Scientific Games Completes Sale of Racing and Venue Management Businesses
Poster: SySAdmin
Posted on October 5, 2010 at 7:14:01 AM
Scientific Games Completes Sale of Racing and Venue Management Businesses
NEW YORK, Oct. 5 /PRNewswire-FirstCall/ -- Scientific Games Corporation (Nasdaq: SGMS) (the "Company") today announced the completion of the sale of its racing and venue management businesses ("Scientific Games Racing") to U.K.-based Sportech Plc (LSE: SPO).
The Company received cash proceeds of approximately $33 million and 39,742,179 shares of Sportech stock, valued at approximately $26 million (based on the closing price of Sportech's stock on October 4, 2010), which represents approximately 20% of Sportech's shares outstanding. The Company will also receive an additional cash payment of approximately $10 million on September 30, 2013. Should Sportech achieve certain performance targets over the three-year period following the closing of the transaction, the Company will be entitled to an additional cash payment of up to $8 million. The companies have also entered into a number of ancillary agreements that are expected to deliver additional value as part of an ongoing strategic relationship.
In the fourth quarter of 2010, the Company will begin recording its pro rata share of Sportech's net income (loss) as equity in earnings of joint ventures. The Company also expects to record the following amounts in the third and fourth quarters of 2010 related to the sale of Scientific Games Racing:
Third quarter 2010:
-- A non-cash, pre-tax gain of approximately $1.5-2.5 million related to
the "held for sale" accounting treatment which requires the Company to
adjust the carrying value of Scientific Games Racing's assets and
liabilities.
Fourth quarter 2010:
-- A non-cash, pre-tax gain of approximately $0.5-1.5 million related to
the "held for sale" accounting treatment which requires the Company to
adjust the carrying value of Scientific Games Racing's assets and
liabilities,
-- A non-cash, pre-tax gain of approximately $2.0-3.0 million related to
reclassifying the Accumulated Foreign Currency Translation Adjustment
from Accumulated Other Comprehensive Income to Net Income, and
-- A non-cash charge of approximately $1.1 million related to the
acceleration of stock-based awards in connection with the transaction.
Commenting on the announcement, the Company's President and Chief Executive Officer, Michael Chambrello stated, "The consummation of this transaction will allow our management team to focus exclusively on growing our core lottery and gaming businesses, while enabling our company to participate in the potential synergies and enhanced growth opportunities that the racing and venue management businesses will have under Sportech's stewardship. I would like to thank all of the employees of our racing division for their unwavering commitment to the success of this business and wish them well in this new venture."
Upon closing, Sportech's Board of Directors appointed Brooks Pierce, President of Scientific Games Racing, to the Sportech Board as an Executive Director. In addition, Sportech's Board of Directors appointed Lorne Weil, Chairman of the Company, to the Sportech Board as a Non-Executive Director (in his individual capacity and not as a representative of the Company).
Additional information about the transaction and pro forma historical financial information will be provided in the Company's Form 8-K to be filed with the Securities and Exchange Commission.
About Scientific Games
Scientific Games Corporation is a global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide. Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries. In 2009, the Company had over $900 million in revenue and approximately 4,000 employees. For more information, please visit our web site at http://www.scientificgames.com.
Company Contact:
Cindi Buckwalter, Investor Relations
212-754-2233
Forward-Looking Statements
In this press release the Company makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate," "could," "potential," "opportunity," or similar terminology. These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of future results or performance. Actual results may differ materially from those projected in these statements due to a variety of risks and uncertainties and other factors, including, among other things: competition; material adverse changes in economic and industry conditions; technological change; retention and renewal of existing contracts and entry into new or revised contracts; availability and adequacy of cash flow to satisfy obligations and indebtedness or future needs; protection of intellectual property; security and integrity of software and systems; laws and government regulation, including those relating to gaming licenses, permits and operations; inability to identify, complete and integrate future acquisitions; inability to benefit from, and risks associated with, joint ventures and strategic investments and relationships; seasonality; inability to identify and capitalize on trends and changes in the lottery and gaming industries; inability to enhance and develop successful gaming concepts; dependence on suppliers and manufacturers; liability for product defects; fluctuations in foreign currency exchange rates and other factors associated with foreign operations; influence of certain stockholders; dependence on key personnel; failure to perform on contracts; resolution of pending or future litigation; labor matters; and stock price volatility. Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in the Company's filings with the Securities and Exchange Commission, including under the heading "Risk Factors" in our periodic reports. Forward-looking statements speak only as of the date they are made and, except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE Scientific Games Corporation
Scientific Games Corporation
CONTACT: Cindi Buckwalter, Investor Relations, +1-212-754-2233
Web Site: http://www.scientificgames.com
NEW YORK, Oct. 5 /PRNewswire-FirstCall/ -- Scientific Games Corporation (Nasdaq: SGMS) (the "Company") today announced the completion of the sale of its racing and venue management businesses ("Scientific Games Racing") to U.K.-based Sportech Plc (LSE: SPO).
The Company received cash proceeds of approximately $33 million and 39,742,179 shares of Sportech stock, valued at approximately $26 million (based on the closing price of Sportech's stock on October 4, 2010), which represents approximately 20% of Sportech's shares outstanding. The Company will also receive an additional cash payment of approximately $10 million on September 30, 2013. Should Sportech achieve certain performance targets over the three-year period following the closing of the transaction, the Company will be entitled to an additional cash payment of up to $8 million. The companies have also entered into a number of ancillary agreements that are expected to deliver additional value as part of an ongoing strategic relationship.
In the fourth quarter of 2010, the Company will begin recording its pro rata share of Sportech's net income (loss) as equity in earnings of joint ventures. The Company also expects to record the following amounts in the third and fourth quarters of 2010 related to the sale of Scientific Games Racing:
Third quarter 2010:
-- A non-cash, pre-tax gain of approximately $1.5-2.5 million related to
the "held for sale" accounting treatment which requires the Company to
adjust the carrying value of Scientific Games Racing's assets and
liabilities.
Fourth quarter 2010:
-- A non-cash, pre-tax gain of approximately $0.5-1.5 million related to
the "held for sale" accounting treatment which requires the Company to
adjust the carrying value of Scientific Games Racing's assets and
liabilities,
-- A non-cash, pre-tax gain of approximately $2.0-3.0 million related to
reclassifying the Accumulated Foreign Currency Translation Adjustment
from Accumulated Other Comprehensive Income to Net Income, and
-- A non-cash charge of approximately $1.1 million related to the
acceleration of stock-based awards in connection with the transaction.
Commenting on the announcement, the Company's President and Chief Executive Officer, Michael Chambrello stated, "The consummation of this transaction will allow our management team to focus exclusively on growing our core lottery and gaming businesses, while enabling our company to participate in the potential synergies and enhanced growth opportunities that the racing and venue management businesses will have under Sportech's stewardship. I would like to thank all of the employees of our racing division for their unwavering commitment to the success of this business and wish them well in this new venture."
Upon closing, Sportech's Board of Directors appointed Brooks Pierce, President of Scientific Games Racing, to the Sportech Board as an Executive Director. In addition, Sportech's Board of Directors appointed Lorne Weil, Chairman of the Company, to the Sportech Board as a Non-Executive Director (in his individual capacity and not as a representative of the Company).
Additional information about the transaction and pro forma historical financial information will be provided in the Company's Form 8-K to be filed with the Securities and Exchange Commission.
About Scientific Games
Scientific Games Corporation is a global leader in providing customized, end-to-end gaming solutions to lottery and gaming organizations worldwide. Scientific Games' integrated array of products and services include instant lottery games, lottery gaming systems, terminals and services, and internet applications, as well as server-based interactive gaming machines. Scientific Games serves customers in approximately 50 countries. In 2009, the Company had over $900 million in revenue and approximately 4,000 employees. For more information, please visit our web site at http://www.scientificgames.com.
Company Contact:
Cindi Buckwalter, Investor Relations
212-754-2233
Forward-Looking Statements
In this press release the Company makes "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements describe future expectations, plans, results or strategies and can often be identified by the use of terminology such as "may," "will," "estimate," "intend," "continue," "believe," "expect," "anticipate," "could," "potential," "opportunity," or similar terminology. These statements are based upon management's current expectations, assumptions and estimates and are not guarantees of future results or performance. Actual results may differ materially from those projected in these statements due to a variety of risks and uncertainties and other factors, including, among other things: competition; material adverse changes in economic and industry conditions; technological change; retention and renewal of existing contracts and entry into new or revised contracts; availability and adequacy of cash flow to satisfy obligations and indebtedness or future needs; protection of intellectual property; security and integrity of software and systems; laws and government regulation, including those relating to gaming licenses, permits and operations; inability to identify, complete and integrate future acquisitions; inability to benefit from, and risks associated with, joint ventures and strategic investments and relationships; seasonality; inability to identify and capitalize on trends and changes in the lottery and gaming industries; inability to enhance and develop successful gaming concepts; dependence on suppliers and manufacturers; liability for product defects; fluctuations in foreign currency exchange rates and other factors associated with foreign operations; influence of certain stockholders; dependence on key personnel; failure to perform on contracts; resolution of pending or future litigation; labor matters; and stock price volatility. Additional information regarding risks and uncertainties and other factors that could cause actual results to differ materially from those contemplated in forward-looking statements is included from time to time in the Company's filings with the Securities and Exchange Commission, including under the heading "Risk Factors" in our periodic reports. Forward-looking statements speak only as of the date they are made and, except for the Company's ongoing obligations under the U.S. federal securities laws, the Company undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise.
SOURCE Scientific Games Corporation
Scientific Games Corporation
CONTACT: Cindi Buckwalter, Investor Relations, +1-212-754-2233
Web Site: http://www.scientificgames.com