Gtech Reports 38% Gain in Third Quarter Earnings

Gtech Holdings, a co-owner of Turfway Park and lottery system operator, reported Monday an 18% increase in fiscal third-quarter profits due to the sale of terminals and software to the United Kingdom.

The U.K. sales increased overall product sales ninefold to $67.2 million.
Net income rose to $21.6 million, or 73 cents a share, in the three months ending Nov. 24 from $18.3 million, or 53 cents a share, a year earlier. Revenues increased to $263.6 million from $221 million.

Service revenues fell 8% to $196.4 million as a result of the weakening of the Brazilian real against the U.S. dollar, along with the expiration of certain electronic benefits transfer contracts.

Gtech (NYSE:GTK) said it expects product shipments to increase fourth-quarter revenue by 9% to 10% over a year ago, and services revenues is expected to decline slightly.

The company said it will take a fourth-quarter charge of $11 million to $14 million, or 35 cents to 46 cents a share, as a result of costs of plans to pay down debt and to refinance the debt related to its headquarters.

Excluding the charge, Gtech expects fourth-quarter earnings to be in line with earlier expectations of 81 cents to 86 cents a share. It said it sees full-year earnings of between $2.70 and $2.75, also before the charge.

GtechÊs board of directors authorized a $75 million share buyback program through Feb. 2003, in addition to the unused capacity of approximately $16 million remaining in its existing program, which was scheduled to expire on June 30, 2002.

The company also said it will purchase up to $150 million aggregate principal amount of its 7.75 percent Series A guaranteed senior notes due 2004 and its 7.87 percent Series B guaranteed senior notes due 2007. The offer expires Jan. 9.