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Autotote Announced Results For Fiscal Q4 2000

21 December 2000

NEW YORK -- (Press Release) --Dec. 21, 2000 -- Autotote Corporation (Amex: TTE) today announced results for its fiscal fourth quarter and year ended October 31, 2000. The results include the operations of Scientific Games Holdings Corp. since September 6, 2000 when Autotote acquired it.

Revenues for the fiscal fourth quarter of 2000 were $82.7 million compared to $59.2 million in the fourth quarter of fiscal 1999. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter before acquisition and other unusual charges and extraordinary items was $11.9 million versus $11.8 million in the fiscal fourth quarter of 1999.

Net loss before acquisition and other unusual charges and extraordinary items was $11.3 million or a loss of $0.31 per diluted share in the fiscal fourth quarter of 2000 compared to net income of $346,000 or $0.01 per diluted share in the fiscal fourth quarter of 1999.

Revenue for fiscal 2000 was $233.3 million compared to $211.1 million in fiscal 1999. EBITDA before acquisition and other unusual charges and extraordinary items was $45.6 million in fiscal 2000 versus $40.5 million for fiscal 1999. Net loss before acquisition and other unusual charges and extraordinary items was $6.9 million or $0.19 per diluted share compared to net income of $379,000 or $0.01 per diluted share in fiscal 1999.

Including the acquisition and other unusual charges, and extraordinary items, EBITDA was $8.1 million in the fiscal fourth quarter of 2000 and the net loss was $36.4 million or a loss of $0.96 per diluted share. For fiscal 2000, EBITDA was $41.8 million and the net loss was $32.0 million or $0.87 per diluted share in fiscal 2000. These results reflect approximately $23.6 million of costs expensed by the company associated with its acquisition of Scientific Games and of the refinancing the debt of both companies.

Operating results for the fiscal fourth quarter and fiscal year were impacted by several factors:

* During the fourth quarter there were two plant shutdowns and two corresponding start-ups in the Scientific Games manufacturing operation -- one each in the UK and United States. The combination of the interrupted production and unusually high costs (such as overtime and scrap), coupled with excess costs in their systems business, is estimated to have had a $5.0 million negative impact on EBITDA in the fourth quarter. By calendar year end, both production and manufacturing costs had rebounded to normal levels.

* As planned, the company largely completed the conversion of its satellite network to 8 to 1 compression but was unable to eliminate the resulting excess transponder capacity until late in the year due to market softness. Consequently an annualized saving of $2.0 million that was expected to contribute to fiscal 2000 will not begin until 2001.

* Year to year comparisons are impacted by Autotote's unusually strong pari-mutuel equipment sales to Sisal S.p.A. and the British Totalizator Board in fiscal 1999 which, as expected, did not continue into the fourth quarter of fiscal 2000;

* Start up costs for the OTB joint venture in Germany were approximately $1.0 million;

* The write-off of the Company's option to purchase Atlantic City Raceway as a result of the New Jersey legislature's failure to pass the necessary legislation to allow OTB expansion in that state resulted in a fiscal fourth quarter charge of approximately $1.1 million."

Business Review

Lorne Weil, Chairman and CEO of Autotote Corporation said, ``We have created a tremendous foundation for significant growth going forward, notwithstanding the losses sustained in the fourth quarter. With the acquisition of Scientific Games, we are able to take advantage of many more on-line and instant ticket opportunities and, at the same time, reduce administrative and operating costs by at least $10 million.

"We increased printing capacity so we can bid on more business and take advantage of increased economies of scale. The fact that we are now the only full-service manufacturer and marketer of lottery equipment, instant tickets and related services in the world should give us a competitive advantage in some jurisdictions. Since the acquisition, we have already won contracts in both Maine and Iowa, and successfully executed the start up of the Vermont and New Hampshire lotteries.

" In addition, earlier this week, Britain's National Lottery Commission awarded its national lottery contract to Camelot Group plc, to whom we already supply instant tickets.''

``With the completion of the integration of Scientific Games and our subsidiary, Autotote Lottery Corporation, we are now a significant competitor in both the on-line lottery and instant ticket businesses. During the next few years, we expect income from both these businesses to grow in the low double digits.

"That growth is anticipated to come from new contracts, the integration of our sales and marketing efforts, the introduction of new instant games and the incorporation of new technologies, including our new probability games. We also expect to see improved profitability due to favorable pricing trends and from the reduced cost structure we have implemented. Building on the technology developed for the instant ticket industry, our pre-paid phone card business, based in the UK, continues to show exceptional rates of growth.''

Mr. Weil continued, ``We continue to be excited by the strength of our worldwide pari-mutuel business. During fiscal 2000 we completed the development of the ECLIPSE(TM) system which will drive important productivity gains and profitability going forward. As mentioned earlier, we have made great strides in the implementation of the 8 to 1 compression technology and we continue to pursue a reduction in the number of our wagering hubs. In the last five months, we have announced new contracts in Turkey, Cyprus, Venezuela and Chile which will begin to have a positive impact on revenues in 2001.''

``Our Connecticut venues continued to perform well during fiscal 2000, delivering record handle and cash flow. During the year we significantly expanded our North American account wagering network which should contribute to accelerating revenues in 2001. We will also deliver strong marketing support for the account wagering segment in the form of, our horseracing information web site, scheduled to launch in the first half of 2001.''


``In light of the Securities and Exchange Commission's new Regulation FD, Autotote may provide earnings guidance in press releases going forward. Clearly we cannot guarantee these results but they represent our best estimate of what is reasonable to project will occur during fiscal 2001 at this point in time and we reserve the right to adjust our guidance at any time but may not necessarily do so. Please note that we will be changing our fiscal year from October 31st to December 31st this year so we will be reporting a two- month stub period in February and, among other things, may adjust our guidance again at that time.''

``During fiscal 2001, we expect the on-line lottery business to increase significantly due to the start up of both the Iowa and Maine lotteries and the fact that this will be the first full year of operations for the New Hampshire and Vermont lotteries, as compared to only four months in fiscal 2000. We anticipate modest revenue increases in printed products with more rapid growth in EBITDA due to cost improvements.

"Growth in the pari-mutuel segment should come primarily from cost reductions in the totalizator and satellite operations (with fewer transponders, more efficient hubbing and European operations consolidation) and projected revenue growth on the venue side of the business. The venue management business has significant growth potential going forward due to some of the steps we have taken to attract more customers to use our account wagering service and the Internet initiative mentioned earlier.''

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