September 10, 2012

Majesco Entertainment Reports Third Quarter Fiscal 2012 Financial Results

Zumba(R) Fitness Franchise Continues to Build Momentum Ahead of Upcoming Zumba(R) Fitness Core Release

EDISON, NJ -- (Marketwire) -- 09/10/12 -- Majesco Entertainment Company (NASDAQ: COOL), an innovative provider of video games for the mass market, today reported financial results for the fiscal third quarter ended July 31, 2012.

For the third quarter ended July 31, 2012, Majesco's net revenues were $9.1 million compared to $19.5 million in the same period a year ago. The Company reported an operating loss of $3.6 million, compared to operating income of $0.9 million in the third quarter of 2011.

Net loss for the third quarter was $3.1 million versus net income of $1.9 million in 2011. On a non-GAAP basis, net loss for the third quarter was $3.2 million compared to non-GAAP net income of $1.1 million in the third quarter of fiscal 2011. Please refer to the Reconciliation of GAAP to Non-GAAP Financial Measures table included later in this release for additional information and details on non-GAAP items.

The Company's basic and diluted net loss per share for the third quarter ended July 31, 2012 was $0.08, compared to basic and diluted net income per share of $0.05 in the same period last year. Non-GAAP diluted net loss per share for the quarter ended July 31, 2012 was $0.09 compared to diluted net income per share of $0.03 in the third quarter of 2011. Please refer to the Reconciliation of GAAP to Non-GAAP Financial Measures table included later in this release for additional information and details on Non-GAAP items.

For the nine months ended July 31, 2012, the Company's net revenues were $105.7 million versus $100.2 million in the year ago period. The Company reported operating income of $6.7 million compared to operating income of $14.3 million in the same 2011 period. Non-GAAP operating income for the nine month period was $8.0 million compared to $15.4 million for the comparable 2011 period. In the nine months ended July 31, 2012 net income was $7.3 million compared to net income of $10.7 million for the nine months ended July 31, 2011. For the same period, Non-GAAP net income was $7.1 million this year compared to $13.9 million in 2011.

The Company's basic and diluted net income per share for the nine months ended July 31, 2012 was $0.18, compared to basic and diluted net income per share of $0.28 and $0.27, respectively, for the corresponding period in 2011. The Company's Non-GAAP basic and diluted net income per share for the nine months ended July 31, 2012 was $0.17 compared to $0.35 in the corresponding 2011 period.

Jesse Sutton, Chief Executive Officer of Majesco, said, "As expected, our third quarter results reflect historical seasonal patterns and continued challenging retail conditions for interactive entertainment. During the quarter, the Zumba Fitness franchise continued to be a top selling title across the Wii™ and Kinect™ platforms ahead of the upcoming Zumba Fitness Core release. With eight million units now sold, Zumba Fitness has solidified its place as the second bestselling fitness franchise of all time.

"Our release slate for the 2012 holiday season is one of our most diverse ever," added Sutton. "In addition to a strong brand lineup including Zumba® Fitness, Cooking Mama, and Hello Kitty we have several innovative new product launches targeted at the growing markets for motion-based, social and mobile games. Tomorrow is the official launch of NBA Baller Beats at retail, and we are pleased with the pre-launch buzz with over 650,000 Twitter followers and over 4 million views on YouTube. Last week we launched our first internally developed social game, Mini Putt Park, on We will follow this up with at least two smartphone-based freemium games for the mobile games market by the end of the year. We have never been more excited about the growth opportunities provided by these new platforms."


  • As of July 31, 2012, the Company had $27.3 million in cash and cash equivalents, compared with $19.7 million on July 31, 2011.
  • In June, Majesco announced two new mobile games, Sci-Fi Heroes and Legends of Loot, for release in the fall.
  • On June 13th, Majesco announced a strategic partnership with FremantleMedia Enterprises, the commercial and brand extension arm of FremantleMedia, to develop and produce interactive games based on the Emmy nominated American Idol television series. Under the terms of the partnership, Majesco received the exclusive rights to publish games in North America.

Announced Product Line-up
Fourth Quarter Fiscal 2012 Ending October 31, 2012
To date, the Company has announced the following titles that were, or are expected to be, released during its fiscal fourth quarter 2012:

  • Zumba® Fitness Core, the latest release in the best-selling fitness game franchise, launches this October on Wii™ and Kinect™ for Xbox 360®. Zumba® Fitness Core is the first and only game designed to sculpt and tone your abs through an exhilarating total body workout. Dance your way to flat, sexy abs with 40 new songs and routines, 33 international dance styles and a range of new fitness features that reward you and keep you motivated. Lose yourself in the music as celebrity Zumba® instructors guide you through choreography set to contagious new Zumba® fitness originals and a broader mix of smash hits from hot artists including Enrique Iglesias, Sean Paul, Don Omar, Karmin, and many more.
  • NBA Baller Beats, the first ever motion-based sports video game that requires you to actively play using a real basketball launches September 11th exclusively on Kinect for Xbox 360. In this high energy interactive beats-driven experience players are challenged to perfect 20 different ball-handling skills and increase their stamina for the court while bouncing the ball to the beat of 30 licensed tracks spanning decades and genres including hits from Kanye West, LMFAO, Run DMC, Queen, Common, Janelle Monae, and more. The game comes packaged with an officially licensed NBA Game Day replica ball from Spalding and will be available for the suggested retail price of $59.99.
  • Mini Putt Park, Majesco's first internally developed social game, launches exclusively on and Facebook® platform. Players of all ages can design their very own miniature golf course in this ultimate mini putt social experience. As the world's first-ever virtual mini putt construction kit, Mini Putt Park lets players build a replica of their real-life home course, a fantastical otherworldly course or something in between. Players can either visit Putter Island and conquer course after course, each complete with a crazy boss to defeat, or take the fun to their friends list by sharing their own custom courses with others.
  • Harley Pasternak's Hollywood Workout, the interactive game that brings you the fitness program used by many of today's Hollywood celebrities, launches on Kinect for Xbox 360 and Wii™. Renowned fitness and nutrition expert, best-selling author, and acclaimed celebrity trainer Harley Pasternak will introduce you to his breakthrough 5-Factor program that is an easy yet effective approach to reach your personal fitness goals. The game provides players with direct access to Harley Pasternak, the trainer behind many of Hollywood's hottest bodies including Lady Gaga, Megan Fox, Katy Perry, Hilary Duff, Jennifer Hudson, Robert Pattinson and Kanye West. The secret is Harley's 5-Factor Fitness program that requires focused training sessions just 25 minutes a day, five days a week. Choose your goals, follow Harley's advice and 5-Factor program and you too can achieve the Hollywood body you've always dreamed of!
  • Double Dragon Neon will be released as a full-scale digital game on Xbox LIVE® Arcade for the Xbox 360® video game and entertainment system from Microsoft. Majesco Entertainment has once again partnered with WayForward, the award-winning team known for bringing franchise favorites including BloodRayne: Betrayal back to audiences in exciting new ways, and is thrilled for the fan-favorite developer to put its signature spin on this classic franchise. Double Dragon: Neon isn't just a sequel -- it's a face-melting 80's tour de force! Featuring bodacious characters, gnarly combat, and a retro aesthetic, it's pure over-the-top baditude... to the max!
  • Mama's Combo Pack Volume 1 & 2 on Nintendo DS™ and Mama's 2-Pack on Wii™ was launched on August 14th for the terrific value of $29.99 each. Cooking Mama, the iconic kitchen cutie who has sold more than 13 million copies worldwide, is serving up double the fun with three separate combo packs that bundle together some of the hit franchise's best-selling games. Mama's Combo Pack Volume 1 for Nintendo DS™ combines the original best-selling classic Cooking Mama with Camping Mama: Outdoor Adventures. Mama's Combo Pack Volume 2 for Nintendo DS™ includes Cooking Mama 2: Dinner with Friends and Crafting Mama. Mama's 2-Pack for Wii™ brings the culinary action to your console in Cooking Mama Cook Off and Cooking Mama World Kitchen. The Wii Remote™ transforms into your universal cooking tool as you chop, grate, slice, stir and roll in motion-based cooking activities.
  • Hello Kitty Picnic with Sanrio Friends is where Hello Kitty will make her Nintendo 3DS™ debut in North America this holiday season. Filled with loads of fun activities and cute collectibles, Hello Kitty Picnic invites players to join Hello Kitty and her Sanrio friends as they prepare for a picnic adventure. Play 10 mini-games including Hidden Object, Spot the Difference, and Picnic Blanket Checkers to collect goodies for the party. Explore and decorate whimsical 3D environments including Hello Kitty's bedroom, kitchen, and more. Interact directly with Hello Kitty using the 3DS touch screen and listen as the game guides you along. Invite your friends to join the fun as you play with your favorite Sanrio characters including My Melody®, Keroppi®, Chococat®, Badtz-Maru®, Little Twin Stars®, and many more!
  • Sci-Fi Heroes was announced for release late in the fall. With its exciting and innovative gameplay and incredible co-op fun, Sci-Fi Heroes is the perfect title to show what Majesco's new mobile and social offerings strive for. The free-to-play interstellar adventure gives players of all ages the chance to lead a team of combat specialists to victory over a galactic evil empire, as well as the opportunity to join forces with their friends to collaboratively complete quests, defeat formidable nemeses, and find rare items. Space explorers can battle to save their universe across more than 40 levels on four different planets, each containing unique enemies, landscapes and bosses.
  • Legends of Loot, due to hit this fall, is our latest free mobile app. This role-playing dungeon-crawler game delivers challenges through a series of engaging quests, twisting mazes and mind-bending puzzles; Legends of Loot takes players on a thrilling journey to save the realm and become a mighty adventurer.

Fiscal 2012 Outlook
For the twelve months of fiscal 2012 ending October 31, 2012 the Company expects operating results to be in the lower end of the range of its previously issued guidance of net revenues of $130 to $140 million, and non-GAAP earnings per share of $0.20 to $0.30. This outlook is based on an estimated fully diluted share count of approximately 40.0 million shares, and assumes non-cash compensation of approximately $0.04 to $0.05 per share for fiscal 2012. The Company has not provided a reconciliation of forward-looking GAAP and Non-GAAP financial measures due to the potential effects that changes in its stock price may have on the fair value of outstanding warrants.

Conference Call
At 4:30 p.m. EDT today, management will host an earnings conference call the third quarter results. To access the call in the U.S., please dial 1-800-860-2442. Please dial in 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 In addition, a replay of the call will be available via telephone for seven days beginning approximately two hours after the call. To listen to the telephone replay in the U.S., please dial 1-877-344-7529 and for international callers, dial 1-412-317-0088. Enter access code #10018032.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
To facilitate a comparison between the three and nine months ended July 31, 2012 and 2011, the Company has presented both GAAP and non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings per share, have been adjusted to report certain non-GAAP financial measures.

These non-GAAP financial measures exclude the following items from the Company's consolidated statements of operations:

  • Expenses related to non-cash compensation
  • Change in fair value of warrants

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 to Non-GAAP Financial Measures."

About Majesco Entertainment Company
Majesco Entertainment Company is a provider of video games for the mass market. Building on more than 20 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on all leading console and handheld platforms as well as online, social networks and mobile devices. Product highlights include Zumba® Fitness, Cooking Mama™, and Alvin and the Chipmunks. The company's shares are traded on the Nasdaq Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ with offices in San Francisco, CA, Brockhampton, UK, and a social games development studio in Foxboro, MA. More info can be found online at or on Twitter at

Safe Harbor

Some statements set forth in this release, including the estimates under the headings "Fiscal 2012 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 consumer demand for videogame consoles and related hardware; 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; and other factors described in our filings with the SEC. The Company does not undertake, and specifically disclaims 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.




                          (Unaudited, in thousands)

                                           Three months Ended

                                                July 31,

                                  2012         %         2011         %

                              -----------  --------  -----------  --------

                              (thousands)            (thousands)

Nintendo Wii                  $     5,539       61%  $    14,036       72%

Microsoft Xbox 360                  2,153       24%        2,306       12%

Nintendo DS                           948       10%        2,249       11%

Nintendo 3DS                            -        -%            -        -%

Sony PlayStation 3                    119        1%          637        3%

Accessories and other                 386        4%          317        2%

                              -----------  --------  -----------  --------

TOTAL                         $     9,145      100%  $    19,545      100%

                              ===========  ========  ===========  ========

                                            Nine months Ended

                                                July 31,

                                  2012         %         2011         %

                              -----------  --------  -----------  --------

                              (thousands)            (thousands)

 Nintendo Wii                 $    65,147       62%  $    59,794       60%

 Microsoft Xbox 360                26,491       25%       20,334       20%

 Nintendo DS                       10,142       10%       14,610       15%

 Nintendo 3DS                       1,452        1%            -        -%

 Sony PlayStation 3                   809        1%        4,438        4%

 Accessories and other              1,684        1%          978        1%

                              -----------  --------  -----------  --------

 TOTAL                        $   105,725      100%  $   100,154      100%

                              ===========  ========  ===========  ========



                    (In thousands, except share amounts)

                                                   July 31,     October 31,

                                                     2012          2011

                                                 ------------  ------------



Current assets:

  Cash and cash equivalents                      $     27,292  $     13,689

  Due from factor, net                                      -           937

  Accounts and other receivables, net                   3,347         3,143

  Inventory, net                                        6,052        11,605

  Advance payments for inventory                        1,465         5,975

  Capitalized software development costs and

   license fees, net                                    7,667        12,564

  Prepaid expenses and other current assets               599         3,071

                                                 ------------  ------------

    Total current assets                               46,422        50,984

Property and equipment, net                             1,029         1,184

Other assets                                              159           209

                                                 ------------  ------------

    Total assets                                 $     47,610  $     52,377

                                                 ============  ============


Current liabilities:

  Accounts payable and accrued expenses          $     14,591  $     20,313

  Inventory financing payable                               -         1,238

  Advances from customers and deferred revenue            227         5,642

  Due to factor                                           650             -

  Warrant liability                                       363             -

                                                 ------------  ------------

    Total current liabilities                          15,831        27,193

Warrant liability                                           -         1,949

Commitments and contingencies

Stockholders' equity:

  Common stock -- $.001 par value; 250,000,000

   shares authorized; 41,364,549 and 41,307,349

   shares issued and outstanding at July 31,

   2012 and October 31, 2011, respectively                 41            41

  Additional paid-in capital                          120,496       119,222

  Accumulated deficit                                 (88,159)      (95,501)

  Accumulated other comprehensive loss                   (599)         (527)

                                                 ------------  ------------

    Net stockholders' equity                           31,779        23,235

                                                 ------------  ------------

    Total liabilities and stockholders' equity   $     47,610  $     52,377

                                                 ============  ============



               (Unaudited, in thousands, except share amounts)

                             Three Months Ended         Nine months Ended

                                   July 31                   July 31

                          ------------------------  ------------------------

                                 2012         2011         2012         2011

                          -----------  -----------  -----------  -----------

Net revenues              $     9,145  $    19,545  $   105,725  $   100,154

                          -----------  -----------  -----------  -----------

Cost of sales

  Product costs                 2,632        8,577       35,563       42,681

  Software development

   costs and license fees       2,997        3,015       31,461       16,237

                          -----------  -----------  -----------  -----------

                                5,629       11,592       67,024       58,918

                          -----------  -----------  -----------  -----------

Gross profit                    3,516        7,953       38,701       41,236

                          -----------  -----------  -----------  -----------

Operating costs and


  Product research and

   development                  1,912        1,947        5,890        5,150

  Selling and marketing         2,684        2,313       16,356       11,952

  General and

   administrative               2,392        2,484        8,088        8,089

  Loss on impairment of

   software development

   costs and license fees

   - cancelled games                -          150        1,219        1,512

  Depreciation and

   amortization                   141          121          448          223

                          -----------  -----------  -----------  -----------

                                7,129        7,015       32,001       26,926

                          -----------  -----------  -----------  -----------

Operating income (loss)        (3,613)         938        6,700       14,310

Other expenses (income)

  Interest and financing

   costs, net                     102          123          765        1,077

  Change in fair value of

   warrant liability             (594)      (1,258)      (1,586)       2,085

                          -----------  -----------  -----------  -----------

Income (loss) before

 income taxes                  (3,121)       2,073        7,521       11,148

  Income taxes                    (34)         184          179          421

                          -----------  -----------  -----------  -----------

Net income (loss)         $    (3,087) $     1,889  $     7,342  $    10,727

                          ===========  ===========  ===========  ===========

Net income (loss) per


  Basic                   $     (0.08) $      0.05  $      0.18  $      0.28

                          ===========  ===========  ===========  ===========

  Diluted                 $     (0.08) $      0.05  $      0.18  $      0.27

                          ===========  ===========  ===========  ===========

Weighted average shares


  Basic                    39,893,133   38,803,090   39,883,365   38,165,521

                          ===========  ===========  ===========  ===========

  Diluted                  39,893,133   41,318,806   41,016,631   39,827,022

                          ===========  ===========  ===========  ===========



                         (Unaudited, in thousands)

                                                      Nine months Ended

                                                          July 31,


                                                     2012          2011

                                                 ------------  ------------


Net income                                       $      7,342  $     10,727

Adjustments to reconcile net income to net cash

 provided by operating activities:

  Depreciation and amortization                           448           223

  Change in fair value of warrant liability            (1,586)        2,085

  Non-cash compensation expense                         1,301         1,064

  Provision for price protection                        3,211         2,380

  Amortization of capitalized software

   development costs and license fees                  11,103         3,467

  Loss on impairment of software development

   costs and license fees                               1,219         1,512

  Provision for excess inventory                           27         1,612

  Changes in operating assets and liabilities,

   net of acquisition:

    Due from/to factor                                 (2,500)       (2,786)

    Accounts and other receivables, net                   631        (1,987)

    Inventory, net                                      5,526         2,199

    Capitalized software development costs and

     license fees                                      (7,378)       (9,420)

    Advance payments for inventory                      4,467         4,888

    Prepaid expenses and other assets                   2,472           261

    Accounts payable and accrued expenses              (5,769)          753

    Advances from customers and deferred revenue       (5,367)         (376)

                                                 ------------  ------------

      Net cash provided by operating activities        15,147        16,602

                                                 ------------  ------------


Purchases of property and equipment                      (244)         (396)

Purchase of assets of Quick Hit, Inc., net of

 acquired cash                                              -          (800)

                                                 ------------  ------------

    Net cash used in investing activities                (244)       (1,196)

                                                 ------------  ------------


Repayment of inventory financing                       (1,237)       (5,557)

Proceeds from exercise of warrants                          -         1,824

Restricted shares withheld for employee taxes             (27)            -

                                                 ------------  ------------

    Net cash used in financing activities              (1,264)       (3,733)

                                                 ------------  ------------

Effect of exchange rates on cash and cash

 equivalents                                              (36)           (3)

                                                 ------------  ------------

Net increase in cash and cash equivalents              13,603        11,670

Cash and cash equivalents -- beginning of period       13,689         8,004

                                                 ------------  ------------

Cash and cash equivalents -- end of period       $     27,292  $     19,674

                                                 ============  ============



Landlord-provided leasehold improvements         $          -  $        163

                                                 ============  ============

Warrant liability reclassified to additional

 paid-in capital upon exercise                   $          -  $      1,042

                                                 ============  ============


Cash paid during the year for interest and

 financing costs                                 $        715  $      1,078

                                                 ============  ============

Cash paid during the year for income taxes       $        565  $          -

                                                 ============  ============



               (Unaudited, in thousands, except share amounts)

                             Three months ended         Nine months ended

                                  July 31,                  July 31,

                          ------------------------  ------------------------

                              2012         2011         2012         2011

                          -----------  -----------  -----------  -----------

GAAP operating income

 (loss)                   $    (3,613) $       938  $     6,700  $    14,310

Non-cash compensation (1)         438          437        1,301        1,064

                          -----------  -----------  -----------  -----------

Non-GAAP operating income

 (loss)                   $    (3,175) $     1,375  $     8,001  $    15,374

                          ===========  ===========  ===========  ===========

GAAP net income (loss)    $    (3,087) $     1,889  $     7,342  $    10,727

Non-cash compensation (1)         438          437        1,301        1,064

Change in fair value of

 warrants (2)                    (594)      (1,258)      (1,586)       2,085

                          -----------  -----------  -----------  -----------

Non-GAAP net income

 (loss)                   $    (3,243) $     1,068  $     7,057  $    13,876

                          ===========  ===========  ===========  ===========

GAAP net income (loss)

 per diluted share        $     (0.08) $      0.05  $      0.18  $      0.27

Non-cash compensation (1)        0.01         0.01         0.03         0.03

Change in fair value of

 warrants (2)                   (0.02)       (0.03)       (0.04)        0.05

                          -----------  -----------  -----------  -----------

Non-GAAP net income

 (loss) per diluted share $     (0.09) $      0.03  $      0.17  $      0.35

                          ===========  ===========  ===========  ===========

Shares used in GAAP and

 Non-GAAP per diluted

 share amounts             38,893,133   41,318,806   41,016,631   39,827,022

(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 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.

Add to Digg Bookmark with Add to Newsvine

Company Contact:

For additional information, please contact:

Michael Vesey

Chief Financial Officer


Investor Relations Contact:

Stephanie Prince/Jody Burfening



Source: Majesco Entertainment

News Provided by Acquire Media

Close window | Back to top

Copyright 2015 Majesco Entertainment Company