Zumba(R) Fitness Franchise Continues to Build Momentum Ahead of Upcoming Zumba(R) Fitness Core Release
EDISON, NJ--(Marketwire - Sep 10, 2012) - Majesco Entertainment Company (
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 Zynga.com. 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."
Highlights
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:
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 http://ir.majescoentertainment.com. 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:
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 http://www.majescoent.com/ or on Twitter at www.twitter.com/majesco.
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.
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, |
Nine months Ended July 31, |
|||||||||||||||||||
2012 | % | 2011 | % | 2012 | % | 2011 | % | |||||||||||||
(thousands) | (thousands) | (thousands) | (thousands) | |||||||||||||||||
Nintendo Wii | $ | 5,539 | 61% | $ | 14,036 | 72% | $ | 65,147 | 62% | $ | 59,794 | 60% | ||||||||
Microsoft Xbox 360 | 2,153 | 24% | 2,306 | 12% | 26,491 | 25% | 20,334 | 20% | ||||||||||||
Nintendo DS | 948 | 10% | 2,249 | 11% | 10,142 | 10% | 14,610 | 15% | ||||||||||||
Nintendo 3DS | - | -% | - | -% | 1,452 | 1% | - | -% | ||||||||||||
Sony PlayStation 3 | 119 | 1% | 637 | 3% | 809 | 1% | 4,438 | 4% | ||||||||||||
Accessories and other | 386 | 4% | 317 | 2% | 1,684 | 1% | 978 | 1% | ||||||||||||
TOTAL | $ | 9,145 | 100% | $ | 19,545 | 100% | $ | 105,725 | 100% | $ | 100,154 | 100% | ||||||||
MAJESCO ENTERTAINMENT COMPANY AND SUBSIDIARY | ||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
(In thousands, except share amounts) | ||||||||||
July 31, 2012 |
October 31, 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 July 31 |
Nine months Ended 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.
Contact Information:
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