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Multimedia Games Exceeds Guidance for 2002

Fourth-quarter diluted 2002 EPS was $0.47, on revenues of $77.5 million, compared to diluted EPS of $0.24 for the same period last year. Net income for the quarter increased to $6.8 million from $3.4 million for the same quarter in 2001, an increase of 99 percent.

                      Summary - FY 2002 Results
          (in thousands, except share data and unit counts)
                                                               Percent
Years Ending September 30               FY 2002       FY 2001  Increase
Gross revenues                          $291,010      $131,812    121%
Net revenues                              93,342        43,766    113%
Net income                                25,265         6,672    279%
SG&A                                      34,253        19,508     76%
Depreciation and amortization             14,304        10,085     42%
EPS (basic)                                 2.02          0.71    185%
EPS (diluted)                               1.74          0.57    205%

Basic shares outstanding              12,481,159     9,218,543     35%
Diluted shares outstanding            14,559,196    11,599,578     26%
EBITDA                                  $ 54,710      $ 21,708    152%
End-of-year unit placement totals:
  Class III Video Lottery Terminals  2,139 units   1,506 units     42%
  Class II (Legacy games)            2,398 units   2,979 units    (20)%
  Class II (MegaNanza(TM))           3,962 units   1,966 units    102%
  Class II (Reel Time Bingo(TM))     1,276 units         ---     ---

                    Summary - 4th Quarter Results
                  (in thousands, except share data)

                                                               Percent
3 Months Ending September 30             FY 2002       FY 2001 Increase
Gross revenues                          $ 77,547      $ 47,782     62%
Net revenues                              23,798        15,910     50%
Net income                                 6,782         3,407     99%
SG&A                                       9,467         6,273     51%
Depreciation and amortization              3,871         2,791     39%
EBITDA                                    14,054         8,459     66%
EPS (Basic)                                 0.53          0.29     83%
EPS (Diluted)                               0.47          0.24     96%

The costs associated with staff increases and rising legal costs contributed to a 76 percent increase in FY 2002 SG&A expenses. Depreciation and amortization expense increased 42 percent as the Company continued to place additional Class II machines. However, SG&A as a percentage of net gaming revenues decreased from 45 percent in FY 2001 to 37 percent in FY 2002.

Gordon Graves, founder and Chief Executive Officer, said, "Overall, the performance of the company was excellent, despite the challenging business environment. The increases in gross revenue, net gaming income and net income directly relate to the positive impact of MegaNanza and Reel Time Bingo, our New Generation games. In the fourth quarter, we placed 252 Reel Time Bingo and 383 MegaNanza player stations, while replacing 74 Legacy games."

At the end of FY 2002, net equity had increased 102 percent over the prior year, and cash was up $10.4 million during the same period. However, cash did decrease during the fourth quarter due to an increase in inventory levels deemed necessary to meet expected demands for Class II player stations.

FY 2003 Guidance

Contrary to MGAM's prior practice, we are providing a range for next year's guidance instead of providing a specific guidance number. The reason for this decision is the increased level of uncertainty regarding the timing of several potential strategic placements of Class II player stations. The timing of these major placements is somewhat beyond our control, and therefore we find it most appropriate to provide a guidance range.

MGAM's guidance for diluted EPS for FY 2003 ranges from $2.30 to $2.60. If one or more of the expected placements occurs early in the fiscal year, we expect our EPS to be at the upper end of this range. If none of these placements materialize, we expect EPS to be at the lower end of the range.

Guidance for the first quarter of FY 2003 diluted EPS is in the range of $0.47 to $0.50.

Graves summarized, "The quarterly and year-end earnings were better than expected. We continue to be very positive about the future, yet cautious in our guidance due to uncertainties in tribal expansion schedules and the regulatory environment. We see opportunities to continue improving our earnings per share, and create new opportunities for MGAM in our ongoing effort to create shareholder value."

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