Anchor Gaming Reports Fiscal 2001 Third Quarter and Nine Months Results

Interest in Pala Casino Fees Increased,

Substantial Impairment and Restructuring Charges Incurred at AWI



Apr 24, 2001, 01:00 ET from Anchor Gaming

    LAS VEGAS, April 24 /PRNewswire/ -- Anchor Gaming (Nasdaq:   SLOT) (Company)
 today reported operating results for its third quarter ended March 31, 2001.
 All amounts included within this narrative for revenues and earnings before
 interest, taxes, depreciation (including Anchor Gaming's share of joint
 venture depreciation), amortization, one-time charges and stock-based
 compensation expense ("EBITDA") have been adjusted to exclude the Sunland Park
 operations that were sold in December 2000.  For the third quarter of fiscal
 2001 compared to the third quarter of fiscal 2000, revenues increased 11% to
 $123 million and EBITDA increased 12% to $49 million.  Diluted earnings per
 share before one-time charges increased 30% to $0.87.
 
     In addition to the quarterly results, Anchor Gaming announced:
 
     Gaming Machines
 
     --  The joint venture had a record quarter earning $35 million and grew
         its installed base to 15,400 units including more than 6,800
         traditional Wheel of Fortunes(R), 4,750 video Wheel of Fortunes(R),
         more than 1,300 I Dream of Jeannies(TM) and more than 1,800
         conversions.  Anchor Gaming's total installed base of proprietary
         games grew to more than 18,900 games at quarter end.
 
     --  The Company will discontinue sales of the VLC Casino product line as
         of September 30, 2001.
 
     Gaming Operations
 
     --  The Company acquired an additional interest in the development and
         management fees derived from the operation of the Pala Casino in
         San Diego, which opened on April 3.  In March, Anchor Gaming purchased
         for an undisclosed amount, an entity that had contractual rights to
         18% of the development and management fees derived from the operation
         of the Pala Casino. The Company now maintains a 68% interest in these
         Pala fees.
 
     --  The Company will dispose of its slot route operation in Montana.  The
         Company plans to close the sale of the Montana route operation no
         later than March 31, 2002.
 
     Gaming Systems
 
     --  In the third quarter of fiscal 2001, the Company commenced a
         restructuring plan focused on AWI, its on-line lottery subsidiary.
         The major components of the plan include the elimination of certain
         facilities and certain positions and the termination of certain
         contractual arrangements.  Management of the Company believes that all
         activities under the restructuring plan will be completed by the end
         of calendar 2001.
 
         During the third quarter of fiscal 2001, certain events occurred that
         caused the Company to conclude that the balances of certain assets
         would not be recoverable.  As a result of this determination and
         pursuant to the restructuring plan, the Company recorded one-time
         charges of $133 million, of which $124 million were non-cash charges.
         These charges primarily related to AWI and include a non-cash asset
         impairment charge of $120 million, which primarily comprised the
         write-down of goodwill that had been recorded through the acquisition
         of Powerhouse Technologies in June 1999, and also included the
         write-down of equipment and other intangible assets.  The Company also
         recorded a restructuring charge of $9 million in accordance with the
         restructuring plan.  Other one-time charges at AWI included $4 million
         for inventory write-downs and a provision for a contractual dispute.
 
         The Company estimates that the impairment charges and the
         restructuring plan will result in annualized cost reductions of at
         least $15 million.  Most of these savings are due to decreased
         depreciation and amortization.  The Company may incur additional
         one-time charges of less than $10 million related to AWI in the fourth
         quarter of fiscal 2001.
 
     Including the one-time charges, Anchor Gaming reported a loss per share of
 $6.41 for the quarter ended March 31, 2001.  For the third quarter of the
 previous year, revenues were $111 million, EBITDA was $44 million, and diluted
 earnings per share were $0.67.
     "Anchor Gaming had a good operating quarter. More importantly, the
 decisions made in this quarter will result in a much leaner organization,"
 said T.J. Matthews, CEO of Anchor Gaming.  "At Anchor Gaming we're focused on
 long-term growth initiatives and we remain optimistic about our ability to
 grow the Company's revenues, cash flows and earnings in each of our business
 segments."
     For the nine months ended March 31, 2001, compared to the nine months
 ended March 31, 2000, revenues increased 8% to $372 million, EBITDA increased
 19% to $151 million and diluted earnings per share before one-time charges
 increased 27% to $2.46.
     The one-time charges incurred in the first nine months of fiscal 2001
 include the second quarter charges in connection with the stock repurchase
 from the Fulton family, the cumulative effect of a change in accounting
 principle for the implementation of a new accounting standard on derivatives
 and the one-time charges discussed above.
     Including the one-time charges, Anchor Gaming reported a loss per share of
 $3.93 for the nine months ended March 31, 2001.  For the first nine months of
 the previous year, revenues were $345 million, EBITDA was $127 million and
 diluted earnings per share were $1.94.
     The Company's cash balance at March 31, 2001 was $23 million.  During the
 quarter, the Company repaid $8 million under its senior credit facility.  At
 March 31, 2001, the outstanding balance under the senior credit facility was
 $180 million and the Company had availability of $143 million under this
 facility.
     Due to the magnitude of the impairment charges and the restructuring, the
 Company believes that it is appropriate to provide guidance relative to the
 fourth quarter of fiscal 2001 and for fiscal 2002.  According to Matthews,
 "Given the changes in the systems business, the opening of the Pala Casino, as
 well as our additional stake in the Pala fees the Company estimates that it
 will achieve diluted EPS, before one-time charges, of at least $1.05 for Q4
 fiscal 2001 and at least $4.40 in fiscal 2002."
     A conference call to discuss Anchor Gaming's third quarter results will be
 held at 8 a.m. EDT (5 a.m. PDT) Wednesday, April 25.  The Company may use this
 conference call as a forum for public disclosure for important information
 about any aspect of its business, finances and prospects.  A live webcast of
 the conference call is available on the Anchor Gaming website at
 http://www.anchorgaming.com.  An audio replay of the broadcast and the text
 script will be available following its conclusion on the Anchor Gaming
 website.
 
     Anchor Gaming is a diversified technology company with operations around
 the world.  Anchor operates in three complementary business segments: gaming
 machines, gaming operations and gaming systems.  The gaming machine segment
 focuses on the development and placement of unique proprietary games.  The
 gaming operations segment operates a Native American casino in San Diego, two
 casinos in Colorado, and manages a gaming-machine route in Nevada.  The gaming
 systems segment provides equipment, and related services to on-line lotteries,
 video lotteries, and pari-mutuel organizations.  Anchor Gaming has equipment
 and systems in operation in the United States, Canada, Australia, Asia,
 Europe, South America, South Africa, and the West Indies.
 
     This press release contains certain forward-looking statements within the
 meaning of section 21e of the Securities Exchange Act of 1934, as amended and
 other applicable securities laws.  All statements other than statements of
 historical fact are "forward-looking statements" for purposes of these
 provisions.  Included in these provisions are any projections or estimates of
 earnings, revenues, or other financial items. Also, any statements of plans,
 strategies, and objectives of management for future operation; any statements
 concerning proposed new products, services, or developments; any statements
 regarding future economic conditions or performance; statements of belief; and
 any statement of assumptions underlying any of the foregoing.  Such forward-
 looking statements are subject to inherent risks and uncertainties, and actual
 results could differ materially from those anticipated by the forward-looking
 statements.  Although the Company believes that the expectations reflected in
 any of its forward-looking statements will prove to be correct, actual results
 could differ materially from those projected or assumed in the Company's
 forward-looking statements.  These risks and uncertainties include, but are
 not limited to: risks regarding the final amount of the one-time charges; the
 risk that we may not meet our projected financial results for the fourth
 quarter of fiscal 2001 or fiscal 2002; risks of proprietary games such as
 pressures from competitors, changes in economic conditions, obsolescence,
 declining popularity of existing games, failure of new game ideas or concepts
 to become popular, duplication by third parties and changes in interest rates
 as they relate to the wide area progressive machine operations within our
 joint venture with IGT; general changes in economic conditions; our ability to
 improve results of operations in our gaming systems segment; our ability to
 achieve the cost reductions associated with the restructuring; reduced lottery
 sales in lottery jurisdictions where AWI has lottery contracts; our ability to
 keep or renew existing lottery contracts; competition in Colorado that could
 adversely affect our Colorado casinos; our ability to generate sales of new
 video lottery central control systems and video lottery terminals; we are
 subject to adverse determination in pending litigation with Acres Gaming
 relative to our proprietary games' intellectual property; we are subject to
 adverse determination in pending litigation between GTECH Holdings and the
 Florida Lottery relative to our Florida lottery contract; we have obligations
 under agreements with the Pala Band of Mission Indians that subject us to
 joint venture risk, construction risk and sovereign immunity risk; risk that
 initial results from the Pala Casino cannot be sustained over the long-term
 and other factors described from time to time in the Company's reports filed
 with the Securities and Exchange Commission, including Anchor's Form 10-K for
 the year ended June 30, 2000 and Form 10-Qs for the quarters ended September
 30, 2000 and December 31, 2000.  These reports may be obtained free of charge
 at the website of the Securities and Exchange Commission at
 http://www.sec.gov.
 
 
                                   ANCHOR GAMING
 
                               SUMMARY OF OPERATIONS
                      (in thousands except per share amounts)
                                    (unaudited)
 
                                               Three months ended
                                                    March 31,
                                                                      Percent
                                               2001           2000     Change
 
     Revenues (excluding Sunland Park)       $122,853      $110,779       11%
     Total Revenues                           122,853       123,497       (1%)
     EBITDA (excluding Sunland Park)           49,009        43,887       12%
     Total EBITDA                              49,009        46,718        5%
     Diluted Earnings Per Share
      Before One-time Charges                 $  0.87       $  0.67       30%
     Diluted Earnings (Loss) Per Share        $ (6.41)      $  0.67      N/A
 
 
                                                Nine months ended
                                                    March 31,
                                                                      Percent
                                               2001           2000     Change
 
     Revenues (excluding Sunland Park)       $372,056      $344,823        8%
     Total Revenues                           390,953       377,746        4%
     EBITDA (excluding Sunland Park)          150,575       126,976       19%
     Total EBITDA                             154,549       134,297       15%
     Diluted Earnings Per Share
      Before One-time Charges                 $  2.46       $  1.94       27%
     Diluted Earnings (Loss) Per Share        $ (3.93)      $  1.94      N/A
 
 
 
     ANCHOR GAMING
     CONSOLIDATED STATEMENTS OF OPERATIONS
     (Unaudited)                            Three months ended March 31,
     (in thousands except                 2001         2001           2000
      per share amounts)               (Actual)   (Adjusted)(a)   (Actual)(b)
 
     Revenues:
       Gaming machines                $ 45,184      $ 45,184       $ 36,226
       Gaming operations                34,846        34,846         46,823
       Gaming systems                   42,823        42,823         40,448
         Total revenues                122,853       122,853        123,497
     Costs of revenues:
       Gaming machines                   6,579         6,579          5,632
       Gaming operations                22,926        22,926         31,529
       Gaming systems (a)               34,439        30,196         22,348
         Total costs of revenues        63,944        59,701         59,509
     Gross margin                       58,909        63,152         63,988
     Other costs:
       Selling, general and
        administrative                  15,365        15,365         16,294
       Research and development          3,157         3,157          4,125
       Depreciation and amortization    12,900        12,900         12,829
       Impairment, restructuring
        and other (a)                  128,452            --             --
         Total other costs             159,874        31,422         33,248
     Income (loss) from operations    (100,965)       31,730         30,740
     Other income (expense):
       Interest income                     579           579            521
       Interest expense                (10,316)      (10,316)        (4,348)
       Other income                         23            23             53
       Minority interest in earnings
        of consolidated subsidiary        (168)         (168)          (111)
         Total other income (expense)   (9,882)       (9,882)        (3,885)
     Income (loss) before provision
      (benefit) for income taxes      (110,847)       21,848         26,855
     Income tax provision (benefit)    (16,820)        8,630         10,842
     Net income (loss)                $(94,027)     $ 13,218       $ 16,013
 
     Diluted earnings (loss)
      per share                       $  (6.41)     $   0.87       $   0.67
     Weighted average common and
      common equivalent
      shares outstanding (c)            14,670        15,237         24,076
 
 
     (a) Results have been adjusted to exclude one-time charges.  One-time
         charges include impairment, restructuring and other charges as
         detailed above on the statement of operations.  In addition, one-time
         charges include charges at AWI of $4.2 million for inventory
         write-downs and a contractual dispute (included within Gaming
         Systems -- costs of revenues.)
     (b) Prior year amounts have been reclassed to conform to the current
         year presentation.
     (c) All share amounts have been adjusted to reflect the stock split
         that was distributed on November 15, 2000.
 
 
     ANCHOR GAMING                                    March 31,     June 30,
     CONSOLIDATED BALANCE SHEETS (Unaudited)             2001         2000
     (in thousands except share amounts)
 
                            ASSETS
     Current assets:
       Cash and cash equivalents                      $ 23,378      $ 25,883
       Accounts and notes receivable, net               38,407        43,959
       Inventory, net                                   15,382        17,378
       Other current assets                              9,216        11,339
         Total current assets                           86,383        98,559
     Property and equipment, net                       129,693       200,976
     Goodwill, net                                      16,247       117,218
     Other intangible assets, net                       32,467        50,766
     Investments in unconsolidated affiliates           69,664        66,822
     Other long-term assets                             67,891        14,378
         Total assets                                 $402,345      $548,719
 
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                               $ 11,616      $ 17,777
       Current portion of long-term debt                   686         1,524
       Other current liabilities                        45,732        32,035
         Total current liabilities                      58,034        51,336
     Long-term debt, net of current portion            429,734       222,770
     Minority interest in consolidated subsidiary        4,248         4,093
       Total liabilities and minority
        interest in consolidated subsidiary            492,016       278,199
     Stockholders' equity:
       Preferred stock, $.01 par value,
        1,000,000 shares authorized, 0 shares
        issued and outstanding at March 31, 2001
        and June 30, 2000                                   --            --
       Common stock, $.005 par value, 50,000,000
        shares authorized, 29,173,578 issued and
        14,792,892 outstanding at March 31, 2001,
        28,099,700 issued and 23,051,414
        outstanding at June 30, 2000                       146           140
       Treasury stock at cost, 14,380,686 shares
        at March 31, 2001 and 5,048,286
        shares at June 30, 2000                       (429,214)     (115,342)
       Additional paid-in capital                      154,086       124,359
       Deferred compensation                            (5,710)           --
       Retained earnings                               191,021       261,363
         Total stockholders' (deficit) equity          (89,671)      270,520
         Total liabilities and
          stockholders' (deficit) equity              $402,345      $548,719
 
     All share amounts have been adjusted to reflect the stock split that was
     distributed on November 15, 2000.
 
 

SOURCE Anchor Gaming
    LAS VEGAS, April 24 /PRNewswire/ -- Anchor Gaming (Nasdaq:   SLOT) (Company)
 today reported operating results for its third quarter ended March 31, 2001.
 All amounts included within this narrative for revenues and earnings before
 interest, taxes, depreciation (including Anchor Gaming's share of joint
 venture depreciation), amortization, one-time charges and stock-based
 compensation expense ("EBITDA") have been adjusted to exclude the Sunland Park
 operations that were sold in December 2000.  For the third quarter of fiscal
 2001 compared to the third quarter of fiscal 2000, revenues increased 11% to
 $123 million and EBITDA increased 12% to $49 million.  Diluted earnings per
 share before one-time charges increased 30% to $0.87.
 
     In addition to the quarterly results, Anchor Gaming announced:
 
     Gaming Machines
 
     --  The joint venture had a record quarter earning $35 million and grew
         its installed base to 15,400 units including more than 6,800
         traditional Wheel of Fortunes(R), 4,750 video Wheel of Fortunes(R),
         more than 1,300 I Dream of Jeannies(TM) and more than 1,800
         conversions.  Anchor Gaming's total installed base of proprietary
         games grew to more than 18,900 games at quarter end.
 
     --  The Company will discontinue sales of the VLC Casino product line as
         of September 30, 2001.
 
     Gaming Operations
 
     --  The Company acquired an additional interest in the development and
         management fees derived from the operation of the Pala Casino in
         San Diego, which opened on April 3.  In March, Anchor Gaming purchased
         for an undisclosed amount, an entity that had contractual rights to
         18% of the development and management fees derived from the operation
         of the Pala Casino. The Company now maintains a 68% interest in these
         Pala fees.
 
     --  The Company will dispose of its slot route operation in Montana.  The
         Company plans to close the sale of the Montana route operation no
         later than March 31, 2002.
 
     Gaming Systems
 
     --  In the third quarter of fiscal 2001, the Company commenced a
         restructuring plan focused on AWI, its on-line lottery subsidiary.
         The major components of the plan include the elimination of certain
         facilities and certain positions and the termination of certain
         contractual arrangements.  Management of the Company believes that all
         activities under the restructuring plan will be completed by the end
         of calendar 2001.
 
         During the third quarter of fiscal 2001, certain events occurred that
         caused the Company to conclude that the balances of certain assets
         would not be recoverable.  As a result of this determination and
         pursuant to the restructuring plan, the Company recorded one-time
         charges of $133 million, of which $124 million were non-cash charges.
         These charges primarily related to AWI and include a non-cash asset
         impairment charge of $120 million, which primarily comprised the
         write-down of goodwill that had been recorded through the acquisition
         of Powerhouse Technologies in June 1999, and also included the
         write-down of equipment and other intangible assets.  The Company also
         recorded a restructuring charge of $9 million in accordance with the
         restructuring plan.  Other one-time charges at AWI included $4 million
         for inventory write-downs and a provision for a contractual dispute.
 
         The Company estimates that the impairment charges and the
         restructuring plan will result in annualized cost reductions of at
         least $15 million.  Most of these savings are due to decreased
         depreciation and amortization.  The Company may incur additional
         one-time charges of less than $10 million related to AWI in the fourth
         quarter of fiscal 2001.
 
     Including the one-time charges, Anchor Gaming reported a loss per share of
 $6.41 for the quarter ended March 31, 2001.  For the third quarter of the
 previous year, revenues were $111 million, EBITDA was $44 million, and diluted
 earnings per share were $0.67.
     "Anchor Gaming had a good operating quarter. More importantly, the
 decisions made in this quarter will result in a much leaner organization,"
 said T.J. Matthews, CEO of Anchor Gaming.  "At Anchor Gaming we're focused on
 long-term growth initiatives and we remain optimistic about our ability to
 grow the Company's revenues, cash flows and earnings in each of our business
 segments."
     For the nine months ended March 31, 2001, compared to the nine months
 ended March 31, 2000, revenues increased 8% to $372 million, EBITDA increased
 19% to $151 million and diluted earnings per share before one-time charges
 increased 27% to $2.46.
     The one-time charges incurred in the first nine months of fiscal 2001
 include the second quarter charges in connection with the stock repurchase
 from the Fulton family, the cumulative effect of a change in accounting
 principle for the implementation of a new accounting standard on derivatives
 and the one-time charges discussed above.
     Including the one-time charges, Anchor Gaming reported a loss per share of
 $3.93 for the nine months ended March 31, 2001.  For the first nine months of
 the previous year, revenues were $345 million, EBITDA was $127 million and
 diluted earnings per share were $1.94.
     The Company's cash balance at March 31, 2001 was $23 million.  During the
 quarter, the Company repaid $8 million under its senior credit facility.  At
 March 31, 2001, the outstanding balance under the senior credit facility was
 $180 million and the Company had availability of $143 million under this
 facility.
     Due to the magnitude of the impairment charges and the restructuring, the
 Company believes that it is appropriate to provide guidance relative to the
 fourth quarter of fiscal 2001 and for fiscal 2002.  According to Matthews,
 "Given the changes in the systems business, the opening of the Pala Casino, as
 well as our additional stake in the Pala fees the Company estimates that it
 will achieve diluted EPS, before one-time charges, of at least $1.05 for Q4
 fiscal 2001 and at least $4.40 in fiscal 2002."
     A conference call to discuss Anchor Gaming's third quarter results will be
 held at 8 a.m. EDT (5 a.m. PDT) Wednesday, April 25.  The Company may use this
 conference call as a forum for public disclosure for important information
 about any aspect of its business, finances and prospects.  A live webcast of
 the conference call is available on the Anchor Gaming website at
 http://www.anchorgaming.com.  An audio replay of the broadcast and the text
 script will be available following its conclusion on the Anchor Gaming
 website.
 
     Anchor Gaming is a diversified technology company with operations around
 the world.  Anchor operates in three complementary business segments: gaming
 machines, gaming operations and gaming systems.  The gaming machine segment
 focuses on the development and placement of unique proprietary games.  The
 gaming operations segment operates a Native American casino in San Diego, two
 casinos in Colorado, and manages a gaming-machine route in Nevada.  The gaming
 systems segment provides equipment, and related services to on-line lotteries,
 video lotteries, and pari-mutuel organizations.  Anchor Gaming has equipment
 and systems in operation in the United States, Canada, Australia, Asia,
 Europe, South America, South Africa, and the West Indies.
 
     This press release contains certain forward-looking statements within the
 meaning of section 21e of the Securities Exchange Act of 1934, as amended and
 other applicable securities laws.  All statements other than statements of
 historical fact are "forward-looking statements" for purposes of these
 provisions.  Included in these provisions are any projections or estimates of
 earnings, revenues, or other financial items. Also, any statements of plans,
 strategies, and objectives of management for future operation; any statements
 concerning proposed new products, services, or developments; any statements
 regarding future economic conditions or performance; statements of belief; and
 any statement of assumptions underlying any of the foregoing.  Such forward-
 looking statements are subject to inherent risks and uncertainties, and actual
 results could differ materially from those anticipated by the forward-looking
 statements.  Although the Company believes that the expectations reflected in
 any of its forward-looking statements will prove to be correct, actual results
 could differ materially from those projected or assumed in the Company's
 forward-looking statements.  These risks and uncertainties include, but are
 not limited to: risks regarding the final amount of the one-time charges; the
 risk that we may not meet our projected financial results for the fourth
 quarter of fiscal 2001 or fiscal 2002; risks of proprietary games such as
 pressures from competitors, changes in economic conditions, obsolescence,
 declining popularity of existing games, failure of new game ideas or concepts
 to become popular, duplication by third parties and changes in interest rates
 as they relate to the wide area progressive machine operations within our
 joint venture with IGT; general changes in economic conditions; our ability to
 improve results of operations in our gaming systems segment; our ability to
 achieve the cost reductions associated with the restructuring; reduced lottery
 sales in lottery jurisdictions where AWI has lottery contracts; our ability to
 keep or renew existing lottery contracts; competition in Colorado that could
 adversely affect our Colorado casinos; our ability to generate sales of new
 video lottery central control systems and video lottery terminals; we are
 subject to adverse determination in pending litigation with Acres Gaming
 relative to our proprietary games' intellectual property; we are subject to
 adverse determination in pending litigation between GTECH Holdings and the
 Florida Lottery relative to our Florida lottery contract; we have obligations
 under agreements with the Pala Band of Mission Indians that subject us to
 joint venture risk, construction risk and sovereign immunity risk; risk that
 initial results from the Pala Casino cannot be sustained over the long-term
 and other factors described from time to time in the Company's reports filed
 with the Securities and Exchange Commission, including Anchor's Form 10-K for
 the year ended June 30, 2000 and Form 10-Qs for the quarters ended September
 30, 2000 and December 31, 2000.  These reports may be obtained free of charge
 at the website of the Securities and Exchange Commission at
 http://www.sec.gov.
 
 
                                   ANCHOR GAMING
 
                               SUMMARY OF OPERATIONS
                      (in thousands except per share amounts)
                                    (unaudited)
 
                                               Three months ended
                                                    March 31,
                                                                      Percent
                                               2001           2000     Change
 
     Revenues (excluding Sunland Park)       $122,853      $110,779       11%
     Total Revenues                           122,853       123,497       (1%)
     EBITDA (excluding Sunland Park)           49,009        43,887       12%
     Total EBITDA                              49,009        46,718        5%
     Diluted Earnings Per Share
      Before One-time Charges                 $  0.87       $  0.67       30%
     Diluted Earnings (Loss) Per Share        $ (6.41)      $  0.67      N/A
 
 
                                                Nine months ended
                                                    March 31,
                                                                      Percent
                                               2001           2000     Change
 
     Revenues (excluding Sunland Park)       $372,056      $344,823        8%
     Total Revenues                           390,953       377,746        4%
     EBITDA (excluding Sunland Park)          150,575       126,976       19%
     Total EBITDA                             154,549       134,297       15%
     Diluted Earnings Per Share
      Before One-time Charges                 $  2.46       $  1.94       27%
     Diluted Earnings (Loss) Per Share        $ (3.93)      $  1.94      N/A
 
 
 
     ANCHOR GAMING
     CONSOLIDATED STATEMENTS OF OPERATIONS
     (Unaudited)                            Three months ended March 31,
     (in thousands except                 2001         2001           2000
      per share amounts)               (Actual)   (Adjusted)(a)   (Actual)(b)
 
     Revenues:
       Gaming machines                $ 45,184      $ 45,184       $ 36,226
       Gaming operations                34,846        34,846         46,823
       Gaming systems                   42,823        42,823         40,448
         Total revenues                122,853       122,853        123,497
     Costs of revenues:
       Gaming machines                   6,579         6,579          5,632
       Gaming operations                22,926        22,926         31,529
       Gaming systems (a)               34,439        30,196         22,348
         Total costs of revenues        63,944        59,701         59,509
     Gross margin                       58,909        63,152         63,988
     Other costs:
       Selling, general and
        administrative                  15,365        15,365         16,294
       Research and development          3,157         3,157          4,125
       Depreciation and amortization    12,900        12,900         12,829
       Impairment, restructuring
        and other (a)                  128,452            --             --
         Total other costs             159,874        31,422         33,248
     Income (loss) from operations    (100,965)       31,730         30,740
     Other income (expense):
       Interest income                     579           579            521
       Interest expense                (10,316)      (10,316)        (4,348)
       Other income                         23            23             53
       Minority interest in earnings
        of consolidated subsidiary        (168)         (168)          (111)
         Total other income (expense)   (9,882)       (9,882)        (3,885)
     Income (loss) before provision
      (benefit) for income taxes      (110,847)       21,848         26,855
     Income tax provision (benefit)    (16,820)        8,630         10,842
     Net income (loss)                $(94,027)     $ 13,218       $ 16,013
 
     Diluted earnings (loss)
      per share                       $  (6.41)     $   0.87       $   0.67
     Weighted average common and
      common equivalent
      shares outstanding (c)            14,670        15,237         24,076
 
 
     (a) Results have been adjusted to exclude one-time charges.  One-time
         charges include impairment, restructuring and other charges as
         detailed above on the statement of operations.  In addition, one-time
         charges include charges at AWI of $4.2 million for inventory
         write-downs and a contractual dispute (included within Gaming
         Systems -- costs of revenues.)
     (b) Prior year amounts have been reclassed to conform to the current
         year presentation.
     (c) All share amounts have been adjusted to reflect the stock split
         that was distributed on November 15, 2000.
 
 
     ANCHOR GAMING                                    March 31,     June 30,
     CONSOLIDATED BALANCE SHEETS (Unaudited)             2001         2000
     (in thousands except share amounts)
 
                            ASSETS
     Current assets:
       Cash and cash equivalents                      $ 23,378      $ 25,883
       Accounts and notes receivable, net               38,407        43,959
       Inventory, net                                   15,382        17,378
       Other current assets                              9,216        11,339
         Total current assets                           86,383        98,559
     Property and equipment, net                       129,693       200,976
     Goodwill, net                                      16,247       117,218
     Other intangible assets, net                       32,467        50,766
     Investments in unconsolidated affiliates           69,664        66,822
     Other long-term assets                             67,891        14,378
         Total assets                                 $402,345      $548,719
 
 
              LIABILITIES AND STOCKHOLDERS' EQUITY
     Current liabilities:
       Accounts payable                               $ 11,616      $ 17,777
       Current portion of long-term debt                   686         1,524
       Other current liabilities                        45,732        32,035
         Total current liabilities                      58,034        51,336
     Long-term debt, net of current portion            429,734       222,770
     Minority interest in consolidated subsidiary        4,248         4,093
       Total liabilities and minority
        interest in consolidated subsidiary            492,016       278,199
     Stockholders' equity:
       Preferred stock, $.01 par value,
        1,000,000 shares authorized, 0 shares
        issued and outstanding at March 31, 2001
        and June 30, 2000                                   --            --
       Common stock, $.005 par value, 50,000,000
        shares authorized, 29,173,578 issued and
        14,792,892 outstanding at March 31, 2001,
        28,099,700 issued and 23,051,414
        outstanding at June 30, 2000                       146           140
       Treasury stock at cost, 14,380,686 shares
        at March 31, 2001 and 5,048,286
        shares at June 30, 2000                       (429,214)     (115,342)
       Additional paid-in capital                      154,086       124,359
       Deferred compensation                            (5,710)           --
       Retained earnings                               191,021       261,363
         Total stockholders' (deficit) equity          (89,671)      270,520
         Total liabilities and
          stockholders' (deficit) equity              $402,345      $548,719
 
     All share amounts have been adjusted to reflect the stock split that was
     distributed on November 15, 2000.
 
 SOURCE  Anchor Gaming