Shuffle Master, Inc. (NASDAQ Global Select Market: SHFL) announced today that on August 30, 2007, the Macau Gaming Inspection and Coordination Bureau (DICJ) ordered that a number of Stargames' slot machines be turned off at various casinos and slot halls in Macau and that all Stargames' slot machines be turned off at Starworld Hotel and Casino. There are currently 47 machines turned off in Macau. The Company submitted the related software fix this week to DICJ for approval, and once the approval is received, all affected machines will be immediately updated by the Company's Macau-based service personnel.
This action followed a complaint to DICJ inspectors by a player at Starworld claiming a win of HKD42 million on a Stargames stand-alone slot machine. As a result of the player complaint and the subsequent DICJ action, the Company immediately initiated an independent investigation through Gaming Laboratories International, which determined that the machine malfunction was related to a ticketing anomaly and that there was no legitimate player win. On September 13, the DICJ ruled that the player initiating the complaint was not entitled to the "win". Shuffle Master is currently aware of one additional incident of the same malfunction, and currently expects that a similar determination will be made on the second incident. To the best of the Company's knowledge, the potential for this ticket-based malfunction is limited to the Stargames slot machines in Macau.
Shuffle Master, Inc. is a gaming supply company specializing in providing its casino customers Utility Products, including automatic card shufflers, roulette chip sorters and intelligent table system modules, to improve their profitability, productivity and security, and Entertainment Products, including live proprietary table games, electronic multi-player table game platforms, traditional video slot machines for select markets, live table game tournaments and wireless gaming solutions to expand their gaming entertainment content. The Company is included in the S&P Smallcap 600 Index. Information about the Company and its products can be found on the Internet at www.shufflemaster.com.
This release contains forward-looking statements that are based on management's current beliefs and expectations about future events, as well as on assumptions made by and information available to management. The Company considers such statements to be made under the safe harbor 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. Risk 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; increased competition from existing and new products for floor space in casinos; acceleration and/or deceleration of various product development, promotion and distribution schedules; product performance issues; higher than expected manufacturing, service, selling, legal, administrative, product development, promotion and/or distribution 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 and manufacturing vendors; current and/or future litigation, claims and costs or an adverse judicial finding; tax matters including changes in tax legislation or assessments by taxing authorities; acquisitions or divestitures by the Company or its competitors of various product lines or businesses and, in particular, integration of businesses that the Company may acquire; changes to the Company's intellectual property portfolio, such as the issuance of new patents, new intellectual property licenses, loss of licenses, claims of infringement or invalidity 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 or approach, etc.) involving the Company and its products specifically or the gaming industry in general; general and casino industry economic conditions; the financial health of the Company's casino and distributor customers, suppliers and distributors, both nationally and internationally; the Company's ability to meet its debt service obligations, including the Company's senior convertible notes and its senior secured revolving credit facility, which will depend on its future performance and other conditions or events and will be subject to many factors that are beyond the Company's control; various risks related to the Company's customers' operations in countries outside the United States, including currency fluctuation risks, which could increase the volatility of the Company's results from such operations; and the Company's ability to successfully and economically integrate the operations of any acquired companies, such as Stargames. 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 current reports on Form 8-K, quarterly reports on Form 10-Q and annual report on Form 10-K.
