Multimedia Games reports results

6 August 2008

For the fiscal 2008 third quarter, Multimedia Games reported revenue of $30.3 million, compared with revenue of $30.9 million in the comparable period of fiscal 2007. The year-over-year revenue decline primarily reflects a 39% decline in Class II revenue and a 24% decline in revenue derived from the charity bingo market, offset in part by a 33% improvement in revenue from games played under the compact in Oklahoma, a 109% increase in revenue derived from the electronic bingo market in Mexico, and a 19% revenue gain related to Multimedia's New York Lottery operations. In addition, revenue derived from the Oklahoma market, which includes revenue from compact games and from Class II games, improved by 8% compared to the prior year period.

Net income for the 2008 third quarter period was $0.2 million, or $0.01 per diluted share, compared to net income of $0.7 million, or $0.02 per diluted share, in prior year period.

Anthony Sanfilippo, Multimedia's President and CEO, commented, "Since I joined Multimedia Games in mid-June, I have engaged in a discovery process to understand our Company's strengths and opportunities. I have met with customers and visited their casinos and facilities. And, I have talked with Multimedia team members and other stakeholders to gain insight into ways we can improve and become a more valuable company. We are carefully assessing our existing organizational structure in terms of our ability to support the products and systems we offer, where we deploy those products, and whether resources are aligned with present commitments and future opportunities.

"First, let me say that we have terrific customers and business partners. In the key markets of Oklahoma and Mexico, these partners are well disciplined and forward-thinking, providing Multimedia with an opportunity to leverage existing relationships and committed floor space at their facilities in ways that should prove to be mutually beneficial. In Oklahoma, our customers are significant players in the future of gaming entertainment, and we will focus talent and resources to assist them with improving the performance of their gaming floors. I am pleased with our year-over-year revenue growth in Oklahoma and look forward to the imminent growth of our installed base which will come with the opening of our customer's expanded facility north of Dallas. The Chickasaw Nation's WinStar World Casino will open the first phase of its terrific new facility in early September, and we will have placement of approximately 600 new gaming units on the casino floor.

"In Mexico, we are fortunate to have a relationship with Apuestas Internacionales, S.A., a subsidiary of Televisa, a tremendous company that is committed to making gaming entertainment a viable choice for entertainment in Mexico. We will assist our partners at Televisa, as well as our other customers in Mexico, to work through issues typically associated with the early maturation of new gaming markets. This market provides an opportunity for us to provide insights into a means of unlocking value and creating a long-term business model.

"The review of our products and systems reveals strength and opportunity, as we continue our move into the Class III market. A particular bright spot appears to be our wide body units, as initial deployments are performing well, and growing in popularity among our customers and their players. However, we have significant work to do to ensure that we are providing robust, reliable and relevant technology, content and products to our customers. We are establishing a focused and disciplined process of determining how we approach providing resources for both existing and new products. We are committed to excellence in all that we do and are reviewing current practices to ensure we are focused on doing those things that ultimately increase the value of Multimedia Games.

"I am particularly pleased with two recent additions to our senior management team. Ginny Shanks, our new Chief Marketing Officer, is widely recognized as a leader in marketing and branding in the gaming entertainment industry. Among other responsibilities, she will oversee efforts to support the appeal and performance of Multimedia's products on our customers' gaming floors, in addition to being involved in all phases of product development from inception to deployment. Uri Clinton, our new General Counsel, will head up a newly created Legal Affairs Department, utilizing his considerable experience to bring both improved efficiencies and cost savings to the organization, while also allowing us to expand our product licensing opportunities."

Randy Cieslewicz, Multimedia's Chief Financial Officer, added, "Moving forward, Multimedia will closely evaluate and monitor the value of all aspects of our operations, including staff size and resource allocation as well as third-party vendor, supplier and consulting relationships, to ensure that each element contributes to operational or financial improvements and growth in shareholder value. In addition, as Multimedia pursues growth opportunities in new gaming markets, we will continuously review every market we currently serve to be certain each of these opportunities generates, or will generate, an appropriate return on the investment the Company has made in people, products and technology."

Mr. Sanfilippo, concluded, "As we complete our management team's internal review process and further assess market opportunities, we will be able to reveal more specific plans and initiatives. Our collective goal at Multimedia Games is to be a company that may be counted upon to consistently deliver value to our shareholders."

On or about August 15, 2008, Multimedia will provide an update on its total installed base and product mix as of July 31, 2008.

Research and development expense in both the June 30, 2008 and June 30, 2007 quarters was $4.0 million. During the quarters ended June 30, 2008 and March 31, 2008, Multimedia capitalized $0.9 million in costs related to the internal development of software for its gaming products and systems. Approximately $0.8 million of the capitalized costs in the June 2008 quarter were related to the development of new content, and approximately $0.1 million was for systems. For the three months ended June 30, 2008, capital expenditures were $13.4 million, of which $13.3 million was for gaming equipment and license purchases, and $0.1 million was for all other capital expenditures. Included in the gaming equipment purchases was $6.8 million related to gaming equipment and licenses purchased under the third party vendor agreements. The remaining equipment purchases relate primarily to the hardware associated with the development of our proprietary Class III products and maintenance capital expenditures.