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For the third quarter ended
The Company's basic and diluted net income per share for the quarter ended
For the nine months ended
The Company's basic and diluted earnings per share for the nine months ended
Highlights
Announced Product Line-up
Fourth Quarter Fiscal 2011 Ending
To date, the Company has announced the following titles that were, or are expected to be, released during its fiscal fourth quarter 2011:
Console/Handheld Titles:
Digital titles
Fiscal 2012 / Holiday 2011
Fiscal 2011 Outlook
The Company expects fiscal 2011 full year net revenue in a range of
FISCAL 2011 RELEASE SCHEDULE
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Quarter 1 Quarter 2 Quarter 3 Quarter 4
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BloodRayne:
Babysitting Mama Monster Tale DS, Cake Mania Main Betrayal, XBLA,
Wii, $49.99 $29.99 Street DS, PSN, $14.99,
$19.99 (9/6)
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Zumba® Fitness
for Kinect, Wii Zumba® Fitness, Spy Kids: All Camping Mama
and Move, $49.99 Wii, Move the Time in the Outdoor
Kinect, $39.99 (Europe) World, DS, Adventures, DS,
Wii and Move $19.99 $29.99, (9/13)
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Hulk Hogan's
Zumba® Fitness Left Brain Right Greg Hastings Main Event;
for Kinect Brain iPhone, Paintball 2 PSN, Kinect, $49.99
(Europe) $0.99 $19.99 (10/11)
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Cooking Mama
Friends' Café Parking Wars 2, The Hidden, 3DS,
Facebook; Facebook; $39.99 (10/11)
freemium freemium
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Pet Zombies,
3DS, $29.99
(10/18)
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Motion
Explosion,
Kinect, $39.99
(October)
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Face Racers:
Photo Finish,
3DS, $29.99
(October)
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Sudoku Premier
Edition, 3DS
(October)
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FISCAL 2012 RELEASE SCHEDULE
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Quarter 1
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Zumba Fitness 2, Wii, $39.99
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Cooking Mama 4, 3DS, $39.99
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Twister Mania, Kinect, $49.99
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Alvin & the Chipmunks, Kinect, $39.99 , Wii, DS, $29.99
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Jaws: Ultimate Predator, 3DS, $39.99 Wii, $29.99
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Jillian Michaels Fitness Adventure, Kinect, $39.99
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Nano Assault, 3DS, $29.99
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Winter Stars , Kinect, $39.99 , Wii, Move, $29.99
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Conference Call
At
Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
To facilitate a comparison between the three and nine months ended
These non-GAAP financial measures exclude the following items from the Company's consolidated statements of operations:
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. 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."
About
Safe Harbor
Some statements set forth in this release, including the estimates under the headings "Fiscal 2011 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, the availability of an adequate supply of current-generation and next-generation gaming hardware, including but not limited to Nintendo's DS and Wii™ 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
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
UNAUDITED SUPPLEMENTARY PRODUCT DATA
NET SALES BY PLATFORM FOR THREE MONTHS
(Unaudited, in thousands)
Three Months Ended July 31, Nine Months Ended July 31,
--------------------------- ---------------------------
2011 % 2010 % 2011 % 2010 %
------- ---- ------- ---- -------- ---- ------- ----
Nintendo Wii $14,036 72% $ 4,624 38% $ 59,794 60% $15,275 29%
Microsoft Xbox 360 2,306 12% 218 2% 20,334 20% 395 1%
Nintendo DS 2,249 11% 7,139 59% 14,610 15% 35,396 68%
Sony PlayStation 3 637 3% - -% 4,438 4% - -%
Other 317 2% 172 1% 978 1% 1,199 2%
------- ---- ------- ---- -------- ---- ------- ----
TOTAL $19,545 100% $12,153 100% $100,154 100% $52,265 100%
======= ==== ======= ==== ======== ==== ======= ====
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
July 31, October 31,
2011 2010
------------------ -----------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 19,674 $ 8,004
Due from factor 1,409 1,015
Accounts and other receivables, net 2,788 725
Inventory, net 4,607 8,418
Advance payments for inventory 566 5,454
Capitalized software development
costs and license fees 9,417 4,903
Prepaid expenses and other current
assets 896 921
------------------ -----------------
Total current assets 39,357 29,440
Property and equipment, net 1,289 520
Other assets 232 69
------------------ -----------------
Total assets $ 40,878 $ 30,029
================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 12,351 $ 11,375
Inventory financing payables - 5,557
Advances from customers and
deferred revenue 622 945
------------------ -----------------
Total current liabilities 12,973 17,877
Warrant liability 1,187 144
Commitments and contingencies
Stockholders' equity:
Common stock -- $.001 par value;
250,000,000 shares authorized;
40,952,586 and 39,326,376 shares
issued and outstanding at July 31,
2011 and October 31, 2010 ,
respectively 41 39
Additional paid-in capital 118,811 114,824
Accumulated deficit (91,607) (102,333)
Accumulated other comprehensive
loss (527) (522)
------------------ -----------------
Net stockholders' equity 26,718 12,008
------------------ -----------------
Total liabilities and
stockholders' equity $ 40,878 $ 30,029
================== =================
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS DATA
(Unaudited, in thousands, except share amounts)
Three Months Ended Nine Months Ended
July 31 July 31
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
Net revenues $ 19,545 $ 12,153 $ 100,154 $ 52,265
----------- ----------- ----------- -----------
Cost of sales
Product costs 8,577 7,398 42,681 24,573
Software development
costs and license
fees 3,015 1,975 16,237 12,074
Loss on impairment of
software development
costs and license
fees-future releases - - - 1,021
----------- ----------- ----------- -----------
11,592 9,373 58,918 37,668
----------- ----------- ----------- -----------
Gross profit 7,953 2,780 41,236 14,597
----------- ----------- ----------- -----------
Operating costs and
expenses
Product research and
development 1,947 720 5,150 2,361
Selling and marketing 2,313 1,641 11,952 6,225
General and
administrative 2,484 2,004 8,089 6,394
Loss on impairment of
software development
costs and license
fees - cancelled
games 150 116 1,512 276
Depreciation and
amortization 121 43 223 140
----------- ----------- ----------- -----------
7,015 4,524 26,926 15,396
----------- ----------- ----------- -----------
Operating income (loss) 938 (1,744) 14,310 (799)
Other expenses (income)
Interest and financing
costs, net 123 82 1,077 703
Change in fair value
of warrant liability (1,258) (183) 2,085 (412)
----------- ----------- ----------- -----------
Income (loss) before
income taxes 2,073 (1,643) 11,148 (1,090)
Income taxes 184 - 421 (1,647)
----------- ----------- ----------- -----------
Net income (loss) $ 1,889 $ (1,643) $ 10,727 $ 557
=========== =========== =========== ===========
Net income (loss) per
share:
Basic $ 0.05 $ (0.04) $ 0.28 $ 0.02
=========== =========== =========== ===========
Diluted $ 0.05 $ (0.04) $ 0.27 $ 0.01
=========== =========== =========== ===========
Weighted average shares
outstanding:
Basic 38,803,090 36,934,987 38,165,521 36,838,981
=========== =========== =========== ===========
Diluted 41,318,806 36,934,987 39,827,022 37,142,649
=========== =========== =========== ===========
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW DATA
(Unaudited, in thousands)
Nine Months Ended
July 31,
------------------------
2011 2010
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 10,727 $ 557
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 223 140
Change in fair value of warrant liability 2,085 (412)
Non-cash compensation expense 1,064 1,324
Loss on disposal of assets - 19
Provision for price protection and customer
allowances 2,380 3,073
Amortization of software development costs and
license fees 3,467 3,629
Loss on impairment of software development costs
and license fees 1,512 1,297
Inventory write-downs 1,612 -
Changes in operating assets and liabilities, net
of acquisition:
Due from factor (2,786) (940)
Accounts and other receivables (1,987) 475
Inventory 2,199 2,672
Capitalized software development costs and
license fees (9,420) (6,705)
Advance payments for inventory 4,888 -
Prepaid expenses and other assets 261 2,270
Accounts payable and accrued expenses 753 (2,115)
Advances from customers and other liabilities (376) (676)
----------- -----------
Net cash provided by operating activities 16,602 4,608
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (396) (192)
Purchase of assets of Quick Hit, Inc. , net of
acquired cash (800) -
----------- -----------
Net cash used in investing activities (1,196) (192)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Inventory financing (5,557) (5,684)
Proceeds from exercise of options and warrants 1,824 -
----------- -----------
Net cash used in financing activities (3,733) (5,684)
----------- -----------
Effect of exchange rates on cash and cash
equivalents (3) (22)
----------- -----------
Net increase (decrease) in cash and cash
equivalents 11,670 (1,290)
Cash and cash equivalents -- beginning of period 8,004 11,839
----------- -----------
Cash and cash equivalents -- end of period $ 19,674 $ 10,549
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND
FINANCING ACTIVITIES
Landlord-provided leasehold improvements $ 163 $ -
=========== ===========
Warrant liability reclassified to additional paid-
in capital upon exercise 1,042 -
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 1,078 $ 710
=========== ===========
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Unaudited, in thousands, except share amounts)
Three Months Ended Nine Months Ended
July 31, July 31,
------------------------ ------------------------
2011 2010 2011 2010
----------- ----------- ----------- -----------
GAAP operating income
(loss) $ 938 $ (1,744) $ 14,310 $ (799)
Non-cash compensation (1) 436 393 1,063 1,326
Severance (2) - - - 403
----------- ----------- ----------- -----------
Non-GAAP operating income$ 1,374 $ (1,351) $ 15,373 $ 930
=========== =========== =========== ===========
GAAP net income (loss) $ 1,889 $ (1,643) $ 10,727 $ 557
Non-cash compensation (1) 436 393 1,063 1,326
Severance (2) - - - 403
Change in fair value of
warrants (3) (1,258) (183) 2,085 (412)
Sale of NJ state
operating loss
carryforwards (4) - - - (1,656)
----------- ----------- ----------- -----------
Non-GAAP net income $ 1,067 $ (1,433) $ 13,875 $ 218
=========== =========== =========== ===========
GAAP net income (loss)
per diluted share $ 0.05 $ (0.04) $ 0.27 $ 0.01
Non-cash compensation (1) 0.01 0.01 0.03 0.04
Severance (2) - - - 0.01
Change in fair value of
warrants (3) (0.03) (0.01) 0.05 (0.01)
Sale of NJ state
operating loss
carryforwards (4) - - - (0.04)
----------- ----------- ----------- -----------
Non-GAAP net income per
diluted share $ 0.03 $ (0.04) $ 0.35 $ 0.01
=========== =========== =========== ===========
Shares used in GAAP and
Non-GAAP per diluted
share amounts 41,318,806 36,934,987 39,827,022 37,142,649
=========== =========== =========== ===========
(1) Represents expenses recorded for stock compensation expense. The Company
does not consider stock-based compensation charges when evaluating business
performance and management does not consider stock-based compensation
expense in evaluating its short and long-term operating plans.
(2) Represents one time severance costs related to a workforce reduction.
During January 2010 , Company management initiated a plan of restructuring to
better align its workforce to its revised operating plans. As part of the
plan, the Company reduced its personnel count by 16 employees, then
representing 17% of its workforce.
(3) Represents the change in the fair value of warrants classified as a
liability. The fair value of the warrants is calculated at each balance
sheet date with a corresponding charge or credit to earnings for the amount
of the change in fair value.
(4) In December 2009 , we received proceeds of approximately $1.6 million
from the sale of the rights to approximately $21.2 million of New Jersey
state income tax operating loss carryforwards, under the Technology Business
Tax Certificate Program administered by the New Jersey Economic Development
Authority . Net proceeds were recorded as an income tax benefit during the
nine months ended July 31, 2010 .
For additional information, please contact:Todd Greenwald , CFA Director of Investor Relations & Strategic Planning 732-476-1938 tgreenwald@majescoentertainment.com
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