Majesco Entertainment Company Reports Second Quarter Fiscal 2010 Financial Results

EDISON, N.J., June 14 /PRNewswire-FirstCall/ -- Majesco Entertainment Company (Nasdaq: COOL), an innovative provider of video games for the mass market, today reported financial results for the second quarter and six months ended April 30, 2010.

For the second quarter ended April 30, 2010, Majesco's net revenues decreased 47% percent to $10.9 million versus $20.5 million in the same period a year ago. During this same period, the Company reported an operating loss of $1.6 million, compared to an operating loss of $0.6 million in the second quarter of 2009.  For the quarter, Non-GAAP operating loss was $1.2 million versus Non-GAAP operating income of $0.5 million in 2009. Net loss for the quarter was $1.6 million versus a net loss of $1.7 million in 2009. On a Non-GAAP basis, net loss for the quarter was $1.3 million compared to Non-GAAP net income of $0.3 million last year.

The Company's basic and diluted net loss per share for the quarter ended April 30, 2010 was $0.04 compared to net loss per share  of $0.06 in the same period last year. For the same quarter, Non-GAAP basic and diluted net loss per share was $0.03 compared to net income per share of $0.01 last year.

For the six months ended April 30, 2010, the Company's net revenues decreased 25 percent to $40.1 million versus the year ago period.  During the same period, the Company reported operating income of $0.9 million compared to operating income of $3.1 million in the same 2009 period.  Non-GAAP operating income for the six month period was $2.3 million compared to $5.3 million for the comparable 2009 period. In the six months ended April 30, 2010 net income was $2.2 million compared to net income of $2.5 million for six months ended April 30, 2009.  For the same period, Non-GAAP net income was $1.7 million this year compared to $4.5 million in 2009.

The Company's basic and diluted earnings per share for the six months ended April 30, 2010 was $0.06 while basic and diluted earnings per share were  $0.09 for the corresponding period in 2009.  The Company's Non-GAAP basic and diluted earnings per share for the six months ended April 30, 2010 was $0.04 compared to $0.16 in the corresponding 2009 period.

Jesse Sutton, Chief Executive Officer of Majesco, said, "Our Company's second quarter results were in line with our internal expectations.  The revenue decline for the quarter was consistent with our full year guidance of $80 million.  We were up against some difficult comparisons with last year when we launched Gardening Mama, and our first Jillian Michaels' title was selling very well.  Our costs are under control and we continue to adjust our business model to meet industry challenges.  We remain excited about our upcoming titles scheduled to release during the balance of the year.  Our management team is striving for improved profitability and is totally committed to building long-term value for our shareholders."

Financial Highlights

• Total operating expenses declined to $4.7 million or 36% from same period 2009.
• At the end of the quarter and six months ending April 30, 2010 the Company had $11.5 million in cash and cash equivalents.
• Total current liabilities declined $7.5 million from $16.2 million on October 31, 2009 to $8.7 million as of April 30, 2010.

Announced Product Line-up

Third Quarter 2010 Ending July 31, 2010

To date, the Company has announced the following titles that were or are expected to be released during its third quarter:

• Tetris Party Deluxe for Wii and Nintendo DS represents a strategic partnership with Tetris Online, Inc. to support the North American launch and distribution of the two newest additions to the Tetris franchise. Tetris Party Deluxe builds on the previously released Tetris Party for WiiWare by adding new modes and features to enrich the overall game play experience for both platforms.
• Attack of the Movies 3-D is the first-ever 3-D shooter designed exclusively for Wii and Xbox 360®. The game transports players into six fantastic movie-themed worlds and features classic enemies culled from the annals of film history. The game also comes packaged with four pairs of 3-D glasses to support four-player multiplayer action.
• Serious Sam HD: The Second Encounter for Xbox LIVE Arcade continues the glorious high-definition chaos with a slick new graphic presentation, intense multiplayer action, and an onslaught of all-new levels, enemies and bosses from the golden age of first-person shooters.
• Dance Sensation! for Wii is the only game that lets players train and perform routines in four different styles: Hip-Hop, Jazz, Ballet, and Latin Ballroom. Players use the Wii Remote™ and Nunchuk to control their on-screen dancer as she perfects more than 160 real motion-captured dance moves in recitals ranging from local auditoriums to the Broadway stage.
• Summer Camp Showdown for Wii is a motion-based adventure where players vie for the upper hand in sports and pranks to determine who rules the woods.
• Pirates PlundArrr for Wii is a fun and frantic beat-'em-up that lets players hunt the high seas for the renegade captain Rudebelly who has unleashed an army of cursed dead and menacing bosses. Would-be pirates will fight through 45 creature-filled levels to retrieve their stolen treasure, and four mates can even plunder together in a party style, battle royale.
• Super Speed Machines for Nintendo DS lets players kick it into high gear in this frantic arcade racer that delivers super speed and dangerous conditions at every turn.

Fiscal 2010

To date, the Company has announced the following titles that are expected to be released during the rest of fiscal 2010:

• Zumba Fitness® for Wii, PlayStation®Move and another to be announced system is a one-of-a-kind exercise program that pairs Latin rhythms with red-hot international dance steps so you can have a blast as you party your way into shape. Through invigorating, high calorie-burning fitness classes, Zumba Fitness® has helped melt the pounds and inches off seven and a half million Zumba-enthusiasts in more than 75 countries.
• Crafting Mama for Nintendo DS is the newest brand extension of the Cooking Mama franchise that has sold nearly seven million units. Using the stylus as a universal crafting tool, players will sew, mold, glue, cut and paint under Mama's masterful direction as they create 40 different projects, from patchwork quilts to earrings, candles and vases.
• Greg Hastings Paintball 2 for Xbox 360®, Wii, and PlayStation®3, is the most realistic paintball experience to date from the most successful name in the sport. The game introduces more than 10 single and multiplayer game modes, each staged in all-new paintball locations based on actual fields around the world. Featuring three new event branches -- Tournament Speedball, Recball, and Tournament Woodsball -- players can build and develop their team of professional ballers and even cheat to stay in the game.
• Ghostwire: Link to the Paranormal for Nintendo DSi turns your handheld into a portal to the astral plane. Coupled with the DSi camera, this detection and communication tool lets you find, summon, capture and interact with ghosts living amongst us. Ultimately you can help them find peace as you develop your own paranormal prowess within an augmented reality that promises to change your perspective forever.
• Swords for Wii pits players against some of the most formidable adversaries in history using the Wii Remote™ with Wii MotionPlus™ as their blade for accurate 1-to-1 motion based battles.
• Dawn of Heroes for Nintendo DS is a tactical role playing game that combines classic RPG concepts -- including character development, epic combat, quests and puzzles -- with a humorous style.
• Flip's Twisted World for Wii is a unique puzzle platformer that stars Flip, a magician's apprentice who mistakenly gets sucked into an alternate universe where up and down are only a matter of perspective. Players will help Flip navigate his puzzling world by rotating the environment 180 degrees in any direction with a simple twist of the Wii Remote™.

Holiday 2010

• Babysitting Mama for Wii stars the iconic Mama from the best-selling Cooking Mama franchise and features an exciting new play mechanic. This innovative simulation game will be delivered to consumers with an adorable plush baby doll that the babysitter tucks the Wii Remote into in order to interact with the doll and game at the same time in 40 different activities.
• My Baby 3 & Friends for Nintendo DS is the third installment in the My Baby franchise that has sold nearly 2mm units worldwide. My Baby 3 lets players experience the joy of parenting as they feed, bathe, change and cuddle with their in game baby. What's more, the game also sparks new social development skills via interaction with another baby and puppy.

Fiscal 2010 Outlook

We are confirming our full year guidance for net revenue of approximately $80 million.  Our profit guidance is for Non-GAAP EPS of approximately $0.05.  The Company's guidance assumes the release of approximately 32 SKUs in 2010, including 12 DS and 14 Wii, 9 titles released in the third quarter and 13 titles released in the fourth quarter.  We also expect that roughly 62% of our revenue will come from DS titles; 32% from Wii titles and 6% from all other platforms.  The Company's results are also impacted by seasonality from the December holiday period and variability based on release schedules.

Conference Call

At 4:30 PM ET today, management will host an earnings conference call. To access the call please dial 1-800-860-2442. The access code for the call is "438599". Please dial in approximately 10 minutes prior to the start of the conference call. The conference call will also be broadcast live over the Internet and available for replay for 90 days from the "Investor Info" section of the Company's Web site at http://www.majescoentertainment.com. In addition, a replay of the call will be available via telephone for seven days beginning approximately two hours after the call. To listen to the telephone replay in the U.S., please dial 1-877-344-7529 and for international callers, dial 412-317-0088. Enter access code 438599#.

Generally Accepted Accounting Principles (GAAP) and Non-GAAP Metrics

To facilitate a comparison between the three months ended April 30, 2010 and 2009, the Company has presented both GAAP and Non-GAAP financial results. GAAP financial measures, including operating income, net income, and basic and diluted earnings per share, have been adjusted to report certain Non-GAAP financial measures.

These Non-GAAP financial measures exclude the following items from the Company's condensed consolidated statements of operations:

• Expenses related to non-cash compensation
• Net proceeds from the sale of certain state income tax net operating loss carryforwards
• Change in fair value of warrants
• Settlement of certain litigation in 2009
• Costs of operating a development studio in California in 2009
• Severance costs

These Non-GAAP measures are provided to enhance investors' overall understanding of the Company's current financial performance and the Company's prospects for the future. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

For more information on these Non-GAAP financial measures, please see the tables in this release captioned "Reconciliation of GAAP and Non-GAAP Financial Measures".

About Majesco Entertainment Company

Majesco Entertainment Company is a provider of video games for the mass market. Building on more than 20 years of operating history, the company is focused on developing and publishing a wide range of casual and family oriented video games on Wii(TM), Nintendo DS(TM) and other leading systems. Product highlights include Cooking Mama(TM), TETRIS Party Deluxe, Alvin and the Chipmunks: The Squeakquel and Jillian Michaels' Fitness Ultimatum. The company's shares are traded on the Nasdaq Stock Market under the symbol: COOL. Majesco is headquartered in Edison, NJ and has an international office in Bristol, UK. More information about Majesco can be found online at www.majescoentertainment.com. @Majesco is on twitter or at www.twitter.com/majesco.

Safe Harbor

Some statements set forth in this release, including the estimates under the headings "Outlook" contain forward-looking statements that are subject to change. Statements including words such as "anticipate", "believe", "estimate" or "expect" and statements in the future tense are forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual events or actual future results to differ materially from the expectations set forth in the forward-looking statements. Some of the factors which could cause our results to differ materially from our expectations include the following: consumer demand for our products, the availability of an adequate supply of current-generation and next-generation gaming hardware, including but not limited to Nintendo's DS and Wii platforms; our ability to predict consumer preferences among competing hardware platforms; consumer spending trends; the seasonal and cyclical nature of the interactive game segment; timely development and release of our products; competition in the interactive entertainment industry; developments in the law regarding protection of our products; our ability to secure licenses to valuable entertainment properties on favorable terms; our ability to manage expenses; our ability to attract and retain key personnel; adoption of new accounting regulations and standards; adverse changes in the securities markets; our ability to comply with continued listing requirements of the Nasdaq stock exchange; the availability of and costs associated with sources of liquidity; and other factors described in our filings with the SEC, including our Annual Report on Form 10-K for the year ended October 31, 2009. We do not undertake, and specifically disclaim any obligation, to release publicly the results of any revisions that may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

SOURCE Majesco Entertainment Company