Midway Games (MWY) 8-K Midway Reports 2007 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 2007 Q4 AND YEAR END RESULTS

Chicago, Illinois, March 6, 2008— Midway Games Inc. (NYSE: MWY) today announced results of operations for the fourth quarter and full year ended December 31, 2007. The Company also provided guidance for the quarter ending March 31, 2008.

FOURTH QUARTER RESULTS

Net revenues for the 2007 fourth quarter were $77.6 million, compared to the 2006 fourth quarter net revenues of $96.9 million. The 2007 fourth quarter loss applicable to common stock was $29.7 million, or a loss of $0.33 per basic and diluted share, compared with a 2006 fourth quarter loss applicable to common stock of $2.0 million, or a loss of $0.02 per basic and diluted share.

On a non-GAAP basis, excluding the impact of stock-option expenses and certain non-cash items, the 2007 fourth quarter loss was $23.0 million or a loss of $0.25 per basic and diluted share. For the 2006 fourth quarter, on a non-GAAP basis, the Company had a loss of $0.3 million, or a loss of $0.00 per basic and diluted share. A reconciliation of non-GAAP results to GAAP results is provided at the end of this press release.

Other recent operating and financial highlights include:

• Midway announced today that it has terminated its existing $30 million secured credit facility with Well Fargo Foothill, and simultaneously entered into a new credit facility of $90 million with National Amusements, Inc.

• Midway announced that its Board of Directors has elected Shari E. Redstone as Chair of the Board, following the resignation of Kenneth D. Cron.

• Midway releasedUnreal Tournament 3for the PC worldwide and on the PS3 in North America to numerous awards and accolades, including: Runner up for IGN.com’s Best of 2007 for Best First Person Shooter, Best Graphics Technology, and Best Online Multiplayer, in addition to multiple other “Game of the Year” and “Top 10” accolades from other editorial sources.Unreal Tournament 3has to date shipped over one million units worldwide.

• Midway-publishedThe Lord of the Rings Online: Shadows of Angmarreceived the coveted Golden Joystick award for 2007 PC Game of the Year.

• Midway releasedStrangleholdfor the PS3,BlackSite: Area 51for Xbox 360, PS3 and PC,Aqua Teen Hunger Force: Zombie Ninja Pro-Amfor the PS2,Ultimate Mortal KombatandFoster’s Home for Imaginary Friendsfor the DS, andGame PartyandCruis’nfor the Wii.

• Midway announcedThis Is Vegas, a new next generation game where players will be able to live out their Vegas fantasies in a vast, open world, lifestyle action experience.This Is Vegasis expected to ship for the Xbox 360, PS3, and PC in Winter 2008.

FULL YEAR RESULTS

Net revenues for the year ended December 31, 2007, were $157.2 million, compared to net revenues of $165.6 million for the year ended December 31, 2006. The loss applicable to common stock for the year ended December 31, 2007, was $97.4 million or a loss of $1.07 per basic and diluted share, compared to a loss applicable to common stock of $77.8 million or $0.86 per basic and diluted share for the year ended December 31, 2006.

On a non-GAAP basis, excluding the impact of stock-option expenses and certain non-cash items, the loss for the 2007 full year was $80.3 million or a loss of $0.88 per basic and diluted share. For the 2006 full year, on a non-GAAP basis, the Company had a loss of $72.0 million, or a loss of $0.79 per basic and diluted share. A reconciliation of non-GAAP results to GAAP results is provided at the end of this press release.

David F. Zucker, president and chief executive officer, commented, “We were delighted to bring an eager fan base the PS3 version ofUnreal Tournament 3within the fiscal year, and the consumer response to a number of our casual offerings such asGame Partyfor the Wii andTouchmasterfor the DS was encouraging. Now that we have overcome many of the technology hurdles that we encountered over the last year, we anticipate smoother launches as we release our strong 2008 line-up.”

OUTLOOK

During the first quarter, the Company has released an onlineStrangleholdExpansion Pack for Xbox 360 and PS3 in North America, and in Europe Midway has releasedHour of Victoryfor the PC,Unreal Tournament 3for the PS3,Aqua Teen Hunger Force: Zombie Ninja Pro-Am for the PS2, Game PartyandCruis’nfor the Wii, andFoster’s Home for Imaginary Friendsfor the DS. For the first quarter ending March 31, 2008, the Company expects the following:

• Net revenues of approximately $28 million, with a net loss of approximately $0.30 per basic and diluted share.

• On a non-GAAP basis, Midway expects a first quarter loss of approximately $0.21 per basic and diluted share, which excludes approximately:

o $0.01 of stock option expense and deferred income tax expense related to goodwill, and

o $0.08 of convertible debt non-cash interest expense.

Mr. Zucker concluded, “We expect 2008 to be a significant year for Midway, with more front-line releases than 2007, including some ambitious new intellectual properties with broad market appeal,

reinvigorated franchises with well-established fan bases, and some new opportunities in the casual games space with console titles and a new casual games portal. In the near future we expect to reveal more details on our line-up, such as the recent announcement ofThis Is Vegas.”

NON-GAAP FINANCIAL MEASURES

Midway has included non-GAAP financial measures in its quarterly and yearly results and 2008 first quarter 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.

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. These non-GAAP financial measures exclude the following items:

Stock Option Expense. Midway adopted SFAS No. 123R, “Share-Based Payment” beginning January 1, 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 this component of compensation expense that does not require a cash outlay.

Non-cash convertible debt 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 prices 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 a more direct 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 appropriate.

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

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, March 6, 2008. The conference call number is (866) 700-5192 or (617)

213-8833 (international callers). The passcode for the call is 54151333. 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 13, 2008, by dialing (888) 286-8010 or (617) 801-6888 (international callers). The passcode for the replay is 57692673. 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 concerning future business conditions and the outlook for Midway Games Inc. (the “Company”) based on currently available information that involves risks and uncertainties. The Company’s actual results could differ materially from those anticipated in the forward-looking statements as a result of these risks and uncertainties, including, without limitation, the financial strength 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 1. Business — Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, and in more recent 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 Midway 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., 3/06/08

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MIDWAY GAMES INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

	Three-Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
	(unaudited)			(unaudited)			(unaudited)
Net revenues	$	77,577		$	96,864		$	157,195		$	165,574
Cost of sales:
Product costs and distribution		25,272			36,931			56,413			67,331
Royalties and product development		51,529			29,984			88,171			68,883
Total cost of sales		76,801			66,915			144,584			136,214
Gross profit		776			29,949			12,611			29,360
Research and development expense		5,123			8,497			25,373			37,022
Selling and marketing expense		13,786			15,702			42,960			43,150
Administrative expense		5,290			5,363			21,226			21,297
Restructuring and other charges		0			30			(783	)		(130	)
Operating income (loss)		(23,423	)		357			(76,165	)		(71,979	)
Interest income		239			886			2,313			4,384
Interest expense		(9,567	)		(3,680	)		(27,165	)		(11,241	)
Other income, net		901			942			2,902			2,699
Loss before income taxes		(31,850	)		(1,495	)		(98,115	)		(76,137	)
Provision (benefit) for income taxes		(2,133	)		530			(752	)		1,646
Net loss	$	(29,717	)	$	(2,025	)	$	(97,363	)	$	(77,783	)
Loss per share of common stock:
Basic and diluted	$	(0.33	)	$	(0.02	)	$	(1.07	)	$	(0.86	)
Weighted average number of shares outstanding:
Basic and diluted		91,383			90,952			91,167			90,708

– balance sheet follows –

Midway Games Inc., 3/06/08

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MIDWAY GAMES INC.

Consolidated Balance Sheets

(In thousands)

	December 31,			December 31,
	2007			2006
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	27,524		$	73,422
Receivables, net		44,527			51,366
Inventories		3,772			2,891
Capitalized product development costs		52,431			35,213
Prepaid expenses and other current assets		13,362			12,792
Total current assets		141,616			175,684
Capitalized product development costs		2,947			6,400
Property and equipment, net		19,298			20,407
Goodwill		41,307			41,273
Other assets		9,372			10,297
Total assets	$	214,540		$	254,061
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	29,642		$	7,864
Accrued compensation and related benefits		6,134			4,541
Accrued royalties		11,719			8,097
Accrued selling and marketing		5,645			4,935
Deferred revenue		2,940			2,000
Current portion of long-term debt		—			3,333
Other accrued liabilities		14,190			15,164
Total current liabilities		70,270			45,934
Convertible senior notes, less unamortized discount		82,198			142,010
Long-term debt		19,167			3,611
Deferred income taxes		10,715			9,402
Other noncurrent liabilities		880			397
Stockholders’ equity:
Common stock		933			925
Additional paid-in capital		521,031			444,115
Accumulated deficit		(478,245	)		(380,882	)
Accumulated translation adjustment		(2,629	)		(1,671	)
Treasury stock		(9,780	)		(9,780	)
Total stockholders’ equity		31,310			52,707
Total liabilities and stockholders’ equity	$	214,540		$	254,061

– supplemental data follows –

Midway Games Inc., 3/06/08

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MIDWAY GAMES INC.

Consolidated Non-GAAP Operating Results

(In thousands, except per share amounts)

(unaudited)

The following table reconciles Midway’s net loss and basic and diluted loss per share as presented in its Consolidated Statements of Operations as prepared in accordance with Generally Accepted Accounting Principles (“GAAP”) in the United States of America with its non-GAAP loss and non-GAAP basic and diluted loss per share. Midway’s non-GAAP loss and non-GAAP basic and diluted loss per share exclude stock option expense, convertible debt non-cash interest expense, and deferred tax expense related to goodwill.

	Three-Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Net loss	$	(29,717	)	$	(2,025	)	$	(97,363	)	$	(77,783	)
Stock option expense (1)		141			791			1,484			3,332
Convertible debt non-cash interest expense		6,274			555			14,277			1,129
Deferred tax expense related to goodwill		327			331			1,313			1,316
Non-GAAP loss	$	(22,975	)	$	(348	)	$	(80,289	)	$	(72,006	)

	Three-Months Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Basic and diluted loss per share of common stock	$	(0.33	)		(0.02	)		(1.07	)		(0.86	)
Stock option expense (1)		0.00			0.01			0.02			0.04
Convertible debt non-cash interest expense		0.07			0.01			0.16			0.01
Deferred tax expense related to goodwill		0.01			0.00			0.01			0.02
Non-GAAP basic and diluted loss per share of common stock	$	(0.25	)	$	(0.00	)	$	(0.88	)	$	(0.79	)

(1) Excludes stock option costs capitalized as product development costs.

Midway Games Inc., 3/06/08

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MIDWAY GAMES INC.

Net Revenues by Platform

(In thousands)

	Three-Months
	Ended December 31,
	2007				2006
Sony PlayStation 3	$	26,811	34.6	%	$	—	0.0	%
Microsoft Xbox 360		12,011	15.5	%		3,469	3.6	%
Nintendo Wii		5,634	7.3	%		11,456	11.8	%
Sony PlayStation 2		3,872	5.0	%		39,636	40.9	%
Microsoft Xbox		104	0.1	%		6,793	7.0	%
Nintendo Gamecube		34	0.0	%		4,954	5.1	%
Sony PlayStation Portable		990	1.3	%		9,090	9.4	%
Nintendo Dual Screen		7,796	10.0	%		9,870	10.2	%
Nintendo Game Boy Advance		277	0.4	%		6,999	7.2	%
Personal Computer		17,096	22.0	%		2,189	2.3	%
Royalties and other		2,952	3.8	%		2,408	2.5	%
Total	$	77,577	100.0	%	$	96,864	100.0	%

	Year
	Ended December 31,
	2007				2006
Sony PlayStation 3	$	26,811	17.1	%	$	—	0.0	%
Microsoft Xbox 360		45,555	29.0	%		3,469	2.1	%
Nintendo Wii		15,762	10.0	%		11,456	6.9	%
Sony PlayStation 2		12,843	8.2	%		75,955	45.8	%
Microsoft Xbox		834	0.5	%		14,602	8.8	%
Nintendo Gamecube		875	0.6	%		11,184	6.8	%
Sony PlayStation Portable		3,769	2.4	%		13,845	8.4	%
Nintendo Dual Screen		13,138	8.4	%		9,870	6.0	%
Nintendo Game Boy Advance		1,680	1.1	%		9,417	5.7	%
Personal Computer		30,961	19.7	%		9,307	5.6	%
Royalties and other		4,967	3.0	%		6,469	3.9	%
Total	$	157,195	100.0	%	$	165,574	100.0	%

Midway Games Inc., 3/06/08

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MIDWAY GAMES INC.

Net Revenues by Geography

(In thousands)

	Three-Months
	Ended December 31,
	2007				2006
North America	$	47,908	61.8	%	$	71,441	73.8	%
International		29,669	38.2	%		25,423	26.2	%
Total	$	77,577	100.0	%	$	96,864	100.0	%

	Year
	Ended December 31,
	2007				2006
North America	$	96,700	61.5	%	$	124,112	75.0	%
International		60,495	38.5	%		41,462	25.0	%
Total	$	157,195	100.0	%	$	165,574	100.0	%

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