8-K

United States

Securities and Exchange Commission

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  March 12, 2009

SHUFFLE MASTER, INC.

(Exact name of registrant as specified in its charter)

Minnesota (State or Other Jurisdiction of Incorporation or Organization)	0-20820 (Commission File Number)		41-1448495 (IRS Employer Identification No.)
1106 Palms Airport Drive Las Vegas, Nevada (Address of Principal Executive Offices)		89119-3720 (Zip Code)
Registrant’s telephone number, including area code: (702) 897-7150

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition. 

On March 12, 2009, Shuffle Master, Inc. (NASDAQ National Market: SHFL) (either the “Company,” “we” or “our”) issued a press release announcing its financial results for its first quarter ended January 31, 2009.  The full text of the press release is furnished as Exhibit 99.1 to this report.  Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934.

Item 8.01 Other Events

On March 12, 2009, the Company held a conference call announcing its financial results for its first quarter ended January 31, 2009.  The full text of the earnings conference call transcript is furnished as Exhibit 99.2 to this report.  Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1   Press release dated March 12, 2009, regarding the Company’s financial results for its first quarter ended January 31, 2009.

99.2   Earnings conference call transcript dated March 12, 2009, regarding the Company’s financial results for its first quarter ended January 31, 2009.

1

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SHUFFLE MASTER, INC.

(Registrant)

Date:  March 18, 2009

/s/ TIMOTHY J. PARROTT

Timothy J. Parrott

Chief Executive Officer

2

EX-99.1

EXHIBIT 99.1

SHUFFLE MASTER, INC. 1106 Palms Airport Dr. Las Vegas, NV 89119 www.shufflemaster.com
News Release
FOR FURTHER INFORMATION CONTACT: Julia Boguslawski Investor Relations ph:           (702) 897-7150 fax:           (702) 270-5161	Mark L. Yoseloff, Ph.D., CEO Coreen Sawdon, CAO & Acting CFO               ph:                                (702) 897-7150              fax:                                (702) 270-5161

Shuffle Master, Inc. Reports First Quarter 2009 Results

LAS VEGAS, Nevada, Thursday, March 12, 2009 - Shuffle Master, Inc. (NASDAQ Global Select Market:  SHFL) today announced its results for the first quarter ended January 31, 2009.

Mark L. Yoseloff, Ph.D., Chief Executive Officer commented, “Shuffle Master continues to execute well in a tough market.  Despite the dramatic economic downturn over the last year, Shuffle Master’s revenue of $34.5 million was up in most subsidiaries on a local currency basis, although down in U.S. dollars.  Total lease and service revenue of $20.3 million hit yet another record which is testament to the continuing demand for our products and the acceptance of our lease-oriented strategy.  Historically, Q1 is our softest quarter due to a combination of factors; namely, the slow down in Australia due to the month-long summer shutdown of business, three major holidays falling within our fiscal quarter, and the limited capital available to our customers for equipment purchases as they reach the end of their budget year.”  Yoseloff added, “There were a number of positive data points, both financially and operationally, in the quarter including gross margin improvement, double-digit operating expense reduction, growing demand for our suite of e-Table products and the approval of Three Card Poker in Macau.  Finally, and of significant importance, during our first quarter we successfully concluded our almost two year search for our new CEO, with the hiring of Tim Parrott, a highly capable and seasoned gaming executive.”

1

First Quarter Financial Summary

u   Revenue decreased by 9% to $34.5 million from the prior year period.

o   Revenue was impacted by the weakening Australian dollar and the Euro, which collectively comprise approximately 25% of total revenue.  When adjusted for local currencies, total revenue was down just 3%.

o   Lease and service revenue was a Company record, up 8% year-over-year and totaling $20.3 million, or 59% of revenue.

u   Diluted earnings per share ("EPS") totaled ($0.02) as compared to ($0.05) for the prior year period. Factors that impacted EPS include:

o   Non-recurring severance charges of ($0.03) related to the departure of two senior executives.

u   Gross margin improved year-over-year from 58% to 60%.

u   Adjusted EBITDA¹ totaled $9.1 million, up 53% from $6.0 million in the comparable year-ago quarter.

u   Operating expenses, adjusted for nonrecurring severance charges, decreased year-over-year by 24% to $17.0 million.

o   Selling, General and Administrative (“SG&A”) expense, adjusted for nonrecurring severance charges, decreased by $4.6 million, and as a percentage of revenue, from the prior year period.

u   Net debt (total debt, less cash and cash equivalents) totaled $112.1 million compared to $119.8 million as of October 31, 2008. The Company’s debt compliance calls for a maximum allowable leverage ratio of 4.25 times EBITDA (as defined); currently leverage stands at 2.1 times EBITDA (as defined).

“We are committed to maintaining a strong balance sheet in these uncertain economic times,” said Coreen Sawdon, CAO and Acting CFO.  “Excellent free cash flow allowed for continued debt reduction even in our softest quarter.  Looking forward, we remain focused on paying down debt and aggressively managing expenses to maintain our strong financial position and build shareholder value.”

First Quarter Operating Highlights

u  Total lease and service revenue records in Utility and Electronic Table Systems (“ETS”).

u   Proprietary Table Games (“PTG”) gross margin increased 5% year-over-year to 83%.

u   Electronic Gaming Machines (“EGM”) gross margin increased 14% year-over-year to 48%.

u   Three Card Poker® received approval in Macau and is currently installed in several notable properties.

u   Table Master™ installed base grew 24% from the prior year period to a total of 2,035 seats.

u   Year-over-year increases in the average lease price of all product segments excluding EGM, which are generally sold.

u   Year-over-year increases in the average sales price of Utility products.

2

Comparative information for each of the Company’s four segments – Utility, Proprietary Table Games, Electronic Table Systems and Electronic Gaming Machines – is provided below.

Utility

The Utility segment continued to show excellent progress as total lease and service revenue reached a Company record of $9.2 million which was predominantly due to increased placements and increased average lease prices over the prior year period.  Revenue from the Utility segment totaled $15.8 million in the first quarter 2009, a decrease of 10% due to softer sales volume which is in line with the Company’s ongoing strategy of emphasizing leasing.  The installed base of leased shufflers was 5,442 units, up 6% from the prior year.  The increase was predominantly attributable to increased leased units of the Company’s i-Deal™, MD2® and DeckMate® shufflers. The total shuffler installed base reached a record high of 28,452 units.

Proprietary Table Games

The PTG segment includes revenue from the license and sale of the Company’s intellectual property protected titles including premium games, side bets and progressive add-ons.  During the first quarter 2009, revenue from PTG increased 6% to $9.7 million versus $9.2 million in the prior year period. The year-over-year revenue increase and a 5% gross margin increase were primarily due to an increase in royalty and lease revenue, as well as increased net revenues from the Company’s Three Card Poker World Championship tournament.  Sales revenue was down, by design, and offset by royalty, lease and service revenue of $8.5 million, up 4% year-over-year.  This increase was related to growth in the Company’s specialty table games; specifically, Ultimate Texas Hold’em® and Dragon Bonus®, as well as a 5% increase in the average monthly lease price.  Also contributing to the increase in royalty, lease and service revenue was significant growth in add-on wagers to existing tables, such as Fortune Pai Gow Poker Progressive™.  Table game bonusing add-ons were up by 207 net units from the prior year period.  Total installations of table games grew by 146 units from the prior year period.  The total installed base of table games was 5,594 units of which 71% were leased units.

Electronic Table Systems

The ETS segment includes Table Master™, Rapid Table Games® products, Vegas Star® products, Lightning Poker® and wireless gaming.  E-Tables are one of the fastest growing single product categories in gaming and the Company’s status as a market leader in North America positions it well for success in both the near and long term.  ETS lease and service revenue was a record $2.6 million, up 16% from the prior year period, as the result of a 12% increase of seats on lease, the majority of which were Table Master.  These Table Master seats were primarily leased units of the Company’s Royal Match 21™, Three Card Poker® and Ultimate Texas Hold’em® proprietary games.  Total revenue for the first quarter 2009 decreased 28% from the prior year period to $4.0 million as a result of decreased sales activity and offset by increased lease activity, which is in line with the Company’s ongoing strategic initiative.  Because e-Tables have a very high sales price, the quarterly impact on revenue is significant when a unit is sold as compared to leased.  The total installed base of 7,315 seats reflects an increase of 13% from the prior year period.

Electronic Gaming Machines

The EGM segment represents the slot machine business which exclusively caters to the Australasian market.  For the first quarter 2009, EGM revenue was $5.1 million, down 10% year-over-year; however, adjusted for the weakened Australian dollar, revenue was up 23% in local currency.  The increase in sales revenue, on a local currency basis, compared to the same prior year period is primarily attributable to a 21% increase in the number of seats sold due to the success of the Company’s popular titles.  The disparity between EGM revenue from the prior sequential quarter as compared to revenue for the first quarter has always related to the seasonality of the Company’s business and the extended holiday season in Australia.  As a result of the Company’s effort to reduce manufacturing costs across all product lines, EGM gross margin improved 14% year-over-year to 48%.  The total installed base of EGM seats is 21,653, a year-over-year increase of 2,384 seats.

3

Operating Expenses

As a result of the Company’s ongoing emphasis on cost reduction, operating expenses for the first quarter 2009 totaled $17.0 million, down 24% year-over-year, net of nonrecurring $2.4 million severance charges for cash and share-based compensation acceleration related to the departure of two senior executives at the Company’s corporate office.  Net of the severance charges, SG&A expense decreased by approximately $4.6 million from the prior year period; approximately $2.0 million of this decrease is a result of reductions in wages, consulting fees and travel and entertainment expenses.  The Company expects to see the same level of savings in future quarters.  Legal expenses, a component of SG&A, decreased 51% over the prior year period as a result of lower legal expenses incurred on pending cases as well as the settlement of previous cases.  Professional fees decreased 71% over the prior year period.  Legal expenses and professional fees have their own level of volatility and may fluctuate period to period.  Decreases in expenses at the Company’s foreign subsidiaries due to the strengthening of the U.S. dollar, in addition to reduced advertising and promotional spending, contributed to roughly $1.0 million in cost reductions over the prior year period.

Research and Development (“R&D”) expenses totaled $3.7 million, or 11% of revenue, and decreased by 19% from the prior year period, not as a result of any slowdown in the innovation of products; rather, as a result of increased efficiencies and net decreases at the Company’s foreign subsidiaries due to the strengthening of the U.S. dollar. The prior year period also included significant costs for product development in advance of the 2007 Global Gaming Expo.

Other Income (Expense) and Gain on Early Extinguishment of Debt

Other expense includes interest expense on the senior secured credit facility, which includes the term loan and revolving credit facility, and convertible notes as well as gains or losses on foreign currency fluctuations.  Other expense for the first quarter 2009 totaled $2.5 million compared to $1.6 million in the prior year period. Interest expense of $1.9 million for the current quarter primarily relates to interest on the senior secured credit facility and convertible notes as well as amortization of debt issuance costs. Other expense for the first quarter 2009 also includes net foreign currency losses of $0.9 million, compared to net gains of $0.3 million in the comparable year-ago quarter, due to fluctuations of the U.S. dollar as compared to the Australian dollar and the Euro.

The Company also recognized a gain on the early extinguishment of debt related to the convertible notes in the first quarter of 2009.  The Company did not extinguish any portion of its convertible notes in the prior year period.

Balance Sheet, Cash Flows & Capital Deployment

Cash and cash equivalents totaled $8.4 million for the first quarter 2009 as compared to $5.4 million as of October 31, 2008.  Total debt was reduced by nearly $5.0 million from October 31, 2008 to $120.5 million.  Operating cash flow for the quarter was $8.0 million as compared to $10.2 million in the prior year period.  The decline in operating cash flow was the result of increased cash used for inventory of $3.1 million due to the backlog of orders for e-Tables as a result of the growing demand for ETS products and other working capital items.  Capital expenditures were $1.1 million compared to $4.8 million in the first quarter of 2008.  It is expected that capital expenditures may grow as the Company increases its leased asset base of more capital intensive products such as those in the ETS segment.

At the end of the first quarter 2009, the Company had approximately $78.0 million available under the revolving credit facility, a component of the senior secured credit facility, which will be used as needed for working capital, capital expenditures, general corporate purposes and the satisfaction of the remaining convertible notes.  The Company expects to satisfy the remaining outstanding convertible notes on April 15, 2009 through cash on hand and borrowings under its revolving credit facility.  The Company’s debt compliance requires that its total leverage ratio not exceed 4.25 times EBITDA (as defined); currently, the Company is at 2.1 times EBITDA (as defined).

4

Yoseloff concluded, “Our first quarter, always our weakest, was generally in line with our internal expectations.  Looking forward, the overall outlook for the balance of the year is by and large favorable, given the continued growth in our traditional core products, combined with the growing demand for our e-Table products.  Our steady performance, solid balance sheet and the successful execution of our stated strategic initiatives have proven that we have been able to weather the economic storm, which we expect to continue to do despite future uncertainty.  Our suite of innovative and relevant products is essential to operators - now, more than ever - and as I officially hand the reins to the new CEO Tim Parrott next week, I feel more confident in the long-term growth and sustainability of this company than I did walking through the doors of Shuffle Master nearly 15 years ago."

Further detail and analysis of the Company’s financial results for the first quarter ended January 31, 2009, will be included in its Form 10-Q, which has been filed with the Securities and Exchange Commission today, March 12, 2009.  Further detail and analysis of the Company’s financial results for the year ended October 31, 2008, is included in its Form 10-K, which has been filed with the Securities and Exchange Commission.

5

Webcast & Conference Call Information

Company executives will provide additional perspective on the Company’s first quarter earnings results during a conference call on March 12, 2009 at 2 pm Pacific Time.  Those interested in participating in the call may do so by dialing (201) 689-8263 or toll-free (877) 407-0792 and requesting Shuffle Master’s First Quarter 2009 Conference Call.  A hardcopy of the presentation materials may be printed from the Shuffle Master, Inc. website, www.shufflemaster.com, shortly before the start of the call.  In conjunction with the call, a live audio webcast may be accessed at www.shufflemaster.com.  In order to access the live audio webcast please allow at least 15 minutes before the start of the call to visit Shuffle Master’s website and download/install any necessary audio/video software for the webcast.  Immediately following the call and through April 12, 2009, a playback can be heard 24-hours a day by dialing (201) 612-7415 or toll-free (877) 660-6853; account number is 3055; conference I.D. number is 315765.

About Shuffle Master, Inc.

Shuffle Master, Inc. is a gaming supply company specializing in providing its casino customers with improved profitability, productivity and security, as well as popular and cutting-edge gaming entertainment content, through value-add products in four distinct categories: Utility products which includes automatic card shuffler, roulette chip sorters and intelligent table system modules, Proprietary Table Games which include live table game tournaments, Electronic Table Systems which include various e-Table game platforms and Electronic Gaming Machines which include traditional video slot machines for select markets and wireless gaming solutions. The Company is included in the S&P Smallcap 600 Index.  Information about the Company and its products can be found on the Internet at www.shufflemaster.com.

###

Forward Looking Statements

This release contains forward-looking statements that are based on management’s current beliefs and expectations about future events, as well as on assumptions made by and information available to management. The Company considers such statements to be made under the safe harbor created by the federal securities laws to which it is subject, and assumes no obligation to update or supplement such statements. Forward-looking statements reflect and are subject to risks and uncertainties that could cause actual results to differ materially from expectations. Risk factors that could cause actual results to differ materially from expectations include, but are not limited to, the following: the Company may be unable to repurchase its contingent convertible senior notes; its intellectual property or products may be infringed, misappropriated, invalid, or unenforceable, or subject to claims of infringement, invalidity or unenforceability, or insufficient to cover competitors' products; the gaming industry is highly regulated and the Company must adhere to various regulations and maintain its licenses to continue its operations; the transition to a new chief executive officer, and the search for and the transition to a new chief financial officer, could be disruptive to the Company’s business or simply unsuccessful; the Company’s ability to implement its ongoing six-point strategic plan successfully is subject to many factors, some of which are beyond the Company’s control; litigation may subject the Company to significant legal expenses, damages and liability; the Company’s products currently in development may not achieve commercial success; the Company competes in a single industry, and its business would suffer if its products become obsolete or demand for them decreases; any disruption in the Company’s manufacturing processes or significant increases in manufacturing costs could adversely affect its business; the Company’s gaming operations, particularly its Utility, Proprietary Table Games, Electronic Table Systems and Electronic Gaming Machines, may experience losses due to technical difficulties or fraudulent activities; the Company operates in a very competitive business environment; the Company is dependent on the success of its customers and is subject to industry fluctuations; risks that impact the Company’s customers may impact the Company; certain market risks may affect the Company’s business, results of operations and prospects; a continued downturn in general worldwide economic conditions or in the gaming industry or a reduction in demand for gaming may adversely affect the Company’s results of operations; the Company’s domestic and global growth and ability to access capital markets are subject to a number of economic risks; economic, political, legal and other risks associated with the Company’s international sales and operations could adversely affect its operating results; changes in gaming regulations or laws; the Company is exposed to foreign currency risk; the Company could face considerable business and financial risk in implementing acquisitions; if the Company’s products contain defects, its reputation could be harmed and its results of operations adversely affected; the Company may be unable to adequately comply with public reporting requirements; the Company’s continued compliance with its financial covenants in its senior secured credit facility is subject to many factors, some of which are beyond the Company’s control; the restrictive covenants in the agreement governing the Company’s senior secured credit facility may limit its ability to finance future operations or capital needs or engage in other business activities that may be in its interest; the Company’s available cash and access to additional capital may be limited by its leverage; and the Company’s business is subject to quarterly fluctuation. Additional information on these and other risk factors that could potentially affect the Company’s financial results may be found in documents filed by the Company with the Securities and Exchange Commission, including the Company’s current reports on Form 8-K, quarterly reports on Form 10-Q and its latest annual report on Form 10-K.

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6

SHUFFLE MASTER, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

	Three Months Ended
	January 31,
	2009			2008
Revenue:
Product leases and royalties	$	18,356		$	17,019
Product sales and service		16,110			20,834
Other		23			44
Total revenue		34,489			37,897
Costs and expenses:
Cost of leases and royalties		5,839			5,469
Cost of sales and service		8,089			10,582
Gross profit		20,561			21,846
Selling, general and administrative		15,651			18,375
Research and development		3,740			4,589
Total costs and expenses		33,319			39,015
Income (loss) from operations		1,170			(1,118	)
Other income (expense):
Interest income		234			362
Interest expense		(1,872	)		(2,351	)
Other, net		(849	)		353
Total other income (expense)		(2,487	)		(1,636	)
Gain on early extinguishment of debt		163			—
Loss from operations before tax		(1,154	)		(2,754	)
Income tax benefit		(181	)		(951	)
Net loss	$	(973	)	$	(1,803	)
Basic and diluted loss per share:
	$	(0.02	)	$	(0.05	)
Weighted average shares outstanding:
Basic		53,058			34,717
Diluted		53,058			34,717

7

SHUFFLE MASTER, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands except share amounts)

	January 31,			October 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents	$	8,365		$	5,374
Accounts receivable, net of allowance for bad debts of $567 and $584		20,169			28,915
Investment in sales-type leases and notes receivable, net of allowance		4,309			5,655
for bad debts of $195 and $202
Inventories		24,865			22,753
Prepaid income taxes		5,952			7,459
Deferred income taxes		5,312			5,318
Other current assets		6,019			4,925
Total current assets		74,991			80,399
Investment in sales-type leases and notes receivable, net of current portion		1,426			1,961
Products leased and held for lease, net		19,880			21,054
Property and equipment, net		8,841			9,143
Intangible assets, net		62,053			66,153
Goodwill		60,077			60,929
Deferred income taxes		9,339			10,013
Other assets		11,921			12,294
Total assets	$	248,528		$	261,946
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,016		$	10,645
Accrued liabilities		8,913			13,269
Customer deposits		2,396			2,211
Deferred revenue		4,967			4,610
Current portion of long-term debt and other current liabilities		32,844			41,925
Total current liabilities		54,136			72,660
Long-term debt, net of current portion		88,579			83,396
Other long-term liabilities		4,210			2,659
Deferred income taxes		239			373
Total liabilities		147,164			159,088
Commitments and Contingencies
Shareholders' equity:
Common stock, $0.01 par value; 151,368 shares authorized; 53,644 and
53,535 shares issued and outstanding		536			535
Additional paid-in capital		85,483			83,710
Retained earnings		25,850			26,823
Accumulated other comprehensive loss		(10,505	)		(8,210	)
Total shareholders' equity		101,364			102,858
Total liabilities and shareholders' equity	$	248,528		$	261,946

8

SHUFFLE MASTER, INC.

SUPPLEMENTAL DATA

(Unaudited, in thousands)

FINANCIAL DATA
	Three Months Ended
	January 31,
	2009			2008
Cash Flow Data:
Cash provided by operating activities	$	8,026		$	10,152
Cash used by investing activities	$	(438	)	$	(4,929	)
Cash (used) provided by financing activities	$	(4,550	)	$	945
Reconciliation of  net loss to Adjusted EBITDA
Net loss	$	(973	)	$	(1,803	)
Other expense		2,487			1,636
Share-based compensation		2,211			1,392
Gain on early extinguishment of debt		(163	)		—
Benefit for income taxes		(181	)		(951	)
Depreciation and amortization		5,715			5,689
Adjusted EBITDA (1)	$	9,096		$	5,963

1.   Adjusted EBITDA is earnings before other expense, provision for income taxes, depreciation and amortization, share-based compensation and the gain on early extinguishment of debt.  Adjusted EBITDA is presented exclusively as a supplemental disclosure because management believes that it is a useful performance measure and is widely used to measure performance, and as a basis for valuation, within the Company’s industry. Adjusted EBITDA is not calculated in the same manner by all companies and, accordingly, may not be an appropriate measure for comparison.  Management uses Adjusted EBITDA as a measure of the operating performance of its segments and to compare the operating performance of its segments with those of its competitors.  The Company also presents Adjusted EBITDA because it is used by some investors as a way to measure a company’s ability to incur and service debt, make capital expenditures and meet working capital requirements.  Gaming equipment suppliers have historically reported Adjusted EBITDA as a supplement to financial measures in accordance with U.S. generally accepted accounting principles (“GAAP”).  Adjusted EBITDA should not be considered as an alternative to operating income as an indicator of the Company’s performance, as an alternate to cash flows from operating activities as a measure of liquidity, or as an alternative to any other measure determined in accordance with GAAP.  Unlike net income, Adjusted EBITDA does not include depreciation and amortization or interest expense and therefore does not reflect current or future capital expenditures or the cost of capital.  The Company compensates for these limitations by using Adjusted EBITDA as only one of several comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.  Such GAAP measurements include operating income, net income, cash flows from operations and cash flow data.  The Company has significant uses of cash flows, including capital expenditures, interest payments, debt principal repayments, taxes and other non-recurring charges, which are not reflected in Adjusted EBITDA.

9

SHUFFLE MASTER, INC.

SUPPLEMENTAL DATA

(Unaudited)

PRODUCT SEGMENT - UNIT DATA
	Three Months Ended
	January 31,
	2009			2008
Shufflers installed base (end of period)
Lease units		5,442			5,157
Sold units, inception-to-date:
Beginning of period		22,762			20,396
Sold during period		328			498
Less trade-ins and exchanges		(80	)		(191	)
End of period		23,010			20,703
Total installed base (1)		28,452			25,860
Proprietary Table Games installed base (end of period)
Royalty units		3,985			3,988
Sold units, inception-to-date
Beginning of period		1,591			1,437
Sold during period		18			23
End of period		1,609			1,460
Total installed base (1)		5,594			5,448
Electronic Table Systems installed base (end of period)
Lease seats		1,478			1,323
Sold seats, inception-to-date
Beginning of period		5,780			5,040
Sold during period		57			114
End of period		5,837			5,154
Total installed base (1)		7,315			6,477
Electronic Gaming Machines installed base (end of period)
Lease seats		—			2
Sold seats, inception-to-date:
Beginning of period		21,321			18,993
Sold during period		332			274
End of period		21,653			19,267
Total installed base (1)		21,653			19,269

(1) Installed Base is the sum of product units/seats under lease or license agreements and inception-to-date sold units/seats. Management believes that installed units/seats are an important gauge of segment performance because it measures historical market placements of leased and sold units/seats and it provides insight into potential markets for service and next generation products. Some sold units/seats may no longer be in use by the Company's casino customers or may have been replaced by other models. Accordingly, the Company does not know precisely the number of units/seats currently in use.

10

EX-99.2

EXHIBIT 99.2

Event ID:   2103149

Culture:   en-US

Event Name: Q1 2009 Shuffle Master, Inc. Earnings Conference Call

Event Date: 2009-03-12T21:00:00 UTC

C: Julia Boguslawski; Shuffle Master, Inc.; Director of IR

C: Mark Yoseloff; Shuffle Master, Inc.; CEO

C: Coreen Sawdon; Shuffle Master, Inc.; SVP, CAO & Acting CFO

C: Timothy Parrott; Shuffle Master, Inc.; CEO Elect

P: Carlo Santorelli; JPMorgan; Analyst

P: Ryan Worst; Brean Murray Carret; Analyst

+++ presentation

Operator: Welcome to the Shuffle Master first quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Julia Boguslawski, Director of Investor Relations for Shuffle Master. Thank you, Ms. Boguslawski, you may begin.

Julia Boguslawski: Good afternoon, and thank you for joining us today for our first quarter 2009 earnings call. I am Julia Boguslawski, Director of Investor Relations for Shuffle Master.

With me today are Mark Yoseloff, CEO of Shuffle Master; Coreen Sawdon, Senior Vice President, CAO and Acting CFO; Jerry Smith, Executive Vice President and General Counsel; and Timothy Parrott, CEO Elect. Today's conference call is being simultaneously webcast through our website, www.ShuffleMaster.com, and will also be archived for the next 30 days.

Before we get started, I would like to remind you that various remarks we make about future expectations, plans and prospects for the Company constitute forward-looking statements for purposes

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of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from these expectations. We will also be discussing certain financial measures such as adjusted EBITDA, which represents a non-GAAP financial measure. The importance of this measure to investors, as well as reconciliation to the most directly comparable GAAP measures can be found in our most recent 10-Q, which was filed earlier today, as well as in our prior public filings, including our 10-K, and today's press release announcing our first quarter 2009 results.

Now I will turn the call over to our CEO, Mark Yoseloff.

Mark Yoseloff: Thank you, Julia, and good afternoon to everyone.

After a 15-year association with Shuffle Master, today is my last conference call as CEO. Before discussing our first quarter results, I would like to take a few minutes to reflect on our progress during this period.

In 1994, Shuffle Master had only three products, and total revenue of $2.5 million dollars. By the time that I joined as a full-time employee in 1997, revenue had grown to just under $30 million, and in that year we set a business and product strategy that has now seen the Company grow to almost $200 million in revenue, built on numerous innovative products in four major product segments. Yet with all of this growth and success behind us, I believe that the best is yet to come for our Company.

Despite the economic downturn that is now existed for many months, the Company continues to post good results, with a growing lease and service revenue base. Acceptance and demand for our products is at an all-time high, with our core utility and proprietary table game businesses demonstrating remarkable resilience, and our newer electronic table business enjoying excellent growth. Finally, with the recent management restructuring, which has seen several long-term senior executives move to important top management positions, and culminating with the hiring of Tim Parrott as our new CEO, I believe that we have a topnotch team in place to move Shuffle Master to new heights.

As the largest individual shareholder of the Company, I am certainly as concerned as all of you with the dramatic drop in our share price. As recently as this past summer I added to my Shuffle Master holdings, because of my fundamental belief in the long-term positive prospects for the Company. Those beliefs remain strong as I see our Company weather the current economic storm. Recently, the gaming industry has seen upticks in regional gaming revenue. Although tourism, hotel room rates and other metrics are

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down, gambling itself appears to be pretty healthy, and we are solely in the gambling supply business. In fact, we are in product categories that are growing worldwide. The table game business, including e-tables, is the most rapidly-growing part of the casino business, and this is where we concentrate.

Now let me briefly recap our first quarter. Revenue for the quarter was $34.5 million dollars. On a local currency basis, revenue was up in most of our subsidiaries, although down 9% year-over-year in US dollars. When adjusted for local currency, revenue was down just 3% from the prior year period. Total revenue was positively impacted by increased lease and service revenue, which was a record $20.3 million, and helped to mitigate a decline in sales revenue.

As you recall on our fourth quarter year end call, we advised that historically Q1 is our softest quarter. This is due to combination of factors; namely, the slow down in Australia due to the month long summer shutdown of business, three major holidays falling within our fiscal quarter, and the limited capital available to our customers for equipment purchases as they reach the end of their budget cycles. Notwithstanding these factors, our results demonstrate our commitment to improving the bottom line, as evidenced by the 53% increase in adjusted EBITDA to $9.1 million from the prior year period. We achieved this by disciplined expense management and cost containment measures that resulted in a 24% decrease in operating expenses, net of severance charges.

There were some very positive trends during the quarter. Table Master continues to secure its spot as the work horse of our e-tables, appealing to racino, regional and strip operators alike, because of its cost saving features and impressive win per day, in addition to its popularity with customers. This is because Table Master, like all of our e-tables, is a preferred playing format in an electronics-only environment. There are currently over 400 Table Master systems in operation, including 17 on or surrounding the Las Vegas Strip, with pending orders from several renowned properties. To date, Table Master, which was part of a $1.7 million acquisition in 2003, has generated $30 million in revenue.

Three Card Poker was approved in Macau this quarter, and we are hopeful that the game will do well and grow in popularity. We started with three tables and now have orders for ten more, all from big name operators, due to the fact that the game is exceeding pit averages. In fact, the first install of Three Card Poker, or Fortune Three Card, as it's called in Macau, is earning $3000 per day.

Before turning to call over the Corie, I would like to highlight several of the value propositions that set us apart from the other companies in our space. First, we provide utility products that are essential to operating an efficient and secure pit, as well as increasing operator revenue. Shufflers have been long

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known to save our customers money and reduce operating expenses, while maximizing hands per hour and therefore revenue per hour. Additionally, the enhanced security features ensure operators keep every dollar by minimizing dealer error and preventing theft and cheating.

In addition to utility products, we provide entertainment. Even in the current economy people appear to be gambling again, as evidence by the recent increases in regional gaming revenue. In short, it seems people want to be entertained again, and we provide that, whether via our proprietary tables or electronic formats. Our proprietary titles and progressive add-ons are fun, interactive, and offer additional volatility, adding to the "win big" mentality which really resonates in a recession. Because we have the unique combination of both utility and entertainment product, we are generally faring well during the downturn, but poised to succeed when the market rebounds.

Second, we have been a first mover for e-tables in North America, and as demonstrated above, we are seeing e-tables expand their reach outside racinos and sporting clubs. As Corie will highlight later, our proprietary titles give us an unmatched competitive advantage. We've seen the recent proliferation of e-tables due in large part to the growth of electronic-only jurisdictions. We anticipate further expansions as states look to increase tax revenue, and we are positioned to capitalize on the many prospective opportunities.

Third, we believe there is a misconception on Wall Street that gaming is all but left for dead. While there is no denying that the industry has been hard hit, and that non-gaming revenue for gaming operators is down, gambling has not been as impacted as non-gaming revenue. In fact, it appears that the regional casinos are on an upswing in the beginning of this year. Gaming revenue for 2008 was down roughly $1.5 billion year-over-year or 4%, in the combination of US commercial casinos and Tribal Florida and Connecticut, and was up 31% or approximately $3.2 billion in Macau. People are still gambling, and they're doing it everywhere. Fortunately, we are a global company with a diverse revenue stream, and not dependent one region or one market for sustainability.

Looking out three years at the worldwide opportunity, there is great expansion happening in Asia, particularly Singapore, the Philippines, Vietnam, and farther down the road Taiwan, South Korea and possibly Japan. Even those projects with delayed openings in Macau will open in the future. South America continues to be a growing and fertile region for gaming. There's already a nice market for some of our second-generation product. India is often overlooked, but is a growing market, specifically in the region of Goa.

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The regional markets are showing impressive resiliency in the downturn. Year-over-year in 2008 versus 2007, gaming revenue was up in Pennsylvania, New York, Florida, Iowa, Michigan, Missouri, Maine and Rhode Island, and stayed stable in Louisiana, West Virginia and Indiana.

Finally, to recap, we have been committed to our strategic initiatives, and have addressed the major areas of concern for our business to build long-term value for our shareholders. We successfully transitioned to a lease model, and have continued to grow our lease and service revenue every consecutive quarter since the initial rollout of our strategic initiatives in mid-2007. We removed the overhang regarding the convertible notes and debt refinancing in a timely manner, and are now in a strong financial position. We identified the right person to assume the CEO post, and ensured an orderly transition. We committed to a 10% cost reduction target for 2009, and have made excellent headway this quarter, improving the bottom line without compromising quality or interrupting operations.

We are aware of what the issues are, and have been, and as I look at our progress over the last two years, we have been steadily working through them one by one. We still have work to do; rather, Tim and the team still have work to do. But our track record has been consistent, and I have no doubt that the trend will continue.

Now I will turn the call over to Corie to review the quarterly results in more detail.

Coreen Sawdon: Thank you, Mark. Good afternoon to everyone.

As we have indicated before, our revenues are diverse, not reliant on any one jurisdiction or any one product. Although the metrics vary from period to period, this quarter US revenue was $19.9 million, or 58% of revenue, compared to 53% of revenue in the prior year period. These results reflect our steady progress in our growing lease base in this region.

We are very pleased with the excellent strides we have made to drive down operating expenses, both on an absolute dollar basis and as a percentage of revenue. Operating expenses for the first quarter totaled $17 million, and were down 24% from the prior year period, net of severance charges. Approximately $2 million of the reductions relate to wage and consulting fee decreases, as well as reductions in travel and entertainment, and we should expect to see the same level of savings in future quarters.

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To touch on the nature of some of the additional reductions this quarter, our SG&A cost were favorably impacted by foreign currency fluctuations of approximately $700,000. The translation to our reporting currency, the US dollar, was favorable from an expense perspective this quarter; however, we cannot predict what the impact will be in our future periods, as we do not hedge our foreign currency.

Legal expenses decreased by 51%, and professional fees decreased 71% over the prior year period. However, as litigation and professional services have their own level of volatility, we cannot say whether they will continue to decrease consecutively. Although we made substantial reductions this quarter, we cannot commit that operating expenses will continue to decrease at the same rate for the subsequent quarters; however, we are confident of achieving or even surpassing our 10% reduction goal.

Research and development expense totaled $3.7 million, or 11% of revenue, down 19% year-over-year. These decreases, like SG&A, were also favorably impacted by foreign currency translation. These dollar decreases were not related to any slowdown in innovation, but rather a more disciplined approach on how and where we spend our R&D dollars as a result of the oversight of the corporate products group.

For the first quarter, our adjusted EBITDA grew 53% year-over-year on a slightly lower revenue base, which demonstrates the success of our cost savings initiatives in both manufacturing as well as operations. The posting of increased bank EBITDA on a declining outstanding debt balance has decreased our leverage to slightly greater than 2 times, as compared to our maximum allowable ratio of 4.25 times. We are very proud of the headroom we have under our debt covenants in a time when many others are facing compliance and restructuring issues.

Our income from operations of $1.2 million was up year-over-year by $2.3 million, due predominantly to our disciplined expense management. Working capital increased to $20.9 million from $7.7 million as of October 31, 2008. The improvements relate to the repurchase of notes and healthy cash flow during the quarter.

Now I will move into a quick product segment recap, starting with our utility segment quarterly performance. Total utility revenue decreased year-over-year by 10% to $15.8 million, due to softer sales volume, which is in line with our ongoing strategy to emphasize leasing. In that same vein, lease and service revenue reached a Company record of $9.2 million, as a result of both increased placements as well as an increased average lease price year-over-year. Leased shufflers totaled 5,442 units, up 6% from

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the prior year, and up 124 units from the prior sequential quarter. Total revenue in the proprietary table game segment for the first quarter was $9.7 million, up 6% year-over-year.

Revenue growth and a 5% gross margin increase were primarily due to increased royalty, lease and service revenue, up $8.5 million, as well as increased net revenues from our Three Card Poker World Champion Tournament. We also recognized a 5% increase in the average monthly lease price over the prior year period. Additionally, we saw significant growth in add-on wagers (audio dropout) and tables, which were up by 207 net units from the prior year period, and are exclusive to the lease model. The total install base of table games was 5,594 units, of which 71% were leased.

Moving to our electronic table systems segment, lease and service revenue was a record $2.6 million, up 16% from the prior year period, as the result of 155 new seats on lease, the majority of which were Table Master. These Table Master seats were largely leased units of our Royal Match 21, Three Card Poker, and Ultimate Texas Hold 'Em games, which indicate our unmatched competitive advantage in this segment, since only Shuffle Master can provide these proprietary titles.

Total revenue decreased 28% year-over-year to $4 million, as a result of decreased sales volume. This segment is burdened with a fair amount of fixed amortization, which can have a large impact on margin, depending on the amount of sales activity in any period. Accordingly, margin in this segment can vary materially from period to period. The total install base of 7,315 seats reflects an increase of 13% from the prior year period.

Our electronic gaming machine segment reflects sales of our slot machines in the Australasian market. Note that the first quarter results are highly impacted by the summer shutdown in Australia during portions of December and January. For the first quarter 2009 total revenue was $5.1 million, down 10% year-over-year; however, when adjusted for the weakened Australia dollar, revenue was actually up 23% in local currency. The 21% increase in the number of seats sold is largely due to the success of our popular titles as well as the increase in Australian dollars of the average sale price. This segment also experienced a 14% gross margin improvement from the prior year period, due to overall operational improvements and inventory management.

Moving to our margins, the first quarter showed year-over-year improvement of 2%, resulting in gross margin of approximately 60%. Margin growth was principally due to an 8% increase in lease and service revenue, which generally yields better margins over time and higher average lease prices. To a lesser

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extent gross margin was also favorably impacted by the strong quarterly revenue contribution of our proprietary table game segment, which carries a higher gross margin than the other segments.

Our working capital continues to improve as we satisfy our convertible notes. During the quarter, we purchased $10 million of our outstanding notes at a discount on the open market. To date, we have $30.3 million of our convertible bonds outstanding. As these bonds are expected to be put in April of this year, they have been reclassified as current liabilities. We expect to satisfy these notes with either cash on hand or through a draw on our revolver, which has approximately $78 million available and matures in November of 2011. We have significant headroom in our leverage ratio, and continue to most post improvements each quarter. We are in compliance and expect to be compliant when our bonds are put on April 15th of this year.

Finally, I would like to comment on a couple of items in our second quarter of fiscal 2009 to assist with modeling our business. Note that the interest cost of our revolver is slightly greater than that on our converts. Also note that we will be observing a severance charge related to Dr. Yoseloff's retirement. This severance is pursuant to a pre-existing employment agreement which dates back to 2005. The approximately $4 million expense is mostly non-cash, and accelerates the entire severance charge to the quarter of his departure, although this contract includes a three-year part-time employment arrangement.

With that, I would like to turn the call over to Mark for a wrap up and closing remarks.

Mark Yoseloff: Thank you, Corie.

I would now like to take this time to turn the call over to Tim Parrott, our new CEO. But first, a few highlights on Tim's background, and a few words about why Tim was selected for this role. Tim has over 20 years of experience in the gaming and entertainment industry, and has worked for a number of companies in the space. He is operationally focused, having been on both sides of the fence; that is, as an operator with Boom Town, and as a supplier with Aristocrat. And as a result, has solid relationships with many of our current customers. Tim is no stranger to public company management, and is experienced in handling the complex issues our Company faces as a result of our size, our subsidiaries and our infrastructure. He also has proven success in identifying and developing talent.

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Speaking now as a Director, we on the Board were very selective in our process to find the right person to take us to the next level. The alignment of Tim's experience to our current and long-term needs should give shareholders and customers confidence in the future of our Company.

Timothy Parrott: Thanks for the kind words, Mark. Good afternoon everybody.

First, I would like to say it's a privilege to have the opportunity to be the new CEO of Shuffle Master. I would also like to take a minute to recognize Mark, and highlight his many accomplishments and contributions over the years. Under Mark's leadership, this Company has grown from a little under $30 million in annual revenues to approximately $200 million. When Mark joined the Company, there were roughly 3,600 shufflers deployed, and one proprietary game titled Let It Ride. To date, there are over 28,000 shufflers installed and over 30 titles in our suite of proprietary table games.

As an inventor, innovator, and businessman, Mark has led Shuffle Master to greater heights via both organic growth and strategic acquisitions. We are fortunate that Mark will continue to work with us, and me, on a part-time basis in the areas of product strategy and development. On behalf of the whole Shuffle Master team, we want to thank Mark for his tireless commitment, and will strive to uphold his legacy of accomplishments and innovation.

Now I have had the opportunity to walk our campus over the last month or so since I joined the Company, and I've gotten to know our team, see the depth of our products, and visit customers. I would like the share my observations from the last five weeks, and also talk about our future. I already had a high regard for Shuffle Master, first as a customer for many years, and then as a competitor. But I wasn't aware of the depth of products and talent within the Company prior to joining.

In my short time with the Company, I've seen innovative technology, great products, and talented employees who have a passion for delivering what our customers need. When I couple this with the belief that the future of gaming will see major growth in momentum in the table game sector, it makes for an exciting situation. From my perspective, and despite the economy, this is an excellent time to join the Company as the new CEO. Shuffle Master is the clear leader in utility products, specialty table games, and the emerging electronic table games category. It has earned (audio interference).

Operator: Ladies and gentlemen, please stand by, we are experiencing technical difficulties. Your conference will resume shortly.

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Timothy Parrott: Okay, everybody, that was memorable for me. This is Tim Parrott again. Hopefully, you are all still on.

Let me just pick up where I think I left off, and say that Shuffle Master is the clear leader in all of its product categories. It's earned this leadership position because it consistently delivers value to the operators, as well as new and improved gaming experiences to the players. Our market position, coupled with an industry that is certainly going to see continued growth on a global basis, equals a bright future for Shuffle Master. The Company didn't get to its leadership position by accident; it is the result of many talented and passionate people, starting with the experienced management team I've inherited at the Company, bringing high-value products to market. This is certainly the worst business environment in many decades; however, I believe there will be significant opportunities for strong and focused companies to capitalize on the downturn. In our case, I think we will come out of this recession stronger and in a better position than our starting point.

Now I will touch on our priorities, short-term objectives and then a bit on our long-term goals. First, I don't have a silver bullet to shield us from the global economic malaise. However, because of the value of our products to operators, the proven appeal of our games to customers and our solid balance sheet, we are in a very good position. It is impossible to have long-term revenue and profit visibility in this climate, but based on the last two quarters and current demand, we feel good about this year and very positive looking further out.

Let me touch on my objectives. Foremost is a continued focus on our previously-stated strategic initiatives, which include a continued emphasis on leasing, development of relevant technology to drive new products, increasing the return on existing products by adding new value elements, value engineering for reduced manufacturing costs, and cost reductions and expense control.

Most of my 20 years in gaming has been on the operator side, and I clearly see our Company mission as being a customer and product-driven Company. Particularly at times like this, we need to, and will, intensify our efforts to responding to the needs, challenges and opportunities of our customers. I know my responsibility as CEO is to ensure we deliver shareholder value. And the best way I know how to make it happen is by delivering improved results on a steady basis; by continuous innovation; by constantly improving and expanding our suite of products; by being focused, nimble, and having an effective execution; and by strengthening our team of management and employees.

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As the market leader in table game products, we do have an advantage. We have a full suite of products that enjoy the best performance. We will continue to capitalize on our leading position, but I'm fully aware that we can't relax our efforts, as there are a number of experienced competitors in the gaming sector.

In summary, my priorities include remaining customer-centric; responding to the changing needs of operators in this challenging environment; continuing to innovate and protect our IP; strengthening our competitive advantages; maintaining our financial discipline; and further developing our management team, to include hiring a seasoned CFO. I believe that all of these very broad, high-level goals will serve to drive shareholder value. Even with the economic climate that we are currently in, we do have the products, people and platform to deliver solid results over the years to come. I look forward to providing an update on our next call.

And now we will turn it over to the Operator for Q&A.

+++ q-and-a

Operator: Thank you. (Operator Instructions). Our first question comes from the line of Carlo Santorelli with JPMorgan.

Carlo Santorelli: Hi, guys. Just some modeling-type stuff here. I was wondering if you could provide some color, given the amount of moving parts right now in Australia in the EGM business, and how you are kind of looking at foreign currency year-over-year going out over the next three quarters or so?

Mark Yoseloff: Foreign currency issue. Well, business has actually been steadily improving almost from the time that we bought it. And as you know we had a great quarter in Q4, we actually had an up quarter in Q1 in local currency, up quite a bit. The good news in Australia right now is that we have some very, very good titles, well-performing titles, and there is a lot of demand for them.

My expectation this year is that we should have a good year there, based on the strength of these titles, and based on the amount of visibility that we currently have. So without quantifying this for you, but just qualitatively, I expect that Star Games' EGM business will put in another solid year, as it did in fiscal 2008, and that we should be generally very happy with their results. Now on top of that, as you saw,

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we've had some margin improvement there, and that's actually been very helpful to our bottom line. So I think it's going be a good business for us this year.

Carlo Santorelli: Thanks a lot, guys.

Operator: (Operator Instructions). Our next question comes from the line of Ryan Worst with Brean Murray. Please proceed with your question.

Ryan Worst: Thank you. Hi, guys. Mark, just in Australia, without the -- on a local currency basis, would ASP's have been, you know, relatively stable?

Mark Yoseloff: No, actually they've been up.

Ryan Worst: Okay.

Mark Yoseloff: You know, our titles are performing well, and our product generally has been at or below market prices of our competitors. So given the strong performance of the titles, I think we have been able to bring our prices more in line with our competitors, and so the ASP's have been up recently in local currency terms.

Ryan Worst: They would have been up year-over-year?

Mark Yoseloff: Oh, yes.

Ryan Worst: Okay. Then, it looks like when you back out all of the unusual items you're running at -- SG&A at about $13 million, a little over $13 million in the quarter. Is that a pretty good number going forward?

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Coreen Sawdon: I walked through that, Ryan, and we had about $4.5 million in savings year-over-year. Of that, we believe $2 million was something you could extrapolate in the out quarters. We do have timing items in there, such as foreign currency for one, legal and accounting fees which tend to be volatile. But $2 million is the number that we are holding out as something we can bank on.

Ryan Worst: Okay, great. And then could you guys quantify the total impact of foreign currency on your quarter, in terms of revenue or EBITDA?

Mark Yoseloff: It's actually a very tricky question, because it's so -- it's sort of easy to identify certain components of it. So, for example, we know the negative impact on revenue in certain product areas is sort of easy to get to. One of the problems we have is because of the complex rule on transfer pricing between subsidiaries, it's not always clear at the end of the day precisely how much FX impact there is in some of these transactions. So when it's EGMs it's easy because it's all in Australian dollars. When it's salaries that we pay in Australia, it's easy. But when it's transfer pricing amongst several subsidiaries, it gets complicated because they may be in two or sometimes three currencies.

Ryan Worst: Okay.

Mark Yoseloff: I wish I could have been more helpful, sorry.

Ryan Worst: That's okay. Then the last question is Mark, on CapEx, it looks like it was you know, pretty low in the quarter. Is that an indication of demand for leased electronic games, and what could we expect on that line going forward?

Mark Yoseloff: No, actually it's timing. You see classifications on products, as we build the inventory and you see our inventory grows, and then we put it on lease and it's an asset held for lease, and so it keeps moving around the balance sheet. A good sense of that, you know how tough we have been on inventory control over the last three or four or six quarters, yet you saw our inventory grow substantially in Q1. So I would have to believe that's primarily in anticipation of placements of the expensive inventory, namely the electronic table game systems.

I will tell you without going being quantitative, but qualitatively, the demand for Table Master particularly, and now Vegas Star Craps, is quite strong, and I think for one of the only very few times in

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our history we actually have a backlog. I won't tell you what the number is, but we have an actual backlog of Table Master, just because we can't manufacture the product at the same rate as the demand these days.

Ryan Worst: Okay. Can you just talk about any kind of -- any jurisdiction that opened up to that game recently?

Mark Yoseloff: I tell you, it's as much expansion -- I will address a couple of areas. One is the racino or slots-only markets, and probably the best example now for us is Pennsylvania. Because this market continues to expand, we've gotten numerous reorders from properties there, the product's performing extremely well, and my expectation is that as we go through the rest of this year, there will be even greater placements in Pennsylvania.

The other example is in Las Vegas. Even I, when we bought Sega Gaming five years ago and it became Table Master, or six years ago, even I would have found it hard to believe that we would see Table Masters in premier Las Vegas Strip properties, and yet there are some going into those properties. So I quoted you a number earlier, 17 systems, 85 seats, already on the Strip or just off-Strip, with a number of pending orders, some from some very high-profile properties. So the demand appears to be everywhere.

Ryan Worst: Great. Thanks Mark, and good luck in your retirement.

Mark Yoseloff: Thank you so much.

Operator: (Operator Instructions). There are no other questions in the queue. I would like to hand it back over to management for closing comments.

Mark Yoseloff: I would like to thank everyone for joining us. I will not be with you on the next call, but Tim and the team will be. And I, as a very interested shareholder, will probably be listening in to find out how our Company is doing. So my best of luck to everyone, and I think great success ahead for Shuffle Master. Thank you for joining us.

Timothy Parrott: Thanks, Mark. Thanks everyone, talk to you next time.

Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time.

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