UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 5, 2002
0-13063
(Commission File Number)
------------------------------
SCIENTIFIC GAMES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 81-0422894
(State of Incorporation) (IRS Employer
Identification Number)
750 Lexington Avenue, New York, New York 10022
(Address of registrant's principal executive office)
(212) 754-2233
(Registrant's telephone number)
------------------------------
Item 2. Acquisition of Assets.
On June 5, 2002 (the "Effective Date"), Scientific Games Corporation (the
"Company"), acting through its wholly owned subsidiary Scientific Games Chile
Limitada ("SciGames Chile"), completed the purchase from Epicentro S.A. and
Inversiones Y Aesorias Iculpe Limitada (together, the "Sellers") of 65% of the
issued and outstanding shares of Serigrafica Chilena S.A. ("SERCHI"), a leading
supplier of lottery tickets, prepaid phone cards and promotional games in the
Latin American market. Concurrently with the purchase, SERCHI changed its name
to Scientific Games Latino America S.A.
On the Effective Date, SciGames Chile paid the Sellers the aggregate
amount of $3,900,000. The payment was made with funds provided by the Company to
SciGames Chile from the Company's cash on hand at the Effective Date. The stock
purchase agreement also provides for payments of up to $4,355,000 in cash or,
subject to mutual agreement of the Company and the Sellers, shares of the
Company's Class A common stock upon the achievement of certain financial
performance levels of SERCHI over the next four years, as follows:
(a) $875,000 on or before March 31, 2003, if SERCHI has achieved
EBITDA of $1,485,000 for the nine months ending December 31, 2002
(the "2002 EBITDA Target"); provided that such payment will be
reduced by an amount equal to two times the percentage of EBITDA
that was not achieved multiplied by the 2002 EBITDA Target; and
provided further that, if the EBITDA achieved is less than 80% of
the 2002 EBITDA Target, no payment will be made based on earnings in
year 2002;
(b) $1,160,000 on or before March 31, 2004, if SERCHI has achieved
EBITDA of $2,280,000 for the year ending December 31, 2003 (the
"2003 EBITDA Target"); provided that such payment will be reduced by
an amount equal to two times the percentage of EBITDA that was not
achieved multiplied by the 2003 EBITDA Target; and provided further
that, if the EBITDA achieved is less than 80% of the 2003 EBITDA
Target, no payment will be made based on earnings in year 2003;
(c) $1,160,000 on or before March 31, 2005, if SERCHI has achieved
EBITDA of $2,520,000 for the year ending December 31, 2004 (the
"2004 EBITDA Target"); provided that such payment will be reduced by
an amount equal to two times the percentage of EBITDA that was not
achieved multiplied by the 2004 EBITDA Target; and provided further
that, if the EBITDA achieved is less than 80% of the 2004 EBITDA
Target, no payment will be made based on earnings in year 2004;
(d) $1,160,000 on or before March 31, 2006, if SERCHI has achieved
EBITDA of $2,760,000 for the year ending December 31, 2005 (the
"2005 EBITDA Target" and collectively with the 2002 EBITDA Target,
the 2003 EBITDA Target and the 2004 EBITDA Target, the "Annual
EBITDA Targets"); provided that such payment will be reduced by an
amount equal to two times the percentage of EBITDA that was not
achieved multiplied by the 2005 EBITDA Target; and provided further
that, if the EBITDA achieved is less than 80% of the 2005 EBITDA
Target, no payment will be made based on earnings in year 2005; and
2
(e) if (i) the sum of the payments received by March 31, 2006
pursuant to clauses (a) through (d), above (collectively, the
"Annual Earnout Payments"), is less than $4,355,000 due to SERCHI's
failure to achieve any of the Annual EBITDA Targets and (b) SERCHI
has achieved EBITDA of $9,045,000 for the period commencing April 1,
2002 and ending December 31, 2005, then the Sellers shall receive an
additional payment equal to (x) $4,355,000 less (y) the Annual
Earnout Payments.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of the Business Acquired
It is impracticable to provide the required financial statements of SERCHI
at this time. The required financial statements, if any, will be filed under
cover of 8-K/A within 60 days of the date this Form 8-K was required to be
filed.
(b) Pro Forma Financial Information
It is impracticable to provide the required pro forma financial
information at this time. The required pro forma financial information, if any,
will be filed under cover of 8-K/A within 60 days of the date this Form 8-K was
required to be filed.
(c) Exhibits
Exhibit No. Description
----------- -----------
2.1 Stock Purchase Agreement, dated June 5, 2002, among Scientific
Games Corporation, Scientific Games Chile Limitada, Epicentro
S.A., and Inversiones Y Aesorias Iculpe Limitada (the "Stock
Purchase Agreement").
2.2 List of Omitted Annexes to the Stock Purchase Agreement.
3
Index to Exhibits
Exhibit No. Description
----------- -----------
2.1 Stock Purchase Agreement, dated June 5, 2002, among Scientific
Games Corporation, Scientific Games Chile Limitada, Epicentro
S.A., and Inversiones Y Aesorias Iculpe Limitada (the "Stock
Purchase Agreement").
2.2 List of Omitted Annexes to the Stock Purchase Agreement.
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SCIENTIFIC GAMES CORPORATION
By: /s/ Martin E. Schloss
-----------------------------------
Martin E. Schloss
Vice President and Secretary
Date: June 20, 2002
5