GTECH awaits Brazil bucks

Apr 19, 2005 6:02 AM

Partial relief from a Brazilian court relative to funds withheld by a government agency boosted the confidence of investors in GTECH Holdings Corporation (GTK) despite the fact that the company’s earnings fell short of analysts’ projections.

The company reported a 20.9% increase in revenues to $337.9 million for the fourth quarter that ended on Feb. 26. However net income for the period was $43.8 million or $0.34 per diluted share, down 8.3% form the previous year’s $47.8 million or $0.36 per diluted share.

For fiscal 2005, revenues were $1.26 billion a 19.6% jump over the $1.05 billion reported last year. Net income was $196.4 million or $1.50 per diluted share. This compared favorably to 2004’s net income of $183.2 million or $1.40 per share.

Bruce Turner, president and CEO, called the financial results as validating the business as "operationally sound, financially sound and strategically on track. We also met our overall -financial goals and objectives, despite the unexpected revenue holdback in Brazil."

The company explained that a three-judge appellate court ordered the return to GTECH monies that were being held in escrow from payments made by Caixa Economica Federal for lottery services and equipment. Still awaited by the company was an amount equal to about $14 million that have been identified as "in excess" but still being held. Caixa has indicated that it plans to take over the operation of the Brazilian lottery and has advertised for bids on necessary equipment. GTECH has decided not to participate in the bidding process but will discuss a contract that will cover the intervening period.

As for the new fiscal year, the company believes that earnings will be in the range of $1.53 to $1.58 per diluted share.