Multimedia Games’ First Quarter Revenue Increases 27% to $44.3 Million; EBITDA Rises 31% to $21.4 Million

  Multimedia Games’ First Quarter Revenue Increases 27% to $44.3 Million;
  EBITDA Rises 31% to $21.4 Million

- Deploys 1,162 New Revenue Units, Including 644 for Sale Units and a 518 Unit
                       Net Addition to Installed Base -

       - Raises Fiscal 2013 Revenue, EBITDA and Diluted EPS Guidance -

Business Wire

AUSTIN, Texas -- January 30, 2013

Multimedia Games Holding Company, Inc. (Nasdaq: MGAM) (“Multimedia Games” or
the “Company”) today reported operating results for its fiscal 2013 first
quarter ended December 31,2012, as summarized in the table below:

                                          
Summary of 2013 Q1 Results

(In millions, except per-share and unit data)
                                            
                                            Three Months Ended
                                            December 31,
                                            2012      2011
Revenue                                     $ 44.3     $ 34.8
EBITDA^(1)                                  $ 21.4     $ 16.3
Operating income ^ (2)                      $ 11.4     $ 3.8
Net income ^(2) (3)                         $ 7.1      $ 5.8
Diluted earnings per share ^(2) (3)         $ 0.24     $ 0.21
Pro-forma diluted earnings per share ^(4)   $ 0.24     $ 0.12
                                                       
New units sold                                644        408
                                                       
Domestic participation installed units:
Average                                       10,942     9,506
Quarter-end                                   11,188     9,633
                                                         

      EBITDA is defined as net income before net interest expense, income
      taxes, depreciation, amortization and accretion of contract rights. A
(1)  reconciliation of EBITDA to net income, the most comparable Generally
      Accepted Accounting Principles (“GAAP”) financial measure, can be found
      attached to this release.
      Operating income, net income and diluted earnings per share for the
      three month period ended December 31, 2012, reflects a change in the
(2)   depreciable lives for the Company’s gaming operations equipment as
      described in the last paragraph of “Summary of Fiscal 2013 First Quarter
      Operating Results” below.
      Net income and diluted earnings per share for the three month period
      ended December 31, 2011, includes a one-time tax benefit totaling $1.0
(3)   million, or $0.04 per fully diluted share, and a gain on the sale of
      used equipment back to the original manufacturer totaling $0.9 million,
      or $0.03 per diluted share.
      Pro-forma diluted earnings per share for the three month period ended
      December 31, 2011, reflects the following adjustments; (i) a tax expense
      rate of 37.2%, the effective tax rate for the fiscal 2013 first quarter,
      which results in a $0.10 per diluted share reduction from reported
(4)   results; (ii) the elimination of the one-time $0.03 per diluted share
      benefit related to the sale of used equipment to the original
      manufacturer; and, (iii) the Company’s estimated $0.04 benefit to fully
      diluted earnings per share related to the change in depreciable lives of
      its gaming operations equipment (which is described in more detail
      below).

                                             
                                               Three Months Ended December 31,
                                               2012           2011
As reported ^(2) (3)                           $    0.24       $   0.21
Pro-forma at 37.2% tax rate                         —              (0.10   )
Gain on sale of used equipment to original          —              (0.03   )
manufacturer
Normalize depreciation, net of tax                 —             0.04    
Pro-forma EPS ^(4)                             $    0.24       $   0.12    
                                                                           

Patrick Ramsey, President and Chief Executive Officer of Multimedia Games,
commented, “Our strong start to fiscal 2013 reflects a continuation of the
momentum we built throughout fiscal 2012 in expanding our total addressable
market and developing attractive, differentiated games and themes that address
our customers’ needs and player preferences. Revenues of over $44 million in
the first quarter of fiscal 2013 represent the highest quarterly revenue we
have generated since the March 2006 quarter. The domestic installed base rose
5% on a quarterly sequential basis and by over 16% compared to the year ago
period and we achieved another record quarter of unit sales across 17 states.
Our operating leverage continues to improve, and as a result, growth in both
operating income and EBITDA outpaced our 27% year-over-year increase in
revenue.

“TournEvent®, our award-winning slot tournament system, represented
approximately 46% of our total units sold in the quarter and as of December
31, 2012, is installed at 137 casinos nationwide. When in tournament mode,
this proprietary product instantly creates an engaging atmosphere, creating a
buzz that frequently results in higher slot floor traffic and increased
floor-wide revenue performance for our customers. We are further leveraging
this product’s success with a first-of-its-kind nationwide TournEvent of
Champions® promotional event that will culminate with a national final in Las
Vegas in September.

“Gaming operations remains a key driver of our overall business and represents
a stable and growing foundation for our long-term growth. During the fiscal
2013 first quarter, our installed base of participation games eclipsed 11,000
units as we grew the number of our High Rise Games® by nearly 61% and further
diversified our installed base with over 75% of our unit growth coming from
markets outside of Oklahoma. Over the last two quarters we have added over
1,000 recurring revenue units to our domestic installed base which helped
drive the fiscal 2013 first quarter gaming operations revenues to our highest
levels since the September 2008 quarter.”

Ramsey concluded, “We are excited by the progress made to date in fiscal 2013.
Our games are clearly resonating with players as evidenced by their enhanced
performance in a highly competitive marketplace, while customer demand in both
existing and new markets continues to grow. We currently address approximately
45% of the domestic slot market and expect to begin serving the Nevada market
in the second half of fiscal 2013, which will expand our total addressable
market to approximately 65%. Additionally, assuming receipt of all regulatory
approvals, we expect to begin serving New Jersey, Pennsylvania and Illinois
within the next 24 months. We believe our entry into these markets combined
with our established momentum in unit sales and installed base growth provides
a foundation for continued growth.”

Summary of Fiscal 2013 First Quarter Operating Results

Multimedia Games’ fiscal 2013 first quarter revenue rose 27.3%, or $9.5
million, to $44.3 million, compared to revenue of $34.8 million in the fiscal
2012 first quarter. Fiscal 2013 first quarter revenue primarily consisted of
approximately $30.0 million from gaming operations and approximately $14.0
million from gaming equipment and system sales, compared with $24.9 million in
revenue from gaming operations and $9.6 million from gaming equipment and
system sales in the year-ago period.

Gaming operations revenue in the fiscal 2013 first quarter grew 20.4% year
over year to $30.0 million, reflecting continued growth in both the Company’s
installed base of participation units and the revenue per day performance of
those units. During the quarter, Multimedia Games grew its base of
participation games by 518 units, or approximately 4.9%, on a quarterly
sequential basis, with growth coming from all major domestic markets served by
the Company including Oklahoma, Louisiana, Washington, New York and
California. Multimedia Games’ domestic installed base increased 1,555 units,
or 16.1%, year over year to 11,188 units. Included in the quarter-end
participation base were 318 High Rise Games premium participation units
deployed outside of Oklahoma, an increase of 120 units, or 60.6%, on a
quarterly sequential basis. Revenues from Multimedia Games’ New York Lottery
business totaled $3.8 million for the quarter, an increase of 17.8% over the
prior-year period. More modest growth is expected for the remainder of fiscal
2013 reflecting the one year anniversary of the opening of Resorts World in
October 2012.

Gaming equipment and system sales in the fiscal 2013 first quarter increased
46.0% to $14.0 million, from $9.6 million in the prior-year period. During the
quarter, the Company recorded revenue of $12.0 million related to the sale of
644 new units and $1.3 million in revenue related to parts and equipment
sales, compared to $7.5 million in revenue related to the sale of 408 new
proprietary units and $1.5 million related to parts and equipment sales in the
year-ago period. Louisiana, which benefited from a sale of 150 new units to a
single customer’s new facility, Washington and Florida were Multimedia Games’
top three markets for product sales, representing approximately 52% of total
unit sales. In all, the Company sold units into 17 states in its fiscal 2013
first quarter, with the order for 150 units for a new casino opening in
Louisiana representing the Company’s largest sales order in several years.
There was $0.7 million and $0.6 million of deferred revenues for the sale of
player stations and systems in a prior-year period recognized in the fiscal
2013 and fiscal 2012 first quarter periods, respectively.

Other revenue, primarily comprised of service revenue, was approximately $0.3
million in both the fiscal 2013 and 2012 first quarters.

Total operating expenses for the fiscal 2013 first quarter rose $1.9 million,
or 6.0%, year over year to $32.9 million. Total cost of goods sold increased
by $2.3 million, driven primarily by an increase in the number of units sold
and an increase in the Company’s installed base of participation units
reflecting the Company’s expansion into more states. Selling, general and
administrative (“SG&A”) expenses rose 5.5%, or $0.6 million, to $11.3 million,
primarily reflecting higher benefit costs and non-cash stock compensation
costs associated with higher headcount totals versus the prior year. SG&A
expenses for the fiscal 2013 and fiscal 2012 first quarter periods include
non-cash stock compensation costs of approximately $0.9 million and $0.6
million, respectively. Depreciation and amortization declined to $8.0 million
from $9.7 million in the prior-year period primarily reflecting a change in
the depreciable lives for gaming operations equipment from 36 months to 48
months as described below. Research and development expense of $4.2 million
compares to $3.5 million in the prior-year period and reflects Multimedia
Games’ ongoing initiative to develop innovative and differentiated gaming
content that delivers a high-value player entertainment experience.

Reflecting the strong year-over-year revenue growth in the fiscal 2013 first
quarter as well as improved operating margins and the change in the
depreciable lives of the Company’s gaming operations equipment, operating
income rose by $7.6 million to $11.4 million and operating margins improved to
25.8% in the quarter compared to 10.9% in the year-ago period. For the fiscal
2013 first quarter, Multimedia Games reported net income of $7.1 million, or
$0.24 per diluted share, compared to net income of $5.8 million, or $0.21 per
diluted share, in the fiscal 2012 first quarter. Net income and diluted
earnings per share for the fiscal 2013 first quarter reflect a tax expense
rate of 37.2% while net income and diluted earnings per share in the
prior-year period reflect a tax benefit rate of 20.6%.

Effective October 1, 2012, Multimedia Games has moved from a 36-month
depreciable life for its installed base of gaming operations equipment to a
48-month depreciable life. The end of Fiscal 2012 marked the third-year
anniversary of the introduction of the Company’s award-winning wide body dual
video cabinet, and management is now confident that its products have a useful
life in excess of three years. Additionally, the change to the depreciable
lives is now consistent with the standard used by the majority of the gaming
equipment suppliers in the industry and is consistent with the current age of
the Company’s equipment in the field. The change lowers total depreciation
expense, therefore increasing operating income, net income and diluted
earnings per share, but does not impact EBITDA, a non-GAAP financial metric
commonly used in the gaming industry.

Balance Sheet

Multimedia Games ended the quarter with $73.3 million in cash and net cash
(total cash in excess of debt) of $40.9 million, versus net cash of $40.5
million and $17.7 million as of September 30, 2012, and December 31, 2011,
respectively. The fiscal 2013 first quarter represents the sixteenth
consecutive quarter Multimedia Games has grown net cash or reduced net debt.
Capital expenditures in the fiscal 2013 first quarter were $12.7 million
compared to $8.0 million a year ago, primarily reflecting the Company’s
continued investment in the expansion and maintenance of its installed base.

During the fiscal 2013 first quarter, Multimedia Games entered into a
development agreement with its largest customer that will add approximately
150 expansion units at the Winstar World Resort in Oklahoma. The Company made
its first installment payment of $3.3 million in December 2012, with the
second installment payment of $3.2 million due in the current quarter.
Multimedia Games expects to record initial revenues from these units in its
fiscal 2013 fourth quarter.

In the first quarter of fiscal 2013, the Company repurchased 145,000 shares of
its common stock at an average price of $13.95 per share, excluding
commissions, for total consideration of approximately $2.0 million. As of
December 31, 2012, the Company had approximately $38.0 million remaining under
its existing $40.0 million share repurchase authorization which was announced
in November 2012. Since December 2010, the Company has repurchased
approximately 2.4 million of its common shares.

Adam Chibib, Chief Financial Officer, commented, “Multimedia Games entered
fiscal 2013 with strong operating momentum which continues today. Our strong
financial foundation allows the Company to invest in new product development,
expand our total addressable market, grow our base of recurring revenue
placements and return capital to shareholders through share repurchases. We
ended the first quarter of fiscal 2013 with $73.3 million in cash and net cash
of $40.9 million, representing a $63.7 million improvement in our net cash
position since the end of fiscal 2010. Going forward, we expect to remain
profitable and grow cash balances while investing in the long-term growth of
our business. Based on our strong operating performance in the first quarter,
we are raising our fiscal 2013 revenue, EBITDA and diluted EPS guidance.”

Updated Fiscal 2013 EPS Outlook

Reflecting the strong financial performance in the first fiscal quarter of
2013, Multimedia Games is raising its guidance for fiscal 2013. The Company
now forecasts fiscal 2013 revenues in the range of $174.2-$177.1 million,
representing approximately 12%-13% year over year total revenue growth. The
revised revenue growth forecast assumes a 17%-27% year-over-year increase in
unit sales as well as continued quarterly sequential increases in the domestic
installed base. The current unit sales and installed base growth forecast for
fiscal 2013 includes an expectation for a measured level of initial unit
deployments into Nevada beginning in the second half of the fiscal year.


Revised Fiscal 2013 Guidance

(In millions, except per-share)
                           
                             Twelve Months Ended September 30, 2013
                             Revised         Original          Original
                             Guidance       Guidance,        Guidance^(2)
                                             as adjusted^(1)
Revenue                      $ 174.2-177.1   $  165.6-170.2    $ 165.6-170.2
EBITDA                       $ 81.0-84.0     $  76.6-79.2      $ 76.6-79.2
                                                               
Diluted earnings per share   $ 0.79-0.84     $  0.74-0.79      $ 0.60-0.65
                                                                 

      Represents Company guidance for fiscal 2013 provided on November 15,
(1)  2012, with diluted earnings per share guidance adjusted to reflect a
      48-month depreciation schedule for Multimedia Games’ gaming operations
      units.
      Represents Company guidance for fiscal 2013 provided on November 15,
(2)   2012, which reflected a 36-month depreciation schedule for Multimedia
      Games’ gaming operations units.
      

The Company now expects to generate EBITDA, a non-GAAP financial measure, of
$81.0-$84.0 million in fiscal 2013, representing growth of approximately
14%-18% over total fiscal 2012 EBITDA of $71.1 million.

Finally, the Company currently expects its fiscal 2013 tax rate will be in the
range of 36%-40% compared to its fiscal 2012 full year effective tax rate
benefit of 11.4%. As a result of the expected increase in revenues for the
year, the expansion of operating margins and the change in the depreciable
lives of certain gaming operations assets described above, Multimedia Games
now expects to report fiscal 2013 diluted earnings per share (“EPS”) of
$0.79-$0.84, representing a year-over-year increase of approximately 16%-24%
over fiscal 2012 diluted EPS as adjusted for the new depreciation schedule and
when applying a 38% tax rate (the mid-point of the Company’s expected tax rate
for fiscal 2013) for fiscal 2012.

                                               
                                    Fiscal 2012   Revised Fiscal 2013 Guidance
EPS Reconciliation:                               Low              High
As reported                         $  0.96
Pro-forma at 38% tax rate              (0.42  )
Impact of depreciation, net of        0.14                       
tax
Adjusted, Pro-forma EPS             $  0.68      $    0.79         $   0.84
                                                                        

Multimedia Games cautions that market dynamics are constantly changing and as
such, actual results could vary materially from the expectations noted above
based on various factors, such as changes in the Company’s markets,
operations, regulatory requirements, and its estimates and assumptions. See
the risk factors in our publicly-filed Form 10-K’s and subsequent filings and
other items as more fully described in the section below titled “Cautionary
Language.”

2013 First Quarter Conference Call and Webcast

Multimedia Games is hosting a conference call and webcast today, January 30,
2013, beginning at 9:00a.m.ET (8:00a.m.CT). Both the call and the webcast
are open to the general public. The conference call number is 720-545-0001
(domestic or international). Please call five minutes prior to the
presentation to ensure that you are connected.

Interested parties may also access the conference call live on the Internet at
http://ir.multimediagames.com/events.cfm. Approximately two hours after the
call has concluded, an archived version of the webcast will be available for
replay at the same location at http://ir.multimediagames.com/events.cfm.

Non-GAAP Financial Measures

See definitions of EBITDA, net cash position and pro-forma diluted earnings
per share included in the discussion of Non-GAAP financial measures below.

About Multimedia Games Holding Company, Inc.

Through its wholly owned subsidiary, Multimedia Games Holding Company, Inc.
(“Multimedia Games”) develops and distributes gaming technology. The company
is a creator and supplier of comprehensive systems, content and electronic
gaming units for Native American gaming markets, as well as for commercial
casinos and charity and international bingo markets. Revenue is primarily
derived from gaming units in operation domestically and internationally
installed on revenue-sharing arrangements. Multimedia Games also supplies the
central determinant system for the video lottery terminals (“VLTs”) installed
at racetracks in the State of New York. The company is focused on pursuing
market expansion and new product development for Class II, Class III and VLT
markets. Additional information may be found at www.multimediagames.com.

Cautionary Language

This press release contains forward-looking statements based on Multimedia
Games' current expectations and projections, which are intended to qualify for
the safe harbor from liability established by the Private Securities
Litigation Reform Act of 1995. The words "believe", "expect", "continue",
"intend", "plan", "seek", "estimate", project", "may", or the negative or
other variations thereof or comparable terminology as they relate to
Multimedia Games and its products, plans, and markets are intended to identify
such forward-looking statements. All forward-looking statements are based on
current expectations and projections of future events.

These forward-looking statements reflect the current views, models, and
assumptions of Multimedia Games, and are subject to various risks and
uncertainties that cannot be predicted or qualified and could cause actual
results in Multimedia Games' performance to differ materially from those
expressed or implied by such forward looking statements. These risks and
uncertainties include, but are not limited to, the ability of Multimedia Games
to maintain strategic alliances; increase its unit placements, installations
or installed-base; grow revenue; garner new market share; secure new licenses
in new jurisdictions; successfully develop or place proprietary product;
comply with regulations; or have its games approved by relevant jurisdictions.
Please refer to the Company’s most recent Form 10-K and subsequent filings
with the Securities and Exchange Commission for a further discussion of risks
and uncertainties. All forward-looking statements made herein are qualified by
these cautionary statements and there can be no assurance that the actual
results, events or developments referenced herein will occur or be realized.
Readers are cautioned that all forward-looking statements speak only to the
facts and circumstances present as of the date of this press release.
Multimedia Games expressly disclaims any obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.


CONSOLIDATED BALANCE SHEETS

As of December 31, 2012 and September 30, 2012

(In thousands, except share and per-share amounts)

                                                 December 31,  September 30,
ASSETS                                            2012           2012
CURRENT ASSETS:
Cash and cash equivalents                         $  73,295      $  73,755
Accounts receivable, net of allowance for
doubtful accounts of $303 and $266,                  23,895         17,503
respectively
Inventory                                            8,105          7,083
Current portion of notes receivable, net             5,904          8,024
Deferred tax asset                                   8,248          8,248
Prepaid expenses and other                          5,032        6,837    
Total current assets                                 124,479        121,450
Property and equipment and leased gaming             63,912         57,924
equipment, net
Intangible assets, net                               36,738         37,664
Long-term portion of notes receivable, net           5,217          733
Deferred tax asset, less current portion             2,235          2,418 —
Value added tax receivable, net of allowance of      2,728          3,511
$714 and $722, respectively
Other assets                                        2,140        2,275    
Total assets                                      $  237,449    $  225,975  
                                                                             
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt                 $  3,700       $  3,700
Accounts payable and accrued liabilities             33,488         30,192
Federal and state income tax payable                 849            —
Deferred revenue                                    268          483      
Total current liabilities                            38,305         34,375
Long-term debt, less current portion                 28,675         29,600
Long term deferred tax liability                     6,320          6,320
Other long-term liabilities                         555          660      
Total liabilities                                   73,855       70,955   
Commitments and contingencies
Stockholders’ equity:
Preferred stock:
Series A, $0.01 par value, 1,800,000 shares          —              —
authorized, no shares issued and outstanding
Series B, $0.01 par value, 200,000 shares            —              —
authorized, no shares issued and outstanding
Common stock, $0.01 par value, 75,000,000
shares authorized, 36,595,010 and 36,296,027         366            363
shares issued, and 28,337,541 and 28,183,549
shares outstanding, respectively
Additional paid-in capital                           110,905        107,751
Treasury stock, 8,257,469 and 8,112,478,             (64,073 )      (62,048  )
respectively, common shares at cost
Retained earnings                                    116,396        109,283
Accumulated other comprehensive loss, net           —            (329     )
Total stockholders’ equity                          163,594      155,020  
Total liabilities and stockholders’ equity        $  237,449    $  225,975  
                                                                             


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended December 31, 2012 and 2011

(In thousands, except per-share amounts)

(Unaudited)

                                               Three Months Ended
                                             
                                               December 31,
                                               2012            2011
REVENUES:
Gaming operations                              $ 29,974         $ 24,901
Gaming equipment and system sales                14,004           9,593
Other                                           324            301        
Total revenues                                  44,302         34,795     
                                                                
OPERATING COSTS AND EXPENSES:
Cost of gaming operations revenue^(1)            3,186            2,926
Cost of equipment and system sales               6,185            4,158
Selling, general and administrative expenses     11,343           10,748
Research and development                         4,181            3,478
Amortization and depreciation                   7,964          9,690      
Total operating costs and expenses              32,859         31,000     
Operating income                                 11,443           3,795
                                                                
OTHER INCOME (EXPENSE):
Interest income                                  170              453
Interest expense                                 (296       )     (372       )
Other income                                    10             919        
Income before income taxes                       11,327           4,795
Income tax benefit (expense)                    (4,214     )    987        
Net income                                     $ 7,113         $ 5,782      
Basic earnings per common share                $ 0.25          $ 0.21       
Diluted earnings per common share              $ 0.24          $ 0.21       
Shares used in earnings per common share:
Basic                                            28,329,996       27,265,844
Diluted                                          30,016,924       28,108,576
                                                                             

      Cost of gaming operations revenue excludes depreciation and amortization
(1)  of gaming equipment, content license rights and other depreciable
      assets, which are included separately in the amortization and
      depreciation line item.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended December 31, 2012 and 2011
                                                                 
                                                      2012          2011
CASH FLOWS FROM OPERATING ACTIVITIES:                 (In thousands)
Net income                                            $ 7,113       $ 5,782
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization and depreciation                           7,964         9,690
Accretion of contract rights                            1,953         1,896
Share-based compensation                                860           554
Other non-cash items                                    1,175         447
Interest income from imputed interest                   (146    )     (418   )
Deferred income taxes                                   183
Changes in operating assets and liabilities            (4,534  )    (4,028 )
NET CASH PROVIDED BY OPERATING ACTIVITIES              14,568      13,923 
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment and leased       (12,654 )     (8,012 )
gaming equipment
Acquisition of intangible assets                        (2,066  )     (1,404 )
Advances under development and placement fee            (3,262  )     —
agreements
Repayments under development agreements                3,607       2,361  
NET CASH USED IN INVESTING ACTIVITIES                  (14,375 )    (7,055 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options, warrants       2,297         3,098
and related tax benefit
Principal payments of long-term debt                    (925    )     (925   )
Purchase of treasury stock                             (2,025  )    (1,884 )
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES    (653    )    289    
EFFECT OF EXCHANGE RATES ON CASH AND CASH              —           (122   )
EQUIVALENTS
Net increase (decrease) in cash and cash                (460    )     7,035
equivalents
Cash and cash equivalents, beginning of period         73,755      46,710 
Cash and cash equivalents, end of period              $ 73,295     $ 53,745 
                                                                             

Reconciliation of U.S. GAAP to Non-GAAP measures:

This press release and accompanying schedules provide certain information
regarding (i) EBITDA, (ii) net cash position and (iii) pro-forma diluted
earnings per share, all of which may be considered non-GAAP financial measures
under the rules of the Securities and Exchange Commission. The non-GAAP
financial measures included in the press release are reconciled to the
corresponding GAAP financial measures below, or above in this release for
pro-forma diluted earnings per share, as required under the rules of the
Securities and Exchange Commission regarding the use of non-GAAP financial
measures. We define (i) EBITDA as net income before net interest expense,
income taxes, depreciation, and amortization and accretion of contract rights,
(ii) net cash position as cash and cash equivalents less long-term debt, and
(iii) pro-forma diluted earnings per share reflects the following adjustments:
a tax expense rate of 37.2%; the elimination of the one-time benefit related
to the sale of used equipment to the original manufacturer; and, the Company’s
estimated impact of the change in depreciable lives of its gaming operations
equipment. EBITDA, net cash position and pro-forma diluted earnings per share
are not recognized financial measures under GAAP, but we believe that each is
useful in measuring our operating performance. We believe that the use of the
non-GAAP financial measure EBITDA enhances an overall understanding of the
Company’s past financial performance, and provides useful information to the
investor by comparing our performance across reporting periods on a consistent
basis and the use of EBITDA by other companies in the gaming equipment sector
as a measure of performance. We believe that the non-GAAP measures of net cash
position and pro-forma diluted earnings per share provide useful information
to investors as each enhances the overall understanding of our operating
performance.

Investors should not consider these measures in isolation or as a substitute
for net income, operating income, or any other measure for determining the
Company’s operating performance that is calculated in accordance with GAAP. In
addition, because these measures are not calculated in accordance with GAAP,
they may not necessarily be comparable to similarly titled measures employed
by other companies.

                                 
                                   For the Three Months Ended
                                   December 31,
                                   2012         2011
                                   (in thousands)
Net income                         $  7,113      $  5,782
Add back:
Amortization and depreciation         7,964         9,690
Accretion of contract rights^(1)      1,953         1,896
Interest expense (income), net        126           (81     )
Income tax expense (benefit)         4,214        (987    )
EBITDA                             $  21,370     $  16,300  
                                                            

     “Accretion of contract rights” relates to the amortization of intangible
1)  assets for development projects. These amounts are netted against
     revenues in the Consolidated Statements of Operations.


Net Cash Position

                            As of          As of
                           December 31,  September 30,
                            2012           2012
                            (in thousands)
Cash and cash equivalents   $  73,295      $  73,755
Less:
Long-term debt                (32,375 )     (33,300  )
Net cash                    $  40,920     $  40,455   

Contact:

Multimedia Games Holding Company, Inc.
Adam Chibib, 512-334-7500
Chief Financial Officer
or
JCIR
Richard Land
James Leahy
212-835-8500
mgam@jcir.com