Acclaim Entertainment, Inc. Reports Retirement of $6.7 Million Convertible Notes.

Entertainment Editors

GLEN COVE, N.Y.--(BUSINESS WIRE)--June 18, 2001

Acclaim Entertainment, Inc. (NASDAQ: AKLM), a leading global video entertainment software developer and publisher, today reported that it has retired $6,650,000 principal amount of its 10% Convertible Subordinated Notes due March 2002 from Alexandra Global Investment Fund I, Ltd. plus accrued interest 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 $0.1 million will be recorded as a non-cash loss on early extinguishment of debt in the fourth quarter of fiscal 2001. The convertible note retirement will reduce the Company's interest expense for the balance of fiscal 2001 by approximately $0.3 million or $0.01 per fully diluted share.

"As a result of this retirement, the Company has reduced the outstanding principal balance of the notes to approximately $29,225,000," said Gerard F. Agoglia, EVP and Chief Financial Officer for Acclaim.

According to the Company's operating plan and assuming the timely release and expected sell-through of certain titles, the continuing support of its lead lender, and giving effect to the continuation of savings from the successfully implemented expense reductions, Acclaim expects to remain profitable throughout the remainder of fiscal 2001 and generate sufficient positive cash flow from operations to meet its debt service requirements and repay the remaining noteholders at maturity.

In the event the Company does not achieve its product release schedule, sales assumptions, or any additional continuing expense reductions, or if the next generation game-consoles are not released as announced or achieve timely sell through in the quantities anticipated, there can be no assurance that the Company's operations and liquidity will not be materially affected.

Safe Harbor 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, availability of financing, 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 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 as well as personal computer hardware systems. Acclaim owns and operates four studios located in the United States and the United Kingdom, and publishes and distributes its software directly in North America, 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 and Acclaim's common stock is publicly traded on NASDAQ under the symbol AKLM. For more information please visit our website at www.acclaim.com.