Filed by Scientific Games Corporation
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: MDI Entertainment, Inc.
Commission File Number: 0-24919
THE FOLLOWING IS THE TRANSCRIPT OF A TELEPHONE CONFERENCE WITH
ANALYSTS AND OTHERS HELD ON FEBRUARY 26, 2002.
Operator: Hello, everyone. Thank you for joining us
this morning. With us today are Lorne Weil,
chairman and CEO of Scientific Games and
Steve Saferin, CEO and president of MDI
Entertainment. During the call today they
will discuss Scientific Games and MDI
Entertainment's letter of intent
announcement released this morning. If you
have not received the information, please
call Ed Fury, Expector Associates at
212-943-5858 and he will send you copies
right away.
Details regarding the replay of the call are
in the Scientific Games press release. As a
reminder this call is being broadcast live
and there will be a question and answer
session following the remarks.
Before turning the call over to the
management, I would like to remind you that
investors and security holders are advised
to read the joint proxy statements
prospective regarding the proposed merger
when it becomes available.
Investors and security holders are advised
to read the joint proxy statement/prospectus
regarding the proposed merger when it
becomes available, because it will contain
important information. Such joint proxy
statement/prospectus will be filed with the
Securities and Exchange Commission by
Scientific Games and MDI. Investors and
security holders may obtain a free copy of
the joint proxy statement/prospectus (when
available) and other documents filed by
Scientific Games and MDI at the Securities
and Exchange Commission's web site at
www.sec.gov. The joint proxy
statement/prospectus and such other
documents may also be obtained from
Scientific Games and MDI.
MDI and its executive officers and directors
may be deemed to be participants in the
solicitation of proxies from stockholders of
MDI with respect to the transactions
contemplated by the letter of intent.
Information regarding such officers and
directors include MDI's proxy statement for
its 2001 annual meeting of stockholders
filed with the Securities and
Exchange Commission of May 1, 2001. This
document is available free of charge at the
Securities and
Exchange Commission's web site at
http\\www.SEC.gov and from MDI and
Scientific Games.
This press release includes statements that
consist of forward-looking statements made
pursuant to the Safe Harbor provisions of
the Private Securities Litigation Reform Act
of 1995. This information involves risks and
uncertainties that could cause actual
results to differ materially from the
forward-looking statements. For certain
information regarding these risks and
uncertainties, reference is to be made to
Scientific Games annual report on Form 10K
for the fiscal year ended October 31, 2000,
the Transition Period report on form 10Q for
the period of November 1, 2000 through
December 31, 2000 and the Quarterly Report
on Form 10Q for the third quarter ended
September 30, 2001 and to the MDI
Entertainment's Annual Report on Form 10KSB
for the fiscal year ended December 31, 2000
and the Quarterly Report on Form 10QSB for
the third quarter ended September 30, 2001.
Now let's turn the call over to Mr. Steve
Saferin who will review the MDI financial
results. Mr. Saferin.
Lorne: Thank you, operator. Actually this is Lorne
Weil speaking and good morning, everyone.
This is also Lorne Weil speaking. I'm going
to speak first for a few minutes to talk
about how we view this opportunity and then
I'll turn it over to Steve to discuss the
transaction from his point of view and then
we'll leave a few minutes if we have some
time for questions.
We're obviously very excited about the
opportunity to join forces with MDI. We've
had a relationship with MDI for a number of
years. We're one of the largest shareholders
of MDI. We've worked together quite well and
quite extensively and so clearly this is a
relationship that both sides understand
about as well as two parties to a merger
could understand each other and I think we
share each other's optimism and enthusiasm
for where this can take us.
We see all over the world that the
opportunities for branded instant lottery
tickets is a terrific opportunity. We think
that MDI had done a great job, but we feel
that with the full weight of Scientific
Games resources around the world, game
design resources, market resources,
technology resources and so forth that we
can give a real great push to the growth of
the branded lottery business and help it
become a larger and much more vibrant
business than it is at the present time.
I also think because of our role
increasingly as an important player in the
worldwide online lottery business that we
have a significant opportunity to take the
basic concepts that Steve Saferin has
developed so cleverly and brilliantly in the
last few years in the instant ticket
business and apply that to the online
lottery business as well.
We also feel that the MDI team has a great
amount of creativity and great amount of
knowledge and experience in this business
and we think that they can help as well in
the whole area of the development of
proprietary games and proprietary kinds of
lottery tickets. So from a marketing and
product development and from a branding
point of view, I think the synergies between
the two companies are clear and I think that
we're very optimistic and enthusiastic about
where it's going.
In terms of our anticipated financial
impact, I assume that a number of you were
on the earnings call that we had just in the
last week or ten days and we indicated at
that time that we expected over the next
several months to becoming involved in some
acquisitions. And we indicated that all of
these acquisitions would meet a fairly
rigorous set of business and financial
criteria. The business criteria obviously
having to do with fit marketplace overlap,
technology and so forth and from a financial
point of view, that they be accretive
financially in deals that we would do with
stock so that we could also improve our
balance sheet.
And I think we can say here comfortably that
we expect the transaction to be accretive. I
think at this point we don't want to go too
much into a discussion of financial
projections, although I do understand that -
and I guess Steve Saferin will mention this
in a moment - MDI will be filing a proxy in
the fullness of time, which will contain
certainly significant information with
regard to projections.
But as far as we're concerned, let me simply
say that number one, and Steve will talk a
little more about this. We anticipate quite
significant financial synergies between the
two companies that should meaningfully and
importantly enhance the profitability of -
actually the profitability of both
companies.
And I take a great degree of comfort in the
knowledge that Steve Saferin has put a major
portion of what he will be receiving in this
transaction in effect at risk with respect
to meeting certain, you know, profitability
projections going forward. I think Steve
would probably not feel comfortable doing
that if he weren't also
comfortable in his ability to meet those
projections with the two companies merged
and as part of the Scientific Games overall
family. And so again, I think that tends to
give us a lot of comfort and confidence that
from a purely financial point of view that
this transaction will be very nicely
accretive at both the EBITDA level and the
net income level, you know, for our own
shareholders, but certainly in the - and we
wouldn't do it if it weren't.
But in the larger scheme, we see this as a
piece of a much larger puzzle that we feel
anybody in the long run trying to compete in
the lottery business is going to have to
complete. It's becoming a much more
complicated business and much more demanding
business. Clearly the lottery industry as
the gaming industry overall is going through
a period of consolidation and I think that
success in the long run is going to involve
really only a relatively few companies that
are able to bring all of the necessary
expertise and resources together under one
roof. This is what we're trying to do.
We're obviously very grateful that we're
able to have MDI play a critical role in
that strategy and of course only time will
tell where we come out financially. But
certainly from our perspective right now and
for what we see, we think this is going to
turn out to be an excellent transaction for
everyone.
Obviously, again if you were on our call the
other day, we at Scientific Games are
extremely optimistic, extremely enthusiastic
about our own outlook. We have a tremendous
backlog of business building. We continue to
take significant steps to improve the
company's profitability. I think, again, if
you were on the call we offered guidance
quite early on in 2002 indicating quite a
significant improvement from 2001. I think
the addition of MDI to that will only
further strengthen the performance that we
talked about in the guidance.
And therefore, let me in closing and before
I hand it off to Steve say that we warmly
welcome or will shortly down the road warmly
welcome all of the current MDI shareholders
into the Scientific Games shareholder
family. Obviously a number of you already
are shareholders of both companies. And we
hope and we're quite confident that those of
you who are becoming new Scientific Games
shareholders are not going to be
disappointed in your investment.
And with that, I'll turn it over to Steve
Saferin to give you his view of things,
which will hopefully not be too terribly
different than mine.
Steve: Thanks, Lorne. Good afternoon to everybody
in the East and good morning to the rest of
you. The letter of intent, which MDI and Sci
Games signed last evening and announced this
morning, provides what the MDI board
believes is the absolute best opportunity
for MDI shareholders to realize the
significant upside.
This decision was not reached easily. We
spent a lot of time, the board, looking at
Sci Games' business and our business, how
they could mesh together, what the impact
might be, what our future was, and we
determined that this was in fact the best
course.
There were, I guess, four basic reasons that
we came to that conclusion. First and quite
simply, the complexity and now some added
competition in the global lottery market
really requires that a company of our size
align itself with a larger company to be
able to do what we need to do. And Sci Games
is the absolute best company when it comes
to instant tickets and many other lottery
services and we look forward to helping them
grow even more.
In the past as most of you know that have
followed our business, it is almost all is
focused on instant games. But this new
agreement with Sci Games will provide us a
platform to develop online lottery games
featuring our various brands. We look
forward to doing that in the months ahead.
In addition, we believe the time is not too
distant when lottery players will be able to
play lottery on the Internet while buying
their tickets at brick and mortar retailers.
This agreement will give us the resources to
develop sophisticated computer like games
built around some of our brands. As you also
probably know, we have recently announced a
significant international marketing effort
spurred on by our acquisition to exclusive
rights for the 2002 World Cup. And while we
believe that we will be successful in the
long run, this agreement provides us with
far more resources to quickly penetrate this
market and I will tell you there is lots of
interest in our brands all over the world.
While MDI will continue to operate as an
autonomous unit, there are tremendous
synergies that can be achieved between the
two companies and intended cost savings.
Some of the most significant would be from
MDI ridding itself of the cost of being a
public company and a second is a significant
reduction in my salary.
To that point and as Lorne stated earlier, I
as a member of the board and principle
shareholder in the company believe very, very
strongly in this deal and it's potential. So
much so that I've escrowed nearly a quarter of
the shares that I was to receive at closing
only to be earned upon the MDI business unit
hitting certain EBITDA targets. And as stated
earlier, I have taken a significant pay cut
going forward.
One of the primary reasons I have done this is
because I believe not only was this deal right
for MDI, but that the upside potential for all
Sci Games shareholders of which MDI
shareholders will become, myself included, is
very, very significant.
And with that, I guess, we'd like to open it
to questions.
Lorne: Yeah. Thanks, Steve. Operator, if you could
now go into Q&A mode. Everyone, let me just
say we'd like to limit the Q&A, if we can to
about a half an hour and if each person
asking a question could please limit their
questions to just two so that we give as many
people as we can a chance. When we're down to
our last couple of questions, I'll inform the
operator of that. So operator, if you could
start the Q&A please.
Operator: At this time, if you would like to ask a
question, please press star then the number
one on your telephone keypad. If you are on a
speakerphone, please pick up the handset
before asking your question. Your first
question comes from Jay Leonard of CIBC World
Market.
Jay: Gentlemen, just so I understand and just help
me and the other investors understand - and
this is really coming from the lottery - the
MDI board of directors, would the business
that you have improving revenues in the fourth
quarter up 460% and to quote you Steve, our
business model is gaining more and more
acceptance as is evidenced by the increased
number of games introduced by our lottery
customers in 2000, World Cup, MBA, etc.
Talking to new investors volume in the stock
increasing, finally, stock trading at $3.25
last Friday, I'm just, you know, miffed by A)
why we would do the deal at this price.
There's no mention as to what the ratio is or
if there's a [UNINTELLIGIBLE]. You know, just
as a shareholder and with clients who have
significant positions in the company, this has
not been well received. That's my first
question.
Steve: Okay.
Jay: Follow-up question after that.
Steve: Okay. Well, first of all, let me say this that
no one has a bigger position in this company
than I do and we gave this - the board spent
literally hours and hours on this issue. We
certainly recognize that the price that we
have agreed to with Scientific Games and the
price the stock was trading at at the time we
entered into this agreement. But we - the
board believes that this is a much better long
term deal for investors in MDI than anything
else around. We need to have this kind of
synergistic relationship with a larger company
to maximize the potential of our business.
There are - our business is good. There's no
doubt about it. It can be significantly better
with this combination rather than without it.
We're going to be filing a proxy statement.
You'll have access to all the information that
we considered and the shareholders will be
asked to vote on this. We hope that you'll
vote in the favor of it. That will be your
choice.
Jay: Okay. Well, in keeping with that, will that be
filed with the collar? Is there a collar? I
know you can't state it right now until it's
out, but is there a collar on the deal?
Steve: Really can't comment on it.
Jay: All right. Understand - and I appreciate that
you believe very firmly in this thing and I
have no doubt that an alliance with Sci Games
is the right way to go and probably a merger
is fine. It's just that I don't see where as a
shareholder, you know, getting - coming in at
this price point, we're going to need, you
know, Sci Games probably to go to a double to
get the equivalent of rate of return on our
lottery stock from where we are right now. And
you know, as a shareholder with things going
up, it just seems that since this is a stock
deal and Sci Games has, you know, escalated
the price dramatically of recent that we could
have struck on a stock basis a much better
deal. You know, it's not cash changing hands
here. It's stock. And since Sci Games already
is a shareholder of the company, it does not
look to be - or I will not - it is not being
perceived as being as attractive to the
existing shareholders as the deal might be
with all these good things happening. It's not
like, you know, the company was doing poorly.
The company was really turning the corner. We
had just made it or starting to make it.
Steve: And look, I think we'll continue to improve
with this alliance. And I think a double in
Sci Games stock may not be too far fetched.
Jay: I mean, God willing I think that would be
terrific. But again, it just doesn't seem to -
you know, there's no extra pay out to us if
you do your job and I'm sure you will and MDI
will be the driving force and that this is a
screaming steal for Sci Games at this price
point, but, you know, where is the - I mean,
are there - you know, if there were even
warrants or something that was attached to,
you know, the performance that, you know, the
MDI division did or something that we would
benefit. Other than you doing, you know, which
I believe you will be able to do and that your
division will do extremely well, you know,
what if other divisions within Sci Games
doesn't. You know, we're not getting that pure
play.
Lorne: Steve, this is Lorne Weil speaking and then I
think we need to give someone else a chance.
Let me just say that you really do need to at
least consider, you know, in the long run
there's always the, you know - we hope it
won't happen, of course, and we don't think
it'll happen, that things in fact turn out not
to go so well with MDI, but now you have the
security of all the other divisions of
Scientific Games that are doing well. So I
appreciate your point and I understand why
you're making the case you're making. But I
think you have to at least consider the fact
that, you know, MDI is coming into a pretty
special company and that it certainly offers a
degree of security and a degree of comfort for
both MDI the company and MDI shareholders that
it doesn't have now.
And I think if we could go on the next
question, I would appreciate it please.
Operator: Your next question comes from Mr. Neil Gore of
UBS Payne Webber.
Neil: Good afternoon. Several questions. First,
Lorne, what percentage of your -
Lorne: This is Lorne. You only get to ask two
questions.
Neil: Well, I got two and a half.
Lorne: Okay.
Neil: Okay. What percentage of your current instant
tickets are licensed?
Lorne: Of our instant tickets at Scientific Games?
Neil: Right. That's correct.
Lorne: You know, I don't know that -
Neil: Is it large? Small? I really -
Lorne: It's quite small. It's quite small.
Neil: Okay. And Steve?
Steve: Yes, sir.
Neil: Your sales were great last quarter. What
percent of your sales were to Scientific Games
and what percent were to like a GTech or any
of the other people who print instant tickets?
Steve: Well, G-Tech doesn't print instant tickets -
Neil: Okay.
Steve: So there's a couple of other companies -
Neil: Okay. Any of the others.
Steve: I'd say we - Scientific Games has less than
it's proportion of marketshare, probably in
the 35 to 45% range of the revenue was from
games that Sci Games printed. The remainder
from other printers.
Neil: Okay. So therefore, the people who once this
merger is complete, who is your competition
that these other people might have to run to?
If they want to license something.
Steve: Well, there's a couple other companies that
have some licenses in the business, but for
the most part the main - we control about
85% of the license game market.
Lorne: Actually, Neil, its Lorne. Let me answer that
question in a slightly different way, because
I think that there's a pre-supposition in what
you're saying, which is not correct. One of
the things that we Scientific Games like and
like a lot about MDI is the fact that it gives
us an opportunity to sell things to state
lotteries with - who are not currently our
customers. You know, normally in this
business, it's one of the good things about
the business is most of our business tends to
be based on multi-year contracts. But when one
of our competitors has a multi-year contract
with a major lottery, take the California
lottery, for example, which happens not to be
a customer of ours in instant tickets. And
there really isn't anything that we can sell
that lottery until the next time their
contract becomes available and goes out for
RFP.
But what MDI offers us is an opportunity to
go to that lottery with the license
properties that MDI has and get revenue from
that lottery even though it is in fact not
one of our customers. So the -
Steve: I was going to say as an example of that in
the last 18 months, we've recognized about $3
million in revenue from the California
lottery. And there is no requirement here, as
Lorne is saying, that just because we sell a
game to someone that Sci Games has to print
the game. Whoever their printer is can print
it. And I think if you take a look at the fact
that Sci Games is sort of under-represented in
our total volume, it says that this
combination can really have a lot of room for
growth because we can bring in business from
other lotteries that Sci Games doesn't print
for and Sci Games can deliver more of their
business to us as licensed games.
Neil: Well, I understood that. In fact, I actually
thought that the license games were a larger
percentage than they actually were.
Steve: No. It's a reasonably new development in the
lottery business. And I'd be surprised if it's
over 5% of the total games that are on the
street.
Neil: I see. Thank you very much.
Lorne: Sure.
Operator: Your next question comes from Mr. Chris
Nicodemou of UBS Warburg.
Chris: I just had my question answered. Thank you
very much.
Operator: Your next question comes from Mr. Brian
Frickman [PHONETIC].
Brian: I just got - I'm traveling on the road, but
dialing in on the conference call. Apparently
you guys are buying - is this a cash deal or
is there a stock -
Lorne: It's a stock deal and the basic idea of the
deal is that MDI shareholders will receive
$2.10 in value per MDI share and they will
receive it in Scientific Games stock based
upon the average closing price of Scientific
Games over the previous 30 days.
Brian: And when are you expecting to close?
Male Speaker: Close between 60 and 90 days, probably closer
to 90.
Lorne: Did - were you able to hear that. That was our
general counsel speaking.
Brian: 60 to 90 days, closer to 90.
Lorne: Yes. Between 60 and 90 days from now.
Brian: Thank you.
Lorne: Yep.
Operator: Your next question comes from [UNINTELLIGIBLE]
of International Capital Partners.
Mack: Hello. Good morning, Steve.
Steve: Good morning, Mack. How are you?
Mack: Okay. Yes. I just want to make a comment here
and I want to say I oppose the deal. I don't
think it's good for MDI shareholders and I
hope they'll vote along with me. Thank you.
Lorne: Thank you.
Steve: Okay.
Operator: Your next question comes from Mr. Randy
Purdell [PHONETIC] of RS Purdell and
Associates.
Randy: Good morning, gentlemen.
Lorne: Good morning.
Randy: This is basically addressed to Steve. I've
talked to many times over the last, I guess,
three plus years. We've been shareholders
prior to Scientific Games, I believe. Couple
of questions, one given your own shares
board of director shares and Scientific
Games, what percentage does that represent
of the total outstanding shares?
Steve: I think it's probably about 43 or 44%.
Randy: Okay. So you're going to need -
Steve: It's over 40.
Randy: Okay. So you're going to need a lot of
individual shareholders to vote the deal so
that it would conclude, I would imagine.
Steve: We'll need over 50%.
Randy: Right. Okay. I'm just a little perplexed the
timing of this given the fact that the company
has turned around. The stock was trading as
high as $3.65 last week. Obviously your
negotiations probably had transpired much
earlier than the last few weeks when the stock
has been going up on heavy volume. But we are
absolutely opposed to the deal as well as many
of the other shareholders that I've been
talking to. And I'm absolutely perplexed as to
the timing. The synergies between the two
companies - when Scientific Games took a
position in the company it was stated back
then on conference calls and individual
discussions that by them taking the position
in the company you were going to be working
together anyway, so I really don't understand
the necessity to merge with them at this
point. Do you have any comment?
Steve: No, not really. I mean, you're entitled to
your opinion. I hope you take the time to read
the proxy and consider it fully before you
make a final decision. But I understand.
Randy: Well, Steve, you know there's many
shareholders that are in to this stock for as
high as $14 a share that have been riding, you
know, the company up and down and it has
turned the corner and from my perspective, I
don't see why they should even consider a buy
out at $2.10 when the company was doing so
well for the last year. I'm talking about this
stage. I can see down the road, you know,
after you build shareholder value to get a
fair price for the company. But I really don't
understand the necessity of doing it now.
Steve: I understand.
Randy: Okay. Well, that's my - you know, basically
all I have to say on the deal.
Steve: Thank you.
Operator: Your next question comes from Roger
Fitzpatrick of Berthal Fishel [PHONETIC] and
Company
Roger: My question is for Mr. Steve Saferin. What
will be your position with the new combined
operations and will you be brining investor
awareness with you to keep the financial
community up to date on the upcoming events of
the combined operations?
Steve: Well, I will be the president and CEO of MDI,
which will operate as a wholly owned
subsidiary of Scientific Games and we haven't
made any decision yet on - I mean, we will no
longer be a public company so there - we
really won't have any need to have any sort of
investor relations work going on. I mean, Sci
Games will be doing theirs and will encompass
all the new shareholders. We may do something
on the public relations standpoint with
investor - we haven't made that decision yet.
Roger: Well, there some brokers like myself that
know of Scientific Games, but not as close
to them as we are to your company. We've
been - have good relationships with Tony
Shore and he's been able to bring us some
real good updates on this and it'd be nice
to be able to get the same kind of updates
from a new company.
Steve: Well, I'm sure they will do their best to make
sure that you get them.
Roger: Thank you, sir.
Steve: Thank you very much.
Operator: Okay. And I would like to remind everyone if
you would like to ask a question [INAUDIBLE]
on your telephone keypad. You do have a
follow-up question from Mr. Brian Frickman of
Wells Fargo Securities.
Brian: Yeah. I just wanted to state, Steve, that for
the record, you know, I will be voting against
this unfortunate deal because I think there is
more shareholder value. I just don't think it
was fully flushed out in terms of when this
acquisition made in the shareholder's best
interest.
Steve: Okay.
Brian: Thanks.
Steve: Thank you.
Operator: Your next question comes from Mr. Carter
Dunlap of Dunlap Equity Management.
Carter: A housekeeping question. I heard the 60 to 90
anticipated close with a emphasis on 90, but
what do you think of the timing for the
production of the proxy?
Lorne: I don't really know at this point. You know,
I just don't know. I can't comment.
Carter: Okay.
Operator: At this time, there are no further questions.
Lorne: Okay. Well, let me just say again one more
time that we in Scientific Games are, you
know, very enthusiastic about this. We're
certainly as enthusiastic and optimistic as
we've ever been concerning the outlook for
Scientific Games itself. The addition of MDI
to it makes it, I think, that much more of a
special opportunity.
As Steve said, I hope that each of you who
is considering not supporting this merger
will give it fair thought and fair analysis
and give yourself an opportunity to
understand what we're trying to do. Because
I think when you've done that and when
you've had a chance to study the material
that Steve will be sending out shortly I
think you'll come to the conclusion that
this makes for a terrific company and that
it's worth supporting.
And with that, again, let me thank you all for
calling in. It was a terrific turn out
considering the awkwardness of the hour and I
look forward in future investor conference
calls to having at least 51% of you who are on
this call participating in the future calls.
Thank you and we'll talk to you soon.
Operator: Thank you for participating in today's
conference call. You may now disconnect.
[END OF RECORDING]
Investors and security holders are advised to read the joint proxy
statement/prospectus regarding the proposed merger when it becomes available,
because it will contain important information. Such joint proxy
statement/prospectus will be filed with the Securities and Exchange Commission
by Scientific Games and MDI. Investors and security holders may obtain a free
copy of the joint proxy statement/prospectus (when available) and other
documents filed by Scientific Games and MDI at the Securities and Exchange
Commission's web site at www.sec.gov. The joint proxy statement/prospectus and
such other documents may also be obtained from Scientific Games by directing
such request to Scientific Games, 750 Lexington Avenue, New York, NY 10022,
Attn: Investor Relations, tel: 212-754-2233. The joint proxy
statement/prospectus and such other documents may also be obtained from MDI by
directing such request to MDI Entertainment, Inc., 201 Ann Street, 5th Fl.,
Hartford, CT 06103, Attn: Investor Relations; tel: 860-527-5359.
MDI and its executive officers and directors may be deemed to be participants in
the solicitation of proxies from stockholders of MDI with respect to the
transactions contemplated by the Letter of Intent. Information regarding such
officers and directors is included in MDI's Proxy Statement for its 2001 Annual
Meeting of Stockholders filed with the Securities and Exchange Commission on May
1, 2001. This document is available free of charge at the Securities and
Exchange Commission's web site at http//www.sec.gov and from MDI and Scientific
Games.
SAFE HARBOR
This communication includes statements that constitute forward-looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. This information involves risks and uncertainties
that could cause actual results to differ materially from the forward-looking
statements. For certain information regarding these risks and uncertainties,
reference is made to Scientific Games' Annual Report on Form 10-K for the fiscal
year ended October 31, 2000, the Transition Period Report on Form 10-Q for the
period from November 1, 2000 through December 31, 2000 and the Quarterly Report
on Form 10-Q for the third quarter ended September 30, 2001, and to MDI
Entertainment's Annual Report on Form 10-KSB for the fiscal year ended December
31, 2000 and the Quarterly Report on Form 10-QSB for the third quarter ended
September 30, 2001.