Multimedia Games’ Second Quarter Revenue Rises 18% to $46.6 Million and EBITDA Increases 32% to $24.1 Million; Reports Diluted

  Multimedia Games’ Second Quarter Revenue Rises 18% to $46.6 Million and
  EBITDA Increases 32% to $24.1 Million; Reports Diluted EPS of $0.31

 - Deploys 1,104 New Revenue Units, Including 580 For-Sale Units and 524 Net
                        Additions to Installed Base -

   - Raises Fiscal 2013 EPS and EBITDA Guidance to $0.98-$1.02 and $90-$92
                           Million, Respectively -

Business Wire

AUSTIN, Texas -- April 30, 2013

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

Summary of 2013 Q2 Results
(In millions, except per share and unit data)

                                             Three Months Ended
                                                March 31,
                                                2013       2012
Revenue                                         $ 46.6       $ 39.5
EBITDA^(1)                                      $ 24.1       $ 18.2
Operating income ^ (2)                          $ 13.9       $ 6.7
Net income ^(2)                                 $ 9.3        $ 6.8
Diluted earnings per share ^(2)                 $ 0.31       $ 0.24
Pro-forma diluted earnings per share ^(3)       $ 0.31       $ 0.22
                                                             
New units sold                                    580          472
                                                             
Domestic participation installed units:
Average                                           11,540       9,721
Quarter-end                                       11,712       9,891
                                                             

        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 (“EPS”)
(2)     for the three month period ended March 31, 2013, reflects a change in
        the depreciable lives for the Company’s gaming operations equipment as
        described on page 3.
        Pro-forma diluted earnings per share for the three month period ended
        March 31, 2012, reflects the following adjustments: (i) a tax expense
        rate of 32.3%, representing the effective tax rate for the fiscal 2013
(3)     second quarter, which results in a $0.07 per diluted share reduction
        from the reported results; and, (ii) an estimated $0.05 benefit to
        fully diluted EPS related to the change in depreciable lives of its
        gaming operations equipment (which is described in more detail below).
        

                                      Three Months Ended
                                         March 31,
                                         2013     2012
Diluted EPS as reported ^(2) (3)         $ 0.31     $ 0.24
Pro-forma at 32.3% tax rate                —          (0.07)
Normalize depreciation, net of tax        —         0.05
Pro-forma diluted EPS ^(3)               $ 0.31     $ 0.22
                                                    

Patrick Ramsey, President and Chief Executive Officer of Multimedia Games,
commented, “Our strategies to expand the Company’s total addressable market
and invest in the development of great games that resonate with customers
continue to drive robust financial growth and a further strengthening of both
our balance sheet and our Company. In the fiscal 2013 second quarter, total
revenues grew approximately 18% to over $46 million, driven by continued
strength in unit sales and the ongoing expansion of our installed base of
participation units. For the third consecutive quarter we deployed over 1,000
new revenue units, with deployments across 22 states in the fiscal 2013 second
quarter. With the 18% rise in second quarter revenues and a slight decline in
total operating expenses, the Company generated year-over-year EBITDA growth
of over 32%, which highlights the tremendous operating leverage in our
business model.

“During the March 2013 quarter, our new MForce™ gaming platform and several
game themes achieved a key milestone as they received final approval from the
Nevada Gaming Commission, allowing us to pursue performance field trials at
casinos throughout the state. Our fiscal second quarter 2013 results include
initial contributions from the sale and placement of a small number of games
in Nevada. We are making solid progress with additional technical trials of
the MForce platform as well as additional game titles which will allow us to
expand our presence in the state. We also recently began technical field
trials of our TournEvent® slot tournament system in Nevada.

“Our gaming operations business also continued its growth, as we added over
500 units to our installed base for the third consecutive quarter. Growth was
driven primarily by placements outside of Oklahoma which increased by 395
units, or 12.6%, on a quarterly sequential basis. Our installed base growth in
higher-yielding markets combined with a growing number of premium game
placements led to an increase in average revenue per day despite reported
gaming revenue weakness in the majority of our markets. Premium games grew by
over 180 units, bringing our total footprint to 505 games outside of
Oklahoma.”

Ramsey concluded, “Our success in the first half of fiscal 2013 has positioned
the Company for continued progress in the second half of the year as the
awareness and availability of our products in a larger portion of the domestic
marketplace continues to expand. Creating games that clearly resonate with
players and deliver value to operators is enabling Multimedia Games to grow
market share in existing markets and successfully enter new markets. Given our
improving outlook, we are raising our diluted EPS outlook for fiscal 2013 to a
range of $0.98-$1.02 from our prior $0.79-$0.84 range.”

Summary of Fiscal 2013 Second Quarter Operating Results

Multimedia Games’ fiscal 2013 second quarter revenue rose 17.8%, or $7.0
million, to $46.6 million, compared to revenue of $39.5 million in the fiscal
2012 second quarter. Fiscal 2013 second quarter revenue included approximately
$33.4 million from gaming operations and approximately $12.8 million from
gaming equipment and system sales, compared with $29.0 million from gaming
operations and $10.1 million from gaming equipment and system sales in the
year-ago period.

Gaming operations revenue in the fiscal 2013 second quarter grew 15.0% to
$33.4 million, as a $0.6 million, or approximately 4%, year-over-year decline
in Oklahoma revenues from a very strong second quarter a year ago was more
than offset by growth in each of the Company’s other markets. Multimedia
Games’ ending installed base of participation machines increased by 1,821
units, or 18.4%, from the fiscal 2012 second quarter and by 524 units, or
4.7%, on a quarterly sequential basis. There was broad based unit growth
across the Company’s markets including a combined 134 units added in
Louisiana, Mississippi and California and 120 units added throughout the
Midwest. Included in the quarter-end participation base were 505 premium
participation units deployed outside of Oklahoma, an increase of 187 units, or
58.8%, on a quarterly sequential basis. Fiscal 2013 second quarter revenue
also benefitted from a 5.5%, or $0.2 million, year-over-year rise in revenues
related to the Company’s operation of the central determinant system for the
New York Lottery.

Gaming equipment and system sales in the fiscal 2013 second quarter increased
26.4% to $12.8 million, from $10.1 million in the prior-year period. During
the quarter, the Company recorded revenue of $11.0 million related to the sale
of 580 new units and $1.3 million in revenue related to parts and equipment
sales, compared to $8.5 million in revenue related to the sale of 472 new
units and $0.7 million related to parts and equipment sales in the year-ago
period. Multimedia Games sold units into 19 markets, including modest initial
unit sales in Nevada and Illinois, while Washington, Michigan and California
were the Company’s three largest markets for new unit sales with a combined
total of 267 units sold. There was $0.5 million and $0.9 million of deferred
revenues for the sale of player stations and a system in a prior-year period
recognized in the fiscal 2013 and fiscal 2012 second quarter periods,
respectively.

Other revenue, primarily comprised of service revenue, was approximately $0.4
million in both the fiscal 2013 and fiscal 2012 second quarter periods.

Total operating expenses for the fiscal 2013 second quarter fell $0.2 million,
or 0.7%, to $32.7 million as an increase in total cost of goods sold was more
than offset by lower depreciation and amortization reflecting the Company’s
decision to change the depreciation schedule for its gaming operations
equipment, as previously reported. Total cost of goods sold increased by $1.5
million due to an increase in the number of units sold as well as the
significant increase in the number of participation units in the Company’s
installed base compared to the prior-year period. Selling, general and
administrative (“SG&A”) expenses fell 5.7%, or $0.7 million, to $11.6 million,
primarily reflecting lower marketing and inventory expenses which were
partially offset by higher salary and benefit costs. SG&A for both the fiscal
2013 and fiscal 2012 second quarter periods includes non-cash stock
compensation costs of approximately $1.0 million. Depreciation and
amortization was $8.1 million in the fiscal 2013 second quarter compared to
$9.5 million in the prior-year period, primarily reflecting the previously
disclosed change in the depreciable lives for gaming operations equipment from
36 months to 48 months, effective as of October 1, 2012, which is more
consistent with the useful life of the Company’s products as well as with the
standard used by the majority of the gaming equipment suppliers in the
industry. Research and development expenses of $4.3 million in the fiscal 2013
second quarter compares to $3.9 million in the prior-year period and reflects
the Company’s ongoing efforts to develop innovative gaming products that
deliver high-value player entertainment.

Operating income rose to $13.9 million and operating margins improved to 29.9%
in the fiscal 2013 second quarter compared to 16.9% in the year-ago period,
driven by the rise in revenue, increased high-margin recurring revenue in the
overall mix and the slight decline in total operating expenses. For the fiscal
2013 second quarter, Multimedia Games reported net income of $9.3 million, or
$0.31 per diluted share, compared to net income of $6.8 million, or $0.24 per
diluted share, in the fiscal 2012 second quarter. Net income and diluted
earnings per share for the fiscal 2013 second quarter reflect a tax expense
rate of 32.3% while net income and diluted earnings per share in the
prior-year period reflect a tax expense rate of 2.6%.

Balance Sheet Review

Multimedia Games ended the fiscal 2013 second quarter with $81.5 million in
cash and net cash (total cash in excess of total debt) of $50.0 million,
versus net cash of $40.9 million and $22.2 million as of December 31, 2012,
and March 31, 2012, respectively. The fiscal 2013 second quarter represents
the seventeenth consecutive quarter the Company has grown net cash or reduced
net debt. The Company generated free cash flow of $7.6 million in the quarter
compared to $12.2 million in the year-ago period. Capital expenditures were
$12.9 million compared to $11.5 million a year ago, reflecting continued
investment in the Company’s installed base.

In the second quarter of fiscal 2013, the Company repurchased approximately
103,000 shares of its common stock at an average price of $16.00 per share,
excluding commissions, for total consideration of approximately $1.6 million.
As of March 31, 2013, the Company had approximately $36.3 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 2.5 million shares of its common stock.

Adam Chibib, Chief Financial Officer, commented, “Our second quarter results
again highlight the Company’s operating momentum and the benefits of our
strengthened financial position. Products such as TournEvent and the High Rise
Games® series are garnering customer attention and are playing a key role as
we successfully enter new markets and gain share in existing markets. During
the fiscal 2013 second quarter, we generated our first sales in Nevada and
Illinois. We also continue to invest in the business to drive future growth
and to return capital to shareholders through share repurchases. Based on the
strong first half and our expectations for continued profitability and
operating performance in the second half of the year, we are raising our
fiscal 2013 financial guidance.”

Updated Fiscal 2013 Outlook

Reflecting the strong financial performance in the first half, Multimedia
Games today raised its fiscal 2013 guidance. The Company now forecasts fiscal
2013 revenues in the range of $183.2-$185.6 million, representing total
revenue growth of approximately 17%-19% year over year. The revised revenue
growth forecast assumes unit sales of 2,450-2,550 units as well as continued
quarterly sequential increases in the domestic installed base. The fiscal 2013
revenue guidance also includes the previously disclosed early fourth quarter
reduction in revenue share percentage on approximately 1,000 units installed
at the WinStar World Casino in Oklahoma. The Company expects this reduction in
revenue share percentage to impact diluted EPS by $0.02 in the fiscal fourth
quarter. The current unit sales and installed base growth forecast for fiscal
2013 includes an expectation for a measured level of unit deployments into
Nevada and Illinois over the balance of the fiscal year as Multimedia Games
continues to build its library of approved games in these jurisdictions.

The Company now expects to generate EBITDA, a non-GAAP financial measure, of
$90.0-$92.0 million in fiscal 2013, representing growth of approximately
27%-29% over total fiscal 2012 EBITDA of $71.1 million.

Revised Fiscal 2013 Guidance
(In millions, except per-share)
                                 
                                         Twelve Months Ended
                                         September 30, 2013
                                         Revised           Prior
                                         Guidance              Guidance^(1)
Revenue                                  $ 183.2-185.6         $ 174.2-177.1
EBITDA                                   $ 90.0-92.0           $ 81.0-84.0
                                                               
Diluted earnings per share               $ 0.98-1.02           $ 0.79-0.84
                                                               

(1)Represents Company guidance for fiscal 2013 provided on January 30, 2013.

Operating margins for the fiscal 2013 third and fourth quarter periods are
expected to decline from the second quarter and should be in line with the
first quarter as unit sales are currently anticipated to comprise a higher mix
of the overall revenue generated in the second half of the year and the
Company incurs higher marketing costs in the fiscal fourth quarter related to
the annual industry trade show, G2E. The Company currently expects its tax
rate to range from 35% to 39% in the second half of fiscal 2013 compared to
34.5% in the first half of the fiscal year and a benefit of 11.4% in fiscal
2012. As a result, Multimedia Games now expects to report fiscal 2013 diluted
EPS of $0.98-$1.02, representing a year-over-year increase of approximately
40%-46% over fiscal 2012 diluted EPS as adjusted for the new depreciation
schedule and when applying a 35.7% tax rate (the average of the actual rate
for the first half of the year and the mid-point of the Company’s expected tax
rate for the second half of fiscal 2013) for fiscal 2012.

                                                    Revised Fiscal 2013
                                         Fiscal 2012     Guidance
EPS Reconciliation:                                      Low        High
As reported                              $  0.96
Pro-forma at 35.7% tax rate                 (0.41  )
Impact of depreciation, net of tax         0.15                    
Adjusted, Pro-forma EPS                  $  0.70        $  0.98      $ 1.02
                                                                      

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 Second Quarter Conference Call and Webcast

Multimedia Games is hosting a conference call and webcast today, April 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 http://ir.multimediagames.com/events.cfm.

Non-GAAP Financial Measures

See definitions of EBITDA, net cash, free cash flow, 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 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. Please visit
www.multimediagames.com, twitter.com/MultimediaGames or
facebook.com/MultimediaGames, where Multimedia Games discloses important
information about the Company, its sales, and its business.

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 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.


CONDENSED CONSOLIDATED BALANCE SHEETS
As of March 31, 2013 and September 30, 2012
(In thousands, except share and per-share amounts)
(Unaudited)
                                              March 31,        September 30,
                                               2013              2012
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                      $   81,486      $  73,755
Accounts receivable, net of allowance for
doubtful accounts of $313 and $266,                  23,866         17,503
respectively
Inventory                                            8,719          7,083
Current portion of notes receivable, net             1,955          8,024
Deferred tax asset                                   8,248          8,248
Prepaid expenses and other                        4,101        6,837    
Total current assets                                 128,375        121,450
Property and equipment and leased gaming             70,005         57,924
equipment, net
Intangible assets, net                               37,273         37,664
Long-term portion of notes receivable, net           5,128          733
Deferred tax asset, less current portion             2,247          2,418
Value added tax receivable, net of allowance         2,981          3,511
of $755 and $722, respectively
Other assets                                      2,298        2,275    
Total assets                                   $   248,307    $  225,975  
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt              $     3,700       $  3,700
Accounts payable and accrued liabilities             28,811         30,192
Federal and state income tax payable                 2,167          —
Deferred revenue                                  285          483      
Total current liabilities                            34,963         34,375
Long-term debt, less current portion                 27,750         29,600
Long-term deferred tax liability                     6,320          6,320
Other long-term liabilities                       511          660      
Total liabilities                                 69,544       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,
37,245,384 and 36,296,027 shares issued, and
28,885,304
and 28,183,549 shares outstanding,                   372            363
respectively
Additional paid-in capital                           118,368        107,751
Treasury stock, 8,360,080 and 8,112,478,             (65,716 )      (62,048  )
common shares at cost, respectively
Retained earnings                                    125,739        109,283
Accumulated other comprehensive loss, net         —            (329     )
Total stockholders’ equity                        178,763      155,020  
Total liabilities and stockholders’ equity     $   248,307    $  225,975  
                                                                 


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Six Months Ended March 31, 2013 and 2012
(In thousands, except per-share amounts)
(Unaudited)

                    Three Months Ended          Six Months Ended
                         March 31,                     March 31,
                         2013         2012           2013         2012
REVENUES:
Gaming                   $ 33,406       $ 29,043       $ 63,380       $ 53,944
operations
Gaming
equipment and              12,787         10,114         26,791         19,707
system sales
Other                     378          375          702          676    
Total revenues            46,571       39,532       90,873       74,327 
                                                                      
OPERATING
COSTS AND
EXPENSES:
Cost of gaming
operations                 3,263          3,005          6,450          5,931
revenue ^ (1)
Cost of
equipment and              5,381          4,175          11,566         8,333
system sales
Selling,
general and                11,575         12,276         22,918         23,024
administrative
expenses
Research and               4,288          3,896          8,469          7,374
development
Amortization
and                       8,143        9,512        16,107       19,202 
depreciation
Total
operating                 32,650       32,864       65,510       63,864 
costs and
expenses
Operating                  13,921         6,668          25,363         10,463
income
                                                                      
OTHER INCOME
(EXPENSE):
Interest                   144            559            314            1,012
income
Interest                   (293   )       (357   )       (589   )       (729   )
expense
Other income              23           129          33           1,048  
Income before              13,795         6,999          25,121         11,794
income taxes
Income tax
(expense)                 (4,452 )      (181   )      (8,665 )      806    
benefit
Net income               $ 9,343       $ 6,818       $ 16,456      $ 12,600 
Basic earnings
per common               $ 0.33        $ 0.25        $ 0.58        $ 0.46   
share
Diluted
earnings per             $ 0.31        $ 0.24        $ 0.54        $ 0.44   
common share
Shares used in
earnings per
common share:
Basic                      28,666         27,251         28,568         27,454
Diluted                    30,348         28,655         30,252         28,577
                                                                      

              Cost of revenues exclude depreciation and amortization of gaming
   (1)   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 Six Months Ended March 31, 2013 and 2012
(Unaudited)
                                                                   
                                                   2013            2012
CASH FLOWS FROM OPERATING ACTIVITIES:              (In thousands)
Net income                                         $ 16,456        $ 12,600
Adjustments to reconcile net income to cash
provided by operating activities:
Amortization and depreciation                        16,107          19,202
Accretion of contract rights                         3,955           3,829
Share-based compensation                             1,855           1,510
Other non-cash items                                 1,307           800
Interest income from imputed interest                (265    )       (797    )
Deferred income taxes                                171             —
Changes in operating assets and liabilities         (4,524  )      491     
NET CASH PROVIDED BY OPERATING ACTIVITIES           35,062        37,635  
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment and           (25,534 )       (19,532 )
leased gaming equipment
Acquisition of intangible assets                     (4,070  )       (2,719  )
Advances under development and placement fee         (8,535  )       (13,365 )
agreements
Repayments under development agreements             7,555         7,479   
NET CASH USED IN INVESTING ACTIVITIES               (30,584 )      (28,137 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options,             8,771           4,983
warrants and related tax benefit
Principal payments of long-term debt                 (1,850  )       (1,850  )
Proceeds from capital leases                         —               366
Principal payments of capital leases                 —               (34     )
Purchase of treasury stock                          (3,668  )      (1,884  )
NET CASH PROVIDED BY FINANCING ACTIVITIES           3,253         1,581   
EFFECT OF EXCHANGE RATES ON CASH AND CASH           —             (85     )
EQUIVALENTS
Net increase in cash and cash equivalents            7,731           10,994
Cash and cash equivalents, beginning of period      73,755        46,710  
Cash and cash equivalents, end of period           $ 81,486       $ 57,704  
                                                                             

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

This press release and accompanying schedules provide certain information
regarding (i) EBITDA, (ii) net cash, (iii) free cash flow, and (iv) 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 as cash and cash equivalents less long-term debt, (iii) free
cash flow as cash flow from operating activities less the acquisition of
property and equipment and leased gaming equipment, and (iv) pro-forma diluted
earnings per share reflects the following adjustments: a tax expense rate of
32.3% and an estimated $0.05 benefit to fully diluted earnings per share
related to the change in depreciable lives of gaming operations equipment.
EBITDA, net cash, free cash flow 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, free cash flow 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 March 31,
                                         2013        2012
                                         (in thousands)
Net income                               $ 9,343        $ 6,818
Add back:
Amortization and depreciation              8,143          9,512
Accretion of contract rights^(1)           2,002          1,933
Interest expense (income), net             149            (202   )
Income tax expense                        4,452         181    
EBITDA                                   $ 24,089       $ 18,242 
                                                                 

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

Net Cash           
                          For the three months ended
                          March 31, 2013   December 31,     March 31, 2012
                                             2012
Cash and cash             $  81,486          $  73,295          $  57,704
equivalents
Less:
Long-term                   (31,450  )        (32,375  )        (35,482  )
debt
Net cash                  $  50,036         $  40,920         $  22,222   
                                                                            

Free Cash Flow                           
                                             For the three months ended
                                             March 31, 2013   March 31, 2012
Net cash provided by operating               $  20,494          $  23,712
activities
Less:
Acquisition of property and equipment          (12,880  )        (11,520  )
and leased gaming equipment
Free cash flow                               $  7,614          $  12,192   
                                                                

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
 
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