Scientific Games Corp. announced fourth quarter financial results (year ending Dec. 31, 2002) Feb. 28 and reported a 10% gain in revenue for the quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter rose 24% for the comparable period in 2001.
EBITDA was adjusted to exclude approximately $1 million worth of investigation and other costs related to the Breeders' Cup Ultra Pick 6 scandal.
Revenues for the fourth quarter rose to $118.9 million from $108.4 million for the fourth quarter in 2001. EDITDA increased from $24.8 million to $30.7 million. Net income in the fourth quarter of 2002, before the non-cash preferred stock dividend, was $42 million or $0.48 per diluted share.
This unusually high level of net income is primarily due to the inclusion in the fourth quarter of an income tax benefit of about $42.4 million from the recognition of net operating tax loss "carryforwards" as a result of the company's current and anticipated levels of taxable income. Net income for the fourth quarter of 2002 was also affected by approximately $10.2 million of charges attributable to the refinancing of the company's senior secured debt in December 2002.
For the fiscal year 2002, revenues increased to $455.3 million compared to $440.2 million in 2001, and EBITDA grew to $123.7 million from $105.1 million in the prior year. EBITDA for the 2002 year, adjusted to exclude the costs attributable to the Ultra Pick 6 matter, increased by 19% to $124.7 million from $105.1 million for the comparable period in 2001. Net income in 2002 before the non-cash preferred stock dividend was $52.1 million or $0.65 per diluted share.
Lorne Weil, Chairman and CEO of Scientific Games, in a press release, said, "Our pari-mutuel group of companies experienced a successful, albeit challenging, 2002. We signed a five-year totalisator contract extension valued at $10 million with Woodbine Entertainment Group. We also signed contract extensions with the New York Racing Association and three major New York State OTB networks for a combined contract value of $15 million. In addition, six new contracts with a combined value of $5 million, including a communications contract awarded by Churchill Downs, were signed in 2002."
"With the intense scrutiny placed recently on security in the horse race wagering environment, we aggressively pursued a number of initiatives to safeguard our wagering systems. These measures included the hiring of world-class security experts to review our structure and make recommendations, the installation of specialized monitoring systems provided by eSuccess Solutions and the implementation of security measures most typically identified with the lottery industry. Having put these initiatives into practice at all levels in the organization, we will continue our commitment to provide our customers and the wagering public with the most secure systems practicable."