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Interlott to Repurchase Common Stock

"The current valuation of our common stock represents an opportunity to enhance shareholder value through a stock repurchase program. The board felt it was appropriate to affirm our confidence in our corporate strategies, our strong operating fundamentals and our commitment to maximizing shareholder value," said David F. Nichols, president and chief executive officer.

Under the terms of the repurchase plan, the company may make purchases in the open market or in privately negotiated transactions. The timing and terms will be at the company's discretion and will be conducted in accordance with the applicable rules of the Securities and Exchange Commission. Repurchases may be suspended or discontinued at any time and are subject to various credit agreements. The shares acquired will initially be held as treasury stock and may be issued for employee stock programs and general corporate purposes.

Interlott, the nation's leading manufacturer of ITVMs and other high- security vending products, has supplied ITVMs and PTVMs to 29 domestic and 14 international lottery jurisdictions. The company designs, manufactures, sells, leases and services dispensing machines for the lottery and telecommunications industry. Primary products include Instant Ticket Vending Machines (ITVMs) and Pull-tab/Break-open Ticket Vending Machines (PTVMs) for the lottery industry and Phone Card Dispensing Machines (PCDMs) for the telecommunications industry.

At this time, approximately 177,000 retailers sell instant lottery tickets throughout the United States, generating $15.4 billion in lottery revenue, a 196 percent increase from $5.2 billion in 1996. Growth in the instant ticket segment of the lottery market has been driven by the increase in the number of states offering instant games and a broader selection of games in each state as well as the growing penetration of ITVMs and PTVMs. Thirty-eight states and the District of Columbia now offer instant games. This number is expected to grow.

Interlott ITVMs serve the instant ticket market with securely locked units, protecting tickets from loss or theft. Interlott's patented dispenser finds the perforation of an instant ticket and neatly separates it. This prevents damage to tickets that can occur when they are manually torn from a strip by a sales clerk. Interlott ITVMs offer a full-range of accounting reports to keep track of instant ticket sales and identify sales trends, helping to maximize the value of lottery sales for the store. An ITVM also can be placed in a high-traffic area that attracts more customers to the instant ticket games. Tests have shown that customers enjoy the ease of purchasing tickets through an automated unit.

Interlott's common stock is traded on the American Stock Exchange using the symbol ILI.

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