Midway Games (MWY) 8-K Midway Reports 2006 Q4 and Year End Results

Exhibit 99.1

FOR IMMEDIATE RELEASE
CONTACT:
Geoffrey Mogilner
Midway Games Inc.
(773) 961-2222
gmogilner@midway.com

MIDWAY REPORTS 2006 Q4 AND YEAR END RESULTS

Chicago, Illinois, February 22, 2007— Midway Games Inc. (NYSE: MWY) today announced results of operations for the fourth quarter and full year ended December 31, 2006. The Company also provided guidance for the quarter ending March 31, 2007 and the year ending December 31, 2007.

FOURTH QUARTER RESULTS
Net revenues for the 2006 fourth quarter were $96.9 million, up 38.8% from 2005 fourth quarter net revenues of $69.8 million. The 2006 fourth quarter loss applicable to common stock was $2.0 million, which includes $0.8 million of stock option expense, or a loss of $0.02 per basic and diluted share, compared with a 2005 fourth quarter loss applicable to common stock of $37.8 million, or a loss of $0.42 per basic and diluted share.

Other recent operating and financial highlights include:

• Midway launchedMortal Kombat: Armageddonfor PlayStation 2 and Xbox;Happy Feetfor PlayStation 2, PC, Nintendo GameCube, Game Boy Advance (GBA), Nintendo DS and the Nintendo Wii;Blitz: The Leaguefor the Xbox 360;Rampage: Total DestructionandThe Ant Bullyfor Wii;The Grim Adventures of Billy & Mandyfor GBA and Wii;Blitz: The League Overtime,Mortal Kombat: Unchained, andRush for the PlayStation Portable (PSP); andUnreal Anthologyfor the PC.

• Midway recently announced thatMortal Kombat: Armageddon, which has received multiple industry awards and accolades including Best Fighting Game of the Year 2006 from both Spike TV’s Video Game Awards and IGN.com as well as top review scores and nominations from a number of industry publications, has shipped over one million units.

• Midway announced that it has shipped over 1.8 million units ofHappy Feetthe video game, based on the Warner Bros. Pictures blockbuster feature film,Happy Feet, which released in the U.S. on November 17, 2006.

• Midway launchedBlitz: The Leaguefor the Xbox 360, the next generation installment of our million-unit franchise which was a finalist for the GameSpot.com “Best Sports Game” of E3 2005 as well as “Best Alternative Sports Game of 2005.”

• Midway released four titles at or shortly following the launch of Nintendo’s newest home console, the Nintendo Wii:Happy Feet the video game,The Grim Adventures of Billy & Mandy, Rampage: Total DestructionandThe Ant Bully.

• Midway announced numerous new intellectual properties and next generation titles at its January Gamers’ Day press event in Las Vegas includingHour of Victory, a cinematic, innovative first person

	shooter set in World War II;BlackSite: Area 51, an action packed, first person shooter with stunning visuals, life-like squad interactions and a multitude of online multiplayer modes; and two new handheld games,Touchmasterfor the Nintendo DS andHot Brainfor the PSP.
•	Also at the January Gamers’ Day, Midway showed impressive demonstrations of its other major front-line next generation and PC titles expected in 2007 including:Mortal Kombat: Armageddonfor the Wii,The Lord of the Rings Online: Shadows of Angmar for PC, andStranglehold,The WheelmanandUnreal Tournament IIIon multiple next generation platforms and PC.

FULL YEAR RESULTS
Net revenues for the year ended December 31, 2006, were $165.6 million, up 10.3% from $150.1 million for the year ended December 31, 2005. The loss applicable to common stock for the year ended December 31, 2006, was $77.8 million, which includes $3.3 million of stock option expense, or $0.86 per basic and diluted share, compared to a loss applicable to common stock of $112.8 million or $1.30 per basic and diluted share for the year ended December 31, 2005.

David F. Zucker, president and chief executive officer, commented, “The fourth quarter of 2006 was a landmark quarter for Midway: our largest revenue quarter in seven years that included our largest initial ship-in for a single title,Happy Feet; the culmination of our marquee franchiseMortal Kombaton current generation systems; and the kick-off of our next generation releases withBlitz: The Leagueon Xbox 360 as well as our four Wii titles.”

OUTLOOK
For the year ending December 31, 2007, Midway expects the following:

• Net revenues are expected to grow approximately 36% to $225 million with a net loss of approximately $0.44 per basic and diluted share.

• On a non-GAAP basis, Midway expects a loss of approximately $0.27 per basic and diluted share, which excludes approximately:

• $0.03 of stock option expense,

• $0.13 of convertible debt non-cash interest expense, and

• $0.01 of deferred income tax expense related to goodwill.

For the first quarter ending March 31, 2007, the Company expects the following:

• Net revenues of approximately $7 million, with a net loss of approximately $0.25 per basic and diluted share.

• On a non-GAAP basis, Midway expects a first quarter loss of approximately $0.23 per basic and diluted share, which excludes approximately:

• $0.01 of stock option expense, and

• $0.01 of convertible debt non-cash interest expense.

Mr. Zucker concluded, “Midway has made considerable progress since we embarked on our aggressive plan several years ago to revitalize the company. We believe our significant investment in building unified next generation technology and tools, expanding our sales and marketing resources both domestically and internationally, and instilling a culture of quality and innovation throughout the company position Midway for the growth we are projecting for 2007 and beyond. We anticipate that the portfolio of titles we have slated for 2007, includingStranglehold,BlackSite: Area 51,The Wheelman,

The Lord of the Rings Online,Unreal Tournament IIIandHour of Victory, will pave the way for long-term success and larger opportunities for Midway as we enter this generation of console systems.”

NON-GAAP FINANCIAL MEASURES
Midway has included per share non-GAAP financial measures in its 2007 outlook. Midway does not intend for the presentation of the non-GAAP financial measures to be isolated from, a substitute for, or superior to the information that has been presented in accordance with GAAP. In addition, information used in the non-GAAP financial measures may be presented differently from non-GAAP financial measures used by other companies. The non-GAAP financial measures used by Midway include non-GAAP basic and diluted loss per share. These non-GAAP financial measures exclude the following items:

Stock Option Expense. Midway adopted SFAS No. 123R, “Share-Based Payment” beginning January 2006 in which it began to recognize as an expense the fair value of its stock options. A non-GAAP measurement that excludes stock option expense identifies the component of compensation expense that does not require cash outlay.

Convertible debt non-cash interest expense. In accordance with GAAP, Midway is required to record discounts on its convertible senior notes as a result of decreases in the conversion price of these notes. These amounts are amortized as interest expense through the first date on which the holders may redeem the notes. There is no cash outlay associated with this interest expense. A non-GAAP measurement that excludes the convertible debt non-cash interest expense allows for an easier comparison to prior periods, and also distinguishes this interest expense from the remainder of the interest expense, which requires (or required) a cash outlay by Midway.

Deferred tax expense related to goodwill. Midway recognizes deferred tax expense related to increases in the difference between the book basis and tax basis of goodwill. Goodwill is not amortized for book purposes but is amortized for tax purposes. This increase in the book to tax basis difference causes an increase in the related deferred tax liability balance that cannot be offset against deferred tax assets. Given the nature of this deferred tax expense, a non-GAAP measurement that excludes this expense is deemed relevant.

In the future, Midway may consider whether other significant items should be excluded when arriving at non-GAAP measures of financial performance.

Midway considers the non-GAAP financial measures used herein, when used together with the corresponding GAAP measures, to be helpful in providing meaningful additional information regarding its performance by excluding specific items that may not be indicative of Midway’s core business or projected operating results.

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, February 22, 2007. The conference call number is (800) 299-7089 or

(617) 801-9714 (international callers). The passcode for the call is 26702293. 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 March 1st by dialing (888) 286-8010 or (617) 801-6888 (international callers). The passcode for the replay is 11655874. 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 video game systems and personal computers. More information about Midway and its products can be found at www.midway.com.

FORWARD-LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which describe the plans, strategies and goals, beliefs concerning future business conditions and the outlook for Midway Games Inc. (the “Company”) based on currently available information. Where possible, these forward-looking statements are identified by words such as “may,” “will,” “should,” “could,” “expect,” “eventually,” “anticipate,” “plan,” “strategy,” “believe,” “estimate,” “seek,” “intend” and similar expressions. 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, volatility of the market price of the Company’s common stock, 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., 02/22/07 page 5

MIDWAY GAMES INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)

	Three Months Ended						Year Ended
	December 31,						December 31,
	2006			2005			2006			2005
	(unaudited)			(unaudited)			(unaudited)
Net revenues	$	96,864		$	69,810		$	165,574		$	150,078
Cost of sales:
Product costs and distribution		36,931			25,772			67,331			56,212
Royalties and product development		29,984			30,688			68,883			75,852
Total cost of sales		66,915			56,460			136,214			132,064
Gross profit		29,949			13,350			29,360			18,014
Research and development expense		8,497			11,527			37,022			39,693
Selling and marketing expense		15,702			21,592			43,150			57,189
Administrative expense		5,363			5,740			21,297			18,864
Restructuring and other charges		30			10,784			(130	)		10,784
Operating income (loss)		357			(36,293	)		(71,979	)		(108,516	)
Interest income		886			895			4,384			2,449
Interest expense		(3,680	)		(1,800	)		(11,241	)		(3,119	)
Other income and (expense), net		942			(309	)		2,699			(2,040	)
Loss before income taxes		(1,495	)		(37,507	)		(76,137	)		(111,226	)
Provision for income taxes		530			308			1,646			1,261
Net loss		(2,025	)		(37,815	)		(77,783	)		(112,487	)
Preferred stock dividends:
Distributed		—			5			—			282
Imputed		—			—			—			6
Loss applicable to common stock	$	(2,025	)	$	(37,820	)	$	(77,783	)	$	(112,775	)
Loss per share of common stock:
Basic and diluted	$	(0.02	)	$	(0.42	)	$	(0.86	)	$	(1.30	)
Weighted average number of shares outstanding:
Basic and diluted		90,952			89,062			90,708			86,937

— balance sheet follows —

Midway Games Inc., 02/22/07 page 6

MIDWAY GAMES INC.
Consolidated Balance Sheets
(In thousands)

	December 31,				December 31,
	2006				2005
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	73,422			$	98,376
Receivables, net		51,366				30,835
Inventories		2,891		��		5,811
Capitalized product development costs		35,213				27,570
Prepaid expenses and other current assets		12,792				16,134
Total current assets		175,684				178,726
Capitalized product development costs		6,400				25
Property and equipment, net		20,407				19,049
Goodwill		41,273				41,108
Other assets		10,297				9,355
Total assets	$	254,061			$	248,263
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,864			$	12,431
Accrued compensation and related benefits		4,541				4,060
Accrued royalties		8,097				3,938
Accrued selling and marketing		4,935				4,418
Deferred revenue		2,000				384
Current portion of long-term debt		3,333				3,333
Other accrued liabilities		15,164				13,440
Total current liabilities		45,934				42,004
Convertible senior notes, less unamortized discount		142,010				75,000
Long-term debt		3,611				6,944
Deferred income taxes		9,402				8,086
Other noncurrent liabilities		397				784
Stockholders’ equity:
Common stock		925				922
Additional paid-in capital		444,115				431,273
Accumulated deficit		(380,882	)			(303,099	)
Accumulated translation adjustment		(1,671	)			(439	)
Deferred compensation		—				(3,610	)
Treasury stock		(9,780	)			(9,602	)
Total stockholders’ equity		52,707				115,445
Total liabilities and stockholders’ equity	$	254,061			$	248,263

— supplemental data follows —

Midway Games Inc., 02/22/07 page 7

Midway Games Inc.
Revenue by Platform
(in thousands)

	Three-Months
	Ended December 31,
	2006				2005
Microsoft Xbox 360	$	3,469	3.6	%	$	—	0.0	%
Nintendo Wii		11,456	11.8	%		—	0.0	%
Sony PlayStation 2		39,636	40.9	%		40,127	57.5	%
Microsoft Xbox		6,793	7.0	%		19,847	28.4	%
Nintendo GameCube		4,954	5.1	%		2,419	3.5	%
Sony PlayStation Portable		9,090	9.4	%		1,729	2.5	%
Nintendo DS		9,870	10.2	%		—	0.0	%
Nintendo Game Boy Advance		6,999	7.2	%		1,725	2.5	%
Personal Computer		2,189	2.3	%		1,754	2.5	%
Royalties		2,371	2.5	%		1,952	2.8	%
Other		37	0.0	%		257	0.3	%
Total	$	96,864	100.0	%	$	69,810	100.0	%

	Year
	Ended December 31,
	2006				2005
Microsoft Xbox 360	$	3,469	2.1	%	$	—	0.0	%
Nintendo Wii		11,456	6.9	%		—	0.0	%
Sony PlayStation 2		75,955	45.8	%		77,590	51.7	%
Microsoft Xbox		14,602	8.8	%		51,570	34.4	%
Nintendo GameCube		11,184	6.8	%		5,452	3.6	%
Sony PlayStation Portable		13,845	8.4	%		1,729	1.2	%
Nintendo DS		9,870	6.0	%		—	0.0	%
Nintendo Game Boy Advance		9,417	5.7	%		2,333	1.6	%
Personal Computer		9,307	5.6	%		4,016	2.7	%
Royalties		6,301	3.8	%		6,145	4.1	%
Other		168	0.1	%		1,243	0.7	%
Total	$	165,574	100.0	%	$	150,078	100.0	%

Midway Games Inc., 02/22/07 page 8

Midway Games Inc.
Revenue by Geography
(in thousands)

	Three-Months
	Ended December 31,
	2006				2005
North America	$	71,441	73.8	%	$	58,257	83.5	%
International		25,423	26.2	%		11,553	16.5	%
Total	$	96,864	100.0	%	$	69,810	100.0	%

	Year
	Ended December 31,
	2006				2005
North America	$	124,112	75.0	%	$	118,285	78.8	%
International		41,462	25.0	%		31,793	21.2	%
Total	$	165,574	100.0	%	$	150,078	100.0	%

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