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FOR IMMEDIATE RELEASE CONTACT: Stephen G. White
July 6, 2000 Public Affairs
GTECH Corporation
401-392-7452
GTECH BOARD OF DIRECTORS APPOINTS W. BRUCE TURNER NON-EXECUTIVE
CHAIRMAN OF THE BOARD OF DIRECTORS; ACCEPTS RESIGNATIONS OF
WILLIAM Y. O'CONNOR AND STEVEN P. NOWICK.
GTECH expects lower than anticipated earnings for 2nd quarter, full fiscal year.
Turner to lead value assessment of GTECH Operations.
West Greenwich, RI - (July 6, 2000) - GTECH Holdings Corporation (NYSE: GTK)
today announced that GTECH's Board of Directors has appointed W. Bruce Turner
as non-executive chairman of the Company's Board of Directors. Mr. Turner's
appointment is effective immediately. The Board also announced that it has
accepted the resignations of William Y. O'Connor, the Company's chairman of the
Board of Directors and chief executive officer; and Steven P. Nowick, GTECH's
president and chief operating officer.
W. BRUCE TURNER:
Bruce Turner was elected to GTECH's Board of Directors in 1999. Mr. Turner is a
former Managing Director, Equity Research for Salomon Smith Barney from
1994-1999, where he was widely recognized as the premier analyst in the gaming
and leisure industry.
Prior to Salomon Smith Barney, Mr. Turner was Director, Leisure Equity Research
at Raymond James. Mr. Turner began his career in the United States Army as a
Field Artillery Officer. Mr. Turner, a graduate of the United States Military
Academy at West Point, earned an MBA from the University of Tampa in 1989.
"Bruce's investment expertise and experience with the U.S. equity markets,
coupled with his impeccable leadership credentials, make him the ideal
candidate to move GTECH in the right direction and unlock value for our
shareholders," said GTECH Board member The Rt. Honourable Lord Moore.
RESIGNATIONS:
GTECH's Board of Directors accepted Mr. O'Connor's resignation due to a
combination of several factors, including the Board's growing dissatisfaction
with GTECH stock performance and how a software issue was handled in the United
Kingdom in 1998. As previously reported, GTECH identified a software
malfunction in the U.K. in June 1998 and corrected the malfunction in July
1998, but without notifying Camelot, the operator of the U.K. National Lottery.
"The Board is disappointed with the manner in which this entire matter, of
which it only recently became aware, was dealt with and believes the problem
should have been disclosed," said Mr. Turner.
Mr. O'Connor joined GTECH as president and chief operating officer in December
1994. Mr. O'Connor was elected chief executive officer and chairman of the
Board of Directors in 1997 and 1998, respectively.
GTECH's Board of Directors also accepted the resignation of Mr. Nowick, who
joined GTECH as senior vice president for business development in 1997. Mr.
Nowick was named chief operating officer and president in 1998 and 2000,
respectively.
"Bill and Steve each made significant contributions to the Company for which we
are all grateful. We wish them well in their future endeavors," said Mr.
Turner.
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A search will commence shortly to fill the vacancies created by Mr. O'Connor
and Mr. Nowick's departures.
2ND QUARTER, FULL FISCAL YEAR EARNINGS:
GTECH expects lower than anticipated earnings per share for 2nd quarter and
full year for Fiscal 2001. Guidance for the second quarter and full year is
being revised due to two sets of factors. First, there will be material
financial impacts from recent unfavorable developments on the Company's Rhode
Island and Colombian lottery contracts. Second, cost over-runs on two ongoing
system implementation projects, combined with delays in the delivery of several
international product sales, have compounded the situation. These factors have
come about as part of management's ongoing review of operations since the
Company's 1st quarter earnings release.
- - Project Cost Over-runs: GTECH management is currently examining the
possibility of cost over-runs and their projected amount on projects
the Company is currently implementing in certain jurisdictions.
- - Rhode Island: The Rhode Island State Legislature passed their state
budget on June 23, 2000, which included reductions in the fees paid to
vendors and suppliers to the state's two video lottery operations at
Lincoln Park and Newport Jai-Alai, including Dreamport, GTECH's
wholly-owned gaming and entertainment subsidiary. The Rhode Island
Legislature's decision to reduce Dreamport's compensation will take
effect October 1, 2000. The reduction's impact on revenues is expected
to be $3.0- $3.5 million for the full fiscal year.
- - Colombia: The scheduled start-up date for Colombia's National Lottery
has been postponed due to several unforeseen political, legal, and
administrative delays GTECH's lottery customer has encountered. While
management believes these issues will be resolved, the system start-up
delay is expected to be at least four weeks. The delay's impact on
revenues is expected to be $2.0 - $3.0 million in the 2nd quarter.
- - Delays in Certain International Product Sales: The Company now expects
to recognize a portion of the sale of terminals for its previously
announced award by Santa Casa da Misericordia de Lisboa (Operator of
the National Lottery of Portugal) later than previously forecast. The
impact of this delay, combined with delays in certain forecast
contract awards in Asia, is expected to be $10.0 - $15.0 million in
revenue for the full fiscal year.
Management is presently reviewing and addressing these situations in detail and
the Company expects to issue revised earnings guidance for the 2nd quarter and
full year within the next ten (10) business days.
VALUE ASSESSMENT OF GTECH'S OPERATIONS TO BE CONDUCTED:
Mr. Turner announced that the Board of Directors would be conducting a
comprehensive value assessment of GTECH's operations over the next 45-60 days.
"GTECH's core business is sound. It is prudent, given the top management
changes, to avail ourselves of this opportunity to step back and look over our
operations from top to bottom. My first priority will be to get our collective
hands around how our operations are creating value. Each segment of GTECH's
business will be evaluated with two central issues in mind - how we're
creating, maximizing, and returning long-term sustainable value for our
shareholders, and how our operations contribute to exceeding our customer's
expectations for excellence," said Mr. Turner.
SPECIAL CHARGE:
The Company announced it will be taking a special charge against 2nd quarter
earnings to cover the costs associated with the departures of Mr. O'Connor and
Mr. Nowick. It is expected that the review of the financial impact of the
recent business developments and outcome of the value assessment of operations
will likely result in an additional charge. The Company expects to report on
the results of this assessment in the next 45-60 days.
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This press release contains forward-looking statements including, without
limitation, statements relating to future operations and financial performance
of the Company and the Company's future strategies. Such forward looking
statements reflect management's assessment based on information currently
available, but are not guarantees and are subject to risks and uncertainties
which cause results to differ materially from those contemplated in
forward-looking statements. These risks and uncertainties include, but are not
limited to, those set forth above and in the Company's filings with the
Securities and Exchange Commission, including its fiscal 2000 Form 10-K and
subsequent filings.
GTECH Holdings Corporation is the leading global supplier of systems and
services to the lottery and gaming/entertainment industries. GTECH provides
customized solutions to meet the needs of lotteries, governments and
corporations on six continents. More information about the Company is available
at GTECH's website at http://www.gtech.com.
FOR IMMEDIATE RELEASE CONTACT: Stephen G. White
July 6, 2000 Public Affairs
GTECH Corporation
401-392-7452
CORRECTION TO GTECH PRESS RELEASE DATED JULY 6, 2000
Note to Editors:
West Greenwich, RI - (July 6, 2000) - The following correction should be
made to a press release issued by GTECH Holdings Corporation (NYSE:GTK) on
July 6, 2000.
The Rhode Island Legislature's decision to reduce Dreamport's compensation
took effect July 1, 2000.
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The press release stated that October 1, 2000, was the date in question.
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