News Details

ROME (ITALY) - WEST GREENWICH, RHODE ISLAND (US), – The Board of Directors of Lottomatica S.p.A., chaired by Mr. Lorenzo Pellicioli, approved today the consolidated accounts of Lottomatica Group for the nine months of 2006 ended September 30, 2006, which include nine months of Lottomatica Italian operations and one month of GTECH operations.

“It has been a little over two months since Lottomatica completed its acquisition of GTECH.  As you might imagine, integrating two industry leaders is a formidable but achievable challenge. The people of Lottomatica and GTECH have responded admirably to the challenge,” said Bruce Turner, CEO of Lottomatica Group. “While much work has gone on behind the scenes to integrate our systems and operations, I am pleased to report that this process has proceeded swiftly and efficiently. More importantly, it has been seamless to our customers. We are already benefiting from the complementary expertise within the two organizations, and we remain confident about our long-term outlook,” concluded Bruce Turner.

 “We continued to deliver healthy financial results for the nine months of this fiscal year,” said Marco Sala, Managing Director of Lottomatica Italian Operations. “In particular, with reference to the Italian operations, total Lottery wagers grew 20% on a year-to-date basis, and we experienced continued positive performance in the Commercial Services segment.”

Revenues for the period ended September 30, 2006, totalled €566 million including approximately €74 million from one month of GTECH operations. Overall, revenues grew 26.3% year over year.

EBITDA was €268.8 million, up 13.9% over the nine months of fiscal year 2005. EBITDA adjusted for transaction costs, was €287 million including approximately €28 million related to one month of GTECH operations.  EBIT was €200.5 million and EBIT as adjusted for transaction costs, was €232 million.

In addition, Net Income of €38.8 million for the nine months ended September 30, 2006, was impacted by transaction-related items of approximately €91 million.  Excluding such items, Net Income would have been approximately €130 million.

Lottomatica Italy - Operating Results and Business Highlights

The Italian operations enjoyed substantial revenue growth in the nine months of fiscal year 2006, both in the Lottery and in the Services businesses.

Lottery wagers grew approximately 20% to €7.7 billion for the first nine months of fiscal year 2006, from €6.4 billion for the same period last year, as strong Instant Lottery performance more than offset the slight decrease in Lotto.

Lotto game wagers reached €5.0 billion, a drop of 8.8% against €5.5 billion in the third quarter year-to-date of 2005, and Lotto revenues were €322.4 million, compared to €347.9 million in third quarter year-to-date of 2005.

Instant and Traditional lottery gross tickets sales continued to experience growth, reaching approximately €2.6 billion, compared to approximately €0.9 billion as of September 30, 2005. The number of Scratch & Win tickets sold equalled 1,137 million, compared to 542 million in the first nine months of 2005. The price point grew to approximately €2.3, due to the success of the €5 ticket “Miliardario” launched in September 2005. In the first nine months of 2006, four new Scratch & Win games were launched: the €2 “Medaglia d’Oro” linked to the 2006 Winter Olympic Games in Turin, €1 “Portafortuna”, the €2 “Tutti al Mare” and the €2 “Tuffati nell’oro”. Revenues for the Instant and Traditional lottery business totalled €94.4 million.

In the third quarter year-to-date for fiscal year 2006, Commercial Services revenues increased by 19.8% to €56.1 million, compared to €46.8 million for the same period last year. Electronic pre-paid top-up services for mobile accounts posted approximately 167 million top-ups, and 148 million transactions year-to-date in fiscal year 2006.

EBITDA for Lottomatica Italian operations was €255.9 million, up 8.5% over the same period of fiscal year 2005 and, as adjusted for transaction costs, equalled €259 million The EBITDA margin of 52% is comparable with the third quarter year-to-date 2005 results.

GTECH - Operating Results and Business Highlights

In the third quarter of fiscal year 2006, GTECH continued to focus its efforts on its core lottery business and growing its Gaming Solutions business.

Over the course of the quarter, GTECH successfully completed three major lottery system conversions in the United States. In July, the Company converted the Washington Lottery’s central system to GTECH’s Enterprise Series™ platform and installed a new communications network. The Company also replaced the Lottery’s existing terminals with 3,400 Altura^® terminals. Following Washington, the Arizona Lottery was next in line for conversion, when on August the Lottery went live with a new Enterprise Series central system, 2,600 Altura terminals, and a VSAT communications network. In September, the Rhode Island Lottery represented GTECH’s third U.S. system conversion in less than three months, when it received the latest version of Enterprise Series.

Also during the quarter, GTECH launched new online lottery games Rhody Poker™ and Kansas Hold ‘em™ in Rhode Island and Kansas, respectively. Both monitor games, offered every four minutes, are based on Club Poker™, a current offering in GTECH’s product line. 

On the Gaming Solutions front, GTECH, along with its video lottery terminal subsidiary Spielo and the Multi-State Lottery Association (MUSL) in the United States, launched Ca$hola in July. Ca$hola is the country’s first multi-state, multi-vendor, video lottery wide-area progressive game. GTECH also received a video central system contract from Manitoba Lotteries Corporation in Canada.

Revenues for one month of activities totalled €73.6 million, with approximately €62.9 million from the Lottery segment, €5 million from Gaming Solutions, and approximately €5.6 million for Commercial Services line of business. EBITDA from GTECH operations was approximately €13 million and, excluding transaction costs, was approximately €28 million.

Other Business Developments

Following the close of the third quarter, the Oregon Lottery announced its intent to award a new online lottery contract to GTECH.  In addition, lotteries in Trinidad & Tobago and Kentucky extended their contracts with GTECH. 

GTECH also announced its market entry into the instant ticket printing business with its intended acquisition of Creative Games International.  This acquisition is part of GTECH’s strategy to become a provider of a complete range of instant ticket products and services, and is expected to be completed in late-November 2006.

Consolidated Cash Flow and Net Financial Position

Lottomatica Group closed the period with a Net Debt Position of €2.5 billion, with Cash and Equivalents of approximately €402.5 million at the end of period.

In April 2006, Lottomatica paid out €119.4 million in dividends.

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Lottomatica is one of the world’s largest commercial lottery operators and a market leader in the Italian gaming industry. GTECH is a leading gaming technology and services company, providing innovative technology, creative content, and superior service delivery.  GTECH and Lottomatica together create a fully integrated lottery operator and gaming technology solutions provider – a combined company with worldwide scale, considerable financial strength, and industry-leading customer solutions.  Lottomatica is majority owned by the De Agostini Group, a century-old publishing, media, and financial services company.  Lottomatica is publicly traded on the Italian Stock Exchange (LTO), and in FY 2005, had more than €1.6 billion in revenues and 6,300 employees in over 50 countries when combined with GTECH.

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This press release and the previous ones are available on the web site: www.adhoccommunication.it

Lottomatica web site: www.gruppolottomatica.it

For further information:

GTECH Robert K. Vincent Public Affairs 1-401-392-7452

GTECH web site: www.gtech.com