EXHIBIT 99.1
NEWSLEAD
Contact: Luke Haase
231.932.0400
INTERPLAY ANNOUNCES SECOND QUARTER 2003 EARNINGS
IRVINE, CA, August 14, 2003 -- Interplay Entertainment Corp. (OTC Bulletin
Board: IPLY.OB) today reported operating results for the second quarter of 2003.
For the second quarter ended June 30, 2003, the Company reported a net loss of
$5.4 million, or $.06 per basic and diluted share, compared to a net income of
$20.9 million, or $.22 per basic and diluted share, in the same period last
year. The decrease in net income from last year is mainly a result of recording
a $28.8 million gain on the sale of Shiny Entertainment in the second quarter of
last year. Net revenues for the second quarter 2003 were $1.3 million versus
$11.8 million in the same period a year ago, a decrease of 89 percent. The
decrease in net revenues was mainly a result of not releasing a new title in the
2003 period compared to releasing one new title in the 2002 period and lower
back catalog sales in the 2003 period. Finally, operating loss decreased 24
percent from the prior year to $5.4 million in the second quarter 2003 as
compared to $7.1 million in the second quarter 2002.
For the six-month period ended June 30, 2003, the Company reported a net income
of $0.2 million, or $.00 per basic and diluted share, compared to a net income
of $22.4 million, or $.30 per basic and diluted share, in the same period last
year. The decrease in net income from last year is mainly a result of recording
a $28.8 million gain on the sale of Shiny Entertainment in the first six months
of last year. Net revenues for the six-month period ended June 30, 2003 were
$20.0 million versus $27.2 million in the same period a year ago, a decrease of
26 percent. Net revenues during the six-month period ended June 30, 2003
included $15 million in revenue related to the sale of all future interactive
entertainment publishing rights to the "Hunter: The Reckoning" franchise.
Finally, operating income increased 104 percent from the prior year to $0.2
million in the six-month period ended June 30, 2003 as compared to a $5.6
million operating loss in the 2002 period.
Gross profit margin for the second quarter 2003 was 12 percent, compared to 10
percent in the second quarter of 2002. Gross profit margin was higher in the
second quarter this year as compared to last year mainly due to the lack of
inventory expenditures under the August 2002 distribution agreement with Vivendi
Universal Games, Inc. Under this agreement, Vivendi pays us a lower per unit
rate and in return is responsible for all manufacturing, marketing and
distribution expenditures. In addition, the 2003 period included a $1.5 million
decrease in write-offs of canceled development projects or on titles that were
impaired because they were not expected to meet our desired profit
requirements. Total operating expenses decreased 34 percent to $5.5 million from
$8.4 million in the second quarter of this year as compared to the same period
last year. The decrease in operating expenses is a result of lower personnel
costs and general expenses, the lack of advertising expense under the terms of
the August 2002 distribution agreement with Vivendi and a decrease in
advertising expense and overhead fees paid to Virgin Interactive, which changed
its name to Avalon Interactive on July 1, 2003.
Gross profit margin for the six-month period ended June 30, 2003 was 60 percent,
compared to 45 percent in the same period of 2002. Gross profit margin was
higher in the 2003 period as compared to the same period last year mainly due to
the lack of inventory expenditures under the August 2002 distribution agreement
with Vivendi and a $0.3 million decrease in write-offs of canceled development
projects or on titles that were impaired because they were not expected to meet
our desired profit requirements Total operating expenses decreased 34 percent to
$11.7 million from $17.7 million in the first six months of 2003 as compared to
the same period last year. The decrease in operating expenses is a result of
lower personnel costs and general expenses, the lack of advertising expense
under the terms of the August 2002 distribution agreement with Vivendi and a
decrease in advertising expense and overhead fees paid to Virgin.
Net revenues by platform for the second quarter of 2003 were 77 percent PC, 15
percent console, and 8 percent OEM, royalties and licensing. On a geographic
basis, North America accounted for 80 percent of total net revenues,
International represented 12 percent, and OEM, royalty and licensing accounted
for 8 percent.
Net revenues by platform for the six-month period ended June 30, 2003 were 8
percent PC, 16 percent console, and 76 percent OEM, royalties and licensing. On
a geographic basis, North America accounted for 15 percent of total net
revenues, International represented 9 percent, and OEM, royalty and licensing
accounted for 76 percent. Net revenues from OEM, royalty and licensing included
$15 million in revenue related to the sale of all future interactive
entertainment publishing rights to the "Hunter: The Reckoning" franchise.
Commenting on the announcement, Interplay Chairman and Chief Executive Officer
Herve Caen said, "Due to continued cost controls and stability in both
development and distribution, we were able to beat our initial estimate of a $9
million loss by 40 percent. Our challenge ahead is clear: deliver on our key PC
and console titles for the all-important third and fourth quarters, while
improving our cash position."
About Interplay Entertainment Corp.
Interplay Entertainment is a leading developer, publisher and distributor of
interactive entertainment software for both core gamers and the mass market.
Interplay develops
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games for personal computers as well as video game consoles, many of which have
garnered industry accolades and awards. Interplay releases products through
Interplay, Black Isle Studios and its distribution partners.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Statements contained in this release except for historical information are
forward-looking statements that are based on current expectations and involve
risks and uncertainties. Without limiting the generality of the foregoing, words
such as "may," "will," "expect," "believe," "anticipate," "intend," "could,"
"estimate," or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements. The
risks and uncertainties inherent in such statements may cause actual future
events or results to differ materially and adversely from those described in the
forward-looking statements. Examples of such forward-looking statements include,
among other things, future improvements in gross margin, operating expenditures,
and product sales. Important factors that may cause actual future events or
results to differ materially and adversely from those described in the
forward-looking statements include (a) the success of company's future adventure
and role playing games, (b) consumer reaction to the company's future games, (c)
the company's ability to consistently and timely release profitable products and
its ability to control costs, and (d) other factors discussed in the company's
filings from time to time with the Securities and Exchange Commission, including
but not limited to the company's annual report on Form 10-K for the fiscal year
ended December 31, 2002 and the company's subsequent quarterly filings on Form
10-Q. The company disclaims any obligation to revise or update any
forward-looking statements that may be made from time to time by it or on its
behalf.
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INTERPLAY ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
(Unaudited) (Unaudited)
2003 2002 2003 2002
-------- -------- -------- --------
(Dollars in thousands,
except per share amounts)
Net revenues ....................... $ 1,269 $ 11,842 $ 20,031 $ 27,217
Cost of goods sold ................. 1,114 10,602 8,099 15,079
Gross profit ..................... 155 1,240 11,932 12,138
Operating expenses
Marketing and sales .............. 354 2,688 475 4,342
General and administrative ....... 1,269 1,819 3,632 4,835
Product development .............. 3,910 3,848 7,588 8,546
Total operating expenses ....... 5,533 8,355 11,695 17,723
Operating income (loss) ............ (5,378) (7,115) 237 (5,585)
Other income (expense) ............. 2 (873) (37) (908)
Gain on sale of Shiny .............. -- 28,781 -- 28,781
Income (loss) before benefit for
income taxes ...................... $ (5,376) $ 20 $ 200 $ 22,288
Benefit for income taxes ........... $ -- $ 75 $ -- $ 75
Net income (loss) .................. $ (5,376) $ 20 $ 200 $ 22,363
Cumulative dividend on participating
preferred stock ................... $ -- $ -- $ -- $ 133
Net income (loss) attributable to
common stockholders ............... $ (5,376) $ 20 $ 200 $ 22,230
Net income (loss) per common share:
Basic .............................. $ (0.06) $ 0.22 $ 0.00 $ 0.30
Diluted ............................ $ (0.06) $ 0.22 $ 0.00 $ 0.30
Weighted average number of common
shares outstanding:
Basic .............................. 93,849 93,095 93,849 73,873
Diluted ............................ 93,849 93,095 93,849 73,873
INTERPLAY ENTERTAINMENT CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2003 2002
ASSETS (Unaudited)
Current Assets (Dollars in thousands)
Cash ......................................... $ 665 $ 134
Trade receivables, net ....................... 1,936 2,676
Inventories .................................. 447 2,029
Prepaid licenses and royalties ............... 1,623 5,129
Other current assets ......................... 972 1,200
Total Current Assets ....................... 5,643 11,168
Property and Equipment, net .................... 2,760 3,130
TOTAL ASSETS ................................... $ 8,403 $ 14,298
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Current debt ................................. $ 1,426 $ 2,082
Accounts payable ............................. 11,752 16,681
Accrued expenses ............................. 8,953 9,465
Total Current Liabilities .................. 22,131 28,228
Commitments and Contingencies
Stockholders' Deficit
Common stock ................................. 94 94
Paid-in-capital .............................. 121,639 121,637
Accumulated deficit .......................... (135,593) (135,793)
Accumulated other comprehensive
income ...................................... 132 132
Total Stockholders' Deficit ................ (13,728) (13,930)
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT ......................... $ 8,403 $ 14,298
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INTERPLAY ENTERTAINMENT CORP.
QUARTER END INFORMATION SHEET - 3 MONTHS ENDED - June 30, 2003 and 2002
(Dollars in thousands)
(Unaudited)
Percent
Increase
Quarter Ended (Decrease)
Geographic Revenue Mix June 30, 2003 June 30, 2002 Quarter
% of % of
Amount Total Amount Total
North America ............ $1,015 79.9% $ 8,103 68.4% -87.5%
International ............ 158 12.5% 1,764 14.9% -91.0%
OEM, royalty and licensing 96 7.6% 1,975 16.7% -95.1%
Total net revenues ......... $1,269 100.0% $11,842 100.0% -89.3%
Percent
Increase
Quarter Ended (Decrease)
Platform Revenue Mix June 30, 2003 June 30, 2002 Quarter
% of % of
Amount Total Amount Total
PC ....................... $ 976 76.9% $ 2,664 22.5% -63.4%
Console .................. 197 15.5% 7,203 60.8% -97.3%
OEM, royalty and licensing 96 7.6% 1,975 16.7% -95.1%
Total net revenues ......... $1,269 100.0% $11,842 100.0% -89.3%
Quarter Ended
New Titles by Platform Q2-03 Q2-02
PC ....................................... 0 0
Console .................................. 0 1
Total new titles ........................... 0 1
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