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Autotote Announces Q3 2000

In the third quarter of fiscal 2000, revenue was $50.0 million compared to $53.2 million in the third quarter of fiscal 1999, a decrease of 6%. EBITDA (earnings before interest, taxes, depreciation and amortization) rose to $11.6 million from $11.0 million for the earlier period, an increase of 5%.

Net income was $1.7 million or $0.04 per diluted share in the third fiscal quarter of 2000 versus net income of $1.9 million or $0.05 per diluted share in the same period last year. The Company noted that equipment sales were unusually high in the earlier period due to large orders from the U.K., Korea and Ireland.

For the first nine months of fiscal 2000, Autotote reported revenues of $150.6 million compared to $151.9 million for the first nine months of fiscal 1999. EBITDA increased 17% to $33.7 million from $28.7 million in the previous period.

Net income was $4.4 million compared to $33,000 in the comparable period of 1999, and diluted earnings per share were $0.11 compared to breakeven in the first nine months of fiscal 1999. Again, revenue comparisons between the two years are impacted by the unusually high level of equipment sales in 1999.

Autotote said that although equipment sales were down, service revenues grew 5% for the quarter and year-to-date, reflecting new pari-mutuel customers, the consolidation of its German pari-mutuel business, continued growth of the Connecticut OTB business, and the successful start-up of the Vermont and New Hampshire lottery contracts. These increases plus continued emphasis on cost controls and a change in the mix of products sold, contributed to the substantial rise in EBITDA.

However, net income for the third quarter decreased slightly compared to the comparable fiscal 1999 quarter due to higher income taxes and interest costs due to working capital needs for equipment sales.

Lorne Weil, Chairman and CEO of Autotote, commented, ``The third quarter was a very exciting period for Autotote. In addition to making substantial progress in our acquisition of Scientific Games, the closing of which is also being announced today, we continued to realize increases in our lottery sales and service businesses.

"Revenue from these activities jumped 26%, rising from $9.3 million to $11.7 million although revenue overall was down due to particularly large non-recurring equipment sales in 1999. In addition, service revenue from our operations as a whole increased 5% from $38.9 million to $40.8 million. This demonstrates the soundness of our strategy to balance equipment sales with growth in areas of the business that include recurring revenue by virtue of long-term contracts.

"Two such contracts on which we successfully began execution over the busy July 4th weekend were our six-year agreements with Vermont and New Hampshire to supply both new lottery systems and full facility management services.''

``The fourth quarter is off to a fast start for Autotote. On August 2, 2000, we signed a definitive contract with the Turkey Jockey Klub (TJK) of Istanbul with a potential overall value of $21 million.

"In addition to providing for the sale for $11 million of a fully integrated Alpha(TM) central computer system featuring our Eclipse(TM) software, 2,500 MAX3000(TM), STAN (TM) and Walkabout(TM) terminals and related network communications equipment, the contract gives TJK the right to enter into a ten year maintenance contract with Autotote after the one-year warranty period.''

``With the completion of our acquisition of Scientific Games, Autotote is better positioned than ever to take advantage of opportunities in the pari-mutuel, lottery and prepaid phone card businesses worldwide, especially those including the Internet. We look forward to a productive fourth quarter and a rewarding future as a combined Company.''

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