Acclaim Entertainment, Inc. Reports Profitable Results for Third Consecutive Quarter of FY 2001.Entertainment Editors GLEN COVE Glen Cove, city (1990 pop. 24,149), Nassau co., SE N.Y., on the north shore of Long Island, at the entrance to Hempstead Harbor; settled 1668, inc. as a city 1918. , N.Y.--(ENTERTAINMENT WIRE)--July 11, 2001 Acclaim Entertainment, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on .SC: AKLM AKLM Acclaim Entertainment, Inc. (stock symbol) ), a leading global video entertainment software developer and publisher, today reported profitable results of $0.2 million in earnings before an extraordinary gain on net revenues of $38.6 million for its third fiscal quarter ended June 2, 2001. These profits were achieved before an extraordinary gain of $7.1 million, or $0.12 per diluted share, from the early retirement of $13.9 million principal amount of the 10% convertible subordinated notes. For the first nine months of its fiscal 2001, Acclaim reported earnings of $11.6 million or $0.20 per diluted share before the extraordinary gain, and with the extraordinary gain, reported net earnings of $18.7 million or $0.32 per diluted share on net revenues of $151.0 million compared with a net loss of $68.2 million or $1.21 per diluted share for the first nine months of fiscal 2000. The Company achieved operating profitability in the third quarter of fiscal 2001 on substantially higher net revenues and significant reductions in its operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . Net revenues for the three months ended June 2, 2001 were $38.6 million, compared to $4.8 million in the third quarter of the prior year, an increase of $33.8 million. Operating expenses for the third quarter of fiscal 2001 of $24.9 million decreased $15.9 million from $40.8 million for the third quarter of the prior year. The continuing positive effects of Acclaim's cost-reduction initiatives significantly contributed to profitability in the first nine months of fiscal 2001 primarily through reducing the Company's operating expenses $61.8 million or 42% when compared to the same period one year ago on lower net revenues of $151.0 million in the first nine months of fiscal 2001 versus $171.9 million for the same period of the prior year. Profitable performance for the third quarter of fiscal 2001 was fueled by the releases of All-Star Baseball All-Star Baseball is a baseball video game series developed and published by Acclaim Entertainment. The series began in 1998 with the release of All-Star Baseball '99. and Crazy Taxi Crazy Taxi is a video game developed by Hitmaker and published by Sega. The game was first released in arcades in 1999 and was ported to the Sega Dreamcast in 2000. for PlayStation(R)2 computer entertainment system, Blast Lacrosse Blast Lacrosse is an indoor lacrosse video game released in May 2001 for Sony's PlayStation. It is officially licensed by and based on the National Lacrosse League and includes all nine teams of their 14th season, including mascots. and Dave Mirra Dave Mirra (born April 4, 1974 in Chittenango, New York) is an American BMX athlete and business owner. Dave Mirra is known as BMX's most dominant athlete and arguably the most dominant extreme athlete of all-time. Freestyle Maximum Remix for PlayStation(R) game console See video game console. , and Antz Racing for Game Boy(R) Color. In addition, the continued sell through of the catalogue, ongoing success of Dave Mira Freestyle BMX Freestyle BMX is a creative way of using bicycles originally designed for bicycle motocross racing. It can be split into several disciplines, although riders will generally participate in more than one discipline. and the Mary-Kate & Ashley brands across multiple formats, and ATV (1) (Advanced TV) An early name for the digital TV standard proposed by the Advisory Committee on Advanced Television Service (ACATS). See ACATS. See also ATV Forum. (2) (Analog TV) Refers to the NTSC, PAL and SECAM analog TV standads. : Quad Racing for PlayStation(R) game console, all contributed to a profitable quarter. Gross revenues by platform in the third quarter of fiscal 2001, primarily consisted of 128-bit software (70%); 32-bit software (23.9%); portable cartridges (3.8%) and personal computer games This article is about the 80's magazine. For games in general, see Personal computer game. Personal Computer Games was a multi-format UK computer games mag of the early/mid eighties. and other (2.3%). On a geographic basis, North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. and International operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. generated 72% and 28% of net revenues, respectively in the third quarters of both fiscal 2001 and 2000. "This past quarter marks an important milestone for the Company and our shareholders, as we continued to achieve profitability for three consecutive quarters, shifted our product mix effectively from PlayStation(R) game console and Sega Dreamcast(TM) to PlayStation(R)2 computer entertainment system, significantly reduced the outstanding balance of our convertible notes and delivered several successful and highly regarded titles, including Crazy Taxi and All-Star Baseball, for the next-generation console systems," said Gregory Fischbach Gregory Fischbach (known to many as Greg Fischbach) founded video game publisher Acclaim Entertainment, Inc. in 1987 and was its CEO until its bankruptcy in 2004. Mr. Fischbach addressed the United States Senate regarding Internet privacy and ESRB ratings. , Chief Executive Officer of Acclaim. "During this fourth quarter, we will introduce the next generation of our highly successful Dave Mirra franchise, Dave Mira BMX BMX abbr. bicycle motocross BMX Noun 1. bicycle motocross: stunt riding over an obstacle course on a bicycle 2. 2 which has sold in excess of 1.2 million units worldwide, as well as Fur Fighters Fur Fighters is a video game developed by Bizarre Creations and published by Acclaim for the Sega Dreamcast in 2000, then later for the PC. The game was designed very much as a standard third person shooter, but used a world populated by cute little animals as its , NFL Quarterback Club NFL Quarterback Club is a Super Nintendo Entertainment System game to feature quarterbacks from the NFL. Troy Aikman and Warren Moon are two examples of what players can use during the game. , Shadow Man the Second Coming, Paris-Dakar and XG3 Extreme G Racing, which was one of our most talked about and well received titles at this year's E3 show," added Fischbach. "Furthermore, our planned product release schedule is well positioned heading into the holiday season, as we plan to launch 18 Wheeler, Legends of Wrestling Legends of Wrestling is a professional wrestling video game based on the greatest wrestlers of all time, from WWF/WWE, NWA, WCW, ECW and various independent promotions. It was developed and produced by Acclaim. and Jeremy McGrath Supercross World Jeremy McGrath Supercross World is a video game of the supercross genre released in 2002 by Acclaim Entertainment. The game is endorsed by supercross star Jeremy McGrath and is the sequel to Jeremy McGrath Supercross 2000. for the PlayStation(R)2 computer entertainment system; four titles for Nintendo's GAMECUBE(TM), including All Star Baseball All Star Baseball is one of the two most popular baseball board games of the last sixty years, and has been honored as one of the fifty most influential American board games of all time. It was manufactured by Cadaco-Ellis and designed by baseball player Ethan Allen (1904-1993). 2002, Dave Mira BMX 2, Quarterback Club, XG3 Extreme G Racing; and one title for Microsoft's Xbox(TM) video game system, Dave Mira BMX 2. All of our titles will be supported by integrated marketing campaigns, including print and television advertising, strategic cross-promotions and public relations public relations, activities and policies used to create public interest in a person, idea, product, institution, or business establishment. By its nature, public relations is devoted to serving particular interests by presenting them to the public in the most ." "We continue to be cautiously optimistic about the performance of Acclaim for the remainder of fiscal 2001, as we expect to remain profitable in the fourth quarter of this fiscal year and going forward," concluded Fischbach. Retirement of Convertible Subordinated Notes On June 18, 2001, the Company reported the retirement of an additional $6.7 million principal amount of its 10% convertible subordinated notes due March 2002 plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. in exchange for 2,021,882 shares of its common stock. The excess of the fair value of the common stock issued over the principal amount of the notes and accrued interest amounting to approximately $0.4 million will be recorded as a non-cash loss on the early extinguishment of debt in the fourth quarter of fiscal 2001. "As a result of this retirement, the Company has reduced the outstanding principal balance of the notes from $50 million to $29.2 million," said Gerard F. Agoglia, EVP EVP Executive Vice President EVP EGR (Exhaust Gas Recirculation) Valve Position Sensor EVP Electronic Voice Phenomenon EVP Europäische Volkspartei (Germany) EVP Employee Value Proposition and Chief Financial Officer for Acclaim. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains forward-looking statements. The forward-looking statements included here are based on current expectations that involve a number of risks and uncertainties, as well as on certain assumptions. The Company's auditors have provided a qualified opinion on the financial statements for the fiscal year ended August 31, 2001 as to the Company's ability to continue as a going concern. Such statements regarding future events and/or the future financial performance of the Company are subject to certain risks and uncertainties, such as the timing of console transitions, delays in the completion or release of products, the support of the Company's lead lender, availability of financing, the achievement of sales assumptions as projected, the continuation of savings from expense reductions, the possible lack of consumer appeal and acceptance of products released by the Company, fluctuations in demand, that competitive conditions within the Company's markets will not change materially or adversely, that the Company's forecasts will accurately anticipate market demand and the related impact upon liquidity and its ability to service its debt obligations should any of these risks occur. Assumptions relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, the business and operations of the Company are subject to substantial risks and uncertainties that increase the uncertainty inherent in the forward-looking statements. These and other risks and uncertainties are detailed from time to time in Acclaim's reports filed with the Securities and Exchange Commission and should be referred to. About Acclaim Entertainment Based in Glen Cove, N.Y., Acclaim Entertainment, Inc., is a leading worldwide developer, publisher and mass marketer of software for use with interactive entertainment game consoles including those manufactured by Nintendo, Sony Computer Entertainment, Sega and Microsoft Corporation (company) Microsoft Corporation - The biggest supplier of operating systems and other software for IBM PC compatibles. Software products include MS-DOS, Microsoft Windows, Windows NT, Microsoft Access, LAN Manager, MS Client, SQL Server, Open Data Base Connectivity (ODBC), MS Mail, as well as personal computer hardware systems. Acclaim owns and operates four studios located in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and the United Kingdom, and publishes and distributes its software directly in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , the United Kingdom, Germany, France, Spain, Australia and the Pacific Rim. Acclaim also distributes entertainment software for other publishers worldwide, publishes software gaming strategy guides and issues "special edition" comic magazines from time to time to support its time valued brands, Turok and Shadow Man. Acclaim's corporate headquarters are in Glen Cove, New York Glen Cove is a city in Nassau County, New York on the North Shore of Long Island. As of the United States 2000 Census, the city population was 26,622. Part of the early 20th century Gold Coast of the North Shore, Glen Cove has a diverse population. and Acclaim's common stock is publicly traded on NASDAQ.SC under the symbol AKLM. For more information please visit our website at www.acclaim.com. Notice of Conference Call The Company has scheduled a conference call to discuss its operating results for the third fiscal quarter ended May 31, 2001, as well as current operations and the outlook for the fourth quarter of fiscal 2001 and fiscal 2002 following the market close on Wednesday, July 11, at 5:00 PM Eastern Daylight Time (EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT ). Individuals in the U.S. who want to listen to the conference call can dial (800) 388-8975. Overseas callers need to dial (973) 694-2225. All parties should dial in approximately five to ten minutes prior to the scheduled teleconference time. A rebroadcast of the call will be available starting at 6:00 PM EDT on Wednesday, July 11, 2001, through 11:00 PM on Thursday, July 12, 2001. The replay of the conference call can be accessed by dialing (800) 428-6051, and when prompted, enter the PIN number 199327. Overseas callers should dial (973) 709-2089 to hear the rebroadcast and use the same PIN number 199327. Acclaim's conference call can also be accessed live over the Internet through Investor Broadcast Networks' Vcall web site, located at http://www.vcall.com. To listen to the live call, please go to the web site at least 15 minutes before the scheduled time to register, and download and/or install any necessary audio software. A replay on the Vcall site will be available until Wednesday, July 18, 2001. "PlayStation"' and the "PS"' Family logo are registered trademarks of Sony Computer Entertainment Inc. NINTENDO GAMECUBE AND THE NINTENDO GAMECUBE LOGO ARE TRADEMARKS OF NINTENDO. (c) 2001 NINTENDO. Xbox and Microsoft are trademarks of Microsoft Corp. Sega, Dreamcast and the Dreamcast logo are either registered trademarks or trademarks of Sega Corporation.
ACCLAIM ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
June 2, August 31,
2001 2000
Assets
Current Assets
Cash and cash equivalents $ 2,748 $ 6,738
Accounts receivable, net 21,035 3,958
Inventories 4,642 4,708
Prepaid expenses 1,545 2,476
Total Current Assets 29,970 17,880
Other Assets 39,154 42,353
Total Assets $ 69,124 $ 60,233
Liabilities and
Stockholders' Deficit
Current Liabilities
Trade accounts payable $ 26,943 $ 21,844
Accrued selling expenses 12,017 31,093
Other current liabilities 78,109 41,712
Total Current Liabilities 117,069 94,649
Long-Term Liabilities 18,678 59,564
Total Liabilities 135,747 154,213
Stockholders' Deficit
Common stock 1,222 1,133
Additional paid-in capital 222,641 213,940
Accumulated deficit (286,151) (304,866)
Treasury stock (3,338) (3,338)
Accumulated other
comprehensive loss (997) (849)
Total Stockholders' Deficit (66,623) (93,980)
Total Liabilities and
Stockholders' Deficit $ 69,124 $ 60,233
ACCLAIM ENTERTAINMENT, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
June 2, May 31, June 2, May 31,
2001 2000 2001 2000
Net revenues $ 38,642 $ 4,842 $ 151,039 $ 171,937
Cost of revenues 11,264 11,383 48,918 85,504
Gross profit (loss) 27,378 (6,541) 102,121 86,433
Operating expenses
Marketing and selling 8,927 10,861 24,786 57,112
General and administrative 9,530 13,431 29,900 43,183
Research and development 6,492 16,535 29,480 45,680
Total operating expenses 24,949 40,827 84,166 145,975
Earnings (loss)
from operations 2,429 (47,368) 17,955 (59,542)
Total other expense, net (2,176) (1,679) (6,156) (6,725)
Earnings (loss)
before income taxes 253 (49,047) 11,799 (66,267)
Provision for income taxes 10 628 208 1,950
Earnings (loss) before
extraordinary gain 243 (49,675) 11,591 (68,217)
Extraordinary gain 7,124 - 7,124 -
Net earnings (loss) 7,367 (49,675) 18,715 (68,217)
Earnings (loss) per share
before extraordinary gain:
Basic $ - $ (0.88) $ 0.20 $ (1.21)
Diluted $ - $ (0.88) $ 0.20 $ (1.21)
Net earnings (loss)
per share:
Basic $ 0.12 $ (0.88) $ 0.33 $ (1.21)
Diluted $ 0.12 $ (0.88) $ 0.32 $ (1.21)
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