Midway Games (NYSE:MWY)
Historical Stock Chart
From Jul 2019 to Jul 2024
![Click Here for more Midway Games Charts. Click Here for more Midway Games Charts.](/p.php?pid=staticchart&s=NY%5EMWY&p=8&t=15)
Midway Games Inc. (NYSE:MWY) today announced results of operations for
the three month period ended March 31, 2007. The Company also confirmed
its prior full year guidance and provided revenue and earnings guidance
for the second quarter ending June 30, 2007.
FIRST QUARTER RESULTS
Net revenues for the 2007 first quarter were $11.1 million, compared to
the 2006 first quarter net revenues of $15.4 million and ahead of prior
guidance of approximately $7 million. The 2007 first quarter net loss
was $19.8 million, or a loss of $0.22 per basic and diluted share,
compared with a 2006 first quarter net loss of $22.6 million, or a loss
of $0.25 per basic and diluted share.
On a non-GAAP basis, excluding the impact of stock-option expenses and
other non-cash items, the 2007 first quarter loss was $18.2 million or
$0.20 per basic and diluted share, compared to the Company’s
previous non-GAAP guidance of a loss of approximately $0.23 per basic
and diluted share. For the 2006 first quarter, on a non-GAAP basis, the
Company reported a loss of $21.5 million, or a loss of $0.24 per basic
and diluted share. A reconciliation of non-GAAP results to GAAP results
is provided at the end of this press release.
Other recent operating highlights include:
Midway released The Lord of The Rings Online: Shadows of Angmar
in North America on April 24th, culminating
an extensive beta event and the most successful North American
pre-order program in Midway’s history.
In addition, Midway announced that Aqua Teen Hunger Force Zombie
Ninja Pro-Am, an interactive title based on the hit comedy series
from Cartoon Network’s Adult Swim, is
expected to be available for PlayStation 2 this fall.
David F. Zucker, president and chief executive officer, commented, “We
exceeded our expectations during the first quarter primarily due to the
continuing sales of our holiday 2006 releases and other catalog titles.
The second quarter is off to an excellent start with the launch of The
Lord of The Rings Online, and our resources are focused on
successfully launching several more titles later in the quarter.”
OUTLOOK
During the second quarter, the Company has already released The Lord
of the Rings Online: Shadows of Angmar for PC in North America, and
expects to release Mortal Kombat: Armageddon for the Wii, Hour
of Victory for the Xbox 360, Hot Brain for the PSP, and Touchmaster
for the Nintendo DS worldwide. For the second quarter ending June 30,
2007, Midway expects the following:
-- Net revenues of approximately $29 million, with a net loss of
approximately $0.18 per basic and diluted share.
-- On a non-GAAP basis, Midway expects a second quarter loss of
approximately $0.14 per basic and diluted share, which excludes
approximately:
-- $0.01 of stock option expense and deferred income tax
expense related to goodwill, and
-- $0.03 of non-cash convertible debt interest expense.
For the year ending December 31, 2007, Midway’s
full year outlook remains unchanged:
-- Net revenues are expected to grow approximately 36% to $225
million with a net loss of approximately $0.44 per basic and
diluted share.
-- On a non-GAAP basis, Midway expects a loss of approximately
$0.27 per basic and diluted share, which excludes
approximately:
-- $0.02 of stock option expense,
-- $0.13 of non-cash convertible debt interest expense, and
-- $0.02 of deferred income tax expense related to goodwill.
Mr. Zucker concluded, “We are very excited by
the strong response of gamers and the press alike to the launch of The
Lord of the Rings Online, and we are encouraged by the early
excitement we are seeing for such front-line titles as Mortal Kombat:
Armageddon for the Wii, Stranglehold, BlackSite: Area 51,
The Wheelman, Unreal Tournament III and Hour of Victory.
As the next generation systems build momentum through this year, we
believe we are well positioned to take advantage of the growing base of
gamers looking for the highest quality content.”
NON-GAAP FINANCIAL MEASURES
Midway has included non-GAAP financial measures in its quarterly results
and 2007 outlook. Midway does not intend for the presentation of the
non-GAAP financial measures to be isolated from, a substitute for, or
superior to the information that has been presented in accordance with
GAAP. In addition, information used in the non-GAAP financial measures
may be presented differently from non-GAAP financial measures used by
other companies. The non-GAAP financial measures used by Midway include
non-GAAP basic and diluted loss per share.
Midway considers the non-GAAP financial measures used herein, when used
together with the corresponding GAAP measures, to be helpful in
providing meaningful additional information regarding its performance by
excluding specific items that may not be indicative of Midway’s
core business or projected operating results. These non-GAAP financial
measures exclude the following items:
Stock Option Expense. Midway adopted SFAS No. 123R, “Share-Based
Payment” beginning January 1, 2006 in which
it began to recognize as an expense the fair value of its stock options.
A non-GAAP measurement that excludes stock option expense identifies
this component of compensation expense that does not require cash outlay.
Non-cash convertible debt interest expense. In accordance with
GAAP, Midway is required to record discounts on its convertible senior
notes as a result of decreases in the conversion prices of these notes.
These amounts are amortized as interest expense through the first date
on which the holders may redeem the notes. There is no cash outlay
associated with this interest expense. A non-GAAP measurement that
excludes the convertible debt non-cash interest expense allows for an
easier comparison to prior periods, and also distinguishes this interest
expense from the remainder of the interest expense, which requires (or
required) a cash outlay by Midway.
Deferred tax expense related to goodwill. Midway recognizes
deferred tax expense related to increases in the difference between the
book basis and tax basis of goodwill. Goodwill is not amortized for book
purposes but is amortized for tax purposes. This increase in the book to
tax basis difference causes an increase in the related deferred tax
liability balance that cannot be offset against deferred tax assets.
Given the nature of this deferred tax expense, a non-GAAP measurement
that excludes this expense is deemed relevant.
In the future, Midway may consider whether other significant items
should be excluded when arriving at non-GAAP measures of financial
performance.
CONFERENCE CALL
Midway Games Inc. is hosting a conference call and simultaneous webcast
open to the general public at 4:30 P.M. EDT today, Thursday, May 3,
2007. The conference call number is (800) 291-9234 or (617) 614-3923
(international callers). The passcode for the call is 92181909. Please
call ten minutes in advance to ensure that you are connected prior to
the presentation. Interested parties may also access the live call on
the Internet at www.investor.midway.com
or at www.earnings.com. Please
log-on fifteen minutes in advance to ensure that you are connected prior
to the call's initiation. Following its completion, a replay of the call
can be accessed until May 10th by dialing (888) 286-8010 or (617)
801-6888 (international callers). The passcode for the replay is
49959332. Additionally, a replay of the call will be available for
twelve months on the Internet via www.investor.midway.com.
ABOUT MIDWAY
Midway Games Inc. (NYSE:MWY), headquartered in Chicago, Illinois, with
offices throughout the world, is a leading developer and publisher of
interactive entertainment software for major video game systems and
personal computers. More information about Midway and its products can
be found at www.midway.com.
FORWARD-LOOKING STATEMENTS
This press release contains "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995
concerning future business conditions and the outlook for Midway Games
Inc. (the "Company") based on currently available information that
involves risks and uncertainties. The Company's actual results could
differ materially from those anticipated in the forward-looking
statements as a result of these risks and uncertainties, including,
without limitation, the financial strength of the interactive
entertainment industry, dependence on new product introductions and the
ability to maintain the scheduling of such introductions, the current
console platform transition and other technological changes, dependence
on major platform manufacturers and other risks more fully described
under "Item 1. Business - Risk Factors" in the Company’s
Annual Report on Form 10-K for the year ended December 31, 2006, and in
any more recent filings made by the Company with the Securities and
Exchange Commission. Each forward-looking statement, including, without
limitation, financial guidance, speaks only as of the date on which it
is made, and Midway undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the
date on which it is made or to reflect the occurrence of anticipated or
unanticipated events or circumstances, except as required by law.
MIDWAY GAMES INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
2007
2006
Net revenues
$ 11,070
$ 15,396
Cost of sales:
Product costs and distribution
6,594
7,570
Royalties and product development
2,698
7,114
Total cost of sales
9,292
14,684
Gross profit
1,778
712
Research and development expense
7,606
10,662
Selling and marketing expense
6,195
6,453
Administrative expense
5,747
5,347
Restructuring and other charges (benefit)
(783)
-
Operating loss
(16,987)
(21,750)
Interest income
943
995
Interest expense
(3,567)
(1,691)
Other income, net
360
194
Loss before income taxes
(19,251)
(22,252)
Provision for income taxes
563
347
Net loss
$ (19,814)
$ (22,599)
Loss per share of common stock:
Basic and diluted
$ (0.22)
$ (0.25)
Weighted average number of shares outstanding:
Basic and diluted
90,999
90,410
MIDWAY GAMES INC.
Consolidated Balance Sheets
(In thousands)
March 31,
December 31,
2007
2006
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$ 71,967
$ 73,422
Receivables, net
8,223
51,366
Inventories
2,630
2,891
Capitalized product development costs
55,492
35,213
Prepaid expenses and other current assets
12,906
12,792
Total current assets
151,218
175,684
Capitalized product development costs
1,681
6,400
Property and equipment, net
20,420
20,407
Goodwill
41,277
41,273
Other assets
10,436
10,297
Total assets
$ 225,032
$ 254,061
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
$ 6,386
$ 7,864
Accrued compensation and related benefits
3,396
4,541
Accrued royalties
4,765
8,097
Accrued selling and marketing
3,144
4,935
Deferred revenue
2,005
2,000
Current portion of long-term debt
3,333
3,333
Other accrued liabilities
12,940
15,164
Total current liabilities
35,969
45,934
Convertible senior notes, less unamortized discount
142,497
142,010
Long-term debt
2,778
3,611
Deferred income taxes
9,730
9,402
Other noncurrent liabilities
387
397
Stockholders' equity:
Common stock
925
925
Additional paid-in capital
445,137
444,115
Accumulated deficit
(400,696)
(380,882)
Accumulated translation adjustment
(1,915)
(1,671)
Treasury stock
(9,780)
(9,780)
Total stockholders' equity
33,671
52,707
Total liabilities and stockholders' equity
$ 225,032
$ 254,061
MIDWAY GAMES INC.
Consolidated Non-GAAP Operating Results
(In thousands, except per share amounts)
(unaudited)
The following table reconciles Midway's net loss and basic and
diluted loss per share as presented in its Consolidated Statements
of Operations as prepared in accordance with Generally Accepted
Accounting Principles ("GAAP") in the United States of America with
its non-GAAP loss and non-GAAP basic and diluted loss per share.
Midway's non-GAAP loss and non-GAAP basic and diluted loss per share
exclude stock option expense, non-cash convertible debt interest
expense, and deferred tax expense related to goodwill.
Three Months Ended
March 31,
2007
2006
Net loss
$(19,814)
$(22,599)
Stock option expense (1)
753
789
Non-cash convertible debt interest expense
487
-
Deferred tax expense related to goodwill
328
328
Non-GAAP loss
$(18,246)
$(21,482)
Three Months Ended
March 31,
2007
2006
Basic and diluted loss per share of common stock
$ (0.22)
$ (0.25)
Stock option expense (1)
0.01
0.01
Non-cash convertible debt interest expense
0.01
-
Deferred tax expense related to goodwill
0.00
0.00
Non-GAAP basic and diluted loss per share of common stock
$ (0.20)
$ (0.24)
(1)
Excludes stock option costs capitalized as product development costs.
MIDWAY GAMES INC.
Net Revenues by Platform
(in thousands)
Three Months
Ended March 31,
2007
2006
Microsoft Xbox 360
$ 795
7.2%
$ -
0.0%
Nintendo Wii
1,668
15.1%
-
0.0%
Sony PlayStation 2
3,960
35.8%
6,923
45.0%
Microsoft Xbox
479
4.3%
4,280
27.8%
Nintendo GameCube
507
4.6%
331
2.2%
Sony PlayStation Portable
197
1.8%
1,867
12.1%
Nintendo DS
1,341
12.1%
-
0.0%
Nintendo Game Boy Advance
771
7.0%
192
1.2%
Personal Computer
110
1.0%
474
3.1%
Royalties and other
1,242
11.1%
1,329
8.6%
Total
$ 11,070
100.0%
$ 15,396
100.0%
MIDWAY GAMES INC.
Net Revenues by Geography
(in thousands)
Three Months
Ended March 31,
2007
2006
North America
$ 6,954
62.8%
$ 11,467
74.5%
International
4,116
37.2%
3,929
25.5%
Total
$ 11,070
100.0%
$ 15,396
100.0%