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For the third quarter ended
Net loss for the third quarter was
The Company's basic and diluted net loss per share for the third quarter ended
For the nine months ended
The Company's basic and diluted net income per share for the nine months ended
"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,
Highlights
Announced Product Line-up
Fourth Quarter Fiscal 2012 Ending
To date, the Company has announced the following titles that were, or are expected to be, released during its fiscal fourth quarter 2012:
Fiscal 2012 Outlook
For the twelve months of fiscal 2012 ending
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 to Non-GAAP Financial Measures."
About
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
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
UNAUDITED SUPPLEMENTARY PRODUCT DATA
NET SALES BY PLATFORM FOR THREE AND NINE MONTHS
(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%
=========== ======== =========== ========
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
July 31, October 31,
2012 2011
------------ ------------
(unaudited)
ASSETS
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
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
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
============ ============
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(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
expenses
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
share:
Basic $ (0.08) $ 0.05 $ 0.18 $ 0.28
=========== =========== =========== ===========
Diluted $ (0.08) $ 0.05 $ 0.18 $ 0.27
=========== =========== =========== ===========
Weighted average shares
outstanding:
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
=========== =========== =========== ===========
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine months Ended
July 31,
--------------------------
2012 2011
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
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
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
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)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
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
============ ============
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 during the year for interest and
financing costs $ 715 $ 1,078
============ ============
Cash paid during the year for income taxes $ 565 $ -
============ ============
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
RECONCILATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(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.
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Company Contact: For additional information, please contact:Michael Vesey Chief Financial Officer 732.476.1956 Investor Relations Contact:Stephanie Prince /Jody Burfening LHA 212.838.3777 sprince@lhai.com
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