MAJESCO ENTERTAINMENT CO. 
By - Exceeds Revenue Guidance and Achieves Profitability in Fiscal 2008 -
- Fiscal 2008 Net Revenues Increased More Than 25% to
- Fiscal 2008 Net Income of
For the fourth quarter ended
Results for the fourth quarter of 2008 include
For the twelve months ended
Results for the 12 months ended
"We expect to further build on our success in 2009. We believe we are well positioned to benefit from consumer trends given our focus on the fastest growing segment of the gaming industry. We have a proven and disciplined business model and a management team that is committed to growing the company in a profitable manner."
Financial Highlights
-- Fourth quarter 2008, domestic revenue increased 55 percent and
international revenue increased 40 percent.
-- For the twelve months of fiscal 2008:
-- Revenue increased 25.3% to $63.9 million.
-- Gross profit margin increased to 36.1 percent from 33.9 percent in
fiscal 2007.
-- Non-GAAP operating income reached $2.8 million.
-- The Company's interest and financing costs fell to $0.6 million
from $1.6 million in the same period one-year ago.
-- Non-GAAP net income was $2.1 million.
-- Non-GAAP basic and diluted EPS increased to $0.08 from a loss of
$0.06 last year.
Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics
To facilitate a comparison between the three and twelve months ended
During the fiscal year ended
The Company will adjust the fair value of the liability to the fair value of the common stock expected to be distributed at each balance sheet date and record the resulting change as a non-cash charge, or gain, to earnings in each period until the common stock is distributed. Due to fluctuations in the Company's stock price, this resulted in a non-cash gain of
During the fourth quarter of 2007, the Company raised
Comparison of Three Months Ended
-- Net revenue was
-- In the fourth quarter of 2008, 83 percent of revenue came from domestic sales with 17 percent from international. This compares to the fourth quarter of 2007 when 81 percent of revenue came from domestic sales with 19 percent from international.
-- Gross margin was 27.8 percent, compared to 30.9 percent in 2007. Gross margin for the period was impacted by holiday value programs that, while profitable, were at a lower margin.
-- The GAAP operating loss was
-- The GAAP operating loss for 2008 included
-- The GAAP net loss was
Comparison of Year Ended
-- Net revenue was
-- In the twelve months of fiscal 2008, 90.7 percent of revenue came from domestic sales with 9.3 percent from International. This compares to 85.5 percent domestic and 14.5 percent international in the same period last year. The decline in international was the result of unfavorable foreign exchange and a delay in a number of releases.
-- Gross margin was 36.1 percent, compared to 33.9 percent in 2007.
-- Including the aforementioned litigation charges, the GAAP operating income was
-- GAAP net income was
-- Interest expense and financing costs decreased 58 percent in 2008 to
-- At
Announced Product Line-up
First Quarter 2009 ending
All of the following titles have, or are expected to be released in
-- Cooking Mama: World Kitchen for Wii is the sequel to the best-selling Cooking Mama Cook Off game that has sold 700,000 units and challenges players to use the Wii Remote as the ultimate cooking utensil.
-- Left
-- Cake Mania: In the Mix! for Wii marks the first introduction of Sandlot Games' best-selling PC title on the Wii system. The game integrates motion-based control with the series' signature cake-baking, multi-tasking gameplay style.
-- Wonder World Amusement Park for DS is the first game from Majesco Studios Santa Monica. This companion game to the Wii version lets players experience a complete day at the park in the palm of their hands. Using the Touch Screen, players can toss, drive, shoot, whack and spin in more than two dozen mini-games throughout six themed zones.
Fiscal 2009
To date, the Company has announced the following titles that are expected for release during the rest of fiscal 2009:
-- Gardening Mama for DS stars Mama from the multi-million selling Cooking Mama franchise and is the first gardening game available on DS. Gardening Mama transforms the stylus into a universal gardening tool that players will use to plant, nurture and harvest flowers, fruits and vegetables.
-- Math Blaster in the Prime Adventure for DS is inspired by the original hit PC game from Knowledge Adventure that makes learning fun by combining a variety of adventure-based learning games with challenging mathematic puzzles and the unique capabilities of Nintendo DS.
-- Marker Man Adventures for DS is a unique game based on drawing and physics challenges as players maneuver the charming stick figure, Marker Man, through a myriad of scrolling world puzzles in his attempt to find his best friend, Doodle Dog.
-- Our House Party! for Wii turns the Wii Remote into the ultimate home renovating tool that lets players compete party style to build their own personalized trophy home that they can then share with friends via WiiConnect24.
-- Our House for DS is the second game from Majesco Studios Santa Monica. This companion game to the Wii version lets players work as contractors and then use their work-for-hire earnings to design, build and decorate their own personalized home.
-- Rollin' Rascals for DS is an addictive puzzler that challenges players to roll adorable round pets around obstacles and into identical twos to clear them from the game board.
-- Major Minor's Majestic March for Wii marks the return of the creative team behind the renowned PaRappa the Rapper franchise--legendary game designer and multimedia musician
-- Hot 'n' Cold for DS is the first fully 3D hunt and find adventure game for the handheld. Players use the innovative Hot 'n' Cold meter as a guide to discovery of hundreds of missing objects.
-- Escape the Museum for Wii is based on the popular online hidden object game that challenges players to rescue museum artifacts and find their missing daughter in a museum devastated by an earthquake.
-- Drama Queens for DS tasks players with juggling their love life, career and friendships as they compete in a popularity contest set within a virtual 3D board game.
-- Powerbike for DS is an intense motorcycle racer that features death-defying stunts, intense police chases and competitive multiplayer modes.
-- Orchard for online and retail PC is a simulation that challenges players to manage all facets of a retail business, including planting and harvesting crops, developing new recipes, buying ingredients and hiring a workforce.
Fiscal 2009 Outlook
The Company expects fiscal 2009 full year net revenue to be in excess of
Conference Call
At
About Majesco Entertainment Company
Majesco Entertainment Company is a provider of video games for the mass market. Building on 20 years of operating history, Majesco is focused on developing and publishing a wide range of casual and family oriented video games on leading console and portable systems. Product highlights include Cooking Mama(TM) and Cake Mania(R)2 for Nintendo DS(TM), and Cooking Mama World Kitchen and
Use of Non-GAAP Financial Information
To supplement the Company's unaudited condensed consolidated financial statements presented in accordance with GAAP, the Company uses certain Non-GAAP measures of financial performance. The presentation of these Non-GAAP financial measures is not intended to be considered in isolation from, as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP, and may be different from Non-GAAP financial measures used by other companies. In addition, these Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP. The Non-GAAP financial measures used by the Company include Non-GAAP operating income (loss), Non-GAAP net income (loss), and Non-GAAP basic and diluted earnings (loss) per share. These Non-GAAP financial measures exclude the following items from the Company's unaudited condensed consolidated statements of operations:
-- Expenses related to non-cash compensation
-- Gains on settlement of liabilities and other gains
-- Settlement charges related to the settlement of class action litigation
-- Change in fair value of warrants
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, 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
MAJESCO ENTERTAINMENT 2008-2009 RELEASE SCHEDULE*
2008 GAMES
----------
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Furu Furu Wild Earth: Cake Mania Babysitting
Park Wii, African 2 DS, Mania DS,
$19.99 Safari Wii, $19.99 $19.99
$29.99
Left Brain Eco-Creatures: Blast Works: Spy Fox in Dry
Right Brain Save the Build, Cereal Wii,
DS, Forest DS, Trade, $19.99
$19.99 $29.99 Destroy Wii,
$39.99
Mega Brain Nanostray Nancy Drew: Freddi Fish:
Boost DS, 2 DS, Mystery of Kelp Seed
$19.99 the Mystery Wii,
$29.99 Clue Bender $19.99
Society DS,
$19.99
Cooking Blokus Wonder World Air Traffic
Mama 2: Portable:
Dinner with Steambot Amusement Chaos DS,
Friends DS, Championship Park Wii,
$29.99 PSP, $19.99
$19.99 $39.99
Pet Pals: Pajama Sam
Animal in Don't
Doctor
DS, $19.99 Fear the Dark
Wii,
$19.99
Toy Shop DS, Zoo Hospital
Wii,
$19.99 $29.99
Away Shuffle
Dungeon DS,
$29.99
Jillian
Michaels'
Fitness
Ultimatum
2009 Wii,
$39.99
2009 GAMES
----------
Quarter 1 Quarter 2 Quarter 3
Cooking Mama Rollin' Rascals Our House:
World Kitchen Wii, DS, Party!
$49.99 $19.99 Wii, Price TBA
Bananagrams Math Blaster in Our House DS,
Facebook, the Price TBA
Free Prime Adventure
DS, $19.99
FusionFall: Cartoon Gardening Mama Powerbike DS,
Network Universe DS, Price TBA $19.99
PC, $19.99
Left Brain Right Major Minor's Hot -n- Cold DS,
Brain 2 DS, Majestic $19.99
$19.99 March Wii,
Price TBA
Wonder World Escape the Museum
Amusement Park DS, Wii,
$19.99 $19.99
Cake Mania: Drama Queens DS,
In the Mix! Wii, $19.99
$29.99
Marker Man
Adventures DS,
$19.99
Orchard PC,
Price TBA
*Includes all released and announced titles to date. Prices subject to
change for unreleased titles.
MAJESCO ENTERTAINMENT COMPANY
UNAUDITED SUPPLEMENTARY PRODUCT DATA
MAJESCO ENTERTAINMENT COMPANY
UNAUDITED SUPPLEMENTARY PRODUCT DATA
------------------------------------
Net Revenue by Platform - Yearly
FY08 FY07 FY06
Actual Actual Actual
CONSOLE:
Wii 34.0% 19.6% 0.0%
PS2 1.0% 6.8% 18.7%
Xbox 0.2% 3.3% 15.7%
35.2% 29.7% 34.4%
HANDHELD:
DS 61.7% 53.7% 24.4%
GBA 0.1% 5.6% 28.0%
PSP 1.1% 3.0% 3.4%
62.9% 62.3% 55.8%
OTHER 1.9% 8.0% 9.8%
TOTAL 100.0% 100.0% 100.0%
MAJESCO ENTERTAINMENT'S NET SALES BY PLATFORM
MAJESCO ENTERTAINMENT COMPANY
NET SALES BY PLATFORM
---------------------
Three Months Ended Three Months Ended
October 31, 2008 October 31, 2007
Net Sales % Net Sales %
--------- - --------- -
CONSOLE:
Wii $9,284 51.6% $1,214 10.2%
PS2 18 0.1% 416 3.5%
Xbox/360 - 0.0% 1,071 9.0%
9,302 51.7% 2,701 22.7%
HANDHELD:
DS 8,365 46.5% 8,257 69.4%
GBA - 0.0% 595 5.0%
PSP 325 1.8% 250 2.1%
8,690 48.3% 9,102 76.5%
OTHER - 0.0% 95 0.8%
TOTAL $17,992 100.0% $11,898 100.0%
Wii / DS $17,649 98.1% $9,471 79.6%
MAJESCO ENTERTAINMENT COMPANY
NET SALES BY PLATFORM
---------------------
Twelve Months Ended Twelve Months Ended
October 31, 2008 October 31, 2007
Net Sales % Net Sales %
--------- ---------
CONSOLE:
Wii $21,746 34.0% $10,005 19.6%
PS2 640 1.0% 3,481 6.8%
Xbox/360 128 0.2% 1,651 3.3%
22,514 35.2% 15,137 29.7%
HANDHELD:
DS 39,390 61.7% 27,387 53.7%
GBA 64 0.1% 2,854 5.6%
PSP 703 1.1% 1,529 3.0%
40,158 62.9% 31,770 62.3%
OTHER 1,215 1.9% 4,060 8.0%
TOTAL $63,887 100.0% $50,967 100.0%
Wii / DS $61,136 95.7% $37,392 73.3%
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share amounts)
Year Ended Three Months Ended
October 31, October 31,
2008 2007 2008 2007
Net revenues $63,887 $50,967 $17,992 $11,898
Cost of sales
Product costs 28,881 25,936 9,335 6,124
Software development
costs and license fees 11,917 7,746 3,663 2,061
40,798 33,682 12,998 8,185
Gross profit 23,089 17,285 4,994 3,713
Operating costs and expenses
Product research
and development 3,306 2,311 885 624
Selling and marketing 8,628 7,421 2,144 1,748
General and administrative 9,549 8,376 2,684 2,304
Depreciation and amortization 300 296 78 76
Gain (loss) on settlements - (266) - 17
Settlement of litigation
and related charges, net (322) 2,822 - 322
Loss on impairment of
software development costs 101 154 101 119
21,562 21,114 5,892 5,210
Operating income (loss) 1,527 (3,829) (898) (1,497)
Other expenses (income)
Interest and financing
costs, net 649 1,552 232 75
Change in fair value
of warrants (1,250) (611) (293) (611)
Income (loss) before
income taxes 2,128 (4,770) (837) (961)
Income taxes 26 - 26 -
Net income (loss) $2,102 $(4,770) $(863) $(961)
Net income (loss) per share:
Basic and diluted $0.08 $(0.20) $(0.03) $(0.04)
Weighted average
shares outstanding:
Basic and diluted 27,547,211 23,891,860 26,893,386 24,439,973
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
October 31,
-----------
2008 2007
---- ----
ASSETS
Current assets:
Cash and cash equivalents $5,505 $7,277
Accounts and other receivables 3,032 670
Inventory 5,619 3,850
Capitalized software development costs and
license fees, current portion 6,812 2,171
Prepaid expenses 1,956 1,128
----- -----
Total current assets 22,924 15,096
Property and equipment - net 563 568
Capitalized software development costs and
license fees, net of current portion - 549
Other assets 83 100
----- -----
Total assets $23,570 $16,313
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $10,697 $7,488
Share based litigation settlement 2,500 2,822
Due to factor 983 1,527
Customer billings due to distribution partner 1,487 -
Inventory financing payables 1,540 -
Advances from customers 265 425
----- -----
Total current liabilities 17,472 12,262
Warrant liability 211 1,460
Stockholders' equity:
Common stock - $.001 par value; 250,000,000
shares authorized; 30,127,950 and 28,675,962
issued and outstanding at October 31, 2008 and 30 29
October 31, 2007 respectively
Additional paid in capital 101,722 100,201
Accumulated deficit (95,422) (97,524)
Accumulated other comprehensive
loss (443) (115)
----- -----
Net stockholders' equity 5,887 2,591
----- -----
Total liabilities and stockholders' equity $23,570 $16,313
======= =======
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended October
31,
----
2008 2007
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $2,102 ($4,770)
Adjustments to reconcile net income
(loss) to net cash used in operating
activities:
Change in fair value of warrants
(1,250) (611)
Depreciation and amortization
315 296
Amortization of capitalized software
development costs and prepaid licenses
fees 6,122 3,116
Non-cash compensation expense
1,558 1,505
Warrant issued for services
77 -
Write-off of accounts receivable
255 -
Share based litigation settlement
(322) 2,822
Gain on settlements - (266)
Loss on impairment of software
development costs 101 154
Changes in operating assets and
liabilities
Due to/from factor - net (544) 2,716
Accounts and other receivables (2,806) 2,433
Inventory (1,769) (1,412)
Capitalized software development costs
and prepaid license fees (10,362) (4,501)
Prepaid expenses (833) 1,097
Other assets (17) (18)
Accounts payable and accrued expenses
3,314 (2,791)
Customer billings due to distribution
partner 1,487 -
Advances from customers (126) (536)
Net cash used in operating activities (2,698) (766)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment
(314) (163)
Net cash used in investing activities
(314) (163)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options
- 49
Treasury stock, to be
retired (72) -
Inventory financing 1,540 (1,390)
Proceeds from private placement, net of
expenses (40) 5,819
Net cash provided by financing
activities 1,428 4,478
Effect of exchange rates on cash and
cash equivalents (188) (66)
Net (decrease) increase in cash and
cash equivalents (1,772) 3,483
Cash and cash equivalents - beginning
of year 7,277 3,794
Cash and cash equivalents - end of year
$5,505 $7,277
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the year for interest
$676 $1,638
SUPPLEMENTAL SCHEDULE OF
NON CASH INVESTING AND
FINANCING ACTIVITIES
Issuance of common stock in payment of
accounts payable - $365
Issuance of common stock for assets
- $11
Warrant liability incurred on private
placement ($1,250) $2,071
MAJESCO ENTERTAINMENT COMPANY
RECONCILIATION OF GAAP to Non-GAAP FINANCIAL MEASURES
(in thousands, except share amounts)
(Unaudited)
Three Months Ended Year Ended
October 31 October 31
2008 2007 2008 2007
GAAP operating
income (loss) $ (898) $ (1,497) $1,527 $(3,829)
Settlement of litigation
and related charges, net (1) - 322 (322) 2,822
Non-Cash Compensation (3) $439 $492 $1,557 $1,505
Gain on settlement
of liabilities
and other gains - - - (266)
Non-GAAP operating
income (loss) $(459) $(683) $2,762 $232
GAAP net income (loss) $(863) $(961) $2,102 $(4,770)
Settlement of litigation
and related charges, net (1) - 322 (322) 2,822
Change in fair
value of warrants (2) (293) (611) (1,250) (611)
Non-Cash Compensation (3) $439 $492 $1,557 $1,505
Gain on settlement
of liabilities
and other gains - - (266)
Non-GAAP net income (loss) $(717) $(758) $2,087 $(1,320)
GAAP net income (loss)
per diluted share $(0.03) $(0.04) $0.08 $(0.20)
Settlement of litigation
and related charges, net (1) - 0.01 (0.01) 0.12
Change in fair
value of warrants (2) (0.01) (0.02) (0.05) (0.03)
Non-Cash Compensation (3) 0.01 0.02 0.06 0.06
Gain on settlement of
liabilities and other gains - - - (0.01)
Non-GAAP net income (loss)
per diluted share $(0.03) $(0.03) $0.08 $(0.06)
Shares used in GAAP
and Non-GAAP per
diluted share amounts 26,893,386 24,439,973 27,547,211 23,891,860
(1) During the year ended
(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.
(3) Represents expenses recorded for stock compensation expense in accordance with SFAS 123R. 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.
SOURCE Majesco Entertainment Company
