Shuffle Master, Inc. Reports Record Results for Fourth Quarter and Fiscal Year Ended October 31, 2002.Business Editors LAS VEGAS--(BUSINESS WIRE)--Dec. 12, 2002 Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share of $0.77 for year and $0.25 for quarter are all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal records Shuffle Master, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on National Market: SHFL SHFL Schuylkill Haven Free Library (Schuylkill Haven, PA) ) today announced results for the Company's fiscal 2002 fourth quarter and year. For the year ended October October: see month. 31, 2002, the Company reported record revenue of $56.1 million compared to $48.0 million for fiscal 2001, an increase of 17%. Net income for the 2002 fiscal year was a record $14.0 million, increasing 21% over the $11.6 million generated in fiscal 2001. Earnings per diluted share were $0.77 for fiscal 2002, compared to $0.63 for fiscal 2001, representing a 22% increase. The higher levels of revenue and earnings for fiscal 2002, versus the prior year, reflect revenue increases in all product lines, combined with improved gross margins and operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . For the fourth quarter ended October 31, 2002, the Company reported revenue of $15.6 million, compared to $11.8 million for the same quarter one year ago, an increase of 32%. Net income for the quarter was $4.4 million, or $0.25 per diluted share, compared to $2.8 million, or $0.15 per diluted share, for the fourth quarter of fiscal 2001, an increase in net income of 57%. The increase in revenue for the fourth quarter of fiscal 2002, versus the fourth quarter of fiscal 2001, was primarily due to a 64% increase in shuffler shuf·fle v. shuf·fled, shuf·fling, shuf·fles v.tr. 1. To slide (the feet) along the floor or ground while walking. 2. To move (something) from one place to another; transfer or shift. sales and service to $3.4 million, a 24% increase in table royalties to $5.1 million, and a 56% increase in slot lease revenue to $1.7 million (excluding $0.5 million of revenue earned in the fourth quarter of fiscal 2001 under the Company's fiscal 2000 slot games agreements with IGT IGT impaired glucose tolerance. .) Mark L. Yoseloff, Chairman and Chief Executive Officer of the Company, commented, "This was another great year for Shuffle Master, demonstrating our ability to diversify diversify To acquire a variety of assets that do not tend to change in value at the same time. To diversify a securities portfolio is to purchase different types of securities in different companies in unrelated industries. our revenue streams while maintaining or improving our margins. In addition to the strength and predictability of our core Shuffler and Table Game segments, we are certainly excited about the progress we have made in our Slot Products, particularly since mid-year. As we indicated last month, we are looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. continued significant revenue and earnings growth in fiscal 2003, with even greater product diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. and market opportunities. As Shuffle Master grows, we continue to be committed to significant investment in R&D, which harnesses technology to provide innovative new products for our customers." Yoseloff noted a number of the Company's specific accomplishments in fiscal 2002: -- Delivered gross margin of 75%, operating margin of 37% and net margin of 25%, all records, and return on average equity of 31%. -- Produced recurring revenue of $42.1 million, or 75% of total revenue for the year, with the fourth quarter representing the 20th consecutive quarter of recurring revenue increases. -- Generated EBITDA of $28.1 million, a record 50% of revenue. -- Introduced important new products in every business segment, providing significant growth opportunities for fiscal 2003 and beyond. -- Purchased the assets, technology, and products of Casino Software and Services, LLC., including Bloodhound(TM) (formerly, Blackjack Survey Voice(TM)), for the purpose of developing and producing integrated and automated table game solutions for casino clients. -- Repurchased 896,000 shares of the Company's common stock in fiscal 2002 at a cost of $16.3 million, an average of $18.14 per share. Shuffle Master, Inc. is a gaming supply company specializing in providing innovative, high quality products and services to the casino casino or cassino (both: kəsē`nō). 1 Card game played with a full deck by two to four players. Its origins are obscure though it probably traces back to the Italian game of Scopa. industry, including card shufflers and other table gaming equipment, table and slot games, and gaming machine See video game console. software and related hardware. The Company was ranked: the 35th best small company in America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. by Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes magazine in its October 2002 survey; the 25th fastest growing small company by Fortune Small Business(C) magazine in June June: see month. 2002; and named to the S&P Smallcap 600 Index in April 2002. Information about the Company and its products can be found on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at www.shufflemaster.com. This report contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. which are based on management's beliefs as well as on assumptions made by and information available to management. The Company considers such statements to be made under the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. created by the federal securities laws to which it is subject, and assumes no obligation to update or supplement such statements. Forward-looking statements reflect and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. Factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: changes in the level of consumer or commercial acceptance of the Company's existing products and new products as introduced; competitive advances; acceleration and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. deceleration deceleration /de·cel·er·a·tion/ (de-sel?er-a´shun) decrease in rate or speed. early deceleration of various product development and roll out schedules; product performance issues; higher than expected manufacturing, service, selling, administrative, product development and/or roll out costs; changes in the Company's business systems or in technologies affecting the Company's products or operations; reliance on strategic relationships with distributors and technology vendors; current and/or future litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. or claims; changes to the Company's intellectual property portfolio, such as loss of licenses, claims of infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. or invalidity in·va·lid 1 n. One who is incapacitated by a chronic illness or disability. adj. 1. Incapacitated by illness or injury. 2. Of, relating to, or intended for invalids. tr.v. of patents; regulatory and jurisdictional issues (e.g., technical requirements and changes, delays in obtaining necessary approvals, or changes in a jurisdiction's regulatory scheme, etc.) involving the Company and its products specifically or the gaming industry in general; general and casino industry economic conditions; and the financial health of the Company's casino and distributor customers, suppliers and distributors, both nationally and internationally. Additional information on these and other risk factors that could potentially affect the Company's financial results may be found in documents filed by the Company with the Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q Form 10-Q See 10-Q. and annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Shuffle Master, Inc. will hold a conference call on December December: see month. 12, 2002 at 1:00 pm Pacific time to discuss the results of operations for the fourth quarter and fiscal year ended October 31, 2002. The dial-in number is (800) 814-3911 and ask for "Shuffle Master's mas·ter's n. A master's degree. Fourth Quarter Fiscal 2002 Conference Call". The call will also be webcast by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network and can be accessed at Shuffle Master's web site at, www.shufflemaster.com. For approximately two hours after the call and for approximately 14 days after the call, a playback Playback could mean:
Shuffle Master, Inc.
Consolidated Statements of Income
(In thousands, except per share amounts)
Three Months Ended Year Ended
October 31, October 31,
----------------- -----------------
2002 2001 2002 2001
-------- -------- -------- --------
Revenue:
Shuffler lease $ 4,194 $ 4,011 $16,258 $16,026
Shuffler sales and service 3,354 2,044 12,435 11,690
Table royalties 5,102 4,098 18,437 15,140
Table sales 897 10 1,479 83
Slot lease 1,656 1,560 6,626 4,420
Slot sales 417 73 789 262
Other 27 22 104 339
-------- -------- -------- --------
Total revenue 15,647 11,818 56,128 47,960
-------- -------- -------- --------
Cost and expenses:
Cost of revenue 3,484 2,899 13,794 12,522
Selling, general and
administrative 3,882 3,142 14,748 12,417
Research and development 1,726 1,705 6,845 6,021
-------- -------- -------- --------
Total cost and expenses 9,092 7,746 35,387 30,960
-------- -------- -------- --------
Income from operations 6,555 4,072 20,741 17,000
Interest income, net 190 209 663 702
-------- -------- -------- --------
Income before income taxes 6,745 4,281 21,404 17,702
Provision for income taxes 2,327 1,476 7,384 6,107
-------- -------- -------- --------
Net income $ 4,418 $ 2,805 $14,020 $11,595
======== ======== ======== ========
Earnings per common share, basic $ 0.25 $ 0.16 $ 0.79 $ 0.67
======== ======== ======== ========
Earnings per common share, diluted $ 0.25 $ 0.15 $ 0.77 $ 0.63
======== ======== ======== ========
Weighted average common shares,
basic 17,433 17,867 17,698 17,225
======== ======== ======== ========
Weighted average common shares,
diluted 17,858 18,671 18,316 18,518
======== ======== ======== ========
Consolidated Balance Sheets
(In thousands)
October 31,
---------------------
2002 2001
---------- ---------
ASSETS
Current assets:
Cash and cash equivalents $3,604 $3,082
Investments 15,818 15,621
Accounts receivable, net 9,028 5,419
Current portion of note receivable from
related party - 17
Inventories 5,615 6,210
Prepaid income taxes 5,685 -
Deferred income taxes 459 323
Other current assets 384 451
---------- ---------
Total current assets 40,593 31,123
Systems and equipment leased and held
for lease, net 7,037 8,646
Property and equipment, net 2,119 2,367
Intangible assets, net 5,539 5,487
Goodwill 3,664 3,258
Non-current deferred income taxes 1,298 984
Long-term note receivable from related party - 300
Other assets 353 234
---------- ---------
Total assets $60,603 $52,399
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,209 $5,681
Accrued liabilities 2,481 2,424
Obligation to related party - 97
Customer deposits and unearned revenue 1,953 2,120
Income taxes payable - 1,511
Current portion of long-term obligations 175 -
---------- ---------
Total current liabilities 8,818 11,833
---------- ---------
Long-term obligations 1,518 -
---------- ---------
Contingencies
Shareholders' equity:
Common stock, $0.01 par value; 67,500 shares
authorized; 17,276 and 17,609 shares
issued and outstanding 173 176
Additional paid-in capital 1,895 6,211
Retained earnings 48,199 34,179
---------- ---------
Total shareholders' equity 50,267 40,566
---------- ---------
Total liabilities and shareholders' equity $60,603 $52,399
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