Revenues for the fourth quarter of fiscal 2001 totaled $245.9 million, a decrease of 8% from the $267.2 million of revenues in the fourth quarter of fiscal 2000. Net income was $25.9 million, or $0.76 per basic share, compared with $30.1 million, or $0.87 per basic share, for the same period last year. In the fourth quarter of fiscal 2001, the Company recorded a special charge of $2.3 million, or $0.04 per share, in connection with the final phase of the Company-wide value assessment. Excluding the special charge, the Company reported net income of $27.3 million or $0.80 per basic share for the fourth quarter.

Revenues for fiscal 2001 declined approximately 7% to $936.5 million from $1.01 billion in fiscal 2000. Net income was $43.1 million, or $1.25 per basic share, compared with net income of $93.6 million, or $2.58 per basic share in fiscal 2000. The results for the year include special charges totaling $42.3 million, or $0.74 per share, and additional non-cash charges associated with the Restricted Stock Plan implemented in the second quarter of fiscal 2001 of $5.2 million, or $0.09 per share. Excluding the special and additional charges, the Company reported net income of $72.0 million or $2.08 per basic share for the full year.

Service revenues were $215.8 million in the fourth quarter, representing a 1% decline from the $218.3 million of service revenues in the same quarter last year. This decline reflects changes in foreign exchange rates, contractual rate changes, and a net change in the Company’s customer mix.

Product sales were $30.1 million, compared with $48.9 million in the same quarter last year. Prior year product sales included the sale of radios and terminals to South Africa.

Service gross margins for the quarter were 38.2%, comparable to the 37.9% in the same quarter last year.

Product margins declined to 26.4% in the fourth quarter of fiscal 2001, compared to 35.6% in the fourth quarter of last year, primarily as the result of radio and terminal sales to South Africa in the prior year that did not repeat.

Service revenues were $856.5 million in fiscal 2001, down less than 1% compared to service revenues of $860.4 million in fiscal 2000. This decrease reflects a 2.8% decline in domestic lottery service revenues, partially offset by a 4.5% improvement in international lottery service revenues.

Product sales declined from $150.4 million in fiscal 2000 to $80.1 million in fiscal 2001. Prior year product sales included significant sales to customers in South Africa, Israel and Sweden. The Company sold approximately 5,600 lottery terminals in fiscal 2001, compared to approximately 13,300 lottery terminals in fiscal 2000.

Service gross margins declined to 34.1% from 35.5% last year, primarily due to start-up costs associated with new lotteries in Colombia and Morocco.

Operating expenses, which include Selling, General & Administrative expenses, Research & Development expenses, and amortization of Goodwill in fiscal 2001 were $173.4 million, down slightly from the $174.6 million spent in the prior year. Excluding the additional charges associated with the Restricted Stock Plan implemented in August 2000, operating expenses declined approximately $6.3 million, or 3.6%. This decline was driven by initiatives implemented as a result of the value assessment.

Other income of $7.2 million in fiscal 2001 is comprised primarily of the amortization of the gain on the sale of Camelot, which is being amortized over the remaining period of Camelot’s first operating license, due to expire in September 2001. Other expense in fiscal 2000 of ($1.3) million was comprised of net foreign exchange losses associated with the Company’s global asset protection and foreign exchange management programs designed to provide a degree of protection for future cash flows, partially offset by the amortization of the gain on the sale of Camelot.

The Company’s effective income tax rate declined from 40% in fiscal 2000 to 39% in fiscal 2001, due principally to lower state taxes and increased research and development tax credits.

Over the past eight months, we have worked hard to improve our efficiency, streamline our cost base, and strengthen our competitive position. This has enabled us to deliver performance in line with our revised guidance, said GTECH Chairman W. Bruce Turner.

During fiscal 2001, the Company generated $252.0 million of cash from operations. This cash was used principally to fund the purchase of $136.9 million of systems, equipment and other assets relating to contracts and to repurchase $19.6 million of the Company’s common stock. As of February 24, 2001, the Company had no borrowings under its $400 million credit facility. Subsequent to year-end, the Company repurchased five million shares of the Company’s common stock for $130.0 million. This repurchase was funded with cash on-hand and borrowings under the credit facility. As of March 31, 2001, the Company had approximately $350 million available on the credit facility.

For fiscal year 2002, ending February 23, 2002, the Company expects year-over-year service revenue growth of approximately 3% – 4%, driven primarily by new international contracts.

Product sales (based on current backlog) are expected to be in the range of $155 million to $165 million, representing year over year growth of approximately 100% – 110%. Approximately 60% of those sales are expected in the second half.

For the full fiscal year, the Company expects gross profit margins on service revenues to be one to two percentage points lower than fiscal year 2001. Gross profit margins on product sales are expected to be in the range of 20% – 22%.

Based on shares outstanding at March 31, 2001 of approximately 29.4 million shares, the Company currently believes that earnings per share will be in the range of $2.70 – $2.75 for the fiscal year.

For the first quarter of fiscal year 2002, ending May 26, 2001, the Company expects revenues to be essentially even with fiscal year 2001. The Company also expects margin pressure to be more than offset by a quarter-over-quarter reduction in operating expenses in the range of 18% – 20%. Accordingly, the Company expects earnings per share to be in the range of $0.61 – $0.63 for the quarter, compared with $0.58 for the same period last year.