<PAGE>

                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the quarterly period ended May 25, 2002



Commission file number  1-11250




                           GTECH Holdings Corporation
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                         05-0450121
---------------------------------                 ------------------------------
(State or other jurisdiction of                  (I.R.S. Employer Identification
incorporation or organization)                                Number)



55 Technology Way, West Greenwich, Rhode Island                 02817
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)


Registrant's telephone number, including area code: (401) 392-1000



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [_X_]    No [___]



At June 21, 2002, there were 57,276,698 shares of the registrant's Common Stock
outstanding.
<PAGE>
INDEX

GTECH HOLDINGS CORPORATION AND SUBSIDIARIES

<TABLE>
<CAPTION>
                                                                                      Page
PART I.  FINANCIAL INFORMATION                                                       Number
<S>                                                                                  <C>
Item 1.       Financial Statements

              Consolidated Balance Sheets                                                3

              Consolidated Income Statements                                             4

              Consolidated Statements of Cash Flows                                      5

              Consolidated Statements of Shareholders' Equity                            6

              Notes to Consolidated Financial Statements                               7-19

Item 2.       Management's Discussion and Analysis of Financial Condition              20-27
              and Results of Operations

Item 3.       Quantitative and Qualitative Disclosures about Market Risk                28

PART II.  OTHER INFORMATION

Item 1.       Legal Proceedings                                                         28

Item 6.       Exhibits and Reports on Form 8-K                                          28

SIGNATURES                                                                              29

EXHIBITS
</TABLE>
<PAGE>
PART 1. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
GTECH HOLDINGS CORPORATION AND SUBSIDIARIES                                                    (Unaudited)
                                                                                                 May 25,       February 23,
                                                                                                   2002            2002
                                                                                               ----------      ------------
                                                                                                 (Dollars in thousands)
<S>                                                                                            <C>             <C>
ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                                   $  49,876      $  35,095
    Trade accounts receivable                                                                      85,131        100,361
    Sales-type lease receivables                                                                    4,674          4,894
    Inventories                                                                                    89,729         86,629
    Deferred income taxes                                                                          28,321         28,321
    Other current assets                                                                           18,107         22,730
                                                                                                ---------      ---------
                        TOTAL CURRENT ASSETS                                                      275,838        278,030

SYSTEMS, EQUIPMENT AND OTHER ASSETS RELATING TO CONTRACTS                                         391,207        369,595

GOODWILL                                                                                          115,498        116,828

OTHER ASSETS                                                                                       85,596         89,376
                                                                                                ---------      ---------
                        TOTAL ASSETS                                                            $ 868,139      $ 853,829
                                                                                                =========      =========


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
    Short term borrowings                                                                       $   2,371      $   2,358
    Accounts payable                                                                               37,935         43,430
    Accrued expenses                                                                               75,615         75,666
    Employee compensation                                                                          23,085         37,941
    Advance payments from customers                                                                85,363         72,645
    Income taxes payable                                                                           64,581         53,928
    Current portion of long-term debt                                                               3,370          3,510
                                                                                                ---------      ---------
                        TOTAL CURRENT LIABILITIES                                                 292,320        289,478

LONG-TERM DEBT, less current portion                                                              329,065        329,715

OTHER LIABILITIES                                                                                  32,830         27,986

DEFERRED INCOME TAXES                                                                               3,695          3,695

COMMITMENTS AND CONTINGENCIES                                                                         ---            ---

SHAREHOLDERS' EQUITY:
    Preferred Stock, par value $.01 per share--20,000,000 shares authorized, none issued              ---            ---
    Common Stock, par value $.01 per share--150,000,000 shares authorized,
    92,296,404 and 92,297,404 shares issued; 57,245,514 and 57,491,256 shares
      outstanding at May 25, 2002 and February 23, 2002, respectively (shares adjusted
      to reflect May 2002 two-for-one stock split)                                                    923            461
    Additional paid-in capital                                                                    234,237        234,247
    Equity carryover basis adjustment                                                              (7,008)        (7,008)
    Accumulated other comprehensive loss                                                          (99,021)      (100,815)
    Retained earnings                                                                             571,023        542,878
                                                                                                ---------      ---------
                                                                                                  700,154        669,763
    Less cost of 35,050,890 and 34,806,148 shares in treasury at
      May 25, 2002 and February 23, 2002, respectively (shares adjusted to reflect
      May 2002 two-for-one stock split)                                                          (489,925)      (466,808)
                                                                                                ---------      ---------
                                                                                                  210,229        202,955
                                                                                                ---------      ---------
                        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                              $ 868,139      $ 853,829
                                                                                                =========      =========
</TABLE>



See Notes to Consolidated Financial Statements



                                      -3-
<PAGE>
CONSOLIDATED INCOME STATEMENTS

GTECH HOLDINGS CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                                         (Unaudited)
                                                                      Three Months Ended
                                                                     ---------------------
                                                                     May 25,       May 26,
                                                                      2002          2001
                                                                     -------       -------
                                                                    (Dollars in thousands,
                                                                  except per share amounts)
<S>                                                               <C>              <C>
Revenues:
      Services                                                      $223,735       $210,551
      Sales of products                                                7,677         24,414
                                                                    --------       --------
                                                                     231,412        234,965
Costs and expenses:
      Costs of services                                              146,935        144,492
      Costs of sales                                                   6,247         19,937
                                                                    --------       --------
                                                                     153,182        164,429
                                                                    --------       --------

Gross profit                                                          78,230         70,536

Selling, general and administrative                                   22,909         29,570
Research and development                                               6,502          7,633
Goodwill amortization                                                      -          1,473
                                                                    --------       --------
      Operating expenses                                              29,411         38,676
                                                                    --------       --------

Operating income                                                      48,819         31,860


Other income (expense):
      Interest income                                                    842          2,030
      Equity in earnings of unconsolidated affiliates                    696          1,175
      Other income (expense)                                            (591)         2,178
      Interest expense                                                (2,925)        (6,422)
                                                                    --------       --------

Income before income taxes                                            46,841         30,821

Income taxes                                                          17,800         11,712
                                                                    --------       --------

Net income                                                          $ 29,041       $ 19,109
                                                                    ========       ========

Basic earnings per share                                            $    .50       $    .31
                                                                    ========       ========

Diluted earnings per share                                          $    .49       $    .30
                                                                    ========       ========
</TABLE>


See Notes to Consolidated Financial Statements


                                      -4-
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS

GTECH HOLDINGS CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                                                    (Unaudited)
                                                                                Three Months Ended
                                                                                ------------------
                                                                                May 25,       May 26,
                                                                                 2002          2001
                                                                                -------       -------
                                                                               (Dollars in thousands)
<S>                                                                            <C>           <C>
OPERATING ACTIVITIES
Net income                                                                     $ 29,041      $  19,109
Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation                                                               33,956         41,098
      Intangibles amortization                                                    1,685          2,343
      Goodwill amortization                                                           -          1,473
      Equity in earnings of unconsolidated affiliates, net of
          dividends received                                                        215             (9)
      Other                                                                       1,250         (1,555)
      Changes in operating assets and liabilities:
          Trade accounts receivable                                              14,013         33,644
          Inventories                                                            (3,100)        10,918
          Special charge                                                           (347)        (3,207)
          Other assets and liabilities                                           14,684        (11,872)
                                                                               --------      ---------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                        91,397         91,942

INVESTING ACTIVITIES
Purchases of systems, equipment and other assets relating to contracts          (53,023)       (72,142)
Proceeds from sale of investments                                                     -          1,800
Other                                                                              (662)          (259)
                                                                               --------      ---------
NET CASH USED FOR INVESTING ACTIVITIES                                          (53,685)       (70,601)

FINANCING ACTIVITIES
Net proceeds from issuance of long-term debt                                          -         61,100
Principal payments on long-term debt                                             (1,561)        (1,145)
Purchases of treasury stock                                                     (37,686)      (132,094)
Proceeds from stock options                                                      12,549         13,648
Other                                                                               673            739
                                                                               --------      ---------
NET CASH USED FOR FINANCING ACTIVITIES                                          (26,025)       (57,752)

Effect of exchange rate changes on cash                                           3,094           (217)
                                                                               --------      ---------
INCREASE (DECREASE) IN CASH AND CASH  EQUIVALENTS                                14,781        (36,628)

Cash and cash equivalents at beginning of period                                 35,095         46,948
                                                                               --------      ---------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                     $ 49,876      $  10,320
                                                                               ========      =========
</TABLE>



See Notes to Consolidated Financial Statements


                                      -5-
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - (Unaudited)

GTECH HOLDINGS CORPORATION AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                                                Accumulated
                                                                   Equity          Other
                                                    Additional    Carryover    Comprehensive
                          Outstanding     Common     Paid-in        Basis         Income       Retained      Treasury
                            Shares        Stock      Capital      Adjustment       (Loss)      Earnings        Stock       Total
                            ------        -----      -------      ----------       ------      --------        -----       -----
                                                                        (Dollars in thousands)
<S>                       <C>             <C>       <C>           <C>          <C>             <C>          <C>           <C>
Balance at
 February 23, 2002         28,745,628      $461      $234,247      $(7,008)     $(100,815)     $542,878     $(466,808)    $202,955

Comprehensive income:
  Net income                       -         -             -            -              -        29,041             -        29,041
  Other comprehensive
     income (loss),
      net of tax:
    Foreign currency
     translation                   -         -             -            -          2,541             -             -         2,541
    Net loss on
     derivative
     instruments                   -         -             -            -           (675)            -             -          (675)
    Unrealized loss
     on investments                -         -             -            -            (72)            -             -           (72)
                                                                                                                          --------
Comprehensive income                                                                                                        30,835
Treasury shares
     purchased              (656,900)        -             -            -              -             -       (37,686)      (37,686)
Shares issued
   under employee
    stock purchase
    and stock
    award plans               57,154         -             -            -              -             1         1,575         1,576
Shares issued
    upon exercise
    of stock options         476,875         -           (10)           -              -          (435)       12,994        12,549
Shares issued in
    two-for-one
    stock split           28,622,757       462             -            -              -          (462)            -             -
                          ----------      ----      --------      -------      ---------      --------     ---------      --------
Balance at
 May 25, 2002             57,245,514      $923      $234,237      $(7,008)     $ (99,021)     $571,023     $(489,925)     $210,229
                          ==========      ====      ========      =======      =========      ========     =========      ========
</TABLE>



See Notes to Consolidated Financial Statements


                                      -6-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

GTECH HOLDINGS CORPORATION AND SUBSIDIARIES

NOTE A - BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of GTECH Holdings
Corporation ("Holdings" or the "Company"), the parent of GTECH Corporation
("GTECH"), have been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and with the instructions
to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month period ended May 25, 2002 are
not necessarily indicative of the results that may be expected for the full
fiscal year ending February 22, 2003. The balance sheet at February 23, 2002 has
been derived from the audited financial statements at that date. For further
information refer to the Consolidated Financial Statements and footnotes thereto
included in the Company's fiscal 2002 Annual Report on Form 10-K.

Certain reclassifications have been made to the prior years' financial
statements to conform to the current year presentation.


NOTE B - COMMON STOCK SPLIT

In the first quarter of fiscal 2003, the Company's Board of Directors approved a
2-for-1 common stock split effected in the form of a stock dividend distributed
on May 23, 2002 to shareholders of record on May 16, 2002. All references to
common shares and per share amounts have been restated to reflect the stock
split for all periods presented.


NOTE C - INVENTORIES


<TABLE>
<CAPTION>
                                    May 25,       February 23,
                                     2002             2002
                                     ----             ----
                                     (Dollars in thousands)
<S>                                 <C>           <C>
Inventories consist of:
       Raw materials                $ 6,786         $12,310
       Work in progress              80,986          72,847
       Finished goods                 1,957           1,472
                                    -------         -------
                                    $89,729         $86,629
                                    =======         =======
</TABLE>



                                      -7-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE D - LONG-TERM DEBT

<TABLE>
<CAPTION>
                                                         May 25,      February 23,
                                                          2002           2002
                                                          ----           ----
                                                         (Dollars in thousands)
<S>                                                     <C>           <C>
Long-term debt consists of:
       1.75% Convertible Debentures due 2021            $175,000       $175,000
       7.75% Series A Senior Notes due 2004               40,000         40,000
       7.87% Series B Senior Notes due 2007               95,000         95,000
       Interest rate swaps                                10,795         12,089
       Other                                              11,640         11,136
                                                        --------       --------
                                                         332,435        333,225
       Less current portion                                3,370          3,510
                                                        --------       --------
                                                        $329,065       $329,715
                                                        ========       ========
</TABLE>


The Company has an unsecured revolving credit facility of $300 million expiring
in June 2006 (the "Credit Facility"). There were no outstanding borrowings under
the Credit Facility at May 25, 2002 or February 23, 2002.


NOTE E - INCOME TAXES

The Company's effective income tax rate is greater than the statutory rate
primarily due to state income taxes and certain expenses that are not deductible
for income tax purposes.


NOTE F - COMMITMENTS AND CONTINGENCIES

See "Legal Proceedings" in Part II, Item 1 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part I, Item 2
herein.



                                      -8-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE G - EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share:


<TABLE>
<CAPTION>
                                                                         May 25,       May 26,
                                                                           2002          2001
                                                                           ----          ----
                                                                   (Dollars and shares in thousands,
                                                                        except per share amounts)
<S>                                                                <C>                 <C>
Numerator:
       Net income                                                        $29,041       $19,109

Denominator:


       Weighted average shares-Basic                                      57,583        61,520

Effect of dilutive securities:
       Employee stock options and unvested restricted shares               1,678         1,152
                                                                         -------       -------
       Weighted average shares-Diluted                                    59,261        62,672
                                                                         =======       =======

Basic earnings per share                                                 $   .50       $   .31
                                                                         =======       =======

Diluted earnings per share                                               $   .49       $   .30
                                                                         =======       =======
</TABLE>


NOTE H -- COMPREHENSIVE INCOME

The following table sets forth the components of comprehensive income:


<TABLE>
<CAPTION>
                                                                         May 25,      May 26,
                                                                           2002        2001
                                                                           ----        ----
                                                                        (Dollars in thousands)
<S>                                                                     <C>          <C>
Net income                                                               $29,041     $19,109
Other comprehensive income (loss), net of tax:
   Foreign currency translation                                            2,541      (9,764)
   Net loss on derivative instruments                                       (675)       (416)
   Unrealized loss on investments                                            (72)        ---
                                                                         -------     -------
Comprehensive income                                                     $30,835     $ 8,929
                                                                         =======     =======
</TABLE>



                                      -9-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE I - SEGMENT INFORMATION

The Company presently has one reportable business segment, the Lottery segment,
which provides online, high speed, highly secure transaction processing systems
to the worldwide lottery industry. Executive management of the Company evaluates
segment performance based on net operating profit after income taxes. The "All
Other" category (as reported below) is comprised of the Company's Transactive
subsidiary, which provides electronic benefit transfer services over the
Company's dedicated network infrastructure. The composition of the "All Other"
category at May 26, 2001 has been revised to include the Company's IGI/Europrint
business unit in the Lottery segment because management considers it a component
of the Lottery segment.

The Company's business segment data is summarized below:


<TABLE>
<CAPTION>
                                                     May 25,        May 26,
                                                      2002           2001
                                                     -------        -------
                                                     (Dollars in thousands)
<S>                                                 <C>            <C>
Revenues from external sources:
         Lottery                                    $230,731       $231,090
         All other                                       681          3,875
                                                    --------       --------
         Consolidated                               $231,412       $234,965
                                                    ========       ========

Net operating profit after income taxes:
         Lottery                                    $ 31,650       $ 24,317
         All other                                       (50)          (252)
                                                    --------       --------
         Consolidated                               $ 31,600       $ 24,065
                                                    ========       ========
</TABLE>


A reconciliation of net operating profit after income taxes to net income as
reported on the Consolidated Income Statements is as follows:

<TABLE>
<CAPTION>
                                                     May 25,        May 26,
                                                      2002           2001
                                                     -------        -------
                                                     (Dollars in thousands)
<S>                                                  <C>            <C>
Net operating profit after income taxes              $31,600        $24,065
    Reconciling items, net of tax:
    Interest expense                                  (1,814)        (3,982)
    Other                                               (745)          (974)
                                                     -------        -------
       Net income                                    $29,041        $19,109
                                                     =======        =======
</TABLE>



                                      -10-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE J - SPECIAL CHARGES

In fiscal 2001, the Company recorded special charges of $42.3 million in
connection with certain contractual obligations and a value assessment of the
Company's business operations. See Note P to the Consolidated Financial
Statements in the Company's fiscal 2002 Annual Report on Form 10-K for further
information.

A summary of the special charge activity, which is included in accrued expenses
in the Company's Consolidated Balance Sheets, is as follows:


<TABLE>
<CAPTION>
                                                               Exit of Certain
                                    Worldwide     Executive        Business
                                    Workforce    Contractual    Strategies and
                                    Reduction    Obligations    Product Lines        Other        Total
                                    ---------    -----------    -------------        -----        -----
                                                                    (Dollars in thousands)
<S>                                 <C>          <C>           <C>                  <C>          <C>
Special charges                      $13,958       $11,518         $ 8,536          $ 8,258      $ 42,270
Cash expenditures                     (6,032)       (9,965)         (4,140)          (3,289)      (23,426)
Noncash charges                          ---           ---          (4,396)          (4,017)       (8,413)
                                     -------       -------         -------          -------      --------
Balance at February 24, 2001           7,926         1,553             ---              952        10,431

Change in estimate                      (438)          (71)            ---              509           ---
Cash expenditures                     (5,880)         (678)            ---           (1,437)       (7,995)
                                     -------       -------         -------          -------      --------
Balance at February 23, 2002           1,608           804             ---               24         2,436

Cash expenditures                       (208)         (152)            ---               13          (347)
                                     -------       -------         -------          -------      --------
Balance at May 25, 2002              $ 1,400       $   652         $   ---          $    37      $  2,089
                                     =======       =======         =======          =======      ========

</TABLE>



                                      -11-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE K - GOODWILL AND OTHER INTANGIBLE ASSETS

On February 24, 2002, the Company adopted Statement of Financial Accounting
Standard No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which
requires companies to discontinue amortizing goodwill and certain intangible
assets with indefinite useful lives and requires an annual review for
impairment. Upon adoption, the Company discontinued the amortization of
goodwill. Amortization will continue to be recorded on other intangible assets
not classified as goodwill. The nonamortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. Since June 30,
2001, there have been no business acquisitions. Upon adoption, net goodwill of
$1.3 million was reclassified into intangible assets within the Lottery segment.

The pro forma impact of discontinuing the amortization of goodwill is presented
below:


<TABLE>
<CAPTION>
                                                          Three Months Ended
                                                          ------------------
                                                       May 25,          May 26,
                                                         2002            2001
                                                         ----            ----
                                                     (Dollars in thousands, except
                                                            per share data)
<S>                                                  <C>               <C>
Net income as reported                                 $29,041         $19,109
   Add back amortization                                   ---           1,427
                                                       -------         -------
     Adjusted net income                               $29,041         $20,536
                                                       =======         =======

Basic earnings per share as reported                   $   .50         $   .31
   Add back amortization                                   ---             .02
                                                       -------         -------
     Adjusted earnings per share - basic               $   .50         $   .33
                                                       =======         =======

Diluted earnings per share as reported                 $   .49         $   .30
   Add back amortization                                   ---             .03
                                                       -------         -------
     Adjusted earnings per share - diluted             $   .49         $   .33
                                                       =======         =======
</TABLE>



                                      -12-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE K - GOODWILL AND OTHER INTANGIBLE ASSETS (continued)


Intangible assets, which are included in other assets in the Company's
Consolidated Balance Sheets, are comprised of the following:

<TABLE>
<CAPTION>
                                                    As of May 25, 2002
                                 --------------------------------------------------
                                 Gross Carrying     Accumulated        Net Carrying
                                     Amount         Amortization          Amount
                                 --------------     ------------       ------------
                                                  (Dollars in thousands)
<S>                              <C>              <C>                  <C>
Contract based                      $22,038            $21,036           $1,002
Capitalized software                 13,255             10,283            2,972
Other                                 1,853                589            1,264
                                    -------            -------           ------
     Total intangible assets        $37,146            $31,908           $5,238
                                    =======            =======           ======
</TABLE>

<TABLE>
<CAPTION>
                                               As of February 23, 2002
                                 ------------------------------------------------
                                 Gross Carrying      Accumulated     Net Carrying
                                     Amount         Amortization        Amount
                                 --------------     ------------     ------------
                                                 (Dollars in thousands)

<S>                              <C>             <C>                 <C>
Contract based                       $22,038           $20,034          $2,004
Capitalized software                  13,255             9,667           3,588
Other                                  1,489             1,489             ---
                                     -------           -------          ------
     Total intangible assets         $36,782           $31,190          $5,592
                                     =======           =======          ======
</TABLE>


A reconciliation of the net carrying amount of intangible assets as of February
23, 2002 to May 25, 2002 is as follows:


<TABLE>
<CAPTION>
                                           Net Carrying
                                              Amount
                                              ------
<S>                                        <C>
Balance as of February 23, 2002              $ 5,592
Reclassification from goodwill, net            1,331
Amortization expense                          (1,685)
                                             -------
Balance as of May 25, 2002                   $ 5,238
                                             =======
</TABLE>



                                      -13-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NOTE K - GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

Amortization expense for the three months ended May 25, 2002 and the fiscal year
ended February 23, 2002 is as follows:


<TABLE>
<CAPTION>
                                          Three Months        Fiscal Year
                                             Ended              Ended
                                          ------------        -----------
                                             May 25,         February 23,
                                              2002               2002
                                          ------------       ------------
                                              (Dollars in thousands)
<S>                                      <C>                 <C>
Contract based                               $1,002             $4,007
Capitalized software                            616              4,223
Other                                            67                193
                                             ------             ------
       Total amortization                    $1,685             $8,423
                                             ======             ======
</TABLE>


Amortization expense for the next five fiscal years is expected to be as follows
(in thousands):


<TABLE>
<CAPTION>
                Fiscal          Amortization
                 Year             Expense
                 ----             -------
<S>                               <C>
                 2003              $4,733
                 2004               1,383
                 2005                 262
                 2006                 262
                 2007                 262
</TABLE>


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION

On December 18, 2001, Holdings (the "Parent Company") issued $175 million
principal amount of 1.75% Convertible Debentures due 2021 (the "Convertible
Debentures"). The Convertible Debentures are unsecured and unsubordinated
obligations of the Parent Company that are jointly and severally, fully and
unconditionally guaranteed by GTECH and two of its wholly-owned subsidiaries:
GTECH Rhode Island Corporation and GTECH Latin America Corporation (collectively
with GTECH, the "Guarantor Subsidiaries"). Condensed consolidating financial
information is presented below.

Selling, general and administrative costs and research and development costs are
allocated to each subsidiary based on the ratio of the subsidiaries combined
service revenue and sales of products to consolidated revenues.

The Parent Company conducts business through its consolidated subsidiaries and
unconsolidated affiliates and has, as its only asset, an investment in GTECH.
Equity in earnings of consolidated affiliates recorded by the Parent Company
includes the Parent Company's 100% share of the after-tax earnings of GTECH.
Taxes payable and deferred income taxes are obligations of the subsidiaries.
Income tax expense related to both current and deferred income taxes are
allocated to each subsidiary based on the Company's consolidated effective
income tax rates.


                                      -14-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
(continued)

Condensed Consolidating Balance Sheets
May 25, 2002


<TABLE>
<CAPTION>
                                              Parent        Guarantor      Non-Guarantor     Eliminating
                                              Company      Subsidiaries     Subsidiaries       Entries        Consolidated
                                              -------      ------------     ------------       -------        ------------
                                                                             (Dollars in thousands)
<S>                                          <C>           <C>             <C>               <C>              <C>
Assets
Current Assets:
   Cash and cash equivalents                 $     --        $ 37,985        $ 11,891         $      --         $ 49,876
   Trade accounts receivable                       --          59,100          26,031                --           85,131
   Due from subsidiaries and
     affiliates                                    --          62,367              --           (62,367)              --
   Sales-type lease receivables                    --           2,933           1,741                --            4,674
   Inventories                                     --          62,659          48,092           (21,022)          89,729
   Deferred income taxes                           --          25,264           3,057                --           28,321
   Other current assets                            --           8,286           9,821                --           18,107
                                             --------        --------        --------         ---------         --------
     Total Current Assets                          --         258,594         100,633           (83,389)         275,838

Systems, Equipment and Other
   Assets Relating to Contracts                    --         308,465         114,633           (31,891)         391,207
Investment in Subsidiaries and
   Affiliates                                 210,229          91,586              --          (301,815)              --
Goodwill                                           --          70,605          44,893                --          115,498
Other Assets                                       --          69,027          16,569                --           85,596
                                             --------        --------        --------         ---------         --------
     Total Assets                            $210,229        $798,277        $276,728         $(417,095)        $868,139
                                             ========        ========        ========         =========         ========

Liabilities and Shareholders' Equity
Current Liabilities:
   Short term borrowings                     $     --        $     --        $  2,371         $      --         $  2,371
   Accounts payable                                --          30,947           6,988                --           37,935
   Due to subsidiaries and affiliates              --              --          62,367           (62,367)              --
   Accrued expenses                                --          53,380          22,235                --           75,615
   Employee compensation                           --          17,599           5,486                --           23,085
   Advance payments from
     customers                                     --          36,706          48,657                --           85,363
   Income taxes payable                            --          46,659          17,922                --           64,581
   Current portion of long-term debt               --           1,337           2,033                --            3,370
                                             --------        --------        --------         ---------         --------
     Total Current Liabilities                     --         186,628         168,059           (62,367)         292,320

Long-Term Debt, less current
   portion                                         --         319,457           9,608                --          329,065
Other Liabilities                                  --          21,640          11,190                --           32,830
Deferred Income Taxes                              --           7,616          (3,921)               --            3,695
Shareholders' Equity                          210,229         262,936          91,792          (354,728)         210,229
                                             --------        --------        --------         ---------         --------
     Total Liabilities and
       Shareholders' Equity                  $210,229        $798,277        $276,728         $(417,095)        $868,139
                                             ========        ========        ========         =========         ========
</TABLE>



                                      -15-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
(continued)

Condensed Consolidating Income Statements
Three Months Ended May 25, 2002

<TABLE>
<CAPTION>
                                         Parent       Guarantor      Non-Guarantor     Eliminating
                                         Company     Subsidiaries    Subsidiaries       Entries       Consolidated
                                         -------     ------------    ------------       -------       ------------
                                                                      (Dollars in thousands)
<S>                                    <C>           <C>             <C>               <C>            <C>
Revenues:
   Services                            $    --        $172,083         $51,652         $     --         $223,735
   Sales of products                        --           4,670           3,007               --            7,677
   Intercompany sales and fees              --          19,323          12,487          (31,810)              --
                                       -------        --------         -------         --------         --------
                                            --         196,076          67,146          (31,810)         231,412
Costs and expenses:
   Costs of services                        --         104,223          44,859           (2,147)         146,935
   Costs of sales                           --           3,849           2,398               --            6,247
   Intercompany cost of sales
     and fees                               --          14,341           2,092          (16,433)              --
                                       -------        --------         -------         --------         --------
                                            --         122,413          49,349          (18,580)         153,182
                                       -------        --------         -------         --------         --------

Gross profit                                --          73,663          17,797          (13,230)          78,230

Selling, general & administrative           --          17,499           5,410               --           22,909
Research and development                    --           4,966           1,536               --            6,502
                                       -------        --------         -------         --------         --------
     Operating expenses                     --          22,465           6,946               --           29,411
                                       -------        --------         -------         --------         --------

Operating income                            --          51,198          10,851          (13,230)          48,819

Other income (expense):
     Interest income                        --             354             488               --              842
     Equity in earnings of
       unconsolidated affiliates            --              76             620               --              696
     Equity in earnings of
       consolidated affiliates          29,041           7,086              --          (36,127)              --
     Other expense                          --            (505)            (86)              --             (591)
     Interest expense                       --          (2,482)           (443)              --           (2,925)
                                       -------        --------         -------         --------         --------

Income before income taxes              29,041          55,727          11,430          (49,357)          46,841

Income taxes                                --          21,176           4,343           (7,719)          17,800
                                       -------        --------         -------         --------         --------
Net income                             $29,041        $ 34,551         $ 7,087         $(41,638)        $ 29,041
                                       =======        ========         =======         ========         ========
</TABLE>



                                      -16-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
(continued)

Condensed Consolidating Income Statements
Three Months Ended May 26, 2001


<TABLE>
<CAPTION>
                                         Parent       Guarantor       Non-Guarantor    Eliminating
                                         Company     Subsidiaries     Subsidiaries       Entries      Consolidated
                                         -------     ------------     ------------       -------      ------------
                                                                        (Dollars in thousands)
<S>                                      <C>         <C>              <C>              <C>            <C>
Revenues:
   Services                              $   ---       $155,994          $54,557         $    ---       $210,551
   Sales of products                         ---         14,341           10,073              ---         24,414
   Intercompany sales and fees               ---         45,546           12,470          (58,016)           ---
                                         -------       --------          -------         --------       --------
                                             ---        215,881           77,100          (58,016)       234,965
Costs and expenses:
   Costs of services                         ---        100,283           46,361           (2,152)       144,492
   Costs of sales                            ---         14,358            5,806             (227)        19,937
   Intercompany cost of sales
     and fees                                ---         25,869            7,870          (33,739)           ---
                                         -------       --------          -------         --------       --------
                                             ---        140,510           60,037          (36,118)       164,429
                                         -------       --------          -------         ---------      --------

Gross profit                                 ---         75,371           17,063          (21,898)        70,536

Selling, general & administrative            ---         21,440            8,130              ---         29,570
Research and development                     ---          5,533            2,100              ---          7,633
Goodwill amortization                        ---            632              841              ---          1,473
                                         -------       --------          -------         --------       --------
     Operating expenses                      ---         27,605           11,071              ---         38,676
                                         -------       --------          -------         --------       --------

Operating income                             ---         47,766            5,992          (21,898)        31,860

Other income (expense):
     Interest income                         ---          1,147              883              ---          2,030
     Equity in earnings of
       unconsolidated affiliates             ---            403              772              ---          1,175
     Equity in earnings of
       consolidated affiliates            19,109          6,036              ---          (25,145)           ---
     Other income (expense)                  ---           (531)           2,709              ---          2,178
     Interest expense                        ---         (5,802)            (620)             ---         (6,422)
                                         -------       ---------         --------        --------       --------

Income before income taxes                19,109         49,019            9,736          (47,043)        30,821

Income taxes                                 ---         18,627            3,700          (10,615)        11,712
                                         -------       --------          -------         ---------      --------

Net income                               $19,109       $ 30,392          $ 6,036         $(36,428)      $ 19,109
                                         =======       ========          =======         =========      ========
</TABLE>



                                      -17-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
(continued)

Condensed Consolidating Statements of Cash Flows
Three Months Ended May 25, 2002


<TABLE>
<CAPTION>
                                             Parent       Guarantor       Non-Guarantor    Eliminating
                                             Company     Subsidiaries      Subsidiaries      Entries       Consolidated
                                             -------     ------------      ------------      -------       ------------
                                                                           (Dollars in thousands)
<S>                                         <C>          <C>              <C>              <C>             <C>
Net cash provided by operating
   activities                               $    ---      $ 88,440           $ 2,640          $ 317          $ 91,397

Investing Activities
   Purchases of systems, equipment
     and other assets relating to
     contracts                                   ---       (49,848)           (2,858)          (317)          (53,023)
   Other                                         ---          (662)              ---            ---              (662)
                                            --------      --------           -------          -----          ---------
Net cash used for investing
     activities                                  ---       (50,510)           (2,858)          (317)          (53,685)

Financing Activities
   Principal payments on long-term
     debt                                        ---        (1,205)             (356)           ---            (1,561)
   Purchases of treasury stock               (37,686)          ---               ---            ---           (37,686)
   Proceeds from stock options                12,549           ---               ---            ---            12,549
   Intercompany capital transactions          24,662       (24,662)              ---            ---               ---
   Other                                         475           ---               198            ---               673
                                            --------      --------           --------         -----          --------
Net cash used for financing
     activities                                  ---       (25,867)             (158)           ---           (26,025)

Effect of exchange rate changes
     on cash                                     ---            57             3,037            ---             3,094
                                            --------      ---------          --------         -----          ---------
Increase in cash and
     cash equivalents                            ---        12,120             2,661            ---            14,781
Cash and cash equivalents at
     beginning of period                         ---        25,865             9,230            ---            35,095
                                            --------      --------           -------          -----          --------
Cash and cash equivalents at end
     of period                              $    ---      $ 37,985           $11,891          $ ---          $ 49,876
                                            ========      ========           =======          =====          ========
</TABLE>



                                      -18-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


NOTE L - SUPPLEMENTAL GUARANTOR/NON-GUARANTOR FINANCIAL INFORMATION
(continued)

Condensed Consolidating Statements of Cash Flows
Three Months Ended May 26, 2001


<TABLE>
<CAPTION>
                                              Parent           Guarantor         Non-Guarantor       Eliminating
                                              Company         Subsidiaries       Subsidiaries          Entries        Consolidated
                                              -------         ------------       ------------          -------        ------------
                                                                                 (Dollars in thousands)
<S>                                          <C>              <C>                <C>                 <C>              <C>
Net cash provided by operating
   activities                                $      --          $  79,467          $  22,947          $ (10,472)        $  91,942

Investing Activities
   Purchases of systems, equipment
     and other assets relating to
     contracts                                      --            (56,729)           (25,885)            10,472           (72,142)
   Proceeds from sale of investments                --                 --              1,800                 --             1,800
   Other                                            --               (137)              (122)                --              (259)
                                             ---------          ---------          ---------          ---------         ---------
Net cash used for investing
     activities                                     --            (56,866)           (24,207)            10,472           (70,601)

Financing Activities
   Net proceeds from issuance of
     long-term debt                                 --             61,100                 --                 --            61,100
   Principal payments on long-term
     debt                                           --             (1,145)                --                 --            (1,145)
   Purchases of treasury stock                (132,094)                --                 --                 --          (132,094)
   Proceeds from stock options                  13,648                 --                 --                 --            13,648
   Intercompany capital transactions           117,614           (117,614)                --                 --                --
   Other                                           832                 --                (93)                --               739
                                             ---------          ---------          ---------          ---------         ---------
Net cash used for financing
     activities                                     --            (57,659)               (93)                --           (57,752)

Effect of exchange rate changes
     on cash                                        --                255               (472)                --              (217)
                                             ---------          ---------          ---------          ---------         ---------
Decrease in cash and cash
     equivalents                                    --            (34,803)            (1,825)                --           (36,628)
Cash and cash equivalents at
     beginning of period                            --             37,068              9,880                 --            46,948
                                             ---------          ---------          ---------          ---------         ---------
Cash and cash equivalents at end
     of period                               $      --          $   2,265          $   8,055          $      --         $  10,320
                                             =========          =========          =========          =========         =========
</TABLE>



                                      -19-
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS


Certain statements contained in this section and elsewhere in this report are
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act of 1934. Such statements may
include, without limitation, statements relating to (i) the future prospects for
and stability of the lottery industry and other businesses in which the Company
is engaged or expects to be engaged, (ii) the future operating and financial
performance of the Company, (iii) the ability of the Company to retain existing
business and to obtain and retain new business, and (iv) the results and effects
of legal proceedings and investigations. Such forward-looking statements reflect
management's assessment based on information currently available, but are not
guarantees and are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in the forward-looking
statements. These risks and uncertainties include, but are not limited to, the
following: (i) governmental regulations and other actions affecting the online
lottery industry could have a negative effect on the Company's business, (ii)
the Company's lottery operations are dependent upon its continued ability to
retain and extend its existing contracts (including with respect to several of
the Company's significant online lottery service contracts which are the subject
of competitive procurement procedures over the next 9 months) and win new
contracts, (iii) slow growth or declines in sales of online lottery goods and
services could adversely affect the Company's future revenues and profitability,
(iv) the Company has significant foreign exchange exposure, (v) the Company is
subject to the economic, political and social instability risks of doing
business in foreign jurisdictions, (vi) the Company has a concentrated customer
base, and the loss of any of its larger customers could harm its results, (vii)
the Company's quarterly operating results may fluctuate significantly, (viii)
the Company operates in a highly competitive environment, (ix) the Company is
subject to substantial penalties for failure to perform under its contracts, (x)
the Company may not be able to respond to technological changes or satisfy
future technological demands of its customers, (xi) expansion of the gaming
industry faces opposition which may limit the legalization, or expansion, of
online gaming to the detriment of the Company's business, financial condition,
results and prospects, (xii) the Company's business prospects and future success
depend upon its ability to attract and retain qualified employees, (xiii) the
Company may be subject to adverse determinations in pending legal proceedings,
and (xiv) other risks and uncertainties set forth below and elsewhere in this
report, in the Company's fiscal 2002 Form 10-K, and in the Company's subsequent
press releases and Form 10-Q's and other reports and filings with the Securities
and Exchange Commission.


General

The Company operates on a 52- to 53-week fiscal year ending on the last Saturday
in February and fiscal 2003 ends on February 22, 2003.

The Company has derived substantially all of its revenues from the rendering of
services and the sale or supply of computerized online lottery systems and
components to government-authorized lotteries. Service revenues have been
derived primarily from lottery service contracts. These contracts are typically
at least five years in duration, and generally provide compensation to the
Company based upon a percentage of a lottery's gross online lottery sales. These
percentages vary depending on the size of the lottery and the scope of services
provided to the lottery. Product sale revenues have been derived primarily from
the installation of new online lottery systems, installation of new software and
sales of lottery terminals and equipment in connection with the expansion of
existing lottery systems. The Company's gross margins on product sales fluctuate
depending on the mix, volume and timing of product sales contracts. The size and
timing of these transactions have resulted in variability in product sale
revenues from period to period. The Company currently anticipates that product
sales during fiscal 2003 will be in a range of $90 million to $110 million.


                                      -20-
<PAGE>
The Company has taken steps to broaden its offerings of high-volume transaction
processing services outside of its core business of providing online lottery
services. For example, in May 2000 and December 2000, the Company entered into
agreements that permit bill payments over its Brazilian and Chilean lottery
networks, respectively.

The Company's business is highly regulated, and the competition to secure new
government contracts is often intense. Awards of contracts to the Company are,
from time to time, challenged by competitors. Further, there have been and may
continue to be investigations of various types, including grand jury
investigations, conducted by governmental authorities into possible
improprieties and wrongdoing in connection with efforts to obtain and/or the
awarding of lottery contracts and related matters. In light of the fact that
such investigations frequently are conducted in secret, the Company would not
necessarily know of the existence of an investigation that might involve the
Company. Because the Company's reputation for integrity is an important factor
in its business dealings with lottery and other government agencies, if
government authorities were to make an allegation of, or if there were to be a
finding of, improper conduct on the part of or attributable to the Company in
any matter, such an allegation or finding could have a material adverse effect
on the Company's business, including its ability to retain existing contracts
and to obtain new or renewal contracts. In addition, continuing adverse
publicity resulting from these investigations and related matters could have
such a material adverse effect. See "Legal Proceedings" in Part II, Item 1
herein; and Part I, Item 1 - "Certain Factors That May Affect Future Performance
- Government regulations and other actions affecting the online lottery industry
could have a negative effect on the Company's business", Part I, Item 3 - "Legal
Proceedings" and Note F to the Consolidated Financial Statements in the
Company's fiscal 2002 Annual Report on Form 10-K, for further information
concerning these matters and other contingencies.

The Company is a global business and derives a substantial portion of its
revenues from operations outside of the United States. In particular, in fiscal
2002, the Company derived approximately 51% of its revenues from its
international operations and 11.5% of its revenues from its Brazilian operations
alone (including 10.7% of its revenues from the National Lottery of Brazil, one
of the Company's largest customers). In addition, a substantial portion of the
Company's assets are held outside of the United States.

Upcoming Significant Contract Rebids

A majority of the Company's revenues and cash flow is derived from its portfolio
of long-term online lottery services contracts, each of which in the ordinary
course of the Company's business periodically is the subject of competitive
procurement or renegotiation. Through fiscal 2003 (which ends in February 2003),
three of the Company's larger contracts, as measured by annual revenues, will be
the subject of competitive procurements to select contractors to supply lottery
goods and services upon the termination of the Company's current contracts.
Among these is the National Lottery of Brazil, one of the Company's largest
contracts, which accounted for 10.7% of the Company's consolidated revenues in
fiscal 2002. Upon the expiration of the Company's current contract, Caixa
Economica Federal ("Caixa"), the operator of Brazil's National Lottery, will
attempt to handle internally some non-lottery operations currently performed by
the Company under its contract and, with regard to the remaining lottery
operations, is seeking to proceed with a competitive procurement process
calculated to result in multiple vendors to administer Brazil's National
Lottery, which is presently administered solely by the Company. This procurement
process, which Caixa has indicated will result in several small procurements, is
intended to begin on June 28, 2002. Caixa has indicated further that GTECH will
be requested to provide lottery services in varying capacities through the end
of calendar 2003 due to the scope and complexity of the transition Caixa is
attempting. The Company intends to challenge the legality of Caixa's proposed
procurement process. Other large contracts that will be subject to competitive
procurement through fiscal 2003 include the California and Georgia lottery
contracts. See Part I, Item 1 -- "Certain Factors That May Affect Future
Performance" in the Company's fiscal 2002 Annual Report on Form 10-K, for
further information concerning these matters.

                                      -21-
<PAGE>
Critical Accounting Policies

In December 2001, the Securities and Exchange Commission issued new advice
regarding disclosure of critical accounting policies. In response to this
advice, the Company has identified the accounting policies listed below that it
believes are most critical to the Company's financial condition and results of
operations, and that require management's most difficult, subjective and complex
judgments in estimating the effect of inherent uncertainties. This section
should be read in conjunction with Note A to the Consolidated Financial
Statements in the Company's fiscal 2002 Annual Report on Form 10-K, which
includes other significant accounting policies.

REVENUE RECOGNITION

The Company recognizes service revenues as the services are performed.
Liquidated damages (which equaled 0.14%, 0.47% and 0.56% of the Company's total
revenues in fiscal 2002, 2001 and 2000, respectively) are recorded as a
reduction in revenue in the period in which it is determined that they are
probable and estimable. Revenues from product sales or sales-type leases are
recognized when installation is complete and the customer accepts the product
(when acceptance is a stipulated contractual term). In those instances where the
Company is not responsible for installation, revenue is recognized when the
product is shipped. Amounts received from customers in advance of revenue
recognition are deferred as liabilities.

Generally, product sales under long-term contracts are recorded over the
contractual period under the percentage of completion method of accounting.
Under the percentage of completion method of accounting, sales and estimated
gross profit are recognized as work is completed and accepted by the customer by
utilizing the most recent estimates of cost to complete. Sales and gross profit
are adjusted prospectively for revisions in estimated total contract costs
during the period in which the information necessary to make the adjustment
becomes available. If the current contract estimate indicates a loss, provision
is made for the estimated loss when it becomes known and quantifiable. The
completed contract method of accounting is used for long-term contracts in those
circumstances under which estimated costs to complete the delivery cannot be
reasonably estimated or when the contract stipulates the entire balance due
under the contract is refundable if the product is not accepted by the customer.
Under the completed contract method of accounting, product sales are recorded
when the Company has substantially completed its obligations under the contract.

At May 25, 2002, the Company had advance payments from customers of
approximately $85.4 million, including amounts received from two customers in
Europe whose lottery systems are online and selling lottery tickets. The Company
currently expects to record product sales related to these two customers in
fiscal 2003 upon receipt of final acceptance letters.

RECEIVABLES AND INVENTORY RESERVES

The Company evaluates the collectibility of trade accounts and sales-type lease
receivables on a customer-by-customer basis and believes its reserves are
adequate; however, if economic circumstances change significantly resulting in a
major customer's inability to meet its financial obligation to the Company,
original estimates of the recoverability of amounts due the Company could be
reduced by significant amounts requiring additional reserves.

Inventories include amounts related to the Company's long-term service contracts
and product sales contracts, including product sales under long-term contracts,
and are stated at the lower of cost (first-in, first-out method) or market.
Provision for potentially obsolete or slow-moving inventory is made based on
management's analysis of inventory levels and future sales forecasts. The
Company believes its



                                      -22-
<PAGE>
reserves are adequate; however, should future sales forecasts change, the
Company's original estimates of obsolescence could increase by a significant
amount requiring additional reserves.

IMPAIRMENT OF GOODWILL AND OTHER INTANGIBLE AND LONG-LIVED ASSETS

The Company periodically evaluates the recoverability of goodwill and other
intangible and long-lived assets whenever events or changes in circumstances,
such as declines in revenues, earnings or cash flows or material adverse changes
in the economic stability of a particular country indicate that the carrying
amount of an asset may not be recoverable. If facts and circumstances were to
indicate that the Company's long-lived assets might be impaired, the estimated
future undiscounted cash flows associated with the long-lived assets would be
compared to their carrying amounts to determine if a write-down to fair value is
necessary.


Effect of New Accounting Pronouncements

On February 24, 2002, the Company adopted Statement of Financial Accounting
Standard No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets", which
requires companies to discontinue amortizing goodwill and certain intangible
assets with indefinite useful lives and requires an annual review for
impairment. Upon adoption, the Company discontinued the amortization of
goodwill. Amortization will continue to be recorded on other intangible assets
not classified as goodwill. The nonamortization provisions of SFAS 142 apply to
goodwill and intangible assets acquired after June 30, 2001. Upon adoption, net
goodwill of $1.3 million was reclassified into intangible assets within the
Lottery segment. Prior year net income and diluted earnings per share, excluding
amortization of goodwill, was $20.5 million, or $0.33 per diluted share.


Recent Developments

In the first quarter of fiscal 2003, the Company's Board of Directors approved a
2-for-1 common stock split effected in the form of a stock dividend distributed
on May 23, 2002 to shareholders of record on May 16, 2002.


Results of Operations

Revenues for the first quarter of fiscal 2003 were $231.4 million, down $3.6
million, or 1.5%, from revenues of $235.0 million in the first quarter of fiscal
2002.

Service revenues, including lottery and other services, in the fiscal 2003 first
quarter were $223.7 million, up $13.1 million, or 6.3%, over service revenues of
$210.6 million in the first quarter of fiscal 2002. This increase was primarily
driven by a $9.8 million increase in international lottery service revenues and
a $6.6 million increase in domestic lottery services revenues, partially offset
by the expiration of certain electronic benefit transfer contracts.

The Company's international lottery service revenues in the first quarter of
fiscal 2003 were $97.1 million, up $9.8 million, or 11.2%, over the $87.3
million recorded in the first quarter of fiscal 2002, primarily driven by
several new international contracts, including Jamaica and Taiwan.

The Company's domestic lottery service revenues were $125.9 million in the first
quarter of fiscal 2003, up $6.6 million, or 5.5%, over the $119.3 million
recorded in the same quarter of fiscal 2002. This increase was primarily due to
higher sales in states offering multi-state games.


                                      -23-
<PAGE>
Product sales in the first quarter of fiscal 2003 were $7.7 million, down $16.7
million from the $24.4 million of product sales in the first quarter of fiscal
2002. Product sales in the first quarter of the prior year included the sale of
an instant-ticket system and online lottery system to the Company's customers in
Israel and West Australia, respectively.

Gross margins on service revenues were 34.3% in the first quarter of fiscal 2003
compared to 31.4% in the first quarter of fiscal 2002, primarily due to higher
domestic service revenues and new international contracts.

Gross margins on product sales of 18.6% in the first quarter of fiscal 2003 were
comparable to the 18.3% in the same quarter last year.

Operating expenses in the first quarter of fiscal 2003 were $29.4 million, down
$9.3 million, or 24%, when compared with the $38.7 million of operating expenses
incurred in the first quarter of fiscal 2002. This decrease was primarily driven
by the Company's continued focus on operating efficiency, along with the benefit
of the adoption of the new accounting rule on goodwill, which eliminated
approximately $1.5 million of goodwill amortization in the first quarter of the
current year. As a percentage of revenues, operating expenses were 12.7% and
16.5% (15.8% adjusted for the change in goodwill accounting) during the first
quarters of fiscal 2003 and 2002, respectively.

Interest expense in the first quarter of fiscal 2003 was $2.9 million, a
decrease of $3.5 million, or 55%, from interest expense of $6.4 million incurred
during the first quarter of the prior year. This decrease was primarily due to
lower debt balances along with lower interest rates resulting from the Company's
debt restructuring in the fourth quarter of fiscal 2002.

Weighted average diluted shares in the first quarter of fiscal 2003 declined 3.4
million shares to 59.3 million shares, adjusted for the two-for-one stock split,
as a result of the Company's share repurchase program. The impact on the first
quarter of fiscal 2003 diluted earnings per share of the lower level of weighted
average shares in the first quarter of fiscal 2003 as compared to the first
quarter of fiscal 2002 was approximately $0.03 per diluted share.


Changes in Financial Position, Liquidity and Capital Resources

During the first quarter of fiscal 2003, the Company generated $91.4 million of
cash from operations, which was primarily used to fund the purchase of $53.0
million of systems, equipment and other assets relating to contracts and to
repurchase $37.7 million of the Company's common stock.

Trade accounts receivable decreased by $15.3 million, from $100.4 million at
February 23, 2002 to $85.1 million at May 25, 2002, primarily due to collections
related to product sales recorded in the fourth quarter of fiscal 2002, along
with collection of certain domestic service receivables.

Accounts payable decreased by $5.5 million, from $43.4 million at February 23,
2002 to $37.9 million at May 25, 2002, primarily due to the timing of payments
to vendors.

Employee compensation decreased by $14.8 million, from $37.9 million at February
23, 2002 to $23.1 million at May 25, 2002, primarily due to the payment of
fiscal 2002 management incentive compensation and employee profit sharing.



                                      -24-
<PAGE>
Advance payments from customers increased by $12.8 million, from $72.6 million
at February 23, 2002 to $85.4 million at May 25, 2002, primarily due to advances
received from customers related to product sales expected to be delivered during
the second half of fiscal 2003 and the first half of fiscal 2004.

Income taxes payable increased by $10.7 million, from $53.9 million at February
23, 2002 to $64.6 million at May 25, 2002, primarily due to the timing of income
tax payments.

Other liabilities increased by $4.8 million, from $28.0 million at February 23,
2002 to $32.8 million at May 25, 2002, primarily due to the deferral of revenue
related to the Company's joint venture in Taiwan. See Note K to the Consolidated
Financial Statements in the Company's fiscal 2002 Annual Report on Form 10-K for
further information.

At May 25, 2002, the Company's current liabilities exceeded its current assets
by $16.5 million, principally due to the $85.4 million of advance payments from
customers.

The Company's business is capital-intensive. Although it is not possible to
estimate precisely, the Company currently anticipates that net cash used for
investing activities in fiscal 2003 will be in a range of $170 million to $180
million. The principal sources of liquidity for the Company are expected to be
cash generated from operations and borrowings under the Company's credit
facility. The Company's credit facility provides for an unsecured revolving line
of credit of $300 million and matures in June 2006. As of May 25, 2002, there
were no borrowings under the credit facility. The Company currently expects that
its cash flow from operations and available borrowings under its credit facility
will be sufficient for the foreseeable future to fund its anticipated working
capital and ordinary capital expenditure needs, to service its debt obligations,
to fund anticipated internal growth and to repurchase shares of the Company's
common stock, from time to time, under the Company's share repurchase programs.


Off-Balance Sheet Arrangements

The Company has a 50% limited partnership interest in West Greenwich Technology
Associates, L.P. (the "Partnership"), which owns the Company's World
Headquarters facilities. The Company accounts for the Partnership using the
equity method. See Note K to the Consolidated Financial Statements in the
Company's fiscal 2002 Annual Report on Form 10-K for further information.

Guarantees

The Company has guaranteed, at May 25, 2002, approximately $7.9 million, or 44%,
of $17.9 million of loans made by an unrelated commercial lender to Lottery
Technology Services Corporation ("LTSC"), an entity in which the Company has a
44% equity interest. LTSC provides equipment and services, supplied by the
Company, to the Bank of Taipei, which holds the license to operate the Taiwan
Public Welfare Lottery. The loans have a maturity date of January 2007 and the
Company's guarantee expires in July 2007. See Note K to the Consolidated
Financial Statements in the Company's fiscal 2002 Annual Report on Form 10-K for
further information.

At May 25, 2002, the Company has guaranteed $2.6 million of lease obligations of
Times Squared Incorporated. The guarantee expires in December 2013. See Note F
to the Consolidated Financial Statements in the Company's fiscal 2002 Annual
Report on Form 10-K for further information.



                                      -25-
<PAGE>
Market Risk Disclosures

The primary market risk inherent in the Company's financial instruments and
exposures is the potential loss arising from adverse changes in interest rates
and foreign currency rates. The Company's exposure to commodity price changes is
not considered material and is managed through its procurement and sales
practices. The Company did not own any marketable equity securities during the
first quarter of fiscal 2003.

Interest rates

Interest rate market risk is estimated as the potential change in the fair value
of the Company's total debt or current earnings resulting from a hypothetical
10% adverse change in interest rates. At May 25, 2002, after taking into
consideration $135 million of interest rate swaps, the estimated fair value of
the Company's $135 million of fixed rate Senior Notes approximated $138.6
million. A hypothetical 10% adverse or favorable change in interest rates
applied to the fixed rate Senior Notes would not have a material effect on
current earnings. An independent investment banker determined the estimated fair
value amounts.

At May 25, 2002, the estimated fair value of the Company's $175 million
principal amount of 1.75% Convertible Debentures approximated $221.6 million. At
May 25, 2002, a hypothetical 10% increase in interest rates would reduce the
estimated fair value of the Convertible Debentures to $220.0 million and a
hypothetical 10% decrease in interest rates would increase the estimated fair
value of the Convertible Debentures to $223.2 million. An independent investment
banker determined the estimated fair value amounts.

A hypothetical 10% adverse or favorable change in interest rates applied to
variable rate debt would not have a material effect on current earnings.

The Company uses various techniques to mitigate the risk associated with future
changes in interest rates, including entering into interest rate swaps. At May
25, 2002, the Company had interest rate swaps of $135 million, which effectively
entitles the Company to exchange fixed rate payments for variable rate payments
during the period June 2001 to May 2007.


Equity price risk

At May 25, 2002, the estimated fair value of the Company's $175 million
principal amount of 1.75% Convertible Debentures approximated $221.6 million. At
May 25, 2002, a hypothetical 10% increase in the market price of the Company's
common stock would increase the estimated fair value of the Convertible
Debentures to $236.9 million and a hypothetical 10% decrease in the market price
of the Company's common stock would reduce the estimated fair value of the
Convertible Debentures to $207.3 million. An independent investment banker
determined the estimated fair value amounts.

Foreign Currency Exchange Rates

Foreign exchange exposures arise from current and anticipated transactions
denominated in currencies other than the Company's functional currency (United
States dollars) and from the translation of foreign currency balance sheet
accounts into United States dollar balance sheet accounts.

The Company seeks to manage its foreign exchange risk by securing payment from
its customers in United States dollars, by sharing risk with its customers, by
utilizing foreign currency borrowings, by



                                      -26-
<PAGE>
leading and lagging receipts and payments and by entering into foreign currency
exchange and option contracts. In addition, a significant portion of the costs
attributable to the Company's foreign currency revenues are payable in the local
currencies. Whenever possible, the Company negotiates clauses into its contracts
that allow for price adjustments should a material change in foreign exchange
rates occur.

The Company, from time to time, enters into foreign currency exchange and option
contracts to reduce the exposure associated with current transactions and
anticipated transactions denominated in foreign currencies. However, the Company
does not engage in currency speculation. At May 25, 2002, a hypothetical 10%
adverse change in foreign exchange rates would result in a translation loss of
$9.9 million that would be recorded in the equity section of the Company's
balance sheet.

At May 25, 2002, a hypothetical 10% adverse change in foreign exchange rates
would result in a net transaction loss of $2.5 million that would be recorded in
current earnings after considering the effects of foreign exchange contracts
currently in place.

At May 25, 2002, a hypothetical 10% adverse change in foreign exchange rates
would result in a net reduction of cash flows from anticipatory transactions
during the remainder of fiscal 2003 of $9.9 million, after considering the
effects of foreign exchange contracts currently in place. The percentage of
fiscal 2003 anticipatory cash flows that were hedged varied throughout the first
quarter of fiscal 2003, but averaged 28%.

As of May 25, 2002, the Company had contracts for the sale of foreign currency
of approximately $63.9 million (primarily pounds sterling, Brazilian real, Czech
koruna, and Euro) and the purchase of foreign currency of approximately $23.4
million (primarily pounds sterling and Mexican pesos).



                                      -27-
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk

See "Market Risk Disclosures" above.



PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

As previously reported, in February 1999, the Company was sued by a Florida
corporation called EIG Gaming International, Inc. ("EIG"), in the Circuit Court
of the Eleventh Judicial Circuit of Florida. The Company removed the case to the
U.S. District Court for the Southern District of Florida, where it was captioned
EIG Gaming International, Inc. v. GTECH Corporation, Case No.
99-1808-Civ-Jordan. In its complaint, EIG alleged that it entered into a Letter
of Intent with the Company pursuant to which it would assist the Company to
obtain the lottery contract for Peru in return for a percentage of the lottery's
receipts. EIG further contended that it secured the Peruvian contract for the
Company but that the Company thereupon declined to pursue it. Plaintiff claimed
damages exceeding $80 million. In November 2000, the Company moved for summary
judgment. In May 2002, the court granted the Company's motion for summary
judgment and entered final judgment with respect to the matter in favor of the
Company.

The Company was declared the apparent successful vendor in a competitive
procurement to supply a new online and instant ticket central system to
Westdeutsche Gmbtt & Co. ("WestLotto") for the lottery in the German state of
Nordrhein-Westfalen. A competitor protested the award with the Public
Procurement Tribunal of the Regional Regulatory Authority of Munster, Germany.
The tribunal found in favor of the competitor's challenge that WestLotto's
procurement should have been conducted in accordance with European Union public
contracting law instead of provincial contracting law. The Company has decided
to appeal the tribunal's decision and is currently coordinating with WestLotto
on this process.

For information respecting this and other legal proceedings, refer to Part I,
Item 1 - "Certain Factors That May Affect Future Performance," Part I, Item 3 -
"Legal Proceedings" and Note F to the Consolidated Financial Statements in the
Company's fiscal 2002 Annual Report on Form 10-K.


Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits - The exhibits to this report are as follows:

         12.1     Computation of Ratio of Earnings to Fixed Charges


(b)      Reports on Form 8-K - The Company filed the following reports with the
         Securities and Exchange Commission on Form 8-K during the quarter to
         which this report relates:

         (i)      The Company filed a report on Form 8-K on February 27, 2002
                  concerning the issuance of $175 million of 1.75% Convertible
                  Debentures on December 18, 2001 and filed condensed
                  consolidating financial information as required by Rule 3-10
                  of Regulation S-X.

         (ii)     The Company filed a report on Form 8-K on April 4, 2002
                  incorporating by reference a press release issued by the
                  Company on April 4, 2002 announcing its fiscal year 2002
                  fourth quarter and year-end results and revising earnings
                  guidance upward for fiscal year 2003.


                                      -28-
<PAGE>
                                   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.

                              GTECH HOLDINGS CORPORATION



Date:  July 1, 2002           By   /s/ Jaymin B. Patel
                              -------------------------------------------------
                              Jaymin B. Patel, Senior Vice President and Chief
                              Financial Officer (Principal Financial Officer)



Date:  July 1, 2002           By   /s/ Robert J. Plourde
                              -------------------------------------------------
                              Robert J. Plourde, Vice President and Corporate
                              Controller (Principal Accounting Officer)



                                      -29-