Bringing More to the Table TM
During this presentation and the Q&A session, we may be making forward-looking statements that reflect certain risks and uncertainties associated with Shuffle Master s business. The forward-looking statement paragraph that appears in our most recently filed 8-K, 10-K and 10-Q filings with the Securities and Exchange Commission more specifically describe those risks and uncertainties and we urge you to read those filings carefully. This presentation reflects reclassifications for discontinued operations and segment realignment. Forward Looking Statement
Company Overview Product Overview Financial Highlights Investment Considerations Question & Answer Today s Presentation
Company Overview
Table Game Pit Entertainment Products Category Utility Products Category Proprietary Table Games Table Master Shufflers Intelligent Table Systems Roulette Chip Sorters Company Overview
Domestic* Foreign Total Estimated Total Table Games: Blackjack 10,400 8,500 18,900 Proprietary Games (1) 6,000 1,400 7,400 Pai Gow Poker 500 500 1,000 Baccarat 900 4,000 4,900 Live Poker Tables 3,200 2,000 5,200 Other 500 100 600 Total Card Based Games 21,500 16,500 38,000 Roulette Games 1,600 7,200 8,800 Total Table Games 23,100 23,700 46,800 * North America, South America, Caribbean and cruise ships (1) Includes Blackjack, Pai Gow Poker and other side-bet games Source: Company estimates, various gaming industry analyst reports and other industry resources Worldwide Table Market
Entertainment Products Overview
Entertainment Products Category Live Games Electronic Games Game Tournaments Merchandising Opportunities Table Master Live Tournaments For Fun Devices Rapid Roulette Current Entertainment Products
Proprietary table games are patentprotected, newly-developed games Segment is growing in popularity Number of games has quadrupled in the past 10 years Games appeal to casinos because of their increased revenue potential Entice players with their exciting, fast paced content Currently offer 3 of the top 5 titles Generate revenue by collecting royalties from intellectual property Proprietary Table Games
Diverse Selection
Popular Side Bets
4,000 3,500 3,000 3,681 Games Installed 2,500 2,000 1,500 3,233 1,000 500 1,001 1,270 1,527 1,732 0 2000 2001 2002 2003 2004 10/31/2005 Installed Proprietary Games
8,000 7,000 BG Series Introduced Ace Shuffler Released & Three Card Poker Acquired Live Stakes Poker Craze Begins 6,000 5,000 Let It Ride Created 4,000 3,000 2,000 1,000 0 1992 1994 1996 1998 2000 2002 2004 Specialty Shufflers Specialty Games Parallel Game and Shuffler Growth
An electronic, five-player platform targeting lower stakes live games Broaden distribution channel for our entertainment content Currently features our popular proprietary titles like Three Card Poker and Let It Ride Bonus Current installed base of 102 units Expand penetration into areas where live games are not allowed: Racinos Arcades Video Lottery Terminals Table Master
Entertainment Products Category Live Games Electronic Games Game Tournaments Internet Gaming Wireless Gaming Merchandising Opportunities Table Master Live Tournaments For Fun Game Sites In-Casino Wireless For Fun Devices Rapid Roulette Televised Tournaments For Real Game Sites Mobile Telephones Board and PC Game Versions New, More Intricate Content Internet Game Tournaments New Device Development Branded Game Merchandise Existing Offerings Products Driving Future Growth Future Growth Opportunities
Utility Products Overview
Utility Products Category Automatic Shufflers Roulette Chip Sorters Intelligent Table System Other Utility Products Optical Card Recognition Easy Chipper & Chip Tree Intelligent Shoes MD2 Workstation Multi-Shift Drop Box Current Utility Products
First shufflers began being used in 1992 Shuffle Master instrumental in introducing technology to the pit Shufflers enhance game speed, productivity and security Have driven the expansion of the specialty table game market Ample room for increased market penetration Automatic Card Shufflers
Mechanical replication of hand shuffling Hybrid between hand shuffle replication & computer generated shuffle Computer controlled Features data gathering & communication Shuffler Replacement Cycle
20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 6,663 8,193 9,475 11,090 18,589 Shufflers Placed 15,289 2000 2001 2002 2003 2004 10/31/2005 Installed Shufflers
Easy Chipper Next-generation device featuring patented color reading system; maximizes roulette game play and reduces labor costs First product released by CARD since May 2004 acquisition New product category: worldwide roulette market exceeds 8,000 tables Faster and more efficient than similar products Features Intelligent Chip Tree that tracks chip volume and value Roulette Chip Sorters
Two Intelligent Shoe versions Both use optical card recognition to read the rank and suit of each card dealt Work with any type of playing cards IS-B: Premium model that includes automated card delivery and interfaces with attractive display to post baccarat game results IS-T: Lower price-point model that mimics a traditional shoe Intelligent Shoes
Recently announced a worldwide product integration with IGT and Progressive Gaming Partnership will create a comprehensive, automated table game management solution using complementary capabilities, technologies and resources SHFL will provide shufflers, card reading shoes and bet-present sensing technology IGT will provide back-end table management systems PGIC will provide RFID bet and payoff recognition and chip tracking Agreed to sell IGT an equal ownership interest in bet recognition patents for an initial payment of $10.5 million, with a $4.9 million future payment due in 2007 Intelligent Table System
Utility Products Category Automatic Shufflers Roulette Chip Sorters Intelligent Table System Other Utility Products Optical Card Recognition Easy Chipper & Chip Tree Intelligent Shoes MD2 Workstation Next Generation Shufflers Next Generation Chip Sorters Automated Bloodhound Multi-Shift Drop Box Additional ITS Product Developments New Product Development Existing Offerings Products Driving Future Growth Future Growth Opportunities
Worldwide Distribution
FY 2005 Revenue = $114 million United States 77% Other 1% Europe Australasia Other N. 7% 8% America 2% Canada 5% Diversified Business
Financial Highlights
Fiscal 05 Fiscal 04 Variance Total Revenue $ 113,588 $84,7835 34% Income from Operations $ 45,784 $ 36,242 26% Net Income $ 29,537 $ 24,144 22% EPS Fully Diluted $ 0.81 $ 0.60 34% EBITDA $ 56,950 $ 41,972 36% (All amounts shown in thousands, except per share amounts) Fiscal 2005 vs. Fiscal 2004 (From continuing operations)
10/31/05 10/31/04 Total Cash & Investments $ 34,088 $ 47,038 Working Capital $ 57,991 $ 65,671 Total Debt $ 162,659 $157,980 Total Equity $ 13,757 $ 14,729 (All amounts shown in thousands) Balance Sheet Statistics
120 5-year CAGR = 24% (2001 2005) $113.6 ($ Millions) 100 80 60 40 20 0 $58.4 $48.7 $43.2 $84.8 40% 43% 41% 35% 35% 60% 57% 65% 65% 59% 2001 2002 2003 2004 2005 Utility Products Entertainment Products Total Revenue (From continuing operations)
5-year CAGR = 24% (2001 2005) $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 0.30 0.36 0.45 0.60 0.81 1.00-1.05 $0.00 2001 2002 2003 2004 2005 2006 Guidance Earnings per Diluted Share (From continuing operations)
Share Repurchases Fiscal 2005: Repurchased 1.5 million shares for approximately $38.6 million Remaining authorization totaled $8.8 million Total authorizations of $110 million over the past three years Recent Share Repurchases
Ameranth Wireless, Inc.: Worldwide strategic alliance to promote and distribute Ameranth s poker-room management products including Deck Mate interface Casino Solutions, S.A.C.: Distribution agreement to enhance product penetration and service throughout South America Machines Games Automatics, S.A. (MGA): Exclusive Spanish distribution agreement for Table Master Agreement covers modified arcade market platform Product will be debuted at Madrid trade show in September Anticipated first year revenue: $5 million Recent Strategic Partnerships
Investment Considerations
Table game trends remain favorable Leading market share within our core businesses Strength of our intellectual property portfolio and related high margin products Continued investment in R&D Strong balance sheet and cash flow generation Consistency in the growth of our earnings Seasoned management team Investment Considerations
Why invest in Shuffle Master?
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Question & Answer