may be changed;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
These prices will be determined by the holders of the securities or by
agreement between these holders and underwriters or dealers who may receive fees
or commissions in connection with the sale. The aggregate proceeds to the
selling securityholders from the sale of the debentures or our common stock
offered by them hereby will be the purchase price of the debentures or our
common stock less discounts and commissions, if any.
The sales described in the preceding paragraph may be effected in transactions:
o on any national securities exchange or quotation service on
which the debentures and our common stock may be listed or
quoted at the time of sale, including the New York Stock
Exchange in the case of our common stock;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services
or in the over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses
are transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the debentures and our common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
debentures and our common stock in the course of hedging their positions. The
selling securityholders may also sell the debentures and our common stock short
and deliver debentures and our common stock to close out short positions, or
loan or pledge debentures and our common stock to broker-dealers that in turn
may sell the debentures and the common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the debentures and our common stock
by the selling securityholders. Selling securityholders may not sell any, or may
not sell all, of the debentures and the common stock offered by them pursuant to
this prospectus. In addition, we cannot assure you that a selling securityholder
will not transfer, devise or gift the debentures and the common stock by other
means not described in this prospectus. In addition, any securities covered by
this prospectus which qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to
this prospectus.
Our common stock is listed for trading on the New York Stock Exchange.
The selling securityholders and any broker and any broker-dealers,
agents or underwriters that participate with the selling securityholders in the
distribution of the debentures or the common stock may be deemed to be
"underwriters" within the meaning of the Securities Act. In this case, any
commissions received by these broker-dealers, agents or underwriters and any
profit on the resale of the debentures or the common stock purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
In addition, any profits realized by the selling securityholders may be deemed
to be underwriting commissions.
The debentures were issued and sold in December 2001 in transactions
exempt from the registration requirements of the Securities Act to persons
reasonably believed by the initial purchasers to be "qualified institutional
buyers," as defined in Rule 144A under the Securities Act. We have agreed to
indemnify the initial purchasers and each selling securityholder, and each
selling securityholder has agreed to indemnify us, the initial purchasers and
each other selling securityholder, against specified liabilities arising under
the Securities Act.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the debentures and the underlying common stock by
the selling securityholders and any such other person. In addition, Regulation M
of the Exchange Act may restrict the ability of any person engaged in the
distribution of the debentures and the underlying common stock to engage in
market-making activities with respect to the particular debentures and the
underlying common stock being distributed for a period of up to five business
days prior to the commencement of the distribution. This may affect the
marketability of the debentures and the underlying common stock and the ability
of any person or entity to engage in market-making activities with respect to
the debentures and the underlying common stock.
VALIDITY OF SECURITIES
Certain legal matters with respect to the validity of the offered
securities will be passed upon for us by Edwards & Angell, LLP, Providence,
Rhode Island.
INDEPENDENT AUDITORS
The consolidated financial statements of GTECH Holdings Corporation
included in its Annual Report on Form 10-K for the year ended February 23, 2002
and incorporated by reference in this prospectus, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon dated
March 22, 2002, except for Note F, as to which the date is April 2, 2002, which
is also included therein and incorporated by reference herein.
[GTECH logo]
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
GTECH Holdings Corporation is paying all of the selling securityholders'
expenses related to this offering, except the selling securityholders will pay
any applicable broker's commissions and expenses. The following table sets forth
the approximate amount of fees and expenses payable by GTECH in connection with
this registration statement and the distribution of the debentures and common
stock registered hereby. All of the amounts shown are estimates except the SEC
registration fee.
SEC registration fee.................................................................. $17,891
Printing expenses..................................................................... 75,000
Legal fees and expenses............................................................... 30,000
Accounting fees and expenses.......................................................... 140,000
Miscellaneous expenses................................................................ 2,109
-----
Total................................................................................. $265,000
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b) (7) of the Delaware General Corporation Law the ("DGCL") enables
a corporation in its original certificate of incorporation or an amendment
thereto to eliminate or limit the personal liability of a director to the
corporation or its stockholders for monetary damages for a breach of the
director's fiduciary duty, except (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 174 of the DGCL (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions) or (iv) for any transaction from which a director derived an
improper personal benefit. The amended certificates of incorporation of each of
GTECH Holdings Corporation, GTECH Corporation and GTECH Latin America
Corporation contain such a limitation on the personal liability of directors.
Section 145 of the DGCL provides that a corporation may indemnify any persons,
including officers and directors, who were or are, or are threatened to be made,
parties to any threatened, pending or completed legal action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person was an officer, director, employee or agent of such corporation or
is or was serving at the request of such corporation as an officer, director,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise. The indemnity may include expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided such person acted in good faith in a manner he reasonably believed to
be in or not opposed to the corporation's best interests and, for criminal
proceedings, had no reasonable cause to believe that his conduct was unlawful. A
Delaware corporation may indemnify officers and directors in an action by or in
the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify such officer or director
against the expenses that such officer or director actually and reasonably
incurred.
The amended and restated bylaws of GTECH Holdings Corporation, and those of
GTECH Corporation and GTECH Latin America Corporation, each provide that such
corporation shall indemnify, to the full extent permitted under Delaware law,
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of such company or while a director or officer of such
company is or was serving at the request of such company as a director or
officer of another corporation, partnership, joint venture, trust employee
benefit plan or other enterprise.
Under Section 7-1.1-4.1 of the Rhode Island Business Corporation Act, a Rhode
Island corporation has the power, under specified circumstances, to indemnify
its officers, directors, employees and agents against judgments, penalties,
fines, settlements and reasonable expenses, including attorneys' fees, actually
incurred by them in connection with any proceeding to which these persons were
made parties by reason of the fact that these persons are or were directors,
officers, employees or agents, if (i) these persons shall have acted in good
faith, (ii) they reasonably believed that their actions were in the best
interests of the corporation, if the proceeding involves conduct in an official
capacity with the corporation, or not opposed to the best interests of the
corporation, if the proceeding involves conduct other than in an official
capacity with the corporation and (iii) in criminal proceedings, they had no
reasonable cause to believe that their conduct was unlawful. The by-laws of
GTECH Rhode Island Corporation provide that such corporation shall indemnify its
directors and officers to the full extent permitted by Rhode Island law.
Section 7-1.1-48 of the Rhode Island Business Corporation Act provides that
articles of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its shareholders for
monetary damages for breach of fiduciary duty as a director provided that the
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its shareholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 7-1.1-43 of the
Rhode Island Business Corporation Act, which relates to liability for
unauthorized acquisitions or redemptions of, or dividends or distribution on,
capital stock, or (iv) for any transaction from which the director derived an
improper personal benefit, unless said transaction is permitted by Section
7-1.1-37.1 of the Rhode Island Business Corporation Act, which relates to
director conflicts of interest. GTECH Rhode Island Corporation's Articles of
Incorporation contain such a provision.
GTECH Holdings Corporation maintains directors' and officers' liability
insurance for its own officers and directors and those of its subsidiaries,
including GTECH Corporation, GTECH Rhode Island Corporation and GTECH Latin
America Corporation.
ITEM 16. EXHIBITS.
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of GTECH Holdings Corporation, as
amended (incorporated by reference to Exhibit 3.1 to the Form S-1 of
GTECH Holdings Corporation and GTECH Corporation, Registration No.
33-31867)
3.2 Certificate of Amendment to the Certificate of Incorporation of GTECH
Holdings Corporation (incorporated by reference to Exhibit 3.2 to the
Form S-1 of GTECH Holdings Corporation and GTECH Corporation,
Registration No. 33-31867)
3.3 Amended and Restated By-laws of GTECH Holdings Corporation
(incorporated by reference to Exhibit 3.3 to the Annual Report on Form
10-K of GTECH Holdings Corporation for the period ended February 23,
2002)
3.4 Restated Certificate of Incorporation of GTECH Corporation *
3.5 By-laws of GTECH Corporation *
3.6 Certificate of Incorporation of GTECH Latin America Corporation *
3.7 By-laws of GTECH Latin America Corporation *
3.8 Articles of Incorporation of GTECH Rhode Island Corporation *
3.9 By-laws of GTECH Rhode Island Corporation *
4.1 Indenture dated as of December 18, 2001, by and among GTECH Holdings
Corporation, as issuer, GTECH Corporation, GTECH Latin America
Corporation and GTECH Rhode Island Corporation, as guarantors, and Bank
of New York, as trustee (incorporated by reference to Exhibit 4.1 to
the Quarterly Report on Form 10-Q of GTECH Holdings Corporation for the
period ended November 24, 2001)
4.2 Form of 1-3/4% Convertible Debentures due December 15, 2021 (included
in Exhibit 4.1)
4.3 Registration Rights Agreement dated as of December 18, 2001, by and
among GTECH Holdings Corporation, GTECH Corporation, GTECH Latin
America Corporation, GTECH Rhode Island Corporation, Credit Suisse
First Boston Corporation, Banc of America Securities LLC and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (incorporated by reference
to Exhibit 4.2 to the Quarterly Report on Form 10-Q of GTECH Holdings
Corporation for the period ended November 24, 2001).
5 Opinion of Edwards & Angell, LLP *
8 Opinion of Edwards & Angell, LLP as to certain U.S. federal income tax
matters *
12 GTECH Holdings Corporation Computation of Ratio of Earnings to Fixed
Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Edwards & Angell, LLP (included in Exhibit 5)
23.6 Consent of Edwards & Angell, LLP (included in Exhibit 8)
24 Powers of Attorney *
25 Form of T-1 Statement of Eligibility of the Trustee under the Indenture
*
- ----------
* Previously filed.
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b), if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrants pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purposes of determining any liability under the Securities
Act of 1933, as amended, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned Registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrants' annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of either Registrant, pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrants of expenses incurred
or paid by a director, officer or controlling person of either Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, such Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of West Greenwich, State of Rhode Island, on the 30th
day of May, 2002.
GTECH HOLDINGS CORPORATION
By: /s/ Howard S. Cohen
------------------------------------------
Name: Howard S. Cohen
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons on May 30, 2002
in the capacities indicated below.
Signature Title
/s/ Howard S. Cohen Chief Executive Officer, President
- -------------------------------------------- and Director
Howard S. Cohen (Principal Executive Officer)
* Senior Vice President and Chief
- -------------------------------------------- Financial Officer
Jaymin B. Patel (Principal Financial Officer)
* Vice President and Corporate
- -------------------------------------------- Controller
Robert J. Plourde (Principal Accounting Officer)
* Director
- --------------------------------------------
Robert M. Dewey, Jr.
* Director
- --------------------------------------------
Burnett W. Donoho
* Director
- --------------------------------------------
The Rt. Hon. Sir Jeremy Hanley KCMG
* Director
- --------------------------------------------
Philip R. Lochner, Jr.
* Director
- --------------------------------------------
Lt. Gen. (Ret.) Emmett Paige, Jr.
* Director
- --------------------------------------------
Anthony Ruys
* Director
- --------------------------------------------
W. Bruce Turner
*: By: /s/ William M. Pieri
-------------------------------------
William M. Pieri
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of West Greenwich, State of Rhode Island, on the 30th
day of May, 2002.
GTECH CORPORATION
By: /s/ Howard S. Cohen
------------------------------------------
Name: Howard S. Cohen
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons on May 30, 2002
in the capacities indicated below.
Signature Title
/s/ Howard S. Cohen Chief Executive Officer, President
- -------------------------------------------- and Director
(Principal Executive Officer)
Howard S. Cohen
* Senior Vice President and Chief
- -------------------------------------------- Financial Officer
Jaymin B. Patel (Principal Financial Officer)
* Vice President and Corporate
- -------------------------------------------- Controller
Robert J. Plourde (Principal Accounting Officer)
* Director
- --------------------------------------------
David J. Calabro
* Director
- --------------------------------------------
W. Bruce Turner
*: By: /s/ William M. Pieri
------------------------------------
William M. Pieri
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of West Greenwich, State of Rhode Island, on the 30th
day of May, 2002.
GTECH RHODE ISLAND CORPORATION
By: /s/ David J. Calabro
------------------------------------------
Name: David J. Calabro
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons on May 30, 2002
in the capacities indicated below.
Signature Title
/s/ David J. Calabro Chief Executive Officer, President
- -------------------------------------------- and Director
David J. Calabro (Principal Executive Officer)
* Senior Vice President and Chief
- -------------------------------------------- Financial Officer
Jaymin B. Patel (Principal Financial Officer)
* Vice President and Corporate
- -------------------------------------------- Controller
Robert J. Plourde (Principal Accounting Officer)
*: By: /s/ William M. Pieri
------------------------------------
William M. Pieri
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of West Greenwich, State of Rhode Island, on the 30th
day of May, 2002.
GTECH LATIN AMERICA CORPORATION
By: /s/ David J. Calabro
------------------------------------------
Name: David J. Calabro
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
registration statement has been signed by the following persons on May 30, 2002
in the capacities indicated below.
Signature Title
/s/ David J. Calabro Chief Executive Officer, President
- -------------------------------------------- and Director
(Principal Executive Officer)
David J. Calabro
* Senior Vice President, Chief
- -------------------------------------------- Financial Officer and Director
Jaymin B. Patel (Principal Financial and
Accounting Officer)
* Vice President and Director
- --------------------------------------------
Timothy B. Nyman
*: By: /s/ William M. Pieri
------------------------------------
William M. Pieri
Attorney-in-Fact
Exhibit Index
Exhibit
Number Description
3.1 Restated Certificate of Incorporation of GTECH Holdings
Corporation, as amended (incorporated by reference to Exhibit 3.1
to the Form S-1 of GTECH Holdings Corporation and GTECH
Corporation, Registration No. 33-31867)
3.2 Certificate of Amendment to the Certificate of Incorporation of
GTECH Holdings Corporation (incorporated by reference to Exhibit
3.2 to the Form S-1 of GTECH Holdings Corporation and GTECH
Corporation, Registration No. 33-31867)
3.3 Amended and Restated By-laws of GTECH Holdings Corporation
(incorporated by reference to Exhibit 3.3 to the Annual Report on
Form 10-K of GTECH Holdings Corporation for the period ended
February 23, 2002)
3.4 Restated Certificate of Incorporation of GTECH Corporation *
3.5 By-laws of GTECH Corporation *
3.6 Certificate of Incorporation of GTECH Latin America Corporation *
3.7 By-laws of GTECH Latin America Corporation *
3.8 Articles of Incorporation of GTECH Rhode Island Corporation *
3.9 By-laws of GTECH Rhode Island Corporation *
4.1 Indenture dated as of December 18, 2001, by and among GTECH
Holdings Corporation, as issuer, GTECH Corporation, GTECH Latin
America Corporation and GTECH Rhode Island Corporation, as
guarantors, and Bank of New York, as trustee (incorporated by
reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q of
GTECH Holdings Corporation for the period ended November 24, 2001)
4.2 Form of 1-3/4% Convertible Debentures due December 15, 2021
(included in Exhibit 4.1)
4.3 Registration Rights Agreement dated as of December 18, 2001, by
and among GTECH Holdings Corporation, GTECH Corporation, GTECH
Latin America Corporation, GTECH Rhode Island Corporation, Credit
Suisse First Boston Corporation, Banc of America Securities LLC
and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(incorporated by reference to Exhibit 4.2 to the Quarterly Report
on Form 10-Q of GTECH Holdings Corporation for the period ended
November 24, 2001).
5 Opinion of Edwards & Angell, LLP *
8 Opinion of Edwards & Angell, LLP as to certain U.S. federal income
tax matters *
12 GTECH Holdings Corporation Computation of Ratio of Earnings to
Fixed Charges
23.1 Consent of Ernst & Young LLP
23.2 Consent of Edwards & Angell, LLP (included in Exhibit 5)
23.6 Consent of Edwards & Angell, LLP (included in Exhibit 8)
24 Powers of Attorney *
25 Form of T-1 Statement of Eligibility of the Trustee under the
Indenture *
- ----------
* Previously filed.