Date: Fri, 19 Dec 1997 04:18:22 GMT Server: Apache/1.2.1 Last-Modified: Fri, 03 Oct 1997 12:52:03 GMT ETag: "1cb8e8-2a98-3434ea73" Content-Length: 10904 Accept-Ranges: bytes Connection: close Content-Type: text/html
[Company History] [Markets][Recent Developments] [Corporate Officers]
Founded in 1973, Scientific Games introduced the world's first secure instant "scratch-off" lottery ticket in 1974. Since that time, the Company has been a leader in innovative products and services for the lottery industry. The Company's first major contract was to provide instant tickets to the Massachusetts Lottery. Since then, it has sold over 50 billion tickets to lotteries worldwide. Scientific Games was purchased by and became a subsidiary of Bally in 1982. In 1991 the Company was taken private in a management-led buyout. The Company completed its initial public offering of 2.5 million shares in August 1993 and began trading on the Nasdaq Stock Exchange. The proceeds of the IPO were used to repay existing debt and to redeem preferred stock. In March 1995, a two-for-one split of the Common Stock was declared. Of the 13.7 million shares currently outstanding, 6% are owned by senior management, whose options, if fully exercised, could increase their ownership to approximately 15%. Today, the Company remains virtually debt free. In July 1996, the Board of Directors approved a buy back in the open market of up to 2.1 million shares of the Company's common stock over the ensuing 12 months. The Company's Board of Directors voted to continue the buy-back program in May 1997. To date, the Company has purchased approximately 1.2 million shares. The Company began trading on the New York Stock Exchange in August 1996.
In October 1997, Scientific Games was awarded a two-year, $10 million-plus contract to produce instant tickets and provide related services for the State Lottery of Indiana. The contract continues the Company's mutually beneficial relationship with the Hoosier Lottery.
In August 1997, the Company announced that, in conjunction with TeleCom Productions, Inc., it has developed and will market the Daily Race Gameä . This new on-line television lottery game combines advanced animation technology with the fast action of horse racing and the proven popularity of a simple "pick your numbers" format. The new product will be marketed by the Daily Race Game Joint Venture, formed by the two companies.
In July 1997, Scientific Games International was awarded three new contracts for on-line lottery services in Europe as well as instant ticket-related contract extensions from the state lotteries in Georgia, Washington and South Dakota.
Also in July, the Company's Board of Directors adopted a Shareholder Rights Plan designed to protect Stockholder value and assist the Board in realizing the Company's strategic objectives.
In April 1997, Scientific Games completed the acquisition of Tele Control , an on-line lottery and transaction processing company in Vienna, Austria. This acquisition puts the Company back into the on-line segment of the lottery industry and positions it to be a full supplier of lottery products and services.
In January 1997, the Company was the successful bidder for a five year, $40 million Cooperative Services Program contract in Pennsylvania.
In October 1996, Scientific Games completed the purchase of Opax International Limited from Rexam PLC in the United Kingdom and renamed the acquisition Scientific Games International Limited (SGIL). SGIL is a producer of instant lottery and commercial game tickets, with an international customer base and two printing plants in Bradford and Leeds, England. The acquisition is enhancing Scientific Games' opportunities to continue its expansion in the high-growth potential international markets. In addition, the Company purchased the customer base of ILS, an instant ticket supplier in the Netherlands, and entered into a marketing alliance with De La Rue PLC to represent Scientific Games in the selling of instant lottery tickets in the international marketplace.
Late in 1995, the Company introduced its patented SciScan Technologyâ . SciScan provides keyless validation of winning instant tickets at retail outlets. The Company anticipates that SciScan's utility will go far beyond that of validation. Because of its unique ability to "read" a ticket, it can be the basis for new play styles that were not possible before. The technology appears to have applications in other industries as well, such as banking, credit and securities. The Company is installing approximately 6,000 terminals in Virginia, 1,800 in West Virginia, 1,200 in Maine and 1,300 in Nebraska.
Domestic
The instant ticket segment of a lottery is a valuable and growing source of revenue for state governments. Sales of instant lottery tickets in the U.S. have increased rapidly since the instant ticket was introduced in 1974 and have more than doubled in the last five years. Scientific Games is the leader in the domestic instant ticket market, currently providing instant tickets to 24 of the 38 U.S. jurisdictions that have approved lotteries.
International
There are large opportunities for growth in the international market, with only 52 of the 120 international lotteries currently selling the instant scratch-off ticket. The ease of implementation of the instant ticket and its proven success in the North American market have increased its appeal internationally. In 1993, the Company received less than 5% of its revenue from the international market. The Company beleives that even with continued growth in the domestic market, international revenues will represent in excess of 25% of total revenues in 1997. The Company's lottery and commercial games ticket printing capabilities in the United Kingdom should open new opportunities for international sales and expansion.
Other Opportunities
The Company is exploring additional opportunities arising from the expanding promotional games market. These games, which are primarily used as promotions by customers such as oil companies, fast food restaurants, etc., generally have smaller ticket volumes than do state-operated lotteries.
William G. Malloy
Chairman, President and Chief Executive Officer
William F. Behm
Executive Vice President
Thomas F. Little
Senior Vice President - International
Cliff O. Bickell
Vice President and Chief Financial Officer
C. Gray Bethea
Vice President, Secretary and General Counsel
David A. Bausch
Vice President - Lottery Operations
James R. Culver
Vice President - Marketing and Sales
John J. Kriz
Vice President - Manufacturing
Terry D. Mangold
Vice President - Instant Games Services