HONG KONG, May 14 /PRNewswire/ -- Radica Games Limited (Nasdaq: RADA)
announced today financial results for the first quarter ended March 31, 2001.
Loss for the quarter before tax was $3.7 million or $0.21 per fully diluted
share compared to a loss of $2.2 million or $0.12 per share for the first
quarter of 2000. Sales were $11.8 million compared to $17.3 million in 2000
for the period.
Radica reported that cash at the end of the quarter increased to
$29.0 million from $23.1 million on December 31, 2000. Receivables declined
to $9.6 million from $25.9 million at year-end. Inventories were
$14.3 million compared to $14.0 million at year-end and $27.0 million in 2000
on March 31. Net book value stands at $3.63 per share with tangible net worth
at $3.00 per share.
Pat Feely, Radica's CEO said, "In spite of difficult market conditions,
our operating results for the quarter were consistent with the range of
expectations we announced at the beginning of the year for the first half. We
are also pleased with the strength of our balance sheet after a particularly
difficult year in 2000. In the first quarter of 2001, retailers acted
aggressively to reduce inventories across the board in response to worsening
economic conditions. While sales movement at retail of Radica's products met
or exceeded our expectations, retailers have been replenishing stocks at a
significantly reduced rate from prior years. It is currently uncertain
whether this weakening trend in the US economy will continue and impact the
remainder of the year."
"In spite of the economic concerns for 2001," added Feely, "we are pleased
with our retail listings of key products for the Fall. We expect excellent
distribution of our Play TV(TM) product line as well as the Girl Tech(R)
product line. The handheld games industry has continued to decrease in 2001
and declined 16% during the quarter; however, Radica's handheld retail sales
were only slightly below 2000 and our market share increased from 21.8% to
26.5% according to The NPD Group."
"The Gamester(R) video game controller business in the UK had a difficult
first quarter consistent with results recently announced by our competitors.
The next generation of 128 bit systems is unfolding more slowly than
anticipated, particularly in Europe. Sony PlayStation 2 has continued to be
in short supply, which has inhibited industry sales. This fact coupled with
the delayed introduction of Microsoft's Xbox(TM) and Nintendo's Game Cube add
up to continued softness in this category in 2001. However, 2002 should be an
excellent year for game controller companies since supplies of all four new
platforms should be plentiful by then. We feel particularly fortunate to be
one of Microsoft's Xbox licensees and will be introducing a complete line of
Xbox peripherals at the upcoming E3 show this week. However, since Xbox was
delayed until November in the States and next Spring in Europe, the real
potential for this line will be in 2002," said Feely.
"As a result of all of these factors we anticipate a challenging 2001. We
are still determined to achieve the objectives we announced at the beginning
of the year to modestly exceed breakeven; but, we want to caution our
investors that a worsening economic climate and continued softness in the
European game controller industry could jeopardize our return to profitability
in 2001. Even so, given our strong balance sheet, we intend to continue our
planned investments in product development and marketing that are needed in
2001 to build the exciting future we have planned for Radica in 2002 and
beyond," said Feely.
The Company also reported that gross margin for the quarter was 26.7%
compared to 27.5% in the same quarter of 2000 as a result of the shift in
product mix to a higher percentage of controller sales versus the reduction of
higher margin handheld games. Operating expenses dropped to $6.9 million from
$7.5 million in 2000 as a result of reduced variable costs due to the
reduction in sales, as well as the reduced development and G&A expense that
resulted from last year's restructuring. These expense decreases were
partially offset by a foreign exchange impact of approximately $0.4 million
due to the weakening of the British Pound against the US dollar during the
period.
The foregoing discussion contains forward-looking statements that involve
risks and uncertainties that could cause actual results to differ
materially from projected results. Forward-looking statements include
statements about efforts to attract or prospects for additional or
increased business, new product introductions and other statements of a
non-historical nature. Actual results may differ from projected results
due to various Risk Factors, including Risks of Manufacturing in China,
Dependence on Product Appeal and New Product Introductions, and Dependence
on Major Customers, as set forth in the Company's Annual Report on Form
20-F for the fiscal year ended December 31, 2000, as filed with the
Securities and Exchange Commission. See "Item 3. Key Information -- Risk
Factors" in such report on Form 20-F.
Radica Games Limited (Radica) is a Bermuda company headquartered in Hong
Kong (Nasdaq: RADA). Radica is a leading developer, manufacturer and
distributor of a diverse line of electronic products including handheld and
tabletop games, high-tech toys, video game controllers and peripherals, and
Internet enabled appliances. Radica has subsidiaries in the U.S.A., Canada
and the U.K., and a factory in Dongguan, Southern China. More information
about Radica can be found on the Internet at http://www.radicagames.com.
Xbox and Microsoft are trademarks of Microsoft Corporation.
RADICA GAMES LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US Dollars in thousands, Three months ended March 31,
except per share data) 2001 2000*
(unaudited) (unaudited)
REVENUES:
Net sales $11,773 $17,343
Cost of sales (8,631) (12,573)
Gross profit 3,142 4,770
OPERATING EXPENSES:
Selling, general and administrative expenses (4,551) (4,750)
Research and development (1,315) (1,373)
Depreciation and amortization (1,003) (1,380)
Total operating expenses (6,869) (7,503)
OPERATING LOSS (3,727) (2,733)
OTHER INCOME 9 232
NET INTEREST INCOME 26 320
LOSS BEFORE INCOME TAXES (3,692) (2,181)
PROVISION FOR INCOME TAXES (32) (11)
NET LOSS $(3,724) $(2,192)
BASIC AND DILUTED LOSS PER SHARE $(0.21) $(0.12)
BASIC AND DILUTED WEIGHTED AVERAGE
SHARE OUTSTANDING 17,565,878 17,607,396
* Restated to conform with 2001 presentation.
RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, December 31,
(US Dollars in thousands, except share data) 2001 2000
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $29,040 $23,097
Accounts receivable, net of allowances
for doubtful accounts
of $2,263 ($2,073 at Dec. 31, 2000) 9,639 25,931
Inventories, net of provision
of $5,581 ($5,788 at Dec. 31, 2000) 14,285 13,971
Prepaid expenses and other current assets 2,702 1,678
Income taxes receivable 3,915 4,173
Deferred income taxes 223 223
Total current assets 59,804 69,073
PROPERTY, PLANT AND EQUIPMENT, NET 17,373 17,975
INTANGIBLE ASSETS, NET 11,007 11,353
DEFERRED INCOME TAXES, NONCURRENT 993 993
Total assets $89,177 $99,394
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings $3,675 $3,780
Accounts payable 5,054 8,027
Current portion of long-term debt 3,648 3,648
Accrued payroll and employee benefits 750 950
Accrued expenses 7,481 9,834
Income taxes payable 227 215
Deferred income taxes 79 79
Total current liabilities 20,914 26,533
LONG-TERM DEBT 4,561 5,473
Total liabilities 25,475 32,006
SHAREHOLDERS' EQUITY:
Common stock
par value $0.01 each,
100,000,000 shares authorized,
17,567,087 shares outstanding
(17,564,297 at Dec. 31, 2000) 176 176
Additional paid-in capital 1,862 1,855
Retained earnings 61,662 65,386
Cumulative translation adjustment 2 (29)
Total shareholders' equity 63,702 67,388
Total liabilities and shareholders' equity $89,177 $99,394
SOURCE Radica Games Limited
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Related links:
http://www.radicagames.com
CONTACT:
Patrick S. Feely, President & CEO, Los
Angeles, California, 626-744-1150, or David C.W. Howell,
President Asia Operations & CFO, Hong Kong, 852-2688-4201, both
of Radica Games Limited
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