Exhibit 99.1
FOR IMMEDIATE RELEASE
CONTACT:
Geoffrey Mogilner
Midway Games Inc.
(773) 961-2222
gmogilner@midway.com
Geoffrey Mogilner
Midway Games Inc.
(773) 961-2222
gmogilner@midway.com
MIDWAY REPORTS 2006 Q3 RESULTS
Chicago, Illinois, November 2, 2006— Midway Games Inc. (NYSE: MWY) today announced results of operations for the three month period ended September 30, 2006. The Company also confirmed its prior revenue guidance and updated its earnings guidance for the full year ending December 31, 2006, as well as provided revenue and earnings guidance for the fourth quarter ending December 31, 2006.
THIRD QUARTER RESULTS
Net revenues for the 2006 third quarter were $27.4 million, compared with 2005 third quarter net revenues of $29.5 million. The 2006 third quarter loss applicable to common stock was $22.2 million which includes $1.0 million of stock option expense, or a loss of $0.24 per share, compared with a 2005 third quarter loss applicable to common stock of $29.1 million, or $0.33 per share.
Other highlights during the third quarter of 2006 include:
| • | Midway launchedThe Ant Bullyfor PlayStation 2, Nintendo GameCube, Game Boy Advance, and PC;Spy Hunter: Nowhere to Run for PlayStation 2 and Xbox; andThe Grim Adventures of Billy & Mandyfor PlayStation 2 and GameCube. | |
| • | Midway’s real-time strategy PC title launched in June 2006,Rise & Fall: Civilizations at War, which topped the PC charts in the United Kingdom, recently won the prestigious “Best Strategy Game” award from the British Academy of Film and Television Arts, or BAFTA. |
David F. Zucker, president and chief executive officer, commented, “We were pleased to exceed our financial expectations for the third quarter, and to continue our relationship with Warner Bros. with the third quarter release ofThe Ant BullyandThe Grim Adventures of Billy & Mandy, and our scheduled release of theHappy Feetgame in conjunction with the movie release mid-November.”
OUTLOOK
For the quarter ending December 31, 2006, Midway expects net revenues of approximately $86 million and net income of approximately $2 million. For the fourth quarter, Midway has already releasedMortal Kombat: Armageddonfor PlayStation 2 and Xbox, andUnreal Anthologyfor the PC. During the remainder of the quarter, the Company expects to releaseHappy Feetfor multiple platforms;The Grim Adventures of Billy & Mandy,Rampage: Total Destruction, andThe Ant Bullyfor the Nintendo Wii;Blitz: The Leaguefor the Xbox 360; andBlitz: The League Overtime,Mortal Kombat: Unchained, andRushfor the PlayStation Portable (PSP). For the year ending December 31, 2006, Midway continues to
expect net revenues of $155 million, and is revising full year earnings expectations to a net loss of approximately $73 million, compared to our prior guidance of a net loss of approximately $70 million. This is primarily due to decreasing margins on current generation titles. The full year guidance includes approximately $3.5 million of stock option expense.
Mr. Zucker commented, “Our fourth quarter line-up demonstrates both our genre and platform diversity. We expect that 2007 will show the fruits of our investment over the last several years in next generation technology and our sales and marketing infrastructure, and we continue to focus our efforts to position the company for revenue and market share growth in 2007 and beyond.”
CONFERENCE CALL
Midway Games Inc. is hosting a conference call and simultaneous webcast open to the general public at 4:30 P.M. EST today, Thursday, November 2, 2006. The conference call number is (866) 510-0704 or (617) 597-5362 (international callers). The passcode for the call is 82744623. Please call ten minutes in advance to ensure that you are connected prior to the presentation. Interested parties may also access the live call on the Internet at www.investor.midway.com or at www.earnings.com. Please log-on fifteen minutes in advance to ensure that you are connected prior to the call’s initiation. Following its completion, a replay of the call can be accessed until November 9th by dialing (888) 286-8010 or (617) 801-6888 (international callers). The passcode for the replay is 79391706. Additionally, a replay of the call will be available for twelve months on the Internet via www.investor.midway.com.
ABOUT MIDWAY
Midway Games Inc. (NYSE:MWY), headquartered in Chicago, Illinois, with offices throughout the world, is a leading developer and publisher of interactive entertainment software for major videogame systems and personal computers. More information about Midway and its products can be found at www.midway.com.
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning future business conditions and the outlook for Midway Games Inc. (the “Company”) based on currently available information. The Company’s actual results could differ materially from those described in the forward-looking statements as a result of a number of risks and uncertainties, including, without limitation, the performance of the interactive entertainment industry, dependence on new product introductions and the ability to maintain the scheduling of such introductions, the current console platform transition and other technological changes, dependence on major platform manufacturers and other risks more fully described under “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005, and in other filings made by the Company with the Securities and Exchange Commission. Each forward-looking statement, including, without limitation, financial guidance, speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which it is made or to reflect the occurrence of anticipated or unanticipated events or circumstances, except as required by law.
–tables follow–
| Midway Games Inc., 11/2/06 | page 3 |
MIDWAY GAMES INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
Consolidated Statements of Operations
(In thousands, except per share amounts)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
| Net revenues | $ | 27,392 | $ | 29,527 | $ | 68,710 | $ | 80,268 | ||||||||
| Cost of sales: | ||||||||||||||||
| Product costs and distribution | 12,541 | 11,470 | 30,400 | 30,440 | ||||||||||||
| Royalties and product development | 14,774 | 20,469 | 38,898 | 45,164 | ||||||||||||
| Total cost of sales | 27,315 | 31,939 | 69,298 | 75,604 | ||||||||||||
| Gross profit (loss) | 77 | (2,412 | ) | (588 | ) | 4,664 | ||||||||||
| Research and development expense | 7,147 | 8,756 | 28,525 | 28,166 | ||||||||||||
| Selling and marketing expense | 8,059 | 12,538 | 27,448 | 35,597 | ||||||||||||
| Administrative expense | 5,142 | 4,475 | 15,934 | 13,124 | ||||||||||||
| Restructuring and other charges | 1 | — | (160 | ) | — | |||||||||||
| Operating loss | (20,272 | ) | (28,181 | ) | (72,335 | ) | (72,223 | ) | ||||||||
| Interest income | 1,360 | 436 | 3,497 | 1,554 | ||||||||||||
| Interest expense | (3,678 | ) | (595 | ) | (7,561 | ) | (1,319 | ) | ||||||||
| Other income and (expense), net | 781 | (292 | ) | 1,757 | (1,731 | ) | ||||||||||
| Loss before income taxes | (21,809 | ) | (28,632 | ) | (74,642 | ) | (73,719 | ) | ||||||||
| Provision for income taxes | 342 | 297 | 1,116 | 953 | ||||||||||||
| Net loss | (22,151 | ) | (28,929 | ) | (75,758 | ) | (74,672 | ) | ||||||||
| Preferred stock dividends: | ||||||||||||||||
| Distributed | — | 151 | — | 277 | ||||||||||||
| Imputed | — | 3 | — | 6 | ||||||||||||
| Loss applicable to common stock | $ | (22,151 | ) | $ | (29,083 | ) | $ | (75,758 | ) | $ | (74,955 | ) | ||||
| Loss per share of common stock: | ||||||||||||||||
| Basic and diluted | $ | (0.24 | ) | $ | (0.33 | ) | $ | (0.84 | ) | $ | (0.87 | ) | ||||
| Weighted average number of shares outstanding: | ||||||||||||||||
| Basic and diluted | 90,812 | 87,068 | 90,626 | 86,221 | ||||||||||||
– balance sheets follow –
| Midway Games Inc., 11/2/06 | page 4 |
MIDWAY GAMES INC.
Consolidated Balance Sheets
(In thousands)
Consolidated Balance Sheets
(In thousands)
| September 30, | December 31, | |||||||
| 2006 | 2005 | |||||||
| (unaudited) | ||||||||
Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 91,494 | $ | 98,376 | ||||
| Receivables, net | 11,892 | 30,835 | ||||||
| Inventories | 2,452 | 5,811 | ||||||
| Capitalized product development costs | 39,607 | 27,570 | ||||||
| Prepaid expenses and other current assets | 21,007 | 16,134 | ||||||
| Total current assets | 166,452 | 178,726 | ||||||
| Capitalized product development costs | 9,206 | 25 | ||||||
| Property and equipment, net | 20,242 | 19,049 | ||||||
| Goodwill | 41,203 | 41,108 | ||||||
| Other assets | 11,587 | 9,355 | ||||||
| Total assets | $ | 248,690 | $ | 248,263 | ||||
Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 9,629 | $ | 12,431 | ||||
| Accrued compensation and related benefits | 2,453 | 4,060 | ||||||
| Accrued royalties | 3,124 | 3,938 | ||||||
| Accrued selling and marketing | 2,604 | 4,418 | ||||||
| Deferred revenue | 2,385 | 384 | ||||||
| Current portion of long-term debt | 3,333 | 3,333 | ||||||
| Other accrued liabilities | 16,083 | 13,440 | ||||||
| Total current liabilities | 39,611 | 42,004 | ||||||
| Convertible senior notes, less unamortized discount | 141,455 | 75,000 | ||||||
| Long-term debt | 4,445 | 6,944 | ||||||
| Deferred income taxes | 9,070 | 8,086 | ||||||
| Other noncurrent liabilities | 507 | 784 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock | 925 | 922 | ||||||
| Additional paid-in capital | 442,874 | 431,273 | ||||||
| Accumulated deficit | (378,857 | ) | (303,099 | ) | ||||
| Accumulated translation adjustment | (1,573 | ) | (439 | ) | ||||
| Deferred compensation | — | (3,610 | ) | |||||
| Treasury stock | (9,767 | ) | (9,602 | ) | ||||
| Total stockholders’ equity | 53,602 | 115,445 | ||||||
| Total liabilities and stockholders’ equity | $ | 248,690 | $ | 248,263 | ||||
– supplemental data follows –
| Midway Games Inc., 11/2/06 | page 5 |
MIDWAY GAMES INC.
Net Revenues by Platform
(In thousands)
(unaudited)
Net Revenues by Platform
(In thousands)
(unaudited)
| Three Months | ||||||||||||||||
| Ended September 30, | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| Sony PlayStation 2 | $ | 15,561 | 56.8 | % | $ | 17,271 | 58.5 | % | ||||||||
| Microsoft Xbox | 2,202 | 8.0 | % | 10,982 | 37.2 | % | ||||||||||
| Nintendo GameCube | 4,035 | 14.7 | % | 216 | 0.7 | % | ||||||||||
| Nintendo Game Boy Advance | 2,185 | 8.0 | % | 137 | 0.5 | % | ||||||||||
| Sony PlayStation Portable | 744 | 2.7 | % | — | 0.0 | % | ||||||||||
| Personal Computer | 1,666 | 6.1 | % | 109 | 0.4 | % | ||||||||||
| Royalties | 1,063 | 3.9 | % | 663 | 2.2 | % | ||||||||||
| Other | (64 | ) | -0.2 | % | 149 | 0.5 | % | |||||||||
| Total | $ | 27,392 | 100.0 | % | $ | 29,527 | 100.0 | % | ||||||||
| Nine Months | ||||||||||||||||
| Ended September 30, | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| Sony PlayStation 2 | $ | 36,320 | 52.9 | % | $ | 37,463 | 46.7 | % | ||||||||
| Microsoft Xbox | 7,809 | 11.4 | % | 31,723 | 39.5 | % | ||||||||||
| Nintendo GameCube | 6,230 | 9.1 | % | 3,033 | 3.8 | % | ||||||||||
| Nintendo Game Boy Advance | 2,418 | 3.5 | % | 608 | 0.8 | % | ||||||||||
| Sony PlayStation Portable | 4,755 | 6.9 | % | — | 0.0 | % | ||||||||||
| Personal Computer | 7,118 | 10.4 | % | 2,262 | 2.8 | % | ||||||||||
| Royalties | 3,930 | 5.7 | % | 4,193 | 5.2 | % | ||||||||||
| Other | 130 | 0.1 | % | 986 | 1.2 | % | ||||||||||
| Total | $ | 68,710 | 100.0 | % | $ | 80,268 | 100.0 | % | ||||||||
– supplemental data follows –
| Midway Games Inc., 11/2/06 | page 6 |
MIDWAY GAMES INC.
Net Revenues by Geography
(In thousands)
(unaudited)
Net Revenues by Geography
(In thousands)
(unaudited)
| Three Months | ||||||||||||||||
| Ended September 30, | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| North America | $ | 21,370 | 78.0 | % | $ | 24,507 | 83.0 | % | ||||||||
| International | 6,022 | 22.0 | % | 5,020 | 17.0 | % | ||||||||||
| Total | $ | 27,392 | 100.0 | % | $ | 29,527 | 100.0 | % | ||||||||
| Nine Months | ||||||||||||||||
| Ended September 30, | ||||||||||||||||
| 2006 | 2005 | |||||||||||||||
| North America | $ | 52,673 | 76.7 | % | $ | 60,028 | 74.8 | % | ||||||||
| International | 16,037 | 23.3 | % | 20,240 | 25.2 | % | ||||||||||
| Total | $ | 68,710 | 100.0 | % | $ | 80,268 | 100.0 | % | ||||||||
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