| In re: | Case No. 09-10465 (KG) | |
Midway Games Inc., et. al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 - 8/31/09 |
| Document | Affidavit | |||||||||||
| REQUIRED DOCUMENTS | Form No. | Attached | Attached | |||||||||
| Schedule of Cash Receipts and Disbursements | MOR-1 | X | ||||||||||
| Bank Reconciliations, Copies of Bank Statements and Cash Disbursements Journals | MOR-la | X | ||||||||||
| Schedule of Professional Fees Paid | MOR-lb | X | ||||||||||
| Statements of Operations | MOR-2 | X | ||||||||||
| Balance Sheets | MOR-3 | X | ||||||||||
| Status of Postpetition Taxes | MOR-4 | X | ||||||||||
| Summary of Unpaid Postpetition Accounts Payable | MOR-4 | X | ||||||||||
| Accounts Receivable Reconciliation and Aging | MOR-5 | X | ||||||||||
| Debtor Questionnaire | MOR-5 | X | ||||||||||
/s/ Ryan G. O’Desky | 10/26/09 | |
| Ryan G. O’Desky | Date | |
| Chief Financial Officer and Treasurer |
Page 1 of 12
| In re: | Case No. 09-10465 (KG) | |
Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 to 8/31/09 |
| Midway Home | Midway Amusement Games, | Midway | Midway Games | Midway Home | Midway Sales | Midway Studios - Austin | Midway Studios - | |||||||||||||||||||||||||||||||||||||
| Debtor | Entertainment Inc. | LLC | Interactive Inc. | West Inc. | Studios Inc. | Company, LLC | Surreal Software Inc. | Inc. | Los Angeles Inc. | Midway Games Inc. | Current Month Total | |||||||||||||||||||||||||||||||||
Cash at beginning of the month | $ | 71,188,686.53 | $ | (12,612,313.83 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (4,104,386.12 | ) | $ | 436,066.31 | $ | (4,715.70 | ) | $ | (9,313,011.64 | ) | $ | 45,587,725.55 | ||||||||||||||
RECEIPTS | ||||||||||||||||||||||||||||||||||||||||||||
| Trade accounts receivable | 2,181,074.98 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 2,181,074.98 | |||||||||||||||||||||||||||||||||
| Cash held in trust | (2,592,362.52 | ) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | (2,592,362.52 | ) | |||||||||||||||||||||||||||||||
| Proceeds related to asset/stock sales | 740,000.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 1,700,000.00 | 2,440,000.00 | |||||||||||||||||||||||||||||||||
| Other | 232,884.02 | 153,602.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 386,486.02 | |||||||||||||||||||||||||||||||||
Total Receipts | $ | 561,596.48 | $ | 153,602.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 1,700,000.00 | $ | 2,415,198.48 | ||||||||||||||||||||||
DISBURSEMENTS | ||||||||||||||||||||||||||||||||||||||||||||
| Cost of goods sold | 194,536.22 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 194,536.22 | |||||||||||||||||||||||||||||||||
| Payroll | 549,414.79 | 394,813.43 | 0.00 | 0.00 | 0.00 | 0.00 | (0.74 | ) | 0.00 | 0.00 | 178,541.11 | 1,122,768.59 | ||||||||||||||||||||||||||||||||
| Royalties | 110,979.71 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 110,979.71 | |||||||||||||||||||||||||||||||||
| Marketing and advertising | 6,235.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 6,235.00 | |||||||||||||||||||||||||||||||||
| Rent — facilities/equipment/taxes | 107,151.30 | 19,682.50 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 126,833.80 | |||||||||||||||||||||||||||||||||
| Utilities | 13,131.29 | 23,972.95 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 5,769.82 | 0.00 | 0.00 | 42,874.06 | |||||||||||||||||||||||||||||||||
| Benefits | 37,888.49 | 31,432.87 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 10,717.65 | 0.00 | 0.00 | 80,039.01 | |||||||||||||||||||||||||||||||||
| IT equipment | 4,088.66 | 6,704.29 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 10,792.95 | |||||||||||||||||||||||||||||||||
| Legal | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 24,028.00 | 24,028.00 | |||||||||||||||||||||||||||||||||
| Maintenance | 3,768.75 | 694.45 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4,463.20 | |||||||||||||||||||||||||||||||||
| Shipping | 417.11 | 560.94 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 978.05 | |||||||||||||||||||||||||||||||||
| Supplies | 84.06 | 3,904.27 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 3,988.33 | |||||||||||||||||||||||||||||||||
| Consultants and contractors | 2,432.80 | 26,994.16 | 0.00 | 0.00 | 0.00 | 0.00 | 13,992.74 | 0.00 | 0.00 | 0.00 | 43,419.70 | |||||||||||||||||||||||||||||||||
| Board of Directors | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 54,308.00 | 54,308.00 | |||||||||||||||||||||||||||||||||
| Employee expense reports | 741.51 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 4,859.76 | 5,601.27 | |||||||||||||||||||||||||||||||||
| Taxes | 0.00 | 2,322.18 | 0.00 | 0.00 | 0.00 | 0.00 | 615.60 | 0.00 | 0.00 | 0.00 | 2,937.78 | |||||||||||||||||||||||||||||||||
| Purchasing cards | 0.00 | 52,764.76 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 7,948.75 | 60,713.51 | |||||||||||||||||||||||||||||||||
| Subtotal operating disbursements | 1,030,869.69 | 563,846.80 | 0.00 | 0.00 | 0.00 | 0.00 | 14,607.60 | 16,487.47 | 0.00 | 269,685.62 | 1,895,497.18 | |||||||||||||||||||||||||||||||||
| Incentive Bonus | 9,500.00 | 61,500.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 79,000.00 | 150,000.00 | |||||||||||||||||||||||||||||||||
| Subtotal restructuring disbursements | 9,500.00 | 61,500.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 79,000.00 | 150,000.00 | |||||||||||||||||||||||||||||||||
Total Disbursements | $ | 1,040,369.69 | $ | 625,346.80 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 14,607.60 | $ | 16,487.47 | $ | 0.00 | $ | 348,685.62 | $ | 2,045,497.18 | ||||||||||||||||||||||
Receipts less disbursements | $ | (478,773.21 | ) | $ | (471,744.80 | ) | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | (14,607.60 | ) | $ | (16,487.47 | ) | $ | 0.00 | $ | 1,351,314.38 | $ | 369,701.30 | ||||||||||||||||||
Cash at end of the month | $ | 70,709,913.32 | $ | (13,084,058.63 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (650.00 | ) | $ | (4,118,993.72 | ) | $ | 419,578.84 | $ | (4,715.70 | ) | $ | (7,961,697.26 | ) | $ | 45,957,426.85 | ||||||||||||||
| General Notes: | ||
| 1) | Cash balances may not be same as the bank statements or ledger balances as they do not reflect unavailable funds, outstanding checks and other timing differences. | |
| 2) | Included in the cash at the end of the month were two restricted letters of credit at Midway Home Entertainment Inc. (MHE) for $225,000 and at Midway Studios — Austin Inc. (MSA) for $26,103.01. Withdrawals by the beneficiary were made in August 2009 related to the MSA letter of credit. | |
| 3) | Disbursements reflect when the disbursement accounts are funded rather than when the item clears the bank. | |
| 4) | Timing of receipts and internal accounting can cause period-end discrepancies in respective intercompany reporting. | |
| 5) | Because there were no transfers to debtors in possession accounts or estate disbursements made by outside sources, the total disbursements line above will be used to calculate U.S. Trustee quarterly fees. | |
| 6) | U.S. Trustee quarterly fees are paid by Midway Games Inc. (MGI) on behalf of each Debtor and expenses are allocated based on fees calculated for each Debtor. | |
| 7) | The cash held in trust at MHE represents collections of accounts receivable, pursuant to the Transition Services Agreement, on behalf of Warner Bros. Entertainment Inc. (WBEI) subsequent to the sale of accounts receivable to WBEI on July 10, 2009. These amounts collected were remitted to WBEI during the month but are not included in disbursements used to calculate U.S. Trustee quarterly fees. | |
| 8) | Proceeds from asset sales reported at MHE were received upon completion of the sale of assets to THQ Inc. (THQ) on August 19, 2009, pursuant to the Asset Purchase Agreement. On August 18, 2009, the Bankruptcy Court approved the sales by MHE of its stock in certain non-Debtor foreign subsidiaries. Pursuant to the Intercompany Claims Agreement approved in connection therewith, MGI received $1.7 million in cash. | |
| 9) | Other cash receipts reported at MHE and MAG were received upon completion of services by certain Key Employees of the Debtors under the Transition Services Agreement with WBEI. The proceeds were used to pay incentives to these Key Employees. | |
Page 2 of 12
| In re: | Case No. 09-10465 et seq.(KG) | |
Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 - 8/31/09 |
/s/ Ryan G. O’Desky | 10/26/09 | |
| Ryan G. O’Desky | Date | |
| Chief Financial Officer and Treasurer |
Page 3 of 12
| In re: | Case No. 09-10465 (KG) | |
Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 to 8/31/09 |
| Debtor | Bank/Institution | Account Number | Book Balance | |||||||
| Midway Home Entertainment Inc. | Wells Fargo Bank N.A. | #583884 | $ | 225,000.00 | ||||||
| Midway Home Entertainment Inc. | Wells Fargo Bank N.A. | #4030110425 | $ | 3,085.13 | ||||||
| Midway Home Entertainment Inc. | Bank of America | #8765261617 | $ | 55,421.48 | ||||||
| Midway Home Entertainment Inc. | Bank of America | #8666525641 | $ | 126,859.28 | ||||||
| Midway Home Entertainment Inc. | Bank of America | #8188615313 | $ | 50,274.25 | ||||||
| Midway Home Entertainment Inc. | Bank of America | #8188615318 | $ | 44,336,131.38 | ||||||
| Midway Amusement Games, LLC | Bank of America | #8765763067 | $ | 39,871.74 | ||||||
| Midway Amusement Games, LLC | Bank of America | #8666305125 | $ | 203,319.95 | (1) | |||||
| Midway Amusement Games, LLC | Bank of America | #8666018766 | $ | 8,385.51 | ||||||
| Midway Amusement Games, LLC | Wells Fargo Bank N.A. | #4030010797 | $ | 0.00 | ||||||
| Midway Amusement Games, LLC | JP Morgan | #806021788 | $ | 0.00 | ||||||
| Surreal Software Inc. | Bank of America | #8765216044 | $ | 4,309.96 | ||||||
| Midway Studios — Austin Inc. | Wells Fargo Bank N.A. | #561549 | $ | 26,103.01 | ||||||
| Midway Studios — Austin Inc. | Bank of America | #8765216049 | $ | 35,599.42 | ||||||
| Midway Studios — Los Angeles Inc. | Bank of America | #8765216063 | $ | 2,428.41 | ||||||
| Midway Games Inc. | Bank of America | #8666302112 | $ | 0.00 | ||||||
| Midway Games Inc. | Bank of America | #8765763147 | $ | 34,067.16 | ||||||
| Midway Games Inc. | Bank of America | #8666302112 | $ | 766,956.90 | ||||||
| Midway Games Inc. | Bank of America | #8188615332 | $ | (10.00 | ) | |||||
| NOTES: | ||
| (1) | The difference between this book balance and the bank balance of $104,234.87 occurred primarily as a result of a timing difference in when certain incentive payments were cashed and when they were recorded on the books. These incentive payments were made in August but were included in the posting of the September 11 payroll. | |
Page 4 of 12
| In re: Midway Games Inc., et al., Debtors | Case No. 09-10465 (KG) Jointly Administered Reporting Period: 8/1/09-8/31/09 |
| Period | Amount | Check | Amount Paid | Filing to Date | ||||||||||||||||||||||||||||||||
| Payee | Covered | Approved | Payer | Date | Number | Fees | Expenses | Fees | Expenses | |||||||||||||||||||||||||||
| Blank Rome LLP 1 | $ | 597,922.83 | $ | 38,604.36 | ||||||||||||||||||||||||||||||||
| Kramer Levin Naftalis 2 | $ | 232,546.50 | $ | 4,786.13 | ||||||||||||||||||||||||||||||||
| Mesirow Financial 2 | $ | 50,000.00 | $ | 0.00 | ||||||||||||||||||||||||||||||||
| Dewey & LeBoeuf LLP 3 | $ | 327,788.40 | $ | 9,752.12 | ||||||||||||||||||||||||||||||||
| Ernst & Young, LLP 4 | $ | 111,439.20 | $ | 386.00 | ||||||||||||||||||||||||||||||||
| Milbank, Tweed, Hadley & McCloy LLP 5 | $ | 1,039,455.60 | $ | 134,522.55 | ||||||||||||||||||||||||||||||||
| Richards, Layton & Finger, P.A. 6 | $ | 84,939.60 | $ | 15,761.48 | ||||||||||||||||||||||||||||||||
| FTI Consulting, Inc. 7 | $ | 212,299.26 | $ | 338.75 | ||||||||||||||||||||||||||||||||
| Lazard Frères & Co. LLC 8 | $ | 101,785.71 | $ | 1,094.98 | ||||||||||||||||||||||||||||||||
| Huron Consulting Group 9 | $ | 89,377.40 | $ | 0.00 | ||||||||||||||||||||||||||||||||
| $ | 0.00 | $ | 0.00 | $ | 2,847,554.50 | $ | 205,246.37 | |||||||||||||||||||||||||||||
| 1 | Lead bankruptcy counsel for the Debtors | |
| 2 | Lead counsel and financial advisors working on behalf of Thomas Parties | |
| 3 | Special counsel to the independent members of the post-petition Board of Directors of the Debtors | |
| 4 | Independent auditor to the Debtors | |
| 5 | Counsel to the Official Committee of Unsecured Creditors | |
| 6 | Co-counsel to the Official Committee of Unsecured Creditors | |
| 7 | Financial advisor to the Official Committee of Unsecured Creditors | |
| 8 | Investment banker to the Debtors | |
| 9 | Bankruptcy consultants to the Debtors |
Page 5 of 12
| In re: Midway Games Inc., et al., Debtors | Case No. 09-10465 (KG) Jointly Administered Reporting Period: 8/1/09 to 8/31/09 |
| Midway | ||||||||||||||||||||||||||||||||||||||||||||||||
| Midway Home | Amusement | Midway | Midway Games | Midway Home | Midway Sales | Surreal Software | Midway Studios - | Midway Studios - | Midway Games | |||||||||||||||||||||||||||||||||||||||
| Entertainment, Inc. | Games, LLC | Interactive Inc. | West Inc. | Studios Inc. | Company, LLC | Inc. | Austin Inc. | Los Angeles Inc. | Inc. | Adjustments and | Total of All | |||||||||||||||||||||||||||||||||||||
| Case number for individual Debtors | 09-10467 | 09-10466 | 09-10468 | 09-10472 | 09-10473 | 09-10474 | 09-10469 | 09-10470 | 09-10471 | 09-10465 | Allocations (1) | Debtors | ||||||||||||||||||||||||||||||||||||
REVENUES | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross sales | $ | 3,856.00 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,856.00 | ||||||||||||||||||||||||
| Royalty and other revenue (2) | — | (312,523.87 | ) | — | — | — | — | — | — | — | — | — | (312,523.87 | ) | ||||||||||||||||||||||||||||||||||
| Allowances | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Net revenues | 3,856.00 | (312,523.87 | ) | — | — | — | — | — | — | — | — | — | (308,667.87 | ) | ||||||||||||||||||||||||||||||||||
COST OF GOODS SOLD | ||||||||||||||||||||||||||||||||||||||||||||||||
| Product costs and distribution | 50,857.68 | — | — | — | — | — | — | — | — | — | — | 50,857.68 | ||||||||||||||||||||||||||||||||||||
| Royalties (3) | (37,577.25 | ) | — | — | — | — | — | — | — | — | — | — | (37,577.25 | ) | ||||||||||||||||||||||||||||||||||
| Product development costs | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||
| Total cost of goods sold | 13,280.43 | — | — | — | — | — | — | — | — | — | — | 13,280.43 | ||||||||||||||||||||||||||||||||||||
| Gross profit | (9,424.43 | ) | (312,523.87 | ) | — | — | — | — | — | — | — | — | — | (321,948.30 | ) | |||||||||||||||||||||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
| Rent expense (4) | 151,205.25 | (40,562.39 | ) | — | — | — | — | 60,025.63 | 449,508.55 | 7,745.72 | — | — | 627,922.76 | |||||||||||||||||||||||||||||||||||
| Insurance | 39,883.64 | 33,342.89 | — | — | — | — | 460.39 | 749.65 | 14.75 | 172,814.71 | — | 247,266.03 | ||||||||||||||||||||||||||||||||||||
| Payroll and benefits | 633,404.96 | 169,486.20 | — | — | — | — | 245.07 | — | — | 165,804.95 | — | 968,941.18 | ||||||||||||||||||||||||||||||||||||
| All other research and development (5) | 157,033.17 | 148,410.50 | — | — | — | — | 81,150.16 | 38,313.18 | (58,936.25 | ) | — | — | 365,970.76 | |||||||||||||||||||||||||||||||||||
| All other selling and marketing | 41,915.92 | 23,280.33 | — | — | — | — | — | — | — | 463.99 | — | 65,660.24 | ||||||||||||||||||||||||||||||||||||
| All other administrative | 20,119.52 | 105,197.33 | — | — | — | — | — | — | — | 733,142.02 | — | 858,458.87 | ||||||||||||||||||||||||||||||||||||
| (Gain) Loss on sale of assets (6) | (15,325,481.23 | ) | (602,252.17 | ) | — | — | — | — | (326,734.74 | ) | 909,871.14 | 96,666.35 | (3,230,335.56 | ) | — | (18,478,266.21 | ) | |||||||||||||||||||||||||||||||
| Total operating expenses | (14,281,918.77 | ) | (163,097.31 | ) | — | — | — | — | (184,853.49 | ) | 1,398,442.52 | 45,490.57 | (2,158,109.89 | ) | — | (15,344,046.37 | ) | |||||||||||||||||||||||||||||||
OTHER INCOME AND EXPENSES | ||||||||||||||||||||||||||||||||||||||||||||||||
| Interest income | 9,089.93 | — | — | — | — | — | — | — | — | 28.88 | — | 9,118.81 | ||||||||||||||||||||||||||||||||||||
| Interest expense | — | (4.18 | ) | — | — | — | — | — | — | — | (9,814.82 | ) | — | (9,819.00 | ) | |||||||||||||||||||||||||||||||||
| Other income and (expense), net (7) | (332,951.06 | ) | 2,027.26 | — | — | — | — | — | — | — | — | — | (330,923.80 | ) | ||||||||||||||||||||||||||||||||||
| Income (loss) before reorganization items | 13,948,633.21 | (147,403.48 | ) | — | — | — | — | 184,853.49 | (1,398,442.52 | ) | (45,490.57 | ) | 2,148,323.95 | — | 14,690,474.08 | |||||||||||||||||||||||||||||||||
REORGANIZATION ITEMS | ||||||||||||||||||||||||||||||||||||||||||||||||
| Professional fees (8) | — | — | — | — | — | — | — | — | — | 797,765.70 | — | 797,765.70 | ||||||||||||||||||||||||||||||||||||
| U.S. Trustee quarterly fees (9) | 6,100.00 | 3,500.00 | — | — | — | — | — | — | — | 5,750.00 | — | 15,350.00 | ||||||||||||||||||||||||||||||||||||
| Total reorganization expenses | 6,100.00 | 3,500.00 | — | — | — | — | — | — | — | 803,515.70 | — | 813,115.70 | ||||||||||||||||||||||||||||||||||||
| Provision for income taxes | 109,398.00 | — | — | — | — | — | — | — | — | 109,398.00 | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 13,833,135.21 | $ | (150,903.48 | ) | $ | — | $ | — | $ | — | $ | — | $ | 184,853.49 | $ | (1,398,442.52 | ) | $ | (45,490.57 | ) | $ | 1,344,808.25 | $ | — | $ | 13,767,960.38 | |||||||||||||||||||||
| NOTES: | ||
| GENERAL — In the ordinary course of business, individual Debtors may make payments to third parties on behalf of other Debtor entities. When this occurs, receivable and payable amounts are recorded at the paying and receiving entities, respectively, for the value of each such payment made. Amounts owed by Debtor entities to other Midway Games Inc. (MGI) subsidiaries are repaid in accordance with company policy. For example, all payroll-related payments are made to employees through Midway Home Entertainment Inc. (MHE) and the related expenses are reported by each employee’s legal entity; each legal entity with employees incurs a liability to MHE for the amounts paid. Also, no Insider Compensation expenses outside of the normal course of business were incurred during the period presented. | ||
| (1) | In performing the accounting for its day-to-day operations, MGI and its Debtor and non-Debtor affiliates had previously allocated common expenses among MGI subsidiaries and capitalized qualifying product development expenses in accordance with U.S. generally accepted accounting principles (GAAP). As a result of the reduced amount of these common expenses and the discontinuation of the capitalization of product development expenses, no amounts were reported in the Adjustments and Allocations column for August 2009. | |
| (2) | The negative amount primarily represents adjustments to previously recorded accruals based on cash received, which was less than what had been accrued. | |
| (3) | The negative amount represents an adjustment to a royalty accrual based on actual data received; the previous accruals had been based on estimated data. | |
| (4) | As a result of the rejection of certain lease contracts by the Debtors with permission from the Bankruptcy Court, all security deposits and the restricted cash supporting one of the letters of credit were charged to rent expense in August 2009. Also as a result of the rejection of the lease contracts, the deferred rent liability that had been previously recorded to equalize rent expense over the lease term was reversed, resulting in negative expense for August 2009. | |
| (5) | The negative amount recorded at Midway Studios — Los Angeles Inc. represents the reversal of relocation accruals; as of August 2009 all relocation payments had been made to employees. | |
| (6) | These amounts include the net gain or loss resulting from the difference between the consideration received by the Debtors and the net book value of the assets assumed and liabilities settled related to the sale of assets to THQ Inc. and the sale of stock in the Debtors’ European subsidiaries (including all transactions consummated under the Intercompany Claims Agreement). These amounts also include the writedown of fixed asset net book values to zero, as the remaining fixed assets have no substantive value to the Debtors. | |
| (7) | The amount recorded at MHE primarily represents the currency exchange loss recorded resulting from the transactions consummated related to the sale of stock in the Debtors’ European subsidiaries and the Intercompany Claims Agreement. | |
| (8) | Professional Fees, which are paid by MGI, are recorded as expense when incurred. All of these fees represent accruals and have not been paid as of August 31, 2009. No allocation of the benefits of such fees has been made to any other Debtor or non-Debtor entities. In addition to the amounts reported in this line item, $1,174,330.95 in fees have either been submitted to the Bankruptcy Court for approval or have been approved by the Bankruptcy Court but payment had not yet been made as of August 31, 2009. | |
| (9) | U.S. Trustee Quarterly Fees are estimated and are expected to be invoiced and paid in October 2009 for the period from July-September 2009. | |
Page 6 of 12
| In re: | Case No. 09-10465(KG) | |
| Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 to 8/31/09 |
| Midway Home | Midway Amusement | Midway Interactive | Midway Games | Midway Home | Midway Sales | |||||||||||||||||||
| Entertainment Inc. | Games, LLC | Inc. | West Inc. | Studios Inc. | Company, LLC | |||||||||||||||||||
| Case number for individual Debtors | 09-10467 | 09-10466 | 09-10468 | 09-10472 | 09-10473 | 09-10474 | ||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
| CURRENT ASSETS | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 44,578,064.10 | $ | 251,790.66 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Restricted cash | — | — | — | — | — | — | ||||||||||||||||||
| Receivables, net | (338,692.05 | ) | 149,450.33 | — | — | — | — | |||||||||||||||||
| Inventories | 2,117.80 | — | — | — | — | — | ||||||||||||||||||
| Prepaid expenses and other current assets | 172,352.07 | 601,362.84 | — | — | — | — | ||||||||||||||||||
| TOTAL CURRENT ASSETS | 44,413,841.92 | 1,002,603.83 | — | — | — | — | ||||||||||||||||||
| Assets held for sale | — | — | — | — | — | — | ||||||||||||||||||
| Property and equipment, net (2) | — | — | — | — | — | — | ||||||||||||||||||
| Investment in subsidiaries (3) | — | — | 29,265,000.00 | (29,265,000.00 | ) | — | — | |||||||||||||||||
| Due from Debtors | 231,631,187.64 | 308,143,577.27 | 430,000.00 | 32,428,938.86 | — | — | ||||||||||||||||||
| Due from non-Debtor MGI subsidiaries | 195,040.75 | — | — | — | — | — | ||||||||||||||||||
TOTAL ASSETS | $ | 276,240,070.31 | $ | 309,146,181.10 | $ | 29,695,000.00 | $ | 3,163,938.86 | $ | — | $ | — | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
| LIABILITIES NOT SUBJECT TO COMPROMISE (Post-petition) | ||||||||||||||||||||||||
| Amounts due to Insiders (4) | — | — | — | — | — | — | ||||||||||||||||||
| Accounts payable | 589,646.40 | 146,365.77 | — | — | — | — | ||||||||||||||||||
| Accrued compensation and related benefits (5) | (29,060.35 | ) | (239,023.48 | ) | — | — | — | — | ||||||||||||||||
| Accrued royalties | 188,342.17 | — | — | — | — | — | ||||||||||||||||||
| Accrued selling and marketing | 180,605.99 | — | — | — | — | — | ||||||||||||||||||
| Other accrued liabilities | 531,283.33 | 2,573,386.20 | — | — | — | — | ||||||||||||||||||
| TOTAL POST-PETITION LIABILITIES | 1,460,817.54 | 2,480,728.49 | — | — | — | — | ||||||||||||||||||
| LIABILITIES SUBJECT TO COMPROMISE (Pre-Petition) (6) | ||||||||||||||||||||||||
| Secured liabilities | $ | 1,086.71 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Priority liabilities | 475,566.78 | 940,880.31 | — | — | — | — | ||||||||||||||||||
| Non-priority liabilities | 245,766,669.48 | 564,272,667.90 | 22,957,000.00 | 48,011,629.43 | — | — | ||||||||||||||||||
| TOTAL PRE-PETITION LIABILITIES | 246,243,322.97 | 565,213,548.21 | 22,957,000.00 | 48,011,629.43 | — | — | ||||||||||||||||||
| Due to Debtors | 10,590,594.74 | 19,941,323.39 | — | — | — | — | ||||||||||||||||||
| Due to non-Debtor MGI subsidiaries | — | — | — | — | — | — | ||||||||||||||||||
| Deferred income taxes | 12,903,100.00 | — | — | — | — | — | ||||||||||||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||||||
| Common stock | 1,000.00 | — | — | — | — | — | ||||||||||||||||||
| Additional paid-in capital | 1,704,243.52 | — | 2,750,000.00 | (186,000.00 | ) | — | — | |||||||||||||||||
| Retained earnings (accumulated deficit) | 3,336,991.54 | (278,489,418.99 | ) | 3,988,000.00 | (44,661,690.57 | ) | — | — | ||||||||||||||||
| Postpetition contributions (distributions) (draws) (5) | — | — | — | — | — | — | ||||||||||||||||||
| Treasury stock | — | — | — | — | — | — | ||||||||||||||||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | 5,042,235.06 | (278,489,418.99 | ) | 6,738,000.00 | (44,847,690.57 | ) | — | — | ||||||||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 276,240,070.31 | $ | 309,146,181.10 | $ | 29,695,000.00 | $ | 3,163,938.86 | $ | — | $ | — | ||||||||||||
Page 7 of 12
| In re: | Case No. 09-10465(KG) | |
| Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 to 8/31/09 |
| Surreal Software | Midway Studios - | Midway Studios - | Midway Games | |||||||||||||||||
| Inc. | Austin Inc. | Los Angeles Inc. | Inc. | Total of All Debtors | ||||||||||||||||
| Case number for individual Debtors | 09-10469 | 09-10470 | 09-10471 | 09-10465 | (1) | |||||||||||||||
ASSETS | ||||||||||||||||||||
| CURRENT ASSETS | ||||||||||||||||||||
| Cash and cash equivalents | $ | 5,810.17 | $ | 35,599.42 | $ | 2,428.41 | $ | 801,014.06 | $ | 45,674,706.82 | ||||||||||
| Restricted cash | — | — | — | 251,103.01 | 251,103.01 | |||||||||||||||
| Receivables, net | — | — | — | 13.81 | (189,227.91 | ) | ||||||||||||||
| Inventories | — | — | — | — | 2,117.80 | |||||||||||||||
| Prepaid expenses and other current assets | — | 10,833.13 | — | 14,890.87 | 799,438.91 | |||||||||||||||
| TOTAL CURRENT ASSETS | 5,810.17 | 46,432.55 | 2,428.41 | 1,067,021.75 | 46,538,138.63 | |||||||||||||||
| Assets held for sale | — | — | — | 2,346,400.00 | 2,346,400.00 | |||||||||||||||
| Property and equipment, net (2) | — | — | — | 458,827.67 | 458,827.67 | |||||||||||||||
| Investment in subsidiaries (3) | — | — | — | 21,472,773.11 | 21,472,773.11 | |||||||||||||||
| Due from Debtors | — | 253,368.44 | 156,098.21 | 657,608,969.62 | 1,230,652,140.04 | |||||||||||||||
| Due from non-Debtor MGI subsidiaries | — | — | — | 3,798,333.69 | 3,993,374.44 | |||||||||||||||
TOTAL ASSETS | $ | 5,810.17 | $ | 299,800.99 | $ | 158,526.62 | $ | 686,752,325.84 | $ | 1,305,461,653.89 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||
| LIABILITIES NOT SUBJECT TO COMPROMISE (Post-petition) | ||||||||||||||||||||
| Amounts due to Insiders (4) | — | — | — | — | — | |||||||||||||||
| Accounts payable | 37,260.04 | 69,081.87 | (2,695.56 | ) | 800,339.46 | 1,639,997.98 | ||||||||||||||
| Accrued compensation and related benefits (5) | 29,892.82 | (15,857.49 | ) | (5,894.61 | ) | 19,350.51 | (240,592.60 | ) | ||||||||||||
| Accrued royalties | — | — | — | — | 188,342.17 | |||||||||||||||
| Accrued selling and marketing | — | — | — | — | 180,605.99 | |||||||||||||||
| Other accrued liabilities | 49,083.71 | 71,575.38 | 5,920.11 | 2,439,799.99 | 5,671,048.72 | |||||||||||||||
| TOTAL POST-PETITION LIABILITIES | 116,236.57 | 124,799.76 | (2,670.06 | ) | 3,259,489.96 | 7,439,402.26 | ||||||||||||||
| LIABILITIES SUBJECT TO COMPROMISE (Pre-Petition) (6) | ||||||||||||||||||||
| Secured liabilities | $ | — | $ | 4,029.62 | $ | — | $ | — | $ | 5,116.33 | ||||||||||
| Priority liabilities | 174,824.30 | 49,081.40 | 4,884.62 | 275,066.23 | 1,920,303.64 | |||||||||||||||
| Non-priority liabilities | 49,208,204.23 | 64,739,220.37 | 30,531,064.78 | 338,044,123.76 | 1,363,530,579.95 | |||||||||||||||
| TOTAL PRE-PETITION LIABILITIES | 49,383,028.53 | 64,792,331.39 | 30,535,949.40 | 338,319,189.99 | 1,365,455,999.92 | |||||||||||||||
| Due to Debtors | 3,677,681.97 | 728,114.57 | 45,635.41 | 33,839,887.05 | 68,823,237.13 | |||||||||||||||
| Due to non-Debtor MGI subsidiaries | — | — | — | — | — | |||||||||||||||
| Deferred income taxes | — | — | — | — | 12,903,100.00 | |||||||||||||||
| STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||||||||||||||
| Common stock | — | — | — | 935,403.55 | 936,403.55 | |||||||||||||||
| Additional paid-in capital | 4,187,009.00 | 2,575,167.27 | 3,594,163.08 | 522,497,846.03 | 537,122,428.90 | |||||||||||||||
| Retained earnings (accumulated deficit) | (57,358,145.90 | ) | (67,920,612.00 | ) | (34,014,551.21 | ) | (202,316,455.97 | ) | (677,435,883.10 | ) | ||||||||||
| Postpetition contributions (distributions) (draws) (5) | — | — | — | — | — | |||||||||||||||
| Treasury stock | — | — | — | (9,783,034.77 | ) | (9,783,034.77 | ) | |||||||||||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | (53,171,136.90 | ) | (65,345,444.73 | ) | (30,420,388.13 | ) | 311,333,758.84 | (149,160,085.42 | ) | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 5,810.17 | $ | 299,800.99 | $ | 158,526.62 | $ | 686,752,325.84 | $ | 1,305,461,653.89 | ||||||||||
Page 8 of 12
| In re: | Case No. 09-10465(KG) | |
| Midway Games Inc., et al., | Jointly Administered | |
| Debtors | Reporting Period: 8/1/09 to 8/31/09 |
| (1) | Each individual entity’s balances are presented in their respective columns; this “Total of All Debtors” column is provided to show the balances of the combined Debtor entities as a whole for information purposes only. | |
| (2) | As a result of the sales of assets to WBEI and THQ Inc., the remaining fixed assets of the Debtors except for those being used at its corporate offices (recorded at MGI) were determined to have a value of zero; therefore, these balances were written down as losses on sales of investments. | |
| (3) | Investment in subsidiaries represent amounts invested by certain MGI subsidiaries in other MGI subsidiaries. Negative amounts are reported in this line item by the investee subsidiary to represent the amounts invested in that subsidiary. | |
| (4) | Insiders are defined as directors and officers of any Debtor entities or non-Debtor MGI subsidiaries. There were no amounts due to Insiders outside of the normal course of business as of August 31, 2009. | |
| (5) | Accrued compensation and related benefits exclude amounts owed as of the petition date for paid time off, severance, relocation and supplemental insurance; these amounts are included in the Pre-petition Liabilities section. Certain amounts have been paid post-petition related to these pre-petition amounts owed. The accruals for paid time off fluctuate based on employees’ usage of paid time off earned. Also, the amount reported by Midway Studios — Los Angeles represents relocation amounts owed that are reported as pre-petition liabilities by MHE, as the employees affected were (as of the petition date, and continue to be to the extent they have not been terminated) employees of MHE. Similarly, the liability for paid time off for MGI employees is recorded by Midway Amusement Games, LLC (MAG), but is reported as a pre-petition liability by MGI. In both of these instances, accrued compensation and related benefits reported by the Debtor entities that incurred the liability have been reduced by these amounts as a result. The accrued compensation and benefits amounts owed to employees who were hired by WBEI and THQ Inc. in connection with those asset sales have been removed from the books as these amounts are now the responsibility of the purchasers. | |
| (6) | Pre-petition liabilities as of the current balance sheet date include post-petition amounts paid or applied, pursuant to Bankruptcy Court orders, to claims previously reported as of the petition date in the Schedules of Assets and Liabilities. |
Page 9 of 12
| In re: Midway Games Inc., et al., Debtors | Case No. 09-10465 et seq. (KG) Jointly Administered Reporting Period: 8/1/09-8/31/09 |
10/26/09 | /s/ Ryan G. O’Desky | |||
| Chicago, Illinois | Chief Financial Officer and Treasurer |
| 1 | The Debtors use Ceridian, a third party payroll processor, for the remittance of payroll taxes. Ceridian is responsible for remitting both the employee and employer portion of payroll tax liabilities to the appropriate jurisdictions. Moreover, by first day orders entered by the Court on February 13, 2009, the Debtors received authority to pay certain prepetition payroll and “trust fund” taxes. |
Page 10 of 12
| In re: Midway Games Inc., et al., Debtors | Case No. 09-10465 (KG) Jointly Administered Reporting Period: 8/1/09 to 8/31/09 |
| Number of Days Past Due | ||||||||||||||||||||||||
| Current | 0-30 | 31-60 | 61-90 | over 90 | Total | |||||||||||||||||||
| Accounts Payable | $ | 19,597.54 | $ | 263,081.58 | $ | 211,423.72 | $ | 50,129.26 | $ | 64,950.65 | $ | 609,182.75 | ||||||||||||
| Professional Fees 1 | $ | 0.00 | $ | 259,863.90 | $ | 182,856.24 | $ | 24,378.17 | $ | 57,344.35 | $ | 524,442.66 | ||||||||||||
| Total Postpetition Accounts Payable | $ | 19,597.54 | $ | 522,945.48 | $ | 394,279.96 | $ | 74,507.43 | $ | 122,295.00 | $ | 1,133,625.41 | ||||||||||||
Page 11 of 12
| In re: Midway Games Inc., et. al., Debtors | Case No. 09-10465 (KG) Jointly Administered Reporting Period: 8/1/09 to 8/31/09 |
| ACCOUNTS RECEIVABLE RECONCILATION | Amount | |||
| Total trade accounts receivable at the beginning of the reporting period | $ | (355,534.64 | ) | |
| + Amounts billed during the period | 3,856.00 | |||
| - Amounts collected and adjusted during the period | 14,139.18 | |||
| - Amounts sold to third parties during the period | 0.00 | |||
| Total trade accounts receivable at the end of the reporting period | $ | (337,539.46 | ) | |
| ACCOUNTS RECEIVABLE AGING | Amount | |||
| 0 - 30 days old | $ | 0.00 | ||
| 31 - 60 days old | 0.00 | |||
| 61 - 90 days old | (176.00 | ) | ||
| 90 + days old | (337,363.46 | ) | ||
| Total trade accounts receivable | (337,539.46 | ) | ||
| Royalty receivables | 149,450.33 | |||
| Other receivables | 13.81 | |||
| Allowance for doubtful accounts | (1,152.59 | ) | ||
| Net receivables | $ | (189,227.91 | ) | |
| 1) | All trade accounts receivable and related allowances are reported at Midway Home Entertainment Inc. | |
| 2) | Trade accounts receivable are aged from invoice date based on individual customer credit terms. | |
| 3) | Royalty receivables are not aged and are reported at Midway Amusement Games, LLC. | |
| 4) | Receivable allowances are not aged. | |
| 5) | All trade accounts receivable from customers with invoiced amounts outstanding, net of discounts and allowances, were sold to Warner Bros. Entertainment Inc. on July 10, 2009. The remaining trade accounts receivable amounts relate to customers for which only credit memos and/or outstanding price protection remained that had not been previously applied to invoices. |
| Must be completed each month | Yes | No | ||||
| 1. | Have any assets been sold or transferred outside of the normal course of business this reporting period? If yes, provide an explanation below. | X - see (1) below | ||||
| 2. | Have any funds been disbursed from any other account than a debtor in possession account this reporting period? If yes, provide an explanation below. | X | ||||
| 3. | Have all post petition tax returns been timely filed? If no, provide an explanation below. | X | ||||
| 4. | Are workers compensation, general liability, and other necessary insurance coverages in effect? If no, provide an explanation below. | X | ||||
| 5. | Has any bank account been opened during the period? If yes, provide documentation identifying the opened account(s). If an investment account has been opened provide the required documentation pursuant to Delaware Local Rule 4001-3. | X | ||||
| (1) | Pursuant to a sale order previously approved by the Bankruptcy Court, the Debtors sold certain assets to THQ Inc. on August 19, 2009, for $740,000 in cash plus other consideration. |
Page 12 of 12
