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Acres Gaming Releases Improved Q4 and Fiscal Year Results

21 August 2000

LAS VEGAS, Nevada --(Press Release)--Aug. 21, 2000--Acres Gaming Inc. (Nasdaq:AGAM) reported its results of operations for its fourth quarter and fiscal year ended June 30, 2000. Revenues for the fourth quarter increased to $3.2 million from $1.2 million in the prior year quarter and resulted in a current quarter net loss of $1.8 million ($.20 per share) versus a net loss of $4.1 million ($.46 per share) the prior year quarter.

For the fiscal year, revenues totaled $17.0 million, representing an increase of $3.0 million (22 percent) over the prior fiscal year and resulting in a net loss of $2.1 million ($.24 per share) versus a net loss of $7.0 million ($.79 per share) in the prior year. EBITDA improved over the prior year by $5.1 million.

``We successfully increased revenues and reduced expenses during this past fiscal year,'' stated Bud Glisson, CEO and Chairman of Acres Gaming. ``Although we added a South African casino to our international customer portfolio and completed major installations in Australia and Detroit, we didn't meet our total revenue expectations for the year. But we begin fiscal 2001 with a solid backlog that totals over $7.5 million and have many additional promising opportunities in California, Las Vegas and other gaming venues around the globe.''

The current quarter revenues were primarily generated from the Crown Casino Coinless Transit(TM) project in Melbourne, Australia and initial hardware shipments for the Acres Advantage(TM) installations at MonteCasino in Johannesburg, South Africa and a Native American casino in California. In the prior year quarter, revenues were primarily composed of initial hardware shipments to MotorCity Casino in Detroit, Michigan.

Gross profit margin increased to 37 percent in the current quarter from a negative 14 percent in the prior year quarter. For the fiscal year, gross profit margin was 51 percent versus 41 percent in the prior year.

Gross profit margins increased by 37 percentage points and 4 percentage points over the prior year quarter and year, respectively, due to spreading overhead costs over more revenue. The remaining improvements in both the current quarter and fiscal year gross profit margins resulted primarily from changes in the mix of products sold.

As compared to the prior year periods, net operating expenses decreased by $965,000 (24 percent) to $3.0 million for the current quarter and decreased by $2.1 million (17 percent) to $10.8 million for the fiscal year. Reductions in staffing generated $581,000 and $2.2 million in operating expense savings in the current quarter and year ended June 30, 2000, respectively, as compared to the same periods in the prior year.

The prior year periods include a $400,000 non-recurring charge related to the relocation of the Company's headquarters to Las Vegas. The fiscal year operating expense savings were partially offset by a $408,000 reduction in amounts capitalized as software development costs.

At June 30, 2000, the Company had $789,000 in cash and equivalents. The Company does not have any debt outstanding but has secured a revolving credit facility from its commercial bank to provide up to $3.5 million in asset-based financing.

			ACRES GAMING INCORPORATED
                       STATEMENTS OF OPERATIONS

                        Three months ended          Year Ended
                        June 30, (unaudited)         June 30,
                         2000        1999        2000        1999
                           (in thousands except per share data)

NET REVENUES          $  3,209    $  1,211    $ 17,002    $ 13,972

COST OF REVENUES         2,028       1,378       8,409       8,253

GROSS PROFIT (LOSS)      1,181        (167)      8,593       5,719

OPERATING EXPENSES:
  Research
   and development       1,230       1,738       5,097       6,440
  Selling, general
   and administrative    1,778       1,835       5,727       6,127
  Non-recurring
   charge                 --           400        --           400

    Total operating
     expenses            3,008       3,973      10,824      12,967

LOSS FROM OPERATIONS    (1,827)     (4,140)     (2,231)     (7,248)

OTHER INCOME                 5          55          82         260

NET LOSS              $ (1,822)   $ (4,085)   $ (2,149)   $ (6,988)

NET LOSS PER SHARE
 - BASIC              $   (.20)   $   (.46)   $   (.24)   $   (.79)

NET LOSS PER SHARE
 - DILUTED            $   (.20)   $   (.46)   $   (.24)   $   (.79)




                      ACRES GAMING INCORPORATED
                            BALANCE SHEETS

                                ASSETS

                                       June 30,          June 30,
                                        2000               1999
                                            (in thousands)
CURRENT ASSETS:
  Cash and cash equivalents              $   789          $ 5,949
  Receivables                              3,541            1,576
  Inventories                              3,729            4,909
  Prepaid expenses                            83              265
    Total current assets                   8,142           12,699

PROPERTY AND EQUIPMENT, NET                1,472            2,374

OTHER ASSETS                               1,118            1,024
                                         $10,732          $16,097

                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                       $ 2,785          $ 2,407
  Accrued expenses                         1,194            1,491
  Customer deposits                          855            4,152
    Total current liabilities              4,834            8,050

REDEEMABLE CONVERTIBLE PREFERRED STOCK     4,948            4,948

STOCKHOLDERS' EQUITY                         950            3,099
                                         $10,732          $16,097

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