Gtech (NYSE:GTK)
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GTECH Holdings Corporation Provides Update on Brazilian Matters
WEST GREENWICH, R.I., July 29 /PRNewswire-FirstCall/ -- GTECH Holdings
Corporation (NYSE:GTK) today provided an update on recent developments in
Brazil. The Company announced that it has received notice from the United
States Securities and Exchange Commission (SEC) that it has approved a formal
order of investigation in the preexisting matters the SEC staff has been
examining related to media reports about public corruption issues in Brazil.
The Company has been advised by the SEC staff that the new order is unrelated
to any recent or new developments in the matter and is routine and intended to
give it adequate investigatory powers should it desire to employ them. The SEC
has also sent the Company a subpoena for the production of certain documents
and records related to GTECH's operations in Brazil that is identical to the
previously-disclosed informal request for documents from the SEC.
The Company has been cooperating fully with all SEC information requests which
require the review of a substantial volume of documents, many in Portuguese,
from its Brazilian operations. The SEC has expressed its satisfaction with
GTECH's cooperation in this matter.
An internal review conducted by management and under the supervision of the
independent directors of the GTECH Board of Directors is continuing. From what
has been learned from that investigation to date, the Company is confident that
it acted appropriately and GTECH's compliance program worked as it is intended.
In other related developments, GTECH has been formally served with the civil
complaint filed by the Public Ministry in relation to its contracts with Caixa
Economica Federal (Caixa). The Company will now be afforded the opportunity to
review the evidence developed by the public ministry attorneys. The Company
reiterated that it has good and adequate defenses to the claims made in the
lawsuit, will vigorously defend itself in the proceedings, and expects a
positive outcome.
This lawsuit seeks to impose damages equal to (i) the sum of all amounts paid
to GTECH under the 1997 contract and the 2000 contract which has been estimated
to be $650 million to date; (ii) certain other permitted amounts; (iii) minus
our proven investment costs; and (iv) potential penalties. GTECH believes that
the services were provided under valid and enforceable contracts and as such
does not anticipate material liabilities to result from this claim.
As part of that civil action, the Company also filed an appeal to the
injunctive order that placed the restrictions on the transfer or sale of the
Company's Brazilian assets and placed 30 percent of the regular revenues from
its contract with Caixa under court control. The court is expected to take up
that appeal when it returns from its current recess.
Certain statements contained in this press release are forward looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company identifies
forward looking statements by words such as "may," "will," "should," "could,"
"expect," "plan," "anticipate," "intend," "believe," "estimate," "continue," or
similar words that refer to the future. Such statements include, without
limitation, statements relating to the prospects and financial outlook for the
Company, which reflect management assumptions regarding: (i) the future
prospects for and stability of the lottery industry and other businesses in
which the Company is engaged or expects to be engaged, (ii) the future
operating and financial performance of the Company (including, without
limitation, expected future growth in revenues, profit margins and earnings per
share), and (iii) the ability of the Company to retain existing business and to
obtain and retain new business. Such 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, but are not limited to, those set forth
above, in the Company's subsequent press releases and on reports by the Company
on Forms 10-K, 10-Q and 8-K, and other reports and filings with the Securities
and Exchange Commission, as well as risks and uncertainties respecting: (i)
the potential impact of extensive and evolving government regulations upon the
Company's business; (ii) the ability of the Company to continue to retain and
extend its existing contracts and win new contracts; (iii) the possibility of
slower than expected growth or declines in sales of lottery and gaming goods
and services by the Company or the Company's customers; (iv) exposure to
foreign currency fluctuations; (v) risks and uncertainties inherent in doing
business in foreign jurisdictions; (vi) the relatively large percentage of the
Company's revenues attributable to a relatively small number of the Company's
customers; (vii) the possibility of significant fluctuation of quarterly
operating results; (viii) the intensity of competition in the lottery and
gaming industries; (ix) the possibility of substantial penalties under and/or
termination of the Company's contracts; (x) the ability of the Company to
respond to technological change and to satisfy the future technological demands
of its customers; (xi) opposition to expansion of lottery and gaming; (xii) the
Company's ability to attract and retain key employees; and (xiii) the
possibility of adverse determinations in pending legal proceedings.
GTECH, a leading global information technology company with over $1 billion in
revenues and more than 5,500 people in 45 countries, provides software,
networks, and professional services that power high-performance, transaction
processing solutions. The Company's core market is the lottery industry, with
a growing presence in commercial gaming technology and financial services
transaction processing. For more information about the Company, please visit
GTECH's website at http://www.gtech.com/.
Contact:
Robert K. Vincent
Public Affairs
GTECH Corporation
401-392-7452
DATASOURCE: GTECH Holdings Corporation
CONTACT: Robert K. Vincent, Public Affairs of GTECH Corporation,
+1-401-392-7452
Web site: http://www.gtech.com/