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Shuffle Master Reports Strong Q2

For the quarter, the Company reported strong growth in Table Games revenue and a significant increase in Slot Product revenue compared to the same period a year ago. Total Shuffler revenue also rose, resulting in year-over-year revenue increases for all product segments.

For the quarter ended April 30, 2003, the Company's revenue of $16.2 million was an increase of 21% over the $13.4 million in the same period a year ago. This result was a record for any quarter in the Company's history. Operating income increased 32% to $6.2 million, compared to $4.7 million a year ago, while net income for the quarter increased 29% to $4.0 million, compared to $3.1 million in the second fiscal quarter of 2002. Earnings per diluted share increased 41% to $0.24, compared to $0.17 a year ago, reflecting both higher earnings and a decrease in average shares outstanding.

The Company reported revenue of $30.4 million and net income of $7.3 million, or $0.43 per diluted share, for the six months ended April 30, 2003. These results compare to revenue of $25.3 million and net income of $5.7 million, or $0.31 per diluted share, for the first six months of fiscal 2002.

In February, based on the Company's first quarter results, estimated earnings per share for the full year was raised to a range of $0.93 to $0.97. Given the excellent second quarter results, the Company is again raising its full year earnings per share estimate to a range of $0.95 to $0.98. At the same time, looking to 2004, the Company stated that preliminary forecasting supports continued 20% to 25% EPS growth for next year.

Mark L. Yoseloff, Chairman and CEO of Shuffle Master, commented, "We are pleased with our better-than-expected second quarter results. Shuffle Master's ongoing commitment to diversifying its product offerings has once again resulted in impressive and balanced gains in all product categories."

Yoseloff continued, "Several positive developments took place during the second quarter that contributed to our results. Blackjack, which was initiated statewide in Arizona, led to increased leasing activity in our core Shuffler business. In terms of Slot Products, our upgrade kit was approved in Nevada and Arizona. Looking ahead, we continue to maintain a positive outlook for the remainder of fiscal 2003 and believe Shuffle Master remains solidly positioned to create value for its shareholders, particularly from these levels."

Highlights for the second fiscal quarter of 2003 include the following:

--Surpassed 10,000 shufflers installed.

---Produced the 22nd consecutive quarter of growth in its monthly lease, royalty, and service contract revenue, totaling $11.8 million, or 72% of total revenue for the quarter.

--Generated EBITDA of $8.2 million, or 50% of total revenue, and Free Cash Flow of $2.9 million. (See supplemental information table for reconciliation of these non-GAAP financial measures.)

--Increased operating margin from 35% to 38% and net income as a percentage of total revenue from 23% to 25% from the prior year second fiscal quarter.

--More than doubled installations of slot upgrade kits during the second fiscal quarter to 311 units as of April 30, 2003, an increase of 174 net units.

--Acquired certain inventory and intellectual property rights relating to multi-player slot games from Sega Gaming Technology, Inc., a wholly owned subsidiary of Sega Corporation of Japan.

--Repurchased 307,000 shares of the Company's common stock at a cost of $5.4 million, an average of $17.52 per share.

--Increased rolling four-quarter average return on equity (ROE) to 34% from 27% a year ago.

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