Radica Games Limited Reports First Quarter Profits
Highlights:
HONG KONG, May 9 /PRNewswire-FirstCall/ -- Radica Games Limited (NASDAQ:RADA)
announced today its results for the first quarter ended March 31, 2005. The
Company reported a net profit for the quarter of $0.5 million or $0.03 per
diluted share compared to a net loss of ($1.1) million or ($0.06) per diluted
share in the first quarter of 2004.
Sales for the quarter increased by 85% to $22.5 million from $12.1 million due
to exceptional sales of 20Q ($7.9 million for the quarter) plus growth of other
product lines of 21%. Branded sales grew by 100% with U.S. branded sales
increasing by 114% compared to the sales for the same period in 2004.
Radica's Chief Executive Officer, Pat Feely, said, "We are delighted with our
first quarter results particularly in light of the soft results of most other
companies in our industry. Q1 demonstrated a continuation of the sales
momentum we experienced last fall with not only our 20Q product line but
additionally in most areas of our business. Of particular note is the strength
we are seeing from our newly introduced fourth version of the Girl Tech
Password Journal as well as our lighted series of handheld games including
casino and solitaire games. Our Play TV Legends line of retro plug and play
games also performed well but only represented 13% of our sales for the quarter
reflecting our lack of dependence on this category." "The strong start on 2005 has also been reflected in our early bookings for the
entire year. However, in looking at Q1 results it is important to remember
that the quarter was influenced by the earlier timing of Easter as well as
pipeline fill for 20Q resulting from our increased production capacity for 20Q. As a result of these factors and while it is too early to fully predict Q2, we
believe that our second quarter results will be unlikely to exceed first
quarter results. However, the outlook for the full year remains consistent
with current Wall Street estimates," said Feely.
"I also want to comment today that our factory expansion is proceeding ahead of
schedule. We have built ahead early in the year quantities of certain staple
products to ensure that we have plenty of capacity for the fall season. As a
result, we are in an excellent position to respond to any upside late in the
year and avoid extra outsourcing and air freight charges that plagued us last
year. Dealing with growth is a real challenge and one we are prepared to meet
as the year progresses," said Feely.
The following table shows the detailed revenue comparisons for the quarter by
segment: Three months ended March 31,
Product Lines 2005 2004
(US$ in thousands) Games and Youth Electronics Segment
Electronic Games and Toys $16,948 $6,512
Youth Electronics 2,446 1,978
Manufacturing Services 1,486 1,309
$20,880 $9,799
VGA Segment
Video Game Accessories $1,594 $1,992
Manufacturing Services -- 334
$1,594 $2,326 TOTAL $22,474 $12,125 Gross profit margin for Q1 2005 was 38.8% compared to 42.4% in Q1 2004 due to
the impact of the sales of lower margin Play TV Legends products in Q1 2005.
Operating expenses increased to $8.3 million for the quarter from $6.3 million
in Q1 2004. The increase was due to sales related variable expenses plus the
impact of $0.5 million of advertising that due to an earlier Easter fell in Q1
this year. During the quarter, the Company also finalized discussions with
Immersion Corporation (NASDAQ:IMMR) for use of its force feedback technology in
video game accessories. This negotiation resulted in an agreement for the past
and future royalties for a technology license. The expense related to the
settlement of past royalties and related legal costs in the quarter was
$250,000. Research and development costs were up from $0.9 million to $1.2
million due to costs related to the development of Play TV software.
At March 31, 2005 the Company had $38.1 million of cash and investment
securities, and net assets of $91.1 million as compared to $40.1 million and
$91.1 million, respectively, at December 31, 2004. There was no debt at March
31, 2005 and December 31, 2004. Inventories increased to $29.7 million from
$26.8 million at December 31, 2004 reflecting the build up of 20Q and other
staple models to help spread the production load for the year. Receivables
decreased to $13.5 million from $18.4 million at December 31, 2004 due to
normal seasonality.
On April 12, 2005, the Company declared a second quarter dividend of $0.045 per
share, which was paid on April 29, 2005.
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, 2004, 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, the U.K. and Macau, 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 thousands, Three months ended March 31,
except per share data) 2005 2004
(unaudited) (unaudited)
Revenues:
Net sales $22,474 $12,125
Cost of goods sold
(exclusive of items shown separately
below) (13,758) (6,985)
Gross profit 8,716 5,140 Operating expenses:
Selling, general and administrative
expenses (6,659) (4,989)
Research and development (1,197) (929)
Depreciation and amortization (404) (421)
Total operating expenses (8,260) (6,339) Operating income (loss) 456 (1,199) Net interest and other income 219 231 Foreign currency loss, net (25) (28) Profit (loss) before income taxes 650 (996) Provision for income taxes (155) (116) Net profit (loss) $495 $(1,112) Net profit (loss) per share: Basic $0.03 $(0.06) Diluted $0.03 $(0.06) Weighted average number of common and
common equivalent shares: Basic 18,860,682 18,570,938 Diluted 19,571,477 18,570,938 Cash dividends declared per share
(4.5 cents and 4 cents declared and
paid for quarter ended March 31,
2005 and 2004, respectively) $0.045 $0.040 RADICA GAMES LIMITED
CONSOLIDATED BALANCE SHEETS (US Dollars in thousands, except
share data) March 31, December 31,
2005 2004
(unaudited)
Assets
Current assets:
Cash and cash equivalents $25,660 $27,614
Investment securities 12,419 12,456
Accounts receivable, net of allowances
for doubtful accounts of $141
($148 as at December 31, 2004) 13,455 18,359
Inventories 29,710 26,818
Prepaid expenses and other current
assets 3,969 3,374
Income taxes receivable 168 168
Deferred income taxes 1,953 1,850 Total current assets 87,334 90,639 Property, plant and equipment, net 12,015 11,480 Goodwill 6,015 6,015 Other assets 849 854 Deferred income taxes, noncurrent 715 953 Total assets $106,928 $109,941 Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $9,615 $11,840
Accrued payroll and employee benefits 1,299 1,486
Accrued expenses 4,831 5,251
Income taxes payable 98 287 Total current liabilities 15,843 18,864 Total liabilities 15,843 18,864 Shareholders' equity:
Common stock
par value $0.01 each, 100,000,000
shares authorized, 18,991,146 shares
outstanding (18,738,112 as at
December 31, 2004) 190 187
Additional paid-in capital 5,632 4,610
Retained earnings 85,557 85,909
Deferred compensation (195) --
Accumulated other comprehensive
(loss) income (99) 371 Total shareholders' equity 91,085 91,077 Total liabilities and shareholders'
equity $106,928 $109,941
DATASOURCE: Radica Games Limited CONTACT: Patrick S. Feely, Chief Executive Officer (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 Web site: http://www.radicagames.com/
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