GTECH Holdings Corporation Provides Update on Brazilian Matters
July 29 2004 - 8:45AM
PR Newswire (US)
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/
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