Delicious
Digg
Facebook
LinkedIn
Twitter
Jesse Sutton, Majesco's interim chief executive officer, said, "We have met our goals for the quarter and delivered solid financial results by executing our strategy to further penetrate the mass market, strengthen our international distribution, leverage licensing and development relationships, improve gross margins, and continue to reduce costs. In addition, we have made progress related to our class action law suit and reached a tentative understanding on settlement terms. We look forward to putting this situation behind us and we believe that the settlement, if consummated, will have no effect on the company's ongoing operations."
Sutton continued saying, "During the quarter, we launched our first two games for the Nintendo Wii(TM) as well as three DS(TM) titles, which drove net revenue growth of 30 percent compared to last year. Also, we signed a new agreement with Eidos Interactive to distribute a number of Majesco titles to the PAL territories. This partnership, which will commence in the third quarter, aligns our international distribution network with our mass market strategy."
Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
During the second quarter 2007, the company recorded a $2.5 million charge in connection with its class action litigation. In addition, during the second quarter of 2006, the company recorded gains of $3.1 million relating to vendor settlements. To facilitate a comparison to other periods, certain non-GAAP financial results have also been presented.
GAAP financial measures including operating income, net income and diluted earnings per share have been adjusted to report non-GAAP financial measures that exclude charges related to the aforementioned class action litigation and income related to settlement of certain vendor liabilities. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. A reconciliation between GAAP and non-GAAP financial measures is presented later in this press release.
Comparison of Three Months Ended April 30, 2007 to April 30, 2006
Comparison of Six Months Ended April 30, 2007 to April 30, 2006
Announced Product Line-up for 2007
Majesco has announced the following product shipment schedule:
Third Quarter 2007 ending July 31, 2007:
-- Guilty Gear for the DS and PSP
-- Mech Assault: Phantom War for the DS
-- Super Black Bass Fishing for the DS
-- Dino Master for the DS
-- Nacho Libre for the DS
-- F-24 Stealth Fighter for the DS
Fourth Quarter 2007 ending October 31, 2007:
All of the following titles will be released in North America and Operation: Vietnam will also be launched simultaneously internationally.
Sutton added, "In line with our strategy to remain opportunistic, in May we announced the addition of an Xbox 360 title, Kengo: Legend of the 9, to our line-up. This exemplifies our ability to leverage our industry relationships to quickly bring to market titles that we believe will appeal to a wide consumer base. Looking forward, we remain optimistic about the success of both the Nintendo DS and Wii systems and will continue to focus primarily on these systems, while opportunistically pursuing compelling titles that become available in the marketplace."
Outlook
The company reaffirms its 2007 fiscal net revenue guidance and continues to expect its 2007 net revenue to decline approximately 10 percent to 15 percent, compared to fiscal 2006 net revenue of $66.7 million. In addition, the company expects 65 percent to 70 percent of its net revenue to be generated from its new releases, 20 percent to 25 percent from its catalog sales and the balance from its other digital entertainment products.
Conference Call
At 4:30 PM ET today, management will host an earnings conference call. To access the call in the U.S., please dial 800-237-9752. For international callers, please dial 617-847-8706 approximately 10 minutes prior to the start of the conference call. The conference call will also be broadcast live over the Internet and available for replay for 90 days from the "Investor Info" section of the company's website at http://www.majescoentertainment.com/. In addition, a replay of the call will be available via telephone for two business days, beginning two hours after the call. To listen to the telephone replay in the U.S., please dial 888-286-8010 and for international callers, dial 617-801-6888. Enter access code 16976754.
About Majesco Entertainment Company
Headquartered in Edison, NJ, with an international office based in Bristol, UK, Majesco Entertainment Company (NASDAQ:COOL - News) is an innovative provider of video games and digital entertainment products for the mass market, with a focus on publishing video games for leading portable systems and the Wii(TM) console. Current product line highlights include Cake Mania(TM) for the Nintendo DS(TM), Cooking Mama: Cook Off for the Wii(TM) and JAWS(TM) Unleashed. More information about Majesco can be found online at www.majescoentertainment.com and www.majescoeurope.com.
Use of Non-GAAP Financial Information
To supplement the company's condensed consolidated financial statements presented in accordance with GAAP, the company uses non-GAAP measures of certain components of financial performance, including operating loss, net loss and net loss per share data, which are adjusted from results based on GAAP to exclude certain expenses. These non-GAAP measures are provided to enhance investors' overall understanding of the company's current financial performance and the company's prospects for the future. Specifically, the company believes the non-GAAP results provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. For more information on these non-GAAP financial measures, please see the tables in this release captioned "Reconciliation of GAAP and non-GAAP Financial Measures" which includes a reconciliation of the non-GAAP to the GAAP results.
Safe Harbor
Some statements set forth in this release, including the estimates under the headings "Outlook" contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause our results to differ materially from our expectations include the following: consumer demand for our products, and the availability of an adequate supply of, current-generation and next-generation gaming hardware, including but not limited to Nintendo's DS and Wii(TM) platforms; our ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of our products; competition in the interactive entertainment industry; developments in the law regarding protection of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; our ability to manage expenses; our ability to attract and retain key personnel; adoption of new accounting regulations and standards; adverse changes in the securities markets; our ability to comply with continued listing requirements of the Nasdaq stock exchange; the availability of and costs associated with sources of liquidity; final resolution of the class action and other litigation on terms acceptable to the company, and other factors described in our filings with the SEC, including our Annual Report on Form 10-K for the year ended October 31, 2006. We do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share amounts)
April 30, October 31,
2007 2006
------------------------
(unaudited)
ASSETS
Current assets
Cash and cash equivalents $ 4,196 $ 3,794
Due from factor 2,215 1,189
Accounts and other receivables 1,388 3,103
Inventory - principally finished goods 2,790 2,438
Capitalized software development costs and
prepaid license fees 1,558 1,489
Prepaid expenses 169 2,226
------------------------
Total current assets 12,316 14,239
Property and equipment - net 653 701
Other assets 71 71
------------------------
Total assets $ 13,040 $ 15,011
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses 11,481 $ 10,911
Inventory financing payable 796 1,390
Advances from customers 320 961
------------------------
Total current liabilities 12,597 13,262
Stockholders' equity:
Common stock - $.001 par value; 250,000,000
shares authorized; 23,837,156 and 23,427,462
issued and outstanding at April 30, 2007 and
October 31, 2006, respectively 24 23
Additional paid in capital 95,494 94,529
Accumulated deficit (95,015) (92,754)
Accumulated other comprehensive loss (60) (49)
------------------------
Total stockholders' equity 443 1,749
------------------------
Total liabilities and stockholders' equity $ 13,040 $ 15,011
========================
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share amounts)
Three Months Ended Six Months Ended
April 30, April 30,
------------------------------------------------
2007 2006 2007 2006
------------------------------------------------
(Unaudited) (Unaudited)
Net revenues $ 14,564 $ 11,185 $ 29,111 $ 32,823
------------------------------------------------
Cost of sales
Product costs 6,221 5,536 14,392 15,089
Software development
costs and license
fees 2,231 2,154 4,053 6,272
------------------------------------------------
8,452 7,690 18,445 21,361
------------------------------------------------
Gross profit 6,112 3,495 10,666 11,462
------------------------------------------------
Operating expenses
Research and
development 543 629 1,151 1,397
Selling and
marketing 1,903 1,869 3,686 6,325
General and
administrative 2,135 2,586 4,438 4,960
Gain on settlement
of liabilities and
other gains (208) (3,097) (239) (3,097)
Settlement of
litigation and
related charges,
net 2,500 -- 2,500 --
Loss on impairment
of software
development costs 35 -- 35 2,375
Depreciation and
amortization 72 128 145 263
------------------------------------------------
6,980 2,115 11,716 12,223
------------------------------------------------
Operating income
(loss) (868) 1,380 (1,050) (761)
Other costs and
expenses
Interest expense and
financing costs,
net 467 541 1,211 986
------------------------------------------------
Income (loss) before
income taxes (1,335) 839 (2,261) (1,747)
Provision for income
taxes -- -- -- --
------------------------------------------------
Net Income (loss) $ (1,335)$ 839 $ (2,261)$ (1,747)
================================================
Net Income (loss) per
share:
Basic and diluted $ (0.06)$ 0.04 $ (0.10)$ (0.08)
================================================
Weighted average
shares outstanding
Basic and diluted 23,831,737 22,374,073 23,668,235 22,313,326
================================================
Majesco Entertainment Company and Subsidiary
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share data)
Three Months Ended April 30, 2007
---------------------------------------
GAAP Adjustment Non-GAAP (a)
------------ ------------ -------------
Net revenues $ 14,564 $ - $ 14,564
Cost of sales
Product costs 6,221 - 6,221
Software development costs and
license fees 2,231 - 2,231
------------ ------------ ------------
8,452 - 8,452
------------ ------------ ------------
Gross profit 6,112 - 6,112
Operating costs and expenses
Product research and
development 543 - 543
Selling and marketing 1,903 - 1,903
General and administrative 2,135 2,135
Depreciation and amortization 72 72
Settlement of litigation and
related charges, net 2,500 (2,500) -
(Gain) loss on settlements (208) 208 -
Loss on impairment of software
development costs 35 35
- -
6,980 (2,292) 4,688
------------ ------------ ------------
Operating (loss) income (868) 2,292 1,424
Other expenses
Interest and financing costs,
net 467 467
------------ ------------ ------------
Income (loss) before income
taxes (1,335) 2,292 957
(Benefit) provision for income
taxes - - -
------------ ------------ ------------
Net income (loss) (1,335) 2,292 957
============ ============ ============
Net income (loss) per share:
Basic $ (0.06) $ 0.04
============ ============ ============
Diluted $ (0.06) $ 0.04
============ ============ ============
Weighted average shares
outstanding
Basic 23,831,737 23,831,737
============ ============ ============
Diluted 23,844,947 23,849,737
============ ============ ============
Three Months Ended April, 2006
--------------------------------------
GAAP Adjustment Non-GAAP
(a)
------------ ------------ ------------
Net revenues $ 11,185 $ - $ 11,185
Cost of sales
Product costs 5,536 - 5,536
Software development costs and
license fees 2,154 - 2,154
------------ ------------ ------------
7,690 - 7,690
------------ ------------ ------------
Gross profit 3,495 - 3,495
Operating costs and expenses
Product research and development 629 - 629
Selling and marketing 1,869 - 1,869
General and administrative 2,586 2,586
Depreciation and amortization 128 128
Settlement of litigation and
related charges, net - -
(Gain) loss on settlements (3,097) 3,097 -
Loss on impairment of software
development costs - -
------------ ------------ ------------
2,115 3,097 5,212
------------ ------------ ------------
Operating (loss) income 1,380 (3,097) (1,717)
Other expenses
Interest and financing costs,
net 541 541
------------ ------------ ------------
Income (loss) before income
taxes 839 (3,097) (2,258)
(Benefit) provision for income
taxes - -
------------ ------------ ------------
Net income (loss) 839 (3,097) (2,258)
============ ============ ============
------------ ------------ ------------
$ 839 $ (3,097) $ (2,258)
============ ============ ============
Net income (loss) per share:
Basic $ 0.04 $ (0.13) $ (0.10)
============ ============ ============
Diluted $ 0.04 $ (0.14) $ (0.10)
============ ============ ============
Weighted average shares
outstanding
Basic 23,374,073 23,374,073 23,374,073
============ ============ ============
Diluted 22,374,073 22,374,073 22,374,073
============ ============ ============
(a) The Company defines non-GAAP operating loss and non-GAAP net loss
as operating loss and net loss excluding for vendor and litigation
settlements. Non-GAAP net loss per share equals non-GAAP net loss
divided by the weighted average shares outstanding as of that period
end. The Company believes the non-GAAP measures that exclude these
items enhance the comparability of results against prior periods.
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results.
Majesco Entertainment Company and Subsidiary
Reconciliation of GAAP Net Loss to Non-GAAP Net Loss
(In thousands, except per share data)
Six Months Ended April 30, 2007
--------------------------------------
GAAP Adjustment Non-GAAP (a)
------------ ------------ -------------
Net revenues $ 29,111 $ - $ 29,111
Cost of sales
Product costs 14,392 - 14,392
Software development costs and
license fees 4,053 - 4,053
------------ ------------ ------------
18,445 - 18,445
------------ ------------ ------------
Gross profit 10,666 - 10,666
Operating costs and expenses
Product research and
development 1,151 - 1,151
Selling and marketing 3,686 - 3,686
General and administrative 4,438 4,438
Depreciation and amortization 145 145
Settlement of litigation and
related charges, net 2,500 (2,500) -
(Gain) loss on settlements (239) 239 -
Loss on impairment of software
development costs 35 35
------------ ------------ ------------
11,716 (2,261) 9,455
------------ ------------ ------------
Operating (loss) income (1,050) 2,261 1,211
Other expenses
Interest and financing costs,
net 1,211 1,211
------------ ------------ ------------
(Loss) income before income
taxes (2,261) 2,261 -
(Benefit) provision for income
taxes - - -
------------ ------------ ------------
Net (loss) income (2,261) 2,261 -
=========== =========== ===========
Net (loss) per share:
Basic $ (0.10) $ -
============ ============ ============
Diluted $ (0.10) $ -
============ ============ ============
Weighted average shares
outstanding
Basic 23,668,235 23,668,235
============ ============ ============
Diluted 23,668,235 23,673,446
============ ============ ============
Six Months Ended April 30, 2006
-----------------------------------------
GAAP Adjustment Non-GAAP (a)
------------- ------------- -------------
Net revenues $ 32,823 $ - $ 32,823
Cost of sales
Product costs 15,089 - 15,089
Software development costs
and license fees 6,272 - 6,272
------------- ------------- -------------
21,361 - 21,361
------------- ------------- -------------
Gross profit 11,462 - 11,462
Operating costs and expenses
Product research and
development 1,397 - 1,397
Selling and marketing 6,325 - 6,325
General and administrative 4,960 4,960
Depreciation and
amortization 263 263
Settlement of litigation and
related charges, net -
(Gain) loss on settlements (3,097) 3,097 -
Loss on impairment of
software development costs 2,375 2,375
-
------------- ------------- -------------
12,223 3,097 15,320
------------- ------------- -------------
Operating (loss) income (761) (3,097) (3,858)
Other expenses
Interest and financing
costs, net 986 986
-
------------- ------------- -------------
(Loss) income before income
taxes (1,747) (3,097) (4,844)
(Benefit) provision for
income taxes - -
------------- ------------- -------------
Net (loss) income (1,747) (3,097) (4,844)
============= ============= =============
Net (loss) per share:
Basic $ (0.08) $ (0.14) $ (0.22)
============= ============= =============
Diluted $ (0.08) $ (0.14) $ (0.22)
============= ============= =============
Weighted average shares
outstanding
Basic 22,313,326 22,313,326 22,313,326
============= ============= =============
Diluted 22,313,326 22,313,326 22,313,326
============= ============= =============
(a) The Company defines non-GAAP operating loss and non-GAAP net loss
as operating loss and net loss excluding for vendor and litigation
settlements. Non-GAAP net loss per share equals non-GAAP net loss
divided by the weighted average shares outstanding as of that period
end. The Company believes the non-GAAP measures that exclude these
items enhance the comparability of results against prior periods.
These measures should be considered in addition to results prepared
in accordance with GAAP, but should not be considered a substitute
for, or superior to, GAAP results.
Lippert / Heilshorn & Associates
Mary Magnani, 415-433-3777 (Investor Relations)
Yahoo! Buzz