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Acres Gaming Announces Litigation Settlement Agreement

The agreement has not yet been reduced to writing and is subject to final documentation and approval by the U.S. District Court. Under the agreement, the company will pay $660,000 in cash, of which approximately $200,000 will come from the company's insurance carrier, and issue warrants to purchase 1 million shares of the company's common stock, exercisable over a 10-year period, at a price of $2.50 per share.

The value of the warrants, as computed by the Black Scholes valuation model, is approximately $1.6 million. The company recorded a one-time charge of $2.0 million in the year ended June 30, 2000, to account for the settlement.

``We are pleased to get this matter behind us,'' stated Bud Glisson, Acres' chairman and chief executive officer. ``Continuing the litigation in the courts is expensive and distracting. Management resources are better served focusing on the numerous business opportunities ahead of us.''

``Accounting rules require the company to record the charge in fiscal 2000,'' explained Reed Alewel, the company's chief financial officer, ``increasing the fiscal 2000 net loss to $4.2 million (47 cents per share). The charge, recorded as a nonoperating item on the income statement and a long-term liability on the balance sheet, does not affect gross profit or net operating results.''

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