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Shuffle Master Reports Record Q3 Results

For the nine months ended July 31, 2002, revenue totaled $40.4 million, operating income was $14.2 million and net income was $9.6 million, or $0.52 per diluted share. This compares favorably to the prior year's comparable results that included revenues of $36.1 million, operating income of $12.9 million and net income and fully diluted earnings per share of $8.8 million and $0.48, respectively.

Highlights for the third quarter include the following:

Total shuffler installations now exceed 9,000 units, with over 550 new installs in the quarter.

Total table game units increased 20.5% from the third quarter of fiscal 2001, and now stand at 1,476 units.

First shipments of Hollywood and Spider-Man® slot machines were made late in the quarter.

Recurring revenue increased to $8.1 million, up 30.4% over the third quarter of fiscal 2001, the 19th consecutive quarterly increase.

Gross margin was 74.1%, operating margin was 38.6%, and net income was 25.9% of revenue.

Cash and short term investments stand at $19.4 million as of July 31, 2002, as the Company repurchased $11.4 million of its common stock during the quarter.

Mark Yoseloff, Chairman and Chief Executive Officer of Shuffle Master Gaming stated, "This is an exciting time at Shuffle Master. Growth initiatives in all of our business segments have produced the record-setting results that we're announcing today. In our view, this progress is the direct result of our business model, which generates significant free cash flow on a monthly basis, allowing us to invest heavily in research and development, acquire complementary businesses or game concepts, or buy back shares. Clearly, all of this positions us to deliver value to our shareholders."

The Company also announced today that, based on the current business outlook, management is comfortable with an earnings range for the fourth quarter of $0.23 to $0.25 per share. Moreover, management currently believes that earnings in fiscal 2003 and fiscal 2004 will grow at the company's historical rate of 20% to 25%.

Finally, referring to the attached balance sheet, the Company stated that it has applied a $6.2 million tax benefit to the current quarter tax liability, resulting in the $5.3 million posted to prepaid income taxes on the balance sheet. This amount, which will be realized as cash in future quarters, relates to deductions available as a result of certain stock option exercises.

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