HONG KONG, Aug. 9 /PRNewswire-FirstCall/ -- Radica Games Limited
(Nasdaq: RADA) announced today its results for the second quarter ended June
30, 2004. The Company reported a net profit for the quarter of $0.2 million or
$0.01 per diluted share compared to a net loss of ($0.8) million or ($0.04)
per share in the second quarter of 2003. Net loss for the six-month period
ended June 30, 2004 was ($0.9) million or ($0.05) per diluted share compared
to a loss of ($1.4) million or ($0.08) per diluted share for the same period
in 2003.
Sales for the quarter increased by 10.9% to $18.8 million from
$16.9 million due mainly to increases in sales in the U.S. and U.K. of
Electronic Games and Youth Electronics offset by a reduction in Manufacturing
Services and Video Game Accessories sales. Sales for the year to date
decreased to $30.9 million as compared to $33.0 million for the same period in
2003 due to factors discussed in the Q1 press release (i.e. decreases in
Manufacturing Services, loss of a one-off order and general softness in retail
markets in January and February) offset in part by the second quarter
increases.
Pat Feely, Radica's President and CEO, said, "Excluding Manufacturing
Services, second quarter sales of Radica branded products were up 26% compared
to last year demonstrating our continuing strategic progress in growing our
branded product lines instead of manufacturing for others. While it is too
early to gauge consumer response, given the soft retail environment in the
industry during the quarter, we are pleased with this result and believe it is
indicative of the competitive strength of our product offerings for fall. As
a result, we are maintaining our guidance of 20% to 30% sales growth for the
year and full year EPS in the range of 65 to 75 cents recognizing that much
uncertainty still exists on full year results."
"We are particularly excited about the prospects for our line of Arcade
Legends TV games, Twinkleberries electronic dolls, the Tetris Tower, the X-Box
Live game pad and our Gamester Race Pak driving wheel, which are all just
beginning to ship to retailers. Additionally, our spring launch of 20Q is
exceeding our expectations in retail sales movement and almost overnight has
become one of our leading products."
"We also announced today our partnership with the World Poker Tour for
handheld electronic games. As you know, for years we have been the leader in
the handheld electronic casino games business. This alliance with the number
one television license in poker is an exciting development that will allow us
next spring to expand our leadership by leveraging the popular Texas Hold 'Em
trend," said Feely.
The following table shows the detailed revenue comparisons for the
quarter:
Three months ended June 30, Six months ended June 30,
Product Line 2004 2003 2004 2003
Revenues
(US$ in thousands)
Electronic Games $11,059 $8,329 $17,571 $16,594
Youth Electronics 2,848 2,196 4,826 3,874
Other Electronic
Toys 565 -- 565 --
VGA 2,016 2,537 4,008 5,771
Manufacturing
Services 2,311 3,882 3,954 6,750
TOTAL $18,799 $16,944 $30,924 $32,989
Gross profit margin for Q2 2004 was 32.7% compared to 32.4% in Q2 2003 and
was 36.5% for the year to date compared to 35.1% for the comparable period in
2003. This was due to the reduction of lower margin manufacturing services
business offset partially by the impact of a higher proportion of import
shipments on FOB terms and sales to international distributors which also have
lower margin. The margin was also impacted by approximately $110,000 of
freight costs related to relocating the U.S. inventories from Nevada to
Kentucky, a move which is expected to provide cost savings for the remainder
of the year. In addition, demand for products in Q3 has meant that we have
outsourced manufacturing of more product than usual resulting in increased
costs. 2003 comparable numbers have been amended to reflect the reallocation
of certain costs in Asia which were included in operating costs in 2003 but
are now categorized as costs of goods sold.
Operating expenses decreased to $6.5 million for the quarter from
$6.6 million in Q2 2003. The decrease was mainly due to a reduction in
depreciation and amortization charges together with a restructuring charge of
$87,000 which impacted Q2 2003. For the six months ended June 30, 2004,
operating expenses fell $0.5 million from the comparative period in 2003 for
similar reasons together with the impact of variable expenses.
The Company also benefited from certain tax credits in China resulting in
a tax credit for the quarter of $0.26 million and $0.15 million for the year
to date.
At June 30, 2004 the Company had $36.4 million of cash and investment
securities, and net assets of $86.6 million as compared to $42.0 million and
$89.2 million, respectively, at December 31, 2003. There was no debt at June
30, 2004 and December 31, 2003. Inventories increased to $26.6 million from
$15.5 million at December 31, 2003 reflecting normal seasonal increases.
Receivables were at $9.1 million at June 30, 2004 as compared to $15.4 million
at December 31, 2003 also due to normal seasonality.
On June 21, 2004, the Company declared a third dividend for the year of
4 cents per share which was paid on July 30, 2004.
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, 2003, 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 entertainment products including
electronic games, youth electronics, video game accessories and high-tech
toys. 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.
RADICA GAMES LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars in Three months ended June 30, Six months ended June 30,
thousands, 2004 2003* 2004 2003*
except per (unaudited) (unaudited) (unaudited) (unaudited)
share data)
Revenues:
Net sales $18,799 $16,944 $30,924 $32,989
Cost of goods
sold (exclusive
of items shown
separately
below) (12,647) (11,452) (19,632) (21,396)
Gross profit 6,152 5,492 11,292 11,593
Operating expenses:
Selling, general
and administrative
expenses (5,206) (5,028) (10,195) (10,322)
Research and
development (869) (920) (1,798) (1,835)
Depreciation and
amortization (429) (524) (850) (1,116)
Restructuring
charge -- (87) -- (87)
Total operating
expenses (6,504) (6,559) (12,843) (13,360)
Operating loss (352) (1,067) (1,551) (1,767)
Net interest and
other income 187 154 418 269
Foreign currency
gain, net 72 147 44 160
Loss before
income taxes (93) (766) (1,089) (1,338)
Credit (provision)
for income taxes 264 (23) 148 (55)
Net profit (loss) $171 $(789) $(941) $(1,393)
Net profit (loss)
per share:
Basic $0.01 $(0.04) $(0.05) $(0.08)
Diluted $0.01 $(0.04) $(0.05) $(0.08)
Weighted average
number of common
and common
equivalent
shares:
Basic 18,620,108 17,963,983 18,595,387 17,903,140
Diluted 19,499,899 17,963,983 18,595,387 17,903,140
Cash dividends
declared per
share (4 cents
declared and
paid for each
quarter ended
March 31,
June 30, and
September 30,
2004) $0.04 $-- $0.12 $--
* Reclassified to conform with 2004 presentation.
RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS
(US Dollars in thousands, except June 30, December 31,
share data) 2004 2003
(unaudited)
Assets
Current assets:
Cash and cash equivalents $9,966 $13,944
Investment securities 26,444 28,009
Accounts receivable, net of
allowances for doubtful accounts of
$210 ($251 as at December 31, 2003) 9,059 15,360
Inventories 26,648 15,503
Prepaid expenses and other current
assets 5,225 2,748
Income taxes receivable 931 1,404
Deferred income taxes 1,706 1,706
Total current assets 79,979 78,674
Property, plant and equipment, net 12,430 11,908
Goodwill 9,551 9,551
Other asset 864 875
Deferred income taxes, noncurrent 899 1,206
Total assets $103,723 $102,214
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $11,865 $7,390
Accrued payroll and employee benefits 1,277 1,353
Accrued expenses 3,942 3,976
Income taxes payable 4 339
Total current liabilities 17,088 13,058
Total liabilities 17,088 13,058
Shareholders' equity:
Common stock par value $0.01 each,
100,000,000 shares authorized,
18,626,228 shares outstanding
(18,225,204 as at December 31, 2003) 186 182
Additional paid-in capital 4,309 3,517
Retained earnings 82,261 85,437
Accumulated other comprehensive
(loss) income (121) 20
Total shareholders' equity 86,635 89,156
Total liabilities and shareholders'
equity $103,723 $102,214
SOURCE Radica Games Limited
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Related links:
http://www.radicagames.com
CONTACT:
Patrick S. Feely, President & CEO (Los
Angeles, California), +1-626-744-1150, or David C.W. Howell,
President Asia Operations & CFO (Hong Kong), +(852) 2688 4201,
both of Radica Games Limited
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