Shuffle Master restates earnings because of Mikohn settlement

Tuesday, Jan. 4, 2000 | 11:06 a.m.

Shuffle Master Inc. restated its fourth-quarter earnings Monday, turning a profitable quarter into a loss -- but the company said it still expects to meet Wall Street expectations going forward.

The Las Vegas casino supply company was forced to restate earnings as a result of its $2.75 million settlement with Mikohn Gaming Corp., announced last week. As a result, the company is now reporting a loss of $200,000, or 3 cents per share, for the quarter ending Oct. 31.

The company had previously reported net income of $1.56 million, or 20 cents per share, for the quarter. Shuffle Master's earnings for fiscal 1999 were dropped 33 percent to $3.6 million, or 45 cents per share.

The settlement, announced Dec. 29, calls for Mikohn to pay $2.75 million for the rights to the "Let It Ride" and "Three Card Poker" table games, as well as future royalties on those games. Mikohn will also receive royalties from certain new games developed by Shuffle Master.

In exchange, Shuffle Master will receive royalties of $580,000 per year from certain properties leased to Mikohn, including coin sensing and multi-tiered game wagering patents. Mikohn's royalty payments of $145,000 per quarter will begin immediately, Shuffle Master said.

The settlement will reduce the company's legal expenses and taxes over the next year, resulting in savings of about $1 million in fiscal 2000, Shuffle Master reported. These funds will be reinvested into research and development.

Despite lowered earnings, Shuffle Master said it still expected to meet analyst expectations of a 90-cent-per-share profit in fiscal 2000.

Shuffle Master's stock rose 66 cents Monday, to $9.25. However, it fell 38 cents in early trading today to $8.88.